<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 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
----------------
UNITED ARTISTS THEATRE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 7832 84-1198391
(STATE OR OTHER (PRIMARY STANDARD (I.R.S.
JURISDICTION INDUSTRIALCLASSIFICATION EMPLOYERIDENTIFICATION
OFINCORPORATION OR CODE NUMBER) NUMBER)
ORGANIZATION)
UNITED ARTISTS THEATRE COMPANY
9110 E. NICHOLS AVENUE, SUITE 200
ENGLEWOOD, COLORADO 80112-3405
(303) 792-3600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDINGAREA CODE, OF THE
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
COPIES OF ALL COMMUNICATION TO:
GENE HARDY STEPHANIE J. SELIGMAN, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL WACHTELL, LIPTON, ROSEN & KATZ
COUNSEL 51 WEST 52ND STREET
UNITED ARTISTS THEATRE COMPANY NEW YORK, NEW YORK 10019
9110 E. NICHOLS AVENUE, SUITE 200 (212) 403-1000
ENGLEWOOD, COLORADO 80112-3405
(303) 792-3600
(NAME, ADDRESS, INCLUDING ZIP CODE AND
TELEPHONE NUMBER,INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
Approximate date of commencement of proposed sale to public: Upon
consummation of the Exchange Offer referred to herein.
----------------
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. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER NOTE(2) OFFERING PRICE FEE
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 3/4% Series B Senior
Subordinated Notes due
2008(1)........................ $225,000,000 100% $225,000,000 $66,375
</TABLE>
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(1) This Registration Statement covers both the Prospectus filed hereby in
connection with the exchange offer for the Exchange Notes and the
prospectus filed hereby in connection with certain market-making
activities by affiliates of the Registrant.
(2) Estimated solely for purposes of calculating registration fee pursuant to
Rule 457.
----------------
THE REGISTRANT HEREBY AMEND THE REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement covers the registration of an aggregate
principal amount of $225,000,000 of 9 3/4% Series B Senior Subordinated Notes
due 2008 (the "Exchange Notes") of United Artists Theatre Company (formerly
named Oscar I Corporation) ("United Artists" or the "Company"), which will
have been registered under the Securities Act pursuant to a Registration
Statement of which this Prospectus is a part, that may be exchanged for equal
principal amounts of the Company's outstanding 9 3/4% Senior Subordinated
Notes due 2008 (the "Notes") (the "Exchange Offer"). This Registration
Statement also covers the registration of the Exchange Notes for resale by
Merrill Lynch, Pierce, Fenner & Smith Incorporated in market-making
transactions. The complete Prospectus relating to the Exchange Offer (the
"Exchange Offer Prospectus") follows immediately after this Explanatory Note.
Following the Exchange Offer Prospectus are certain pages of the Prospectus
relating solely to such market-making transactions (the "Market-Making
Prospectus"), including alternate front and back cover pages, a section
entitled "Risk Factors--Trading Market for the Exchange Notes" to be used in
lieu of the section entitled "Risk Factors--Absence of Public Market for the
Exchange Notes," a new section entitled "Use of Proceeds" and an alternate
section entitled "Plan of Distribution." In addition, the Market-Making
Prospectus will not include the following captions (or the information set
forth under such captions) in the Exchange Offer Prospectus: "Prospectus
Summary--The Note Offering" and "--The Exchange Offer," "Risk Factors--
Exchange Offer Procedures" and "--Restrictions on Transfer," "The Exchange
Offer," and "Certain Federal Income Tax Consequences of the Exchange Offer."
All other sections of the Exchange Offer Prospectus will be included in the
Market-Making Prospectus.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY 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 JUNE 16, 1998
UNITED ARTISTS[LOGO]
THEATRES
OFFER TO EXCHANGE
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
($225,000,000 PRINCIPAL AMOUNT)
FOR ALL OF ITS OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
($225,000,000 PRINCIPAL AMOUNT OUTSTANDING)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME
ON , 1998, UNLESS EXTENDED.
United Artists Theatre Company (formerly known as Oscar I Corporation) (the
"Company") hereby offers (the "Exchange Offer"), upon the terms and subject to
the conditions set forth in this Prospectus (this "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
up to an aggregate principal amount of $225,000,000 of its 9 3/4% Series B
Senior Subordinated Notes due 2008 (the "Exchange Notes"), which will have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this Prospectus is a part, for an
equal principal amount of its outstanding 9 3/4% Senior Subordinated Notes due
2008 (the "Notes" or the "Fixed Rate Notes"), in integral multiples of $1,000.
The Exchange Notes will be senior unsecured obligations of the Company and are
substantially identical (including principal amount, interest rate, maturity
and redemption rights) to the Notes for which they may be exchanged pursuant to
this Exchange Offer, except that (i) the offering and sale of the Exchange
Notes will have been registered under the Securities Act and (ii) holders of
Exchange Notes will not be entitled to certain rights of holders under the
Registration Rights Agreement of the Company dated as of April 21, 1998
relating to the Notes (the "Registration Rights Agreement").
The Company is also offering to exchange its Floating Rate Series B Senior
Subordinated Notes due 2007 (the "Other Exchange Notes" or "Floating Rate
Exchange Notes") for its outstanding Floating Rate Senior Subordinated Notes
due 2007 (the "Other Notes" or "Floating Rate Notes") by a separate Prospectus
(the "Other Exchange Offer"). Consummation of neither exchange offer is
conditioned upon consummation of the other.
The Exchange Notes will be unsecured senior subordinated obligations of the
Company, will rank pari passu with the Fixed Rate Notes, the Floating Rate
Notes and the Floating Rate Exchange Notes and will be subordinated in right of
payment to all existing and future Senior Indebtedness (as defined) of the
Company, including Indebtedness (as defined) under the Senior Credit Facilities
(as defined). At May 31, 1998, the Company and its subsidiaries had
approximately $644.9 million of indebtedness (excluding trade payables)
outstanding, consisting of $310.0 million of Senior Indebtedness of the Company
(guaranteed by certain of the Company's subsidiaries), $59.9 million of other
indebtedness of the Company's subsidiaries, $225.0 million representing the
Notes and $50.0 million representing the Floating Rate Notes. In addition, on
May 31, 1998 the Company had additional delayed draw and revolving credit
availability of $140.0 million under the Senior Credit Facilities, all of which
would be Senior Indebtedness, if borrowed. Additional Senior Indebtedness may
be incurred by the Company and additional indebtedness may be incurred by the
Company and its subsidiaries, in each case from time to time, subject to
certain restrictions.
The Notes are expected to be designated eligible for trading in the National
Association of Securities Dealers, Inc.'s Private Offerings, Resales and
Trading through Automated Linkages (PORTAL) market.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY HOLDERS OF NOTES BEFORE TENDERING THEIR NOTES IN
THE EXCHANGE OFFER.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1998.
<PAGE>
The Notes have been, and the Exchange Notes will be, issued under an
Indenture dated as of April 21, 1998 (the "Indenture") between the Company and
State Street Bank & Trust Company of Missouri, N.A., as trustee (the
"Trustee"). See "Description of the Exchange Notes." There will be no proceeds
to the Company from this offering; however, pursuant to the Registration
Rights Agreement, the Company will bear certain offering expenses.
The Company will accept for exchange any and all Notes validly tendered at
or prior to 5:00 p.m., New York City time, on , 1998, unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of 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. State Street Bank and
Trust Company of Missouri, N.A. will act as Exchange Agent with respect to the
Notes (in such capacity, the "Exchange Agent") in connection with the Exchange
Offer. The Exchange Offer is not conditioned upon any minimum principal amount
of Notes being tendered for exchange, but is otherwise subject to certain
customary conditions.
The Notes were sold by the Company on April 21, 1998 in transactions not
registered under the Securities Act in reliance upon the exemption provided in
Section 4(2) of the Securities Act. A portion of the Notes were subsequently
resold to qualified institutional buyers in reliance upon Rule 144A under the
Securities Act. The remainder of the Notes were resold outside the United
States in reliance on Regulation S under the Securities Act. Accordingly, the
Notes may not be reoffered, resold or otherwise transferred in the United
States unless registered under the Securities Act or unless an applicable
exemption from the registration requirements of the Securities Act is
available. The Exchange Notes are being offered hereunder in order to satisfy
certain obligations of the Company under the Registration Rights Agreement.
See "The Exchange Offer."
The Exchange Notes will bear interest from April 21, 1998, the date of
issuance of the Notes that are tendered in exchange for the Exchange Notes (or
the most recent Interest Payment Date (as defined) to which interest on such
Notes has been paid), at a rate equal to 9 3/4% per annum. Interest on the
Exchange Notes will be payable semi-annually on April 15 and October 15 of
each year, commencing October 15, 1998. The Exchange Notes are redeemable at
the option of the Company, in whole or in part, at any time on or after April
15, 2003, and prior to maturity, at the redemption prices set forth herein,
together with accrued and unpaid interest, if any, to the date of redemption.
See "Description of the Exchange Notes."
In addition, at any time on or prior to April 15, 2001, the Company may
redeem up to 35% of the aggregate principal amount of the Notes and Exchange
Notes with the net proceeds of one or more Public Equity Offerings (as
defined) at 109.75% of the principal amount together with accrued and unpaid
interest, if any, to the date of redemption; provided that at least $146.25
million aggregate principal amount of Notes and Exchange Notes remains
outstanding immediately after such redemption. Upon the occurrence of Change
of Control (as defined), each holder of the Exchange Notes shall have the
right to require the Company to purchase all or any 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, if any, to the date of
purchase.
The Exchange Offer is being made in reliance on certain no-action positions
that have been published by the staff of the Securities and Exchange
Commission (the "Commission"), which require each tendering holder to
represent that it acquired the Notes in the ordinary course of its business
and that such holder does not intend to participate and has no arrangement or
understanding with any person to participate in a distribution of the Exchange
Notes. In some cases, certain broker-dealers may be required to deliver a
prospectus in connection with the resale of Exchange Notes that they receive
in the Exchange Offer. See "Prospectus Summary--The Note Offering--The
Exchange Offer."
The Company does not intend to list the Exchange Notes on any national
securities exchange or to seek admission thereof to trading in any automated
quotation system. Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") has advised the Company that it intends to make a market in the
Exchange Notes; however, it is not obligated to do so and any market-making
may be discontinued at any time. As a result, the Company cannot determine
whether an active public market will develop for the Exchange Notes.
Any Notes not tendered and accepted in the Exchange Offer will remain
outstanding. To the extent any Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Notes could be adversely
affected. Following consummation of the Exchange Offer, the holders of the
Notes will continue to be subject to the existing restrictions upon transfer
thereof and the Company will have fulfilled one of its obligations
i
<PAGE>
under the Registration Rights Agreement. Holders of Notes who do not tender
their Notes generally will not have any further registration rights under the
Registration Rights Agreement or otherwise. See "The Exchange Offer--
Consequences of Failure to Exchange."
The Exchange Notes issued pursuant to this Exchange Offer generally will be
issued in the form of Global Exchange Notes (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 Notes
representing the Exchange Notes will be shown on, and transfers thereof will
be effected through, records maintained by the Depository and its
participants. Notwithstanding the foregoing, Notes held in certificated form
will be exchanged solely for Exchange Notes in certificated form. After the
initial issuance of the Global Exchange Notes, Exchange Notes in certificated
form will be issued in exchange for the Global Exchange Notes only on the
terms set forth in the Indenture. See "Description of the Exchange Notes--
Book-Entry, Delivery and Form."
----------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE EXCHANGE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE EXCHANGE
NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act for the registration of the Exchange Notes
offered hereby (the "Registration Statement"). This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain items of which
are contained in exhibits and schedules to the Registration Statement as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company or the Exchange Notes offered hereby,
reference is made to the Registration Statement, including the exhibits and
financial statement schedules thereto. With respect to each such document
filed with the Commission 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.
The Company and UATC are subject to the informational requirements of the
Exchange Act and in accordance therewith, file reports and other information
with the Commission. The Registration Statement, such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549; the Chicago Regional Office, Suite 1400, 500
West Madison Street, Citicorp Center, Chicago, Illinois 60661; and the New
York Regional Office, Suite 1300, 7 World Trade Center, New York, New York
10048. Copies of such material also can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Commission maintains a Web site on the Internet that
contains reports and other information regarding registrants that file
electronically with the Commission. The address of this site on the Internet
is http://www.sec.gov.
ii
<PAGE>
The Company will send to each Holder of Exchange Notes copies of annual
reports and quarterly reports containing the information required to be filed
under the Exchange Act. So long as the Company is subject to the periodic
reporting requirements of the Exchange Act, it is required to furnish the
information required to be filed with the Commission to the Trustee and the
Holders of the Notes and the Exchange Notes. The Company has agreed that, even
if it is not required under the Exchange Act to furnish such information to
the Commission, it will nonetheless continue to furnish information that would
be required to be furnished by the Company by Section 13 of the Exchange Act
to the Trustee and the Holders of the Notes or Exchange Notes as if it were
subject to such periodic reporting requirements.
CAUTIONARY NOTICE REGARDING
FORWARD-LOOKING STATEMENTS
CERTAIN OF THE MATTERS DISCUSSED IN THIS PROSPECTUS MAY CONSTITUTE FORWARD-
LOOKING STATEMENTS FOR PURPOSES OF THE SECURITIES ACT AND THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). SUCH FORWARD-LOOKING
STATEMENTS INVOLVE UNCERTAINTIES AND OTHER FACTORS AND THE ACTUAL RESULTS AND
PERFORMANCE OF UNITED ARTISTS MAY BE MATERIALLY DIFFERENT FROM FUTURE RESULTS
OR PERFORMANCE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. CAUTIONARY STATEMENTS
REGARDING THE RISKS ASSOCIATED WITH SUCH FORWARD-LOOKING STATEMENTS INCLUDE,
WITHOUT LIMITATION, THOSE STATEMENTS INCLUDED UNDER "RISK FACTORS,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS." CERTAIN OF SUCH RISKS AND UNCERTAINTIES RELATE TO
THE HIGHLY LEVERAGED NATURE OF UNITED ARTISTS, THE HOLDING COMPANY STRUCTURE,
THE RESTRICTIONS IMPOSED ON UNITED ARTISTS BY CERTAIN INDEBTEDNESS, THE
SENSITIVITY OF UNITED ARTISTS TO ADVERSE TRENDS IN THE GENERAL ECONOMY, THE
HIGH DEGREE OF COMPETITION IN UNITED ARTISTS' INDUSTRY, THE VOLATILITY OF
UNITED ARTISTS' QUARTERLY RESULTS AND UNITED ARTISTS' SEASONALITY, THE
DEPENDENCE OF UNITED ARTISTS ON FILMS AND DISTRIBUTORS AND ON ITS ABILITY TO
OBTAIN POPULAR MOTION PICTURES, THE CONTROL OF UNITED ARTISTS BY THE MERRILL
LYNCH GROUP (AS DEFINED) AND THE DEPENDENCE OF UNITED ARTISTS ON KEY
PERSONNEL, AMONG OTHERS.
ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO UNITED
ARTISTS ARE EXPRESSLY QUALIFIED BY THE FOREGOING CAUTIONARY STATEMENTS.
iii
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. As used in
this Prospectus, unless the context requires otherwise: (i) all references
herein to the "Company" mean United Artists Theatre Company (formerly named
Oscar I Corporation); (ii) all references herein to "United Artists" mean the
Company, United Artists Theatre Circuit, Inc. and United Artists Realty
Company, on a consolidated basis with their subsidiaries; (iii) all references
herein to "UATC" mean United Artists Theatre Circuit, Inc., a wholly owned
subsidiary of the Company; and (iv) all references herein to "UAR" mean United
Artists Realty Company, a wholly owned subsidiary of the Company. The Company
is a holding company that conducts virtually all of its business through
subsidiaries. The Company's subsidiaries, including UATC and UAR and their
respective subsidiaries, will have no obligation to pay amounts due on the
Exchange Notes and will not guarantee the Exchange Notes. See "Risk Factors--
Holding Company Structure; Source of Repayment of Exchange Notes; Effective
Subordination of Exchange Notes to Indebtedness of Subsidiaries." Unless the
context requires otherwise, all theatre and screen information contained herein
is as of December 31, 1997, and relates only to theatres in which United
Artists owns more than a 50.0% equity interest.
THE COMPANY
OVERVIEW
United Artists is a leading motion picture exhibitor in North America and
operates 2,164 screens at 330 theatres located in 25 states. United Artists
licenses films from all major and substantially all independent film
distributors and derives revenues primarily from theatre admissions and
concession sales. Through its geographically diverse theatre locations, United
Artists operates screens in seven of the ten largest demographic market areas
("DMAs") in the United States and approximately 50.0% of United Artists'
screens are located in the top 20 DMAs. In addition, approximately 28.6% of
United Artists' screens (619 screens) have been constructed since January 1,
1992. United Artists believes that it is the largest single exhibitor, based on
number of screens, in many of its core areas of operation and that the location
of its theatres represents a competitive advantage in many of these areas. Six
states (California, New York, Florida, Texas, Pennsylvania and Louisiana)
accounted for approximately 57.9% and 56.5% of United Artists' total theatres
and screens, respectively, at March 31, 1998 and 61.5% and 65.6% of United
Artists' theatrical revenue and theatrical EBITDA (as defined herein),
respectively, for the twelve months ended March 31, 1998.
In December 1996, United Artists implemented a corporate restructuring and
refocused its investment strategy on its core U.S. business. Since that time,
United Artists has: (i) reduced its corporate general and administrative
expenses by 30.4%, or approximately $10.1 million, for the twelve months ended
March 31, 1998 as compared to the twelve months ended March 31, 1997, and
30.8%, or approximately $10.8 million, for the year ended December 31, 1997 as
compared to the year ended December 31, 1996; (ii) increased its presence in
its core areas of operation through the development of new theatres and the
refurbishing or expansion of selected existing key theatres; (iii) implemented
operational improvements; and (iv) accelerated the divestitures of
underperforming and non-strategic theatres.
United Artists has invested more than $373.8 million since January 1, 1992
toward improving the quality of its asset base by, among other things,
renovating existing theatres and constructing new state-of-the-art theatres.
United Artists believes that this level of investment compares favorably with
other major North American theatre
1
<PAGE>
exhibitors. Almost all of the theatres United Artists currently plans to build
are state-of-the-art, 12 to 18 screen multiplex theatres with stadium seating,
high-backed rocking seats, digital sound, expanded concession areas and other
state-of-the-art design features and amenities. As compared to the prior
generation of theatres, these theatres provide a higher quality entertainment
experience for patrons and significant operating efficiencies and improved
economics for United Artists. At March 31, 1998, approximately 86.0% of United
Artists' screens were located in theatres with five or more screens. United
Artists' average number of screens per theatre has increased 37.5% in the last
six years to 6.6 at March 31, 1998 from 4.8 at January 1, 1992.
Although ownership of movie exhibition theatres has become more concentrated
in the last ten years, with the top ten exhibitors operating approximately
56.0% of the over 31,000 screens in North America, the industry is still
largely fragmented, with approximately 450 exhibitors operating the remaining
44.0% of screens.
United Artists believes that movies are attractively priced compared to
certain other forms of entertainment such as sporting events, concerts, and
live theatre. During the five year period ended December 31, 1996, according to
industry sources, industry-wide theatre attendance increased at a compound
annual growth rate ("CAGR") of 3.3%, and industry-wide admissions revenue for
the year ended December 31, 1997 increased approximately 6.6% as compared to
the year ended December 31, 1996.
In addition, management expects that the number of motion pictures rated by
the Classification and Rating Administration, which increased approximately
18.0% from 1993 to 1996, will continue to increase in part as a result of the
increase in the number of major studios and reissues of films as well as an
increased popularity of films made by independent producers (although no
assurance exists concerning any such increase). In addition, the number of
large budget films and the level of marketing support provided by the
production companies has risen, as evidenced by the increase in average
production costs and average advertising costs per film of 55.7% and 38.2%,
respectively, from 1994 to 1997. See "Risk Factors--Dependence on Films and
Distributors."
BUSINESS AND OPERATING STRATEGY
United Artists' business and operating strategy is to continue focusing on
its core U.S. business and improving theatre-level operating efficiencies. Key
elements of this strategy include:
Refocus Overhead and Capital Investment Strategy. In December 1996, United
Artists implemented a corporate restructuring and refocused its investment
strategy on its core U.S. business. United Artists' core business strategy
focuses management's attention and capital resources on those geographic areas
where United Artists intends to strengthen and defend its current position.
United Artists has also implemented operational improvements and overhead
reductions intended to increase aggregate EBITDA and EBITDA per theatre and has
already sold or closed several underperforming or non-strategic theatres. The
corporate restructuring plan resulted in a higher level of focus by United
Artists on its domestic theatrical business and a reduction of corporate
general and administrative expenses 30.4%, or approximately $10.1 million, for
the twelve months ended March 31, 1998 as compared to the twelve months ended
March 31, 1997 and 30.8%, or approximately $10.8 million, for the year ended
December 31, 1997 as compared to the year ended December 31, 1996. These
savings were achieved primarily through headcount reductions and a
consolidation of regional administrative offices.
Develop New Theatres and Rebuild or Expand Existing Key Theatre
Locations. United Artists plans to continue increasing its number of screens
and operating margins by focusing its capital investment activities on
developing new theatre locations in United Artists' core areas of operation and
leveraging its favorable theatre locations through the renovation, rebuilding,
or expansion of existing theatres in those key locations. United Artists is
developing higher margin multi-screen theatres ("multiplexes") of 12 to 18
screens and is seeking to increase concession sales through, among other
things, more efficient theatre design. As a result, the average EBITDAR margin
for theatres built since January 1, 1992 was 31.1% for the twelve months ended
March 31,
2
<PAGE>
1998 as compared to 26.4% for United Artists' remaining theatres. United
Artists is also constructing its new theatres with stadium seating, digital
sound, more comfortable seats and other state-of-the-art design features and
amenities. United Artists believes that these theatres will have an optimal
relationship between the number of screens (12 to 18) and the size of the
auditoriums (125 to 400 seats). These theatres are designed to increase the
revenue per square foot generated by the facility and reduce the cost per
square foot of constructing and operating the theatres. This multi-screen
strategy, in combination with an emphasis on concession sales, is designed to
improve revenue and profitability by enhancing attendance and concession sales,
theatre utilization and operating efficiencies and provide more efficient
clustering around regional and district management centers. During the three
months ended March 31, 1998 and the year ended December 31, 1997, United
Artists developed and opened two theatres (23 screens) and 13 theatres (132
screens), respectively. During the remainder of 1998 and 1999, United Artists
plans to open eight new theatres (96 screens), and to make screen additions to
or renovate 12 existing theatres (117 screens).
Divestiture of Underperforming Theatres. United Artists' 1996 corporate
restructuring was also designed to rationalize underperforming or non-strategic
assets by: (i) terminating leases for theatres that have negative EBITDA; (ii)
selling real estate underlying non-strategic or underperforming theatres; (iii)
divesting theatres in non-core areas; and (iv) exchanging theatres in non-core
areas for theatres in core areas. During the three months ended March 31, 1998,
United Artists closed or sold seven theatres (24 screens). During 1997, United
Artists received approximately $70.0 million from the sale of substantially all
of its international assets and certain non-operating real estate assets and
closed or sold 44 underperforming or non-strategic theatres with 170 screens.
Many of the theatres closed or sold were not profitable or were located in
areas that are not part of United Artists' long-term strategic plans. United
Artists has identified 43 theatres (225 screens) that are not considered
strategically important or had negative EBITDA for the twelve months ended
March 31, 1998. United Artists currently plans to sell or close these theatres
during the next two years although there can be no assurance that United
Artists will be able to accomplish such divestitures or closings. In
conjunction with United Artists' core market focus, these restructuring efforts
have resulted in an Adjusted EBITDAR (as defined) per weighted average
operating theatre increase of 3.4% from $133,425 during the three months ended
March 31, 1997 to $137,952 during the three months ended March 31, 1998 and
20.5% from $411,649 during the year ended December 31, 1996, to $496,045 during
the year ended December 31, 1997.
Implement Operational Improvements. In the past two years United Artists has
recognized theatre and concession operating efficiencies through heightened
focus on increasing concession sales, managing theatre payrolls and variable
costs and increased staff training. United Artists increased concession sales
per capita by approximately 7.9% for the twelve months ended March 31, 1998
versus the twelve months ended March 31, 1997 and 5.0% annually on average from
1993 to 1997. Management believes that there are opportunities to achieve
additional operating efficiencies by disposing of less efficient theatres,
developing new multiplex theatres and continuing to improve theatre-level
operating expenses. Areas of focus in 1998 will include lowering concession
costs, improving entertainment center operations and implementing new theatre
point-of-sale computer systems and corporate level information systems.
Manage Individual Theatre Capital Requirements. While United Artists plans to
continue to develop several new state-of-the-art theatres each year, United
Artists intends to seek to reduce individual theatre financial leverage and
capital requirements by also focusing on expanding, renovating and rebuilding
many of its key locations. In many cases, these existing key locations can be
transformed into state-of-the-art multiplex stadium theatres without competing
against other operators for new locations and incurring higher rent and
excessive preconstruction costs. Furthermore, existing structures can be
utilized while being refurbished to help reduce overall construction costs. In
addition, United Artists' renovation of theatres in desirable locations
eliminates much of the geographic risk related to a project's success. In order
to reduce the overall investment by United Artists in new theatres, United
Artists has entered into "build to suit" and other landlord leasing
arrangements or sale and leaseback transactions. United Artists also intends to
continue to sell non-strategic and
3
<PAGE>
underperforming assets (such as the sale during 1997 of the majority of its
international investments) and expects to redeploy capital to its core U.S.
business. This strategy is intended to provide increased liquidity from the
disposal of non-cash flow producing investments and theatres with limited
growth potential.
Enhance Studio/Distributor Relationships. Management intends to continue to
enhance and balance its studio relationships to obtain the optimal number of
marketable motion pictures. United Artists believes that it will continue to
increase the number of prints it obtains from each studio as it increases the
number of its screens in select locations and leverages its attractive theatre
locations through the development of new, larger (in terms of screens), higher
margin theatres. To the extent that theatrical exhibition remains the primary
distribution channel for new motion picture releases and the overall number of
movies produced continues to increase, management believes that United Artists'
focus on its core business will provide it with access to more prints of each
motion picture.
Develop Ancillary Revenue Opportunities. United Artists believes that there
are opportunities to increase its ancillary revenue from its Satellite Theatre
NetworkTM by renting theatres for seminars and business meetings, product and
customer research and other entertainment uses. Through its VIP/Premier
program, United Artists seeks to enhance theatre attendance by selling large
groups of tickets to businesses and groups through coupon books as well as gift
certificates. On-screen advertising also provides an additional opportunity to
increase revenue and profitability.
TRANSACTION WITH HICKS MUSE
On November 19, 1997, the Company entered into a definitive recapitalization
agreement (the "Recapitalization Agreement") with an affiliate of Hicks, Muse,
Tate & Furst Incorporated ("Hicks Muse"). The Recapitalization Agreement
provided for (i) the sale of newly issued common stock of the Company ("Common
Stock") to Hicks Muse for $266.0 million and the simultaneous repurchase by the
Company of a number of shares of Common Stock which would result in Hicks Muse
owning approximately 88.8% of the outstanding Common Stock; (ii) the redemption
of the Preferred Stock (as defined); (iii) the redemption of the Senior Secured
Notes (as defined) and the issuance of new senior subordinated indebtedness;
and (iv) the establishment of a new bank credit facility to refinance the Prior
Credit Facilities (as defined) and to provide additional working capital. In
late January 1998, just prior to the scheduled closing date, Hicks Muse
indicated that they were unwilling to close on the terms of the
Recapitalization Agreement. Due to the failure by Hicks Muse to close on the
agreed terms, the Company's principal stockholder, the Merrill Lynch Group,
terminated the Recapitalization Agreement on February 20, 1998.
REFINANCING TRANSACTIONS
On April 21, 1998, the Company (i) issued the Fixed Rate Notes; (ii) issued
the Floating Rate Notes; and (iii) entered into $450.0 million of senior
secured credit facilities consisting of up to $350.0 million of term loans and
a $100.0 million senior secured revolving credit facility (collectively, the
"Senior Credit Facilities"). Approximately $170 million of the term loan
portion of the Senior Credit Facilities were available on a delayed draw basis,
of which approximately $125 million was drawn as of May 31, 1998. On April 21,
1998, the Company caused UATC to repay UATC's then existing credit facilities
(the "Prior Credit Facilities"). On May 1, 1998, the Company redeemed all of
its outstanding preferred stock (the "Preferred Stock") and on May 21, 1998,
the Company caused UATC to redeem UATC's 11 1/2% Senior Secured Notes due 2002
(the "Senior Secured Notes"). (The transactions described in this paragraph are
collectively referred to herein as the "Transactions.")
4
<PAGE>
SOURCES AND USES
The following table sets forth the actual sources and uses of funds in
connection with the Transactions. The proceeds to the Company from the
issuances of the Fixed Rate Notes, the Floating Rate Notes and the borrowings
under the Senior Credit Facilities were used: (i) to redeem all of the
outstanding Preferred Stock of the Company; (ii) to repay UATC's Prior Credit
Facilities; (iii) to redeem UATC's Senior Secured Notes; and (iv) to pay
related fees and expenses. See "Use of Proceeds."
<TABLE>
<CAPTION>
AMOUNT
-------------
SOURCES OF FUNDS:
----------------- (IN MILLIONS)
<S> <C>
Senior Credit Facilities....................................... $303.5
Fixed Rate Notes............................................... 225.0
Floating Rate Notes............................................ 50.0
------
Total........................................................ $578.5
======
<CAPTION>
USES OF FUNDS:
--------------
<S> <C>
Redemption of Preferred Stock.................................. $159.2
Repayment of Prior Credit Facilities........................... 272.9
Redemption of Senior Secured Notes............................. 129.4
Transaction fees and expenses.................................. 17.0
------
Total...................................................... $578.5
======
</TABLE>
5
<PAGE>
THE NOTE OFFERING
The Notes...................
The Notes were sold by the Company on April 21,
1998, and were subsequently resold to qualified
institutional buyers pursuant to Rule 144A under
the Securities Act and to certain persons in
transactions outside the United States in
reliance on Regulation S under the Securities Act
(the "Note Offering").
Registration Rights In connection with the Note Offering, the Company
Agreement.................. entered into the Registration Rights Agreement,
which grants holders of the 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.
Issuer......................
United Artists Theatre Company (formerly named
Oscar I Corporation).
THE EXCHANGE OFFER
Securities Offered.......... $225,000,000 aggregate principal amount of 9 3/4%
Series B Senior Subordinated Notes due 2008.
The Exchange Offer..........
$1,000 principal amount of the Exchange Notes in
exchange for each $1,000 principal amount of
Notes. As of the date hereof, $225,000,000
principal amount of Notes are outstanding. The
Company will issue the Exchange Notes to holders
on or promptly after the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Notes may be offered for
resale, resold and otherwise transferred by any
holder thereof (other than any such holder which
is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act)
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 that 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.
Each broker-dealer that receives Exchange Notes
for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale of
such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to
time, may be used by a broker-dealer in
connection with resales of Exchange Notes
received in exchange for Notes where such
6
<PAGE>
Notes were acquired by such broker-dealer as a
result of market-making activities or other
trading activities.
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose
of participating, in a distribution of the
Exchange Notes may not rely on the position of
the staff of the Commission enunciated in Exxon
Capital Holdings Corporation (available April 13,
1989), Morgan Stanley & Co., Incorporated
(available June 5, 1991) or similar no-action
letters and, in the absence of an exemption
therefrom, must comply with the registration and
prospectus delivery requirement of the Securities
Act in connection with the resale of the Exchange
Notes. Failure to comply with such requirements
in such instance may result in such holder
incurring liability under the Securities Act for
which the holder is not indemnified by the
Company.
The Exchange Offer is not being made to, nor will
the Company accept surrender for exchange from,
holders of Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would
not be in compliance with the securities or blue
sky laws of such jurisdiction. Prior to the
Exchange Offer, however, the Company will take
such actions it deems necessary or advisable to
register or qualify the Exchange Notes for offer
and sale under the securities or blue sky laws of
such jurisdictions as is necessary to permit
consummation of the Exchange Offer and to enable
the offer and sale in such jurisdiction of the
Exchange Notes.
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.
Interest on the Exchange
Notes and the Notes........ The Exchange Notes will bear interest from April
21, 1998, the date of issuance of the Notes that
are tendered in exchange for the Exchange Notes
(or the most recent Interest Payment Date, as
defined below in the Summary of Terms of Exchange
Notes). Accordingly, holders of Notes that are
accepted for exchange will not receive interest
on the 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.
Conditions to the Exchange The Exchange Offer will not be subject to any
Offer...................... conditions, other than that the Exchange Offer,
or the making of any exchange by a Holder, does
not violate applicable law or any applicable
interpretation of the staff of the Commission and
that the Company will not be required to
consummate the Exchange Offer if (a) there is in
effect any law, statute, rule, regulation or
interpretation of the Commission or any other
governmental authority, or any order, decree or
judgment, which, in the reasonable opinion of
counsel to the Company satisfactory to the
Initial Purchasers, might materially
7
<PAGE>
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 (b) any governmental approval has
not been obtained, which approval of the Company
shall, in its reasonable judgment, deem necessary
for the consummation of the Exchange Offer. See
"The Exchange Offer--Conditions."
Procedures for Tendering Each holder of Notes wishing to accept the
Notes...................... Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the
Notes and any other required documentation to the
Exchange Agent at the address set forth in the
Letter of Transmittal. 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 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 Notes, tendering holders may
transfer Notes pursuant to the procedure for
book-entry transfer as set forth under "The
Exchange Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf, such
owner must, prior to completing and executing the
Letter of Transmittal and delivering its Notes,
either make appropriate arrangements to register
ownership of the Notes in such owner's name or
obtain a properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time.
Guaranteed Delivery Holders of Notes who wish to tender their Notes
Procedures................. and whose Notes are not immediately available or
who cannot deliver their Notes, the Letter of
Transmittal or any other documents required by
the Letter of Transmittal to the Exchange Agent
(or comply with the procedures for book-entry
transfer) prior to the Expiration Date must
tender their Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures."
Withdrawal Rights........... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date pursuant to the procedures described under
"The Exchange Offer--Withdrawals of Tenders."
8
<PAGE>
Acceptance of Notes and
Delivery of Exchange The Company will accept for exchange any and all
Notes...................... 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."
Federal Income Tax
Consequences............... The issuance of the Exchange Notes to holders of
the Notes 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 of
the Notes upon receipt of the Exchange Notes. See
"Certain Federal Income Tax Consequences of the
Exchange Offer."
Effect on Holders of As a result of the making of this Exchange Offer,
Notes...................... the Company will have fulfilled certain of its
obligations under the Registration Rights
Agreement, and holders of Notes who do not tender
their Notes will generally not have any further
registration rights under the Registration Rights
Agreement or otherwise. Such holders will
continue to hold the untendered Notes and will be
entitled to all the rights and will be subject to
all the limitations applicable thereto under the
Indenture, except to the extent such rights or
limitations, by their terms, terminate or cease
to have further effectiveness as a result of the
Exchange Offer. All untendered Notes will
continue to be subject to certain restrictions on
transfer. Accordingly, if any Notes are tendered
and accepted in the Exchange Offer, the trading
market for the untendered Notes could be
adversely affected.
Exchange Agent..............
State Street Bank and Trust Company of Missouri,
N.A.
9
<PAGE>
SUMMARY OF TERMS OF EXCHANGE NOTES
Maturity.................... April 15, 2008.
Interest Payment Dates...... Interest on the Exchange Notes will accrue from
April 21, 1998 or the last date on which interest
was paid on the Fixed Rate Notes and is payable
semi-annually on April 15 and October 15 of each
year, commencing October 15, 1998.
Optional Redemption......... The Exchange Notes will be redeemable at the
option of the Company, in whole or in part, at
any time on or after April 15, 2003 at the
redemption prices set forth herein, together with
accrued and unpaid interest, if any, to the date
of redemption. In addition, at any time on or
prior to April 15, 2001, the Company may redeem
up to 35% of the aggregate principal amount of
the Notes and Exchange Notes with the net
proceeds of one or more Public Equity Offerings
(as defined) at 109.75% of the principal amount
thereof together with accrued and unpaid
interest, if any, to the date of redemption;
provided that at least $146.25 million aggregate
principal amount of the Notes and Exchange Notes
remains outstanding immediately after such
redemption. See "Description of the Exchange
Notes--Optional Redemption."
Change of Control........... Upon the occurrence of a Change of Control (as
defined), each holder of the Exchange Notes shall
have the right to require the Company to purchase
all or any 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, if any, to the date of
purchase. See "Description of the Exchange
Notes--Repurchase of Exchange Notes upon a Change
of Control."
Ranking..................... The Exchange Notes will be unsecured, senior
subordinated obligations of the Company, will
rank pari passu with the Fixed Rate Notes, the
Floating Rate Notes and the Floating Rate
Exchange Notes and will be subordinated in right
of payment to all existing and future Senior
Indebtedness of the Company, including
Indebtedness under the Senior Credit Facilities.
The Exchange Notes will rank pari passu in right
of payment with any future senior subordinated
indebtedness of the Company and will be senior in
right of payment to Subordinated Indebtedness (as
defined), if any, of the Company. In addition,
the Exchange Notes will be effectively
subordinated to all liabilities of the Company's
subsidiaries, including trade payables. By reason
of such subordination, holders of Senior
Indebtedness must be paid in full before holders
of the Exchange Notes may be paid in the event of
a liquidation, dissolution or other winding up of
the Company, whether voluntary or involuntary and
whether or not involving insolvency or
bankruptcy. At May 31, 1998, the Company and its
subsidiaries had approximately $644.9 million of
indebtedness (excluding trade
10
<PAGE>
payables) outstanding, consisting of $310.0
million of Senior Indebtedness of the Company
(guaranteed by certain of the Company's
subsidiaries), $59.9 million of other
indebtedness of the Company's subsidiaries,
$225.0 million representing the Fixed Rate Notes
and $50.0 million representing the Floating Rate
Notes. In addition, on May 31, 1998 the Company
had additional delayed draw and revolving credit
availability of $140.0 million under the Senior
Credit Facilities, all of which would be Senior
Indebtedness, if borrowed. Additional Senior
Indebtedness may be incurred by the Company and
additional indebtedness may be incurred by the
Company and its subsidiaries, in each case from
time to time, subject to certain restrictions.
See "Risk Factors--Ability to Service Debt;
Substantial Indebtedness," "--Restrictions
Imposed by the 1995 Sale Leaseback," "--Holding
Company Structure; Source of Repayment of
Exchange Notes; Effective Subordination of
Exchange Notes to Indebtedness of Subsidiaries,"
"--Subordination of Exchange Notes" and
"Description of the Exchange Notes--Ranking and
Subordination."
Certain Covenants........... The Indenture contains certain covenants,
including, among others, covenants limiting the
incurrence of additional indebtedness by the
Company and any of its subsidiaries, the payment
of dividends, the redemption of capital stock,
the making of investments, the issuance of
capital stock of subsidiaries, the creation of
dividend and other restrictions affecting
subsidiaries, transactions with affiliates, asset
sales and certain mergers and consolidations.
However, these limitations will be subject to a
number of important qualifications and
exceptions. See "Description of the Exchange
Notes--Certain Covenants."
Absence of a Public There has been no public market for the Notes and
Market...................... there can be no assurance that such a market will
develop or, if such a market develops, as to the
liquidity of such market. The Exchange Notes will
not be listed on any securities exchange but are
expected to be eligible for trading in the PORTAL
market. If the Exchange Notes are traded after
their initial issuance, they may trade at a
discount from their initial offering price for
many reasons, including prevailing interest
rates, the market for similar securities, general
economic conditions and the financial condition
and performance of, and prospects for, United
Artists and other factors. United Artists has
been advised by Merrill Lynch that it intends to
make a market in the Exchange Notes after
consummation of the Exchange Offer as permitted
by applicable laws and regulations; however,
Merrill Lynch is not obligated to do so and any
such market making activities may be discontinued
at any time without notice. In addition, such
market making activities will be subject to the
limits imposed by the Securities Act and the
Exchange Act. Therefore, there can be no
assurance that an active market for the Exchange
Notes will develop.
11
<PAGE>
Exchange Offer; Pursuant to the Registration Rights Agreement,
Registration Rights......... the Company has agreed (i) to file a registration
statement (the "Exchange Offer Registration
Statement") with respect to an offer to exchange
the Notes for senior subordinated notes of the
Company with substantially identical terms as the
Notes within 60 calendar days after the date of
the original issuance of the Notes (the "Issuance
Date" or "Closing Date"), (ii) to use its best
efforts to cause the Exchange Offer Registration
Statement to become effective under the
Securities Act within 120 calendar days after the
Issuance Date and (iii) to use its best efforts
to consummate such an exchange offer within 150
calendar days after the Issuance Date.
In the event that any changes in law or the
applicable interpretations of the staff of the
Commission do not permit the Company to effect
such an exchange offer, or if for any other
reason such an exchange offer is not consummated
within 150 calendar days after the Issuance Date,
or if any holder of the Notes (other than the
Initial Purchasers) is not eligible to
participate in such an exchange offer, or upon
request of the initial purchasers of the Notes
(the "Initial Purchasers") under certain
circumstances, the Company will use its best
efforts to cause to become effective by the 150th
calendar day after the Issuance Date a shelf
registration statement with respect to the resale
of the Notes (a "Shelf Registration Statement")
and to keep the Shelf Registration Statement
effective until two years after the Issuance Date
or such shorter period which will terminate when
all the Notes covered by the Shelf Registration
Statement have been sold pursuant thereto or all
of the Notes become eligible for resale pursuant
to Rule 144 under the Securities Act without
volume restrictions.
In the event that (a) the Exchange Offer
Registration Statement is not filed with the
Commission on or prior to the 60th calendar day
following the Issuance Date, (b) the Exchange
Offer Registration Statement has not been
declared effective on or prior to the 120th
calendar day following the effectiveness of the
Exchange Offer Registration Statement or (c) the
exchange offer to which the Exchange Offer
Registration Statement relates is not consummated
or the Shelf Registration Statement is not
declared effective on or prior to the 150th
calendar day following the Issuance Date, the
interest rate borne by the Notes shall be
increased by one-quarter of one percent per annum
following such 60-day period in the case of
clause (a) above, following such 120-day period
in the case of clause (b) above, or following
such 150-day period in the case of clause (c)
above, which rate will be increased by an
additional one-quarter of one percent per annum
for each 90-day period that any additional
interest continues to accrue; provided that the
aggregate increase in such annual interest rate
may in no event exceed one percent per annum.
Upon (x) the filing of the Exchange Offer
Registration Statement after the 60-day period
described in clause (a) above, (y) the
effectiveness of the Exchange Offer Registration
Statement after the 120-day period described in
clause (b) above or
12
<PAGE>
(z) the consummation of the exchange offer to
which the Exchange Offer Registration Statement
relates or the effectiveness of the Shelf
Registration Statement after the 150-day period
described in clause (c) above, the interest rate
borne by the Notes from the date of such filing,
effectiveness or consummation, as the case may
be, will be reduced to the original interest rate
if the Company is otherwise in compliance with
this paragraph; provided, however, that if, after
any such reduction in interest rate, a different
event specified in clause (a), (b) or (c) above
occurs, the interest rate may again be increased
and thereafter reduced pursuant to the foregoing
provisions. See "Exchange Offer; Registration
Rights."
Trading..................... The Exchange Notes are expected to be designated
eligible for trading in the PORTAL market. The
Exchange Notes are a new issue of securities for
which there is no existing trading market. There
can be no assurance regarding the future
development of a market for the Exchange Notes or
the liquidity of any such market. See "Risk
Factors--Absence of a Public Market for the
Exchange Notes."
RISK FACTORS
See "Risk Factors" for a discussion of certain matters that should be
considered by holders of Notes before tendering their Notes in the Exchange
Offer.
13
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The summary historical consolidated financial information presented below for
each of the years ended December 31, 1993, 1994, 1995 and 1996 and 1997 have
been derived from, and should be read in conjunction with, the consolidated
financial statements of the Company and notes thereto which are included
elsewhere in this Prospectus. The summary historical financial information for
the three months ended March 31, 1997 and 1998 (unaudited) have been derived
from, and should be read in conjunction with, the consolidated financial
statements of the Company and the notes thereto which are included elsewhere in
this Prospectus. In the opinion of management, all adjustments (consisting only
of normal recurring adjustments) considered necessary for a fair presentation
have been included in the unaudited consolidated and combined financial
statements of the Company. Results for the three months ended March 31, 1997
and 1998 are not necessarily indicative of results that can be expected for an
entire year.
The following table also presents certain summary unaudited pro forma
financial data of the Company. The unaudited pro forma consolidated financial
data (other than the balance sheet data) give effect to the Transactions as if
they had occurred as of January 1, 1997. The pro forma consolidated balance
sheet data of the Company as of March 31, 1998 give effect to the Transactions
as if they had occurred on March 31, 1998.
The information set forth below should be read in conjunction with "The
Transactions," "Use of Proceeds," "Selected Historical Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and the Consolidated and Condensed Consolidated
Financial Statements of the Company, including the notes thereto, appearing
elsewhere in this Prospectus. The summary unaudited pro forma financial data
are provided for informational purposes only and do not purport to be
indicative of the results that would have actually been obtained had the
Transactions been completed on the dates indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- --------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Admissions............ $464.3 $447.6 $457.1 $466.5 $473.9 $121.7 $113.4
Concession sales...... 169.6 166.7 178.2 185.1 189.6 47.7 46.6
Other................. 10.7 9.7 14.5 27.5 22.8 5.1 4.7
------ ------ ------ ------ ------ ------ ------
Total revenue....... 644.6 624.0 649.8 679.1 686.3 174.5 164.7
------ ------ ------ ------ ------ ------ ------
Costs and expenses:
Operating expenses:
Film rental and
advertising........ 254.9 239.6 248.6 257.2 262.5 65.8 60.9
Direct concession... 28.5 27.2 29.5 29.3 30.2 7.4 6.5
Occupancy........... 54.4 55.0 58.8 64.6 67.8 16.5 17.0
Sales and leaseback
rental............. -- -- 0.5 11.0 12.8 3.0 3.5
Other operating..... 176.8 172.7 187.5 194.9 193.7 46.0 46.1
General and
administrative....... 30.9 33.4 35.5 35.1 24.3 6.6 5.4
Depreciation and
amortization......... 72.1 66.7 69.8 74.9 60.7 18.4 13.7
Provision for
impairment(1)........ -- -- 21.0 9.5 36.0 -- --
Restructuring charge.. 3.7 -- -- 1.9 0.8 -- --
------ ------ ------ ------ ------ ------ ------
Operating income
(loss)........... 23.3 29.4 (1.4) 0.7 (2.5) 10.8 11.6
Interest expense, net... 43.5 45.3 53.3 45.4 45.6 11.4 10.4
Loss (gain) on
disposition of assets,
net.................... 7.9 9.8 5.7 (2.7) (28.0) -- --
Other expense, net...... 2.6 2.8 2.6 2.7 5.4 1.2 0.9
------ ------ ------ ------ ------ ------ ------
Income (loss)
before income
tax expense...... (30.7) (28.5) (63.0) (44.7) (25.5) (1.8) 0.3
Income tax expense...... 1.6 1.4 1.8 1.1 1.5 0.4 0.3
------ ------ ------ ------ ------ ------ ------
Net income (loss)....... $(32.3) $(29.9) $(64.8) $(45.8) $(27.0) $ (2.2) $ --
====== ====== ====== ====== ====== ====== ======
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- --------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Adjusted EBITDA(2)...... $100.4 $ 97.6 $ 91.4 $ 90.1 $ 98.7 $ 30.0 $ 26.2
Adjusted EBITDAR(2)..... 153.5 151.1 148.7 162.6 175.6 48.7 45.8
Adjusted EBITDA
margin(3).............. 15.6% 15.6% 14.1% 13.3% 14.4% 17.2% 15.9%
Adjusted EBITDAR
margin(3).............. 23.8% 24.2% 22.9% 23.9% 25.6% 27.9% 27.8%
Ratio of earnings to
fixed charges(5)....... -- -- -- -- -- -- 1.0x
PRO FORMA FINANCIAL
DATA:(4)
Ratio of Adjusted EBITDA
to interest
expense(6)............. -- -- -- -- 1.8x 2.1x 1.9x
Ratio of Adjusted
EBITDAR to interest and
rent expense(6)........ -- -- -- -- 1.3x 1.5x 1.4x
OPERATING DATA:
Adjusted EBITDAR:
Per weighted average
theatre.............. $352.9 $365.0 $363.6 $411.6 $496.0 $133.4 $138.0
Per weighted average
screen............... 68.5 68.6 65.5 70.7 79.7 22.0 21.3
Admissions per weighted
average screen......... 207.1 203.3 201.4 202.9 215.0 55.1 52.6
Weighted average(7):
Operating theatres.. 435 414 409 395 354 365 332
Operating screens... 2,242 2,202 2,270 2,299 2,204 2,209 2,154
Screens per
operating theatre.. 5.2 5.3 5.6 5.8 6.2 6.1 6.5
Screens added........... 32 90 137 138 132 61 23
Screens divested........ 128 28 81 245 170 12 24
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
1997 MARCH 31, 1998
------------ ----------------------
ACTUAL ACTUAL AS ADJUSTED(4)
------------ ------ --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 10.8 $ 7.3 $ 7.3
Total assets................................ 563.0 560.5 572.9
Total debt.................................. 414.0 429.7 615.9
Total stockholders' deficit................. (20.3) (20.2) (187.6)
</TABLE>
- - --------
(1) Reflects non-cash charges for the impairment of long-lived assets in
accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed Of" which the Company adopted in 1995.
(2) Adjusted EBITDA represents EBITDA (as defined) before the effects of
restructuring charges, which are not expected to recur, and non-cash rent
expense, which is excluded from Consolidated EBITDA as defined by the
Indenture. Adjusted EBITDAR represents EBITDAR (as defined herein) before
the effects of restructuring charges. While Adjusted EBITDA and Adjusted
EBITDAR are not intended to represent cash flow from operations as defined
by GAAP and should not be considered as an indicator of operating
performance or an alternative to cash flow (as measured by GAAP) as a
measure of liquidity, they are included herein to provide additional
information with respect to the ability of United Artists to meet its
future debt service, capital expenditures, rental obligations, and working
capital requirements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
(3) Defined as Adjusted EBITDA and Adjusted EBITDAR as a percentage of total
revenue.
(4) Presented on a pro forma basis as though the Transactions had occurred as
of January 1, 1997 in the case of all pro forma information other than
balance sheet data and at March 31, 1998 for balance sheet data.
(5) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges, and "fixed charges" consist of
interest, amortization of deferred financing costs and the component of
rental expense believed by the Company to be representative of the interest
factor thereon. Earnings were insufficient to cover fixed charges for each
of the years ended December 31, 1993, 1994, 1995, 1996 and 1997 and for the
three months ended March 31, 1997 by $29.3 million, $27.3 million, $61.7
million, $43.4 million, $22.6 million and $0.9 million, respectively. In
addition, on a pro forma basis after giving effect to the Transactions as
if they occurred on January 1, 1997, earnings would have been insufficient
to cover fixed charges for the year ended December 31, 1997 and the three
months ended March 31, 1998 by $33.4 million and $3.3 million,
respectively.
(6) "Interest expense" means interest expense recorded during the related
period excluding interest income and amortization of deferred financing
fees.
(7) Weighted average operating theatres and screens represent the number of
theatres and screens operated weighted by the number of days operated
during the period.
15
<PAGE>
RISK FACTORS
Holders of Notes should carefully consider the following factors as well as
the other information set forth in this Prospectus before tendering their
Notes in the Exchange Offer.
COMPETITION
United Artists competes for the public's leisure time and disposable income
with all forms of entertainment including sporting events, concerts, live
theatre, and restaurants. United Artists also is subject to varying degrees of
competition from other theatre circuits and independent theatres, some of
which may have greater access to capital resources. The motion picture
exhibition industry is highly competitive, particularly with respect to film
licensing, attracting patrons and acquiring or leasing new theatre sites. Some
of United Artists' competitors may be better established in certain areas
where United Artists' theatres are located. Competition for patrons occurs
locally and depends upon factors such as: (i) which films a particular theatre
is showing; (ii) location of theatres; (iii) comfort and quality of theatres;
and (iv) ticket prices. Film patrons are not "brand" conscious and generally
choose a theatre because of film selection, location and quality of the
theatre.
Competition among theatre circuits for licensing popular films occurs
locally and is based on the prestige and location of an exhibitor's theatres,
quality of the theatres (especially projection and sound quality), seating
capacity, and the exhibitor's ability and willingness to promote the films.
United Artists believes that promoting good relations with film distribution
and production companies is important to consistently obtain the best mix of
available films.
Where real estate is readily available there are few barriers preventing
competitors from opening theatres near one of United Artists' theatres, which
may have a material adverse effect on United Artists' theatre. In addition,
"megaplexes" (theatres with 20 or more screens) have been built or are planned
to be built by competitors in certain areas in which United Artists operates,
which may result in excess capacity and adversely affect attendance and
pricing at other theatres in such areas.
Alternative motion picture exhibition delivery systems, including cable
television, video cassettes, satellite and pay per view, also exhibit filmed
entertainment after its theatrical release. The expansion of such delivery
systems (such as video on demand) could have a material adverse effect upon
United Artists' business and results of operations.
Consolidation in the industry has included the merger of Sony Corp.'s Loews
Theatres Exhibit Group with Cineplex Odeon Corp. announced in October 1997 and
consummated in May 1998; the acquisition by Kohlberg Kravis Roberts & Co.
("KKR") of Act III Cinemas Inc., also announced in October 1997 and
consummated in December 1997; and the joint acquisition of Regal Cinemas Inc.
by affiliates of KKR and Hicks Muse announced in January 1998 and consummated
in May 1998. Such consolidation could increase the level of competition in the
industry.
DEPENDENCE ON FILMS AND DISTRIBUTORS
United Artists' business depends upon the availability and appeal of motion
pictures and on United Artists' ability to license motion pictures. Any
significant disruption in the production of popular motion pictures by major
film producers or independent producers, the failure of United Artists to
obtain popular films or the poor performance of motion pictures licensed by
United Artists may have a material adverse effect on United Artists' business
and results of operations.
United Artists' business also depends to a significant degree on maintaining
good relations with the major film distributors which allocate films to United
Artists' theatres. Although United Artists obtains films from all major film
distributors, because of the relatively small number of such distributors, if
United Artists' relationship with any one or more of the major film
distributors were to deteriorate or if United Artists were unable to obtain
films from any one or more of the major motion picture distributors, it could
have a material adverse effect on United Artists' business and results of
operations. See "Business--Film Licensing."
16
<PAGE>
SUBSTANTIAL CAPITAL EXPENDITURES
United Artists' strategy involves the development (either on owned land or
through leases) of new theatres. United Artists developed and opened two new
theatres (23 screens) and 13 new theatres (132 screens) during the three
months ended March 31, 1998 and the year ended December 31, 1997,
respectively. At March 31, 1998, United Artists had entered into construction
or lease agreements for eight new theatres and for screen additions or
renovations to 12 existing theatres that United Artists intends to open or
renovate during the remainder of 1998 and 1999. United Artists estimates that
capital expenditures associated with these theatres will aggregate
approximately $90.0 million. Such amounts relate only to projects in which
United Artists has executed a definitive lease and all significant lease
contingencies have been satisfied. United Artists expects additional capital
expenditures to be made as other projects are finalized. Of the committed
amount, approximately $15.0 million will be funded from proceeds of certain
sale and leaseback transactions currently held in escrow. United Artists
expects to fund the balance of these capital expenditures from cash flow from
operations, asset sale proceeds and borrowings under the Senior Credit
Facilities. There can be no assurance, however, that these sources of funds
will be sufficient to enable United Artists to make its anticipated capital
expenditures. United Artists intends to continue its expansion over the next
several years. Future theatre development may require additional financing.
There can be no assurance that such additional financing will be available to
United Artists on favorable terms, if at all.
The development of new theatres involves certain risks, including the
possibility of construction cost overruns and delays, uncertainty of site
acquisition costs and availability, uncertainties as to market potential,
market deterioration after commencement of development, increased competition
and lower than anticipated financial performance of new theatres. If new
theatres perform below United Artists' expectations, United Artists may not be
able to service the debt incurred to finance such expansion. Although United
Artists attempts to minimize these risks through its theatre development
process, United Artists may determine not to proceed with its planned theatre
development projects. No assurance can be given therefore that any of the
projected new theatre developments will open or that such developments will
perform in accordance with United Artists' expectations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Competition."
POTENTIAL VOLATILITY OF FUTURE OPERATING RESULTS
United Artists' operating results may fluctuate because of a number of
factors, including the availability of popular major motion pictures.
Historically, the most marketable motion pictures have been released during
the summer extending from Memorial Day to Labor Day and the holiday season
extending from Thanksgiving through year-end. The unexpected emergence of a
hit film during other periods or the failure to release marketable motion
pictures during these periods could alter the traditional trend. Fluctuations
in results could affect the market price of the Exchange Notes in a manner
unrelated to the long-term operating performance of United Artists. In
addition, United Artists competes with other forms of entertainment for the
public's disposable income. A general economic downturn that decreases
disposable income could therefore have a material adverse effect upon United
Artists and the price of the Exchange Notes. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
ABILITY TO SERVICE DEBT; SUBSTANTIAL INDEBTEDNESS
United Artists has substantial indebtedness and, as a result, significant
debt service obligations. At May 31, 1998, the Company and its subsidiaries
had approximately $644.9 million of indebtedness (excluding trade payables)
outstanding. In addition, on May 31, 1998 the Company had additional delayed
draw and revolving credit availability of $140.0 million under the Senior
Credit Facilities. On a pro forma basis after giving effect to the
Transactions, the Company's earnings would have been insufficient to cover its
fixed charges for the twelve months ended March 31, 1998 by $36.4 million and
its EBITDA would have been insufficient to cover its capital expenditures and
interest expense by $27.8 million. United Artists' leveraged financial
position poses substantial risks to holders of the Exchange Notes, including
the risks that: (i) a substantial portion of United Artists' cash flow from
operations will be dedicated to the payment of interest and principal on its
indebtedness; (ii) United
17
<PAGE>
Artists' ability to obtain financing in the future for working capital,
capital expenditures, acquisitions and general corporate purposes may be
impeded; (iii) United Artists may be more vulnerable to economic downturns,
which may limit its ability to withstand competitive pressures; (iv) most of
United Artists' other indebtedness, including the Senior Credit Facilities,
matures prior to the Notes and the Exchange Notes, and the Floating Rate Notes
and Floating Rate Exchange Notes mature prior to the Fixed Rate Notes and
Fixed Rate Exchange Notes; (v) the indebtedness under the Senior Credit
Facilities is secured by a pledge of the stock of UATC, UAR and certain of the
Company's other subsidiaries and by certain intercompany notes; (vi) the
indebtedness under the Senior Credit Facilities is guaranteed by certain of
the Company's subsidiaries, including UATC and UAR; and (vii) certain
indebtedness under the Senior Credit Facilities and the Floating Rate Notes
and Floating Rate Exchange Notes bears interest at floating rates, causing
United Artists to be sensitive to increases in interest rates. There can be no
assurance that the future cash flow of United Artists will be sufficient to
meet United Artists' obligations and commitments or that the Company will have
access to sufficient capital to enable it to pay the Notes or the Exchange
Notes. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources," "Description of the
Exchange Notes," "Description of the Other Exchange Notes" and "Description of
Certain Indebtedness."
During the twelve months ended March 31, 1998, United Artists' interest
expense was approximately $42.9 million, which would increase to $56.0 million
on a pro forma basis for such period assuming that the Transactions occurred
on April 1, 1997. Accordingly, the effect of the Transactions will be to
increase the Company's interest expense.
RESTRICTIONS IMPOSED BY THE 1995 SALE LEASEBACK
In connection with a sale leaseback transaction that occurred in December
1995 (the "1995 Sale Leaseback"), certain restrictions were imposed on the
ability of UATC and its subsidiaries to incur indebtedness, pay dividends or
make distributions and transfer assets. Generally, with certain exceptions,
UATC may not incur additional indebtedness (or permit its subsidiaries to
incur additional indebtedness) unless its "consolidated fixed charge coverage
ratio" (as defined in the Participation Agreement (as defined)), which
includes "consolidated operating rental expense" (as defined in the
Participation Agreement) for the preceding four fiscal quarters is at least
1.40 to 1 after giving effect to the incurrence of the additional
indebtedness. On a pro forma basis after giving effect to the Transactions,
UATC's consolidated fixed charge coverage ratio for the twelve months ended
March 31, 1998 would have been 1.49 to 1. Such restriction applies to draws
under the Senior Credit Facilities since such indebtedness is guaranteed by
UATC. As of March 31, 1998, on such pro forma basis United Artists would have
been able to draw approximately $369.0 million under the Senior Credit
Facilities in compliance with such covenants. UATC is also prohibited from
making "restricted payments," which generally constitute UATC making
distributions on its capital stock, acquiring its stock or the stock of an
affiliate or making certain investments (or permitting its subsidiaries to
engage in any of the foregoing activities) unless UATC could incur additional
indebtedness pursuant to the debt incurrence test described above, the amount
of such distributions and payments does not exceed the amount available under
a "basket" and no "default" or "event of default" exists thereunder. The
amount of this basket includes 50.0% of UATC's "consolidated adjusted net
income" (as defined in the Participation Agreement) accumulated since May 12,
1992 (or if UATC has a loss, less 100.0% of such loss) and the aggregate net
proceeds received by UATC after May 12, 1992 as capital contributions from the
Company. At March 31, 1998 the basket was approximately $45.8 million. After
giving effect to the Transactions and the contribution to UATC of certain of
the proceeds of the issuances of the Fixed Rate Notes and Floating Rate Notes,
the basket would have been approximately $155.8 million at March 31, 1998. The
amounts available for distribution to the Company under the basket, therefore,
will be initially insufficient to repay the principal amount of the
indebtedness of the Company. Accordingly, unless the amount of the basket
increases, the Company will be unable to obtain funds from UATC to repay the
Notes and the Exchange Notes at their maturity and will be required to attempt
to refinance them. In addition, any distributions to the Company or other
restricted payments by UATC (including distributions, if any, to repay the
Floating Rate Notes and the Floating Rate Exchange Notes which mature six
months prior to the Fixed Rate Notes and Fixed Rate Exchange Notes) will
decrease the basket available to permit the Company to make interest and
principal payments on the
18
<PAGE>
Notes and the Exchange Notes or otherwise. For UATC to make distributions to
the Company after the $155.8 million basket is utilized, UATC will need to
generate net income or receive additional equity contributions. UATC is
generally prohibited from transferring assets to the Company. To the extent
that the 1995 Sale Leaseback requirements are not met so that UATC cannot
distribute amounts to the Company to pay the interest and principal payments
on the Notes and the Exchange Notes, UATC will not be able to make such
distributions unless the 1995 Sale Leaseback is amended or unwound, which
could be at a substantial cost to United Artists. There also can be no
assurance that United Artists would be able to amend or unwind the 1995 Sale
Leaseback.
The computations of the "consolidated fixed charge coverage ratio" and the
restricted payments basket are based on estimates and interpretations. There
can be no assurance that the Company's above computations of such ratio and
basket will not be contested. For example, GAAP may require UATC to recognize
the interest expense on the Senior Credit Facilities because UATC will
guarantee these facilities, which will decrease the restricted payments
basket. If UATC distributes cash to the Company to pay such interest expense,
the Participation Agreement could be interpreted as requiring a second
decrease to the basket in the amount of the distribution, resulting in a
"double-counting" of the interest expense when computing the basket.
Further, any distributions by UATC to the Company will be in the form of
dividends. Applicable law requires that the Board of Directors of UATC
determine that any dividend will not render UATC insolvent. If the Board of
Directors of UATC is unable to make such determination, UATC will not be able
to pay a dividend, and United Artists will not have access to the funds of
UATC.
If a Lease Event of Default (as defined in the 1995 Sale Leaseback) occurs,
the owner trustee under the 1995 Sale Leaseback may terminate the lease and
may transfer the properties to UATC (in which case UATC would be required to
pay liquidated damages as calculated pursuant to the 1995 Sale Leaseback) or
may repossess or relet the properties. The 1995 Sale Leaseback also contains
certain other restrictive covenants. The Participation Agreement and certain
other agreements related to the 1995 Sale Leaseback have been filed by United
Artists with the Commission and the foregoing discussion of the terms and
conditions of such agreements is qualified in its entirety to reference to the
agreements themselves. See "Restrictions Imposed by the 1995 Sale Leaseback"
and "Available Information."
SUBSTANTIAL OPERATING LEASE COMMITMENTS
United Artists leases many of its theatres pursuant to non-cancelable
operating leases. For the twelve months ended March 31, 1998 the amount paid
under UATC's non-cancelable operating leases was $81.6 million. United Artists
expects to fund payments under these leases from theatre operations, although
no assurance exists that the revenue from such operations will be sufficient
to make these rent payments and pay other theatre operating expenses. In
addition, the lease payments decrease UATC's "consolidated fixed charge
coverage ratio" under the Participation Agreement, which affects the ability
of UATC and its subsidiaries to incur additional indebtedness. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
RESTRICTIONS IMPOSED BY THE INDENTURE, THE OTHER INDENTURE AND THE SENIOR
CREDIT FACILITIES
The Senior Credit Facilities require the Company to maintain specified
financial ratios and to meet certain financial tests, which may become more
stringent over time. The Indenture, the indenture pursuant to which the Other
Notes were issued (the "Other Indenture") (which Other Indenture contains
restrictions that are substantially equivalent to those in the Indenture) and
the Senior Credit Facilities contain additional restrictions on the ability of
the Company to incur additional indebtedness, make investments, capital
expenditures, acquisitions or asset dispositions, create or incur liens, make
certain payments and dividends or merge or consolidate. There can be no
assurance that the Company can maintain such ratios or that such covenants
will not adversely affect United Artists' ability to finance its future
operations or capital needs or engage in business activities that may be in
the best interests of United Artists. Failure to comply with the restrictions
contained in either the Senior Credit Facilities or the Other Indenture could
lead to an event of default thereunder, which could result in an acceleration
of such indebtedness, or in the case of the Senior Credit Facilities, a
blockage of
19
<PAGE>
payments on the Exchange Notes prior to acceleration. There can be no
assurance that the Company would have access to sufficient resources to pay
its obligations under the Senior Credit Facilities, the Fixed Rate Notes, the
Fixed Rate Exchange Notes, the Floating Rate Notes or the Floating Rate
Exchange Notes if such indebtedness were to be accelerated. See "Description
of Certain Indebtedness--Senior Credit Facilities."
SUBORDINATION OF EXCHANGE NOTES
The Exchange Notes will be general unsecured indebtedness of the Company,
subordinated in right of payment to all existing and future Senior
Indebtedness, including all obligations under the Senior Credit Facilities.
The Exchange Notes will also be effectively subordinated to all existing and
future liabilities of the Company's subsidiaries, including certain of the
Company's subsidiaries' (including UATC's and UAR's) guarantees of the Senior
Credit Facilities. The Exchange Notes will rank pari passu with the Other
Notes and the Other Exchange Notes. At May 31, 1998, the Company and its
subsidiaries had approximately $644.9 million of indebtedness (excluding trade
payables) outstanding, consisting of $310.0 million of Senior Indebtedness of
the Company (guaranteed by certain of the Company's subsidiaries), $59.9
million of other indebtedness of the Company's subsidiaries, and $275.0
million representing the Fixed Rate Notes and the Floating Rate Notes. In
addition, on May 31, 1998, the Company had additional delayed draw and
revolving credit availability of $140.0 million under the Senior Credit
Facilities, all of which would be Senior Indebtedness, if borrowed. Additional
Senior Indebtedness may be incurred by the Company and additional indebtedness
may be incurred by the Company or its subsidiaries, in each case from time to
time, subject to certain restrictions. As a result of the subordination
provisions contained in the Indenture and the Other Indenture, in the event of
a liquidation or insolvency of the Company, the assets of the Company will be
available to pay obligations on the Exchange Notes and the Other Exchange
Notes only after all Senior Indebtedness has been paid in full, and there may
be insufficient assets remaining to pay amounts due on any or all of the
Exchange Notes and the Other Exchange Notes then outstanding. In addition, the
capital stock of UATC, UAR and certain of the Company's other subsidiaries and
certain intercompany notes are pledged to secure the indebtedness under the
Senior Credit Facilities. Upon any payment or distribution of assets of the
Company in a total or partial liquidation, dissolution, reorganization or
similar proceeding, the holders of Senior Indebtedness will be entitled to
receive payment in full before the holders of the Exchange Notes are entitled
to receive any payment. In addition, under certain circumstances, no payment
of principal or interest may be made on the Exchange Notes if a payment
default or certain other defaults exist with respect to certain Senior
Indebtedness. See "Description of the Exchange Notes--Ranking and
Subordination," "Description of the Other Exchange Notes" and "Description of
Certain Indebtedness--Senior Credit Facilities."
HOLDING COMPANY STRUCTURE; SOURCE OF REPAYMENT OF EXCHANGE NOTES; EFFECTIVE
SUBORDINATION OF EXCHANGE NOTES TO INDEBTEDNESS OF SUBSIDIARIES
As a holding company that conducts virtually all of its business through
subsidiaries, the Company has no source of operating cash flow other than from
dividends and distributions from its subsidiaries. See "Restrictions Imposed
by the 1995 Sale Leaseback." To pay cash interest on the Exchange Notes and to
repay the principal amount of the Exchange Notes at maturity, or to redeem or
repurchase the Exchange Notes, the Company will be required to obtain
dividends or distributions from its subsidiaries, refinance its indebtedness
(including the Floating Rate Notes and Floating Rate Exchange Notes, which
mature six months prior to the Fixed Rate Notes and the Fixed Rate Exchange
Notes) or obtain funds in a public or private equity or debt offering by it.
The Indenture, the Other Indenture and the Senior Credit Facilities will,
however, limit the Company's ability to incur additional indebtedness.
If the Company is required to conduct an offering of its capital stock or to
refinance the Exchange Notes, its ability to do so on acceptable terms, if at
all, will be affected by several factors, including financial market
conditions and the value and performance of the Company at the time of such
offering or refinancing, which in turn may be affected by many factors,
including economic and industry cycles. There can be no assurance that an
offering of the Company's capital stock or a refinancing of the Exchange Notes
can or will be completed on
20
<PAGE>
satisfactory terms, that such offering or refinancing would be sufficient to
enable the Company to make any payments with respect to the Exchange Notes if
required or that such offering or refinancing would be permitted by the terms
of the debt instruments of the Company and its subsidiaries then in effect.
The Company's subsidiaries, including UATC and UAR, will have no obligation
to pay amounts due on the Exchange Notes and will not guarantee the Exchange
Notes. Certain of the Company's subsidiaries, including UATC and UAR, do
however, guarantee the Company's obligations under the Senior Credit
Facilities. Therefore, the Exchange Notes will be effectively subordinated to
all obligations under the Senior Credit Facilities and to all existing
liabilities of the Company's subsidiaries, including trade payables. As of May
31, 1998, after giving effect to the Transactions (including the redemption of
the Senior Secured Notes), the total liabilities of the Company's subsidiaries
on a consolidated basis would have been approximately $507.7 million,
including the guarantees of the Company's indebtedness under the Senior Credit
Facilities. Any rights of the Company and its creditors, including the holders
of the Exchange Notes and the Other Exchange Notes, to recover on the assets
of any of the Company's subsidiaries to satisfy indebtedness upon any
liquidation or reorganization of any such subsidiary will be subject to the
prior claims of that subsidiary's creditors, including the lenders under the
Senior Credit Facilities and trade creditors.
PURCHASE OF EXCHANGE NOTES UPON A CHANGE OF CONTROL
Upon a Change of Control, the Company is required to offer to purchase all
outstanding Fixed Rate Exchange Notes and Floating Rate Exchange Notes at 101%
of the aggregate principal amount thereof plus accrued and unpaid interest to
the date of purchase. The source of funds for any such purchase would be the
Company's available cash or cash generated from other sources, including
dividends from subsidiaries, borrowings, sales of assets, sales of equity or
funds provided by new controlling persons. A Change of Control would also give
the lenders under the Senior Credit Facilities the right to require the
Company to repay all indebtedness then outstanding thereunder. There can be no
assurance that sufficient funds will be available at the time of any Change of
Control to make any required purchases of validly tendered Fixed Rate Exchange
Notes and Floating Rate Exchange Notes and to repay any other indebtedness
then in default. See "Description of the Exchange Notes--Repurchase of
Exchange Notes upon a Change of Control," "Description of the Other Exchange
Notes" and "Description of Certain Indebtedness--Senior Credit Facilities."
ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES
The Exchange Notes are a new issue of securities for which there is
currently no trading market. Although Merrill Lynch has informed United
Artists that it currently intends to make a market in the Exchange Notes, it
is not obligated to do so, and any such market making may be discontinued at
any time without notice. There can be no assurance that an active trading
market for the Exchange Notes will develop. If a market were to develop, the
Exchange Notes could trade at prices that may be lower than their initial
offering price for many reasons, including prevailing interest rates, the
markets for similar securities, general economic conditions and the financial
condition and performance of, and prospects for, United Artists and other
factors. See "Exchange Offer; Registration Rights."
CONTROLLING STOCKHOLDERS
Affiliates of Merrill Lynch Capital Partners, Inc. (the "Merrill Lynch
Group") hold approximately 90.8% of the Company's outstanding voting stock
and, accordingly, have the power to control all matters submitted to the
stockholders of the Company, elect all of the directors of the Company,
appoint new management and approve any action requiring the approval of the
holders of the Common Stock, including adopting amendments to the Company's
certificate of incorporation and approving mergers or sales of all or
substantially all of the Company's assets in each case subject to whatever
contractual restrictions apply to the Company, including the Indenture, the
Other Indenture and the Senior Credit Facilities. The interests of the Merrill
Lynch Group may differ from the interests of holders of the Exchange Notes.
See "Management--Directors and Executive Officers of the Company" and "Certain
Transactions."
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RISKS ASSOCIATED WITH FRAUDULENT CONVEYANCE LIABILITY
Management of United Artists believes that the indebtedness represented by
the Fixed Rate Notes and the Floating Rate Notes, and to the extent exchanged
for the Notes and Other Notes, the Exchange Notes and Other Exchange Notes,
was incurred for proper purposes and in good faith, and that as a result of,
and after giving effect to, the Note Offering, the Exchange Offer and the
Other Exchange Offer, based on forecasts, asset valuations and other financial
information, the Company was and will be solvent, had and will have sufficient
capital for carrying on its business and was and is able to pay its debts as
they mature. See "Risk Factors--Ability to Service Debt; Substantial
Indebtedness." 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, a
court were to find that, at the time of the incurrence of such indebtedness,
(i) the Company incurred such indebtedness with the intent of hindering,
delaying or defrauding current or future creditors or (ii) (A) the Company
received less than reasonably equivalent value or fair consideration for
incurring such indebtedness and (B) the Company, (1) was insolvent or was
rendered insolvent by reason of such incurrence, (2) was engaged, or about to
engage, in a business or transaction for which its assets constituted
unreasonably small capital, (3) intended to incur, or believed that it would
incur, debts beyond its ability to pay as such debts matured (as all of the
foregoing terms are defined in or interpreted under such fraudulent conveyance
statutes) or (4) 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 further
subordinate the Exchange Notes to presently existing and future indebtedness
of the Company and take other action detrimental to the holders of the
Exchange Notes, including under certain circumstances, invalidating the
Exchange Notes and requiring the holders of the Exchange Notes to repay
amounts previously received thereon.
The measure of insolvency for purposes of the foregoing considerations
varies depending upon the federal or local law that is being applied in any
such proceeding. Generally, however, the Company would be considered insolvent
if, at the time it issues the Exchange Notes, either: (i) the fair market
value (or fair saleable value) of its assets is 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 mature or
(ii) it is incurring debts beyond its ability to pay as such debts mature.
The Company believes that at the time of the issuance of the Exchange Notes,
the Company: (i) will (A) be neither insolvent nor rendered insolvent thereby,
(B) have sufficient capital to operate its business effectively and (C) be
incurring debts within its ability to pay as the same mature or become due;
and (ii) will have sufficient resources to satisfy any probable money judgment
against it in any pending action. There can be no assurance, however, that
such analysis will prove to be correct or that a court passing on such
questions would reach the same conclusions.
DEPENDENCE ON KEY PERSONNEL
United Artists' success will depend, in large part, on the efforts,
abilities and experience of its executive officers and other key employees.
The loss of the services of one or more of such individuals could have a
material adverse effect on United Artists' business. United Artists has
employment agreements with certain of its executive officers, which, as
amended in May 1998, expire in December 1998, 1999 or 2000, with subsequent
one or two year extensions (absent notice to the contrary by either United
Artists or the employee). United Artists does not maintain key-man life
insurance with respect to any of its executive officers or key employees. In
connection with United Artists' corporate restructuring United Artists'
previous chief executive officer and three additional executive officers
resigned from United Artists during 1996 and 1997. Another executive officer
resigned in early 1998 in connection with United Artists' divestiture of its
remaining international operations. See "Management."
RISKS OF FUTURE ACQUISITIONS
While United Artists has no immediate acquisition plans, United Artists'
growth strategy may from time to time involve the strategic acquisition of
additional theatres or theatre companies. There is substantial competition for
attractive acquisition candidates. There can be no assurance that United
Artists will be able to acquire suitable
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acquisition candidates at reasonable prices or terms or that it will be able
to successfully integrate acquired operations into its existing operations.
There also can be no assurance that future acquisitions will not have an
adverse effect upon United Artists' operating results, particularly in the
quarters immediately following the completion of an acquisition while the
operations of an acquired business are being integrated. Once integrated,
acquired theatres may not achieve levels of revenue or profitability
comparable with those achieved by United Artists' existing theatres, or
otherwise perform as expected. Additionally, expansion of United Artists'
theatre circuit involves the risk that United Artists might not effectively
manage such growth and that significant additional debt may be incurred in
connection with acquisitions. See "Business--Business and Operating Strategy."
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes in exchange for Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Exchange Agent
of such Notes, a properly completed and duly executed Letter of Transmittal
and all other required documents. Therefore, holders of the Notes desiring to
tender such Notes in exchange for Exchange Notes should allow 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 Notes for
exchange. 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 of Notes who
tenders in 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 Notes, where such 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. To the extent that Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
Notes could be adversely affected. See "The Exchange Offer."
RESTRICTIONS ON TRANSFER
The 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 under the Securities Act. As a result, the 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 Notes are legended to restrict
transfer as aforesaid. Each holder of Notes (other than any holder who is an
affiliate or promoter of the Company) who duly exchanges Notes for Exchange
Notes in the Exchange Offer will receive Exchange Notes that are freely
transferable under the Securities Act. Holders of Notes 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 of Notes 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
Notes for resale under the Securities Act. See "Prospectus Summary--The
Exchange Offer" and "Description of the Exchange Notes--Registration Rights."
The Notes currently may be sold pursuant to the restrictions set forth in
Rule 144A or Regulation S, or pursuant to another available exemption under
the Securities Act, without registration under the Securities Act. To the
extent that Notes are tendered and accepted in the Exchange Offer, the trading
market for the untendered and tendered but unaccepted Notes could be adversely
affected.
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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
The Notes were sold by the Company on April 21, 1998, and were subsequently
resold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act and to certain persons in transactions outside the United
States in reliance on Regulation S under the Securities Act. In connection
with the Note Offering, the Company entered into the Registration Rights
Agreement, which requires, among other things, that promptly following the
completion of the Transactions, the Company to (i) file with the Commission a
registration statement under the Securities Act with respect to an issue of
new notes of the Company containing terms substantially identical in all
material respects to the Notes, (ii) use its best efforts to cause such
registration statement to be declared effective by the Commission under the
Securities Act and (iii) upon the effectiveness of that registration
statement, promptly commence the Exchange Offer, it being the objective of the
Exchange Offer to enable each holder (other than certain broker-dealers)
eligible and electing to exchange their Notes for Exchange Notes (assuming
that such holder that is not an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act, acquires the Exchange Notes in the
ordinary course of such holder's business and has no arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the Exchange Notes) to trade such Exchange Notes from
and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities law of a
substantial proportion of the several states of the United States. 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 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 Notes, the number of Notes
tendered and exchanged in the Exchange Offer will reduce the principal amount
of Notes outstanding. Following the consummation of the Exchange Offer,
Holders of the Notes who did not tender their Notes generally will not have
any further registration rights under the Registration Rights Agreement, and
such Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Notes could be adversely
affected. The Notes are currently eligible for sale pursuant to Rule 144A
through the PORTAL System of the National Association of Securities Dealers,
Inc. Because the Company anticipates that most Holders of Notes will elect to
exchange such 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 the market for any Notes remaining after the
consummation of the Exchange Offer may be substantially limited.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Notes
validly 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
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Notes pursuant to the Exchange Offer. However, Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes except that (i) the Exchange Notes have been registered under the
Securities Act and hence will not bear legends restricting the transfer
thereof and (ii) the holders of the 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 Notes and will be entitled
to the benefits of the Indenture.
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Holders of Notes do not have any appraisal or dissenters' rights under the
General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder, including Rule
14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered 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 for the
purpose of receiving the Exchange Notes from the Company.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange
Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 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 term "Expiration Date" means the latest date
and time to which the Exchange Offer is extended.
To extend the Exchange Offer, the Company will notify the Exchange Agent of
any extension by oral or written notice, followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
The Company reserves the right, in its reasonable judgment, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "--Conditions" shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by a
public announcement 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 by means of a prospectus supplement that will
be distributed to the registered Holders, and, depending upon the significance
of the amendment 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.
If the Company does not consummate the Exchange Offer, or, in lieu thereof,
the Company does not file and cause to become effective a resale shelf
registration for the Notes within the time periods set forth herein,
liquidated damages will accrue and be payable on the Notes either temporarily
or permanently. See "Exchange Offer; Registration Rights."
Without limiting the manner in which the Company may choose to make public
announcement of any delay, 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.
INTEREST ON EXCHANGE NOTES
The Exchange Notes will bear interest from April 21, 1998, the date of
issuance of the Notes that are tendered in exchange for the Exchange Notes (or
the most recent Interest Payment Date to which interest on such Notes has been
paid). Accordingly, Holders of Notes that are accepted for exchange will not
receive interest that is accrued but unpaid on the Notes at the time of
tender, but such interest will be payable on the first Interest Payment Date
after the Expiration Date. Interest on the Exchange Notes will be payable
semiannually on each April 15 and October 15, commencing October 15, 1998.
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PROCEDURES FOR TENDERING
Only a Holder of Notes may tender such Notes in the Exchange Offer. To
tender in 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 the Letter of Transmittal and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Notes and any other
required documents, to the Exchange Agent so as to be received by the Exchange
Agent at the address set forth below prior to 5:00 p.m., New York City time,
on the Expiration Date. Delivery of the 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.
By executing the Letter of Transmittal, each Holder will make to the Company
the representation set forth below in the second paragraph under the heading
"--Resale of Exchange Notes."
The tender by a Holder 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 herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF 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 DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES
OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined) unless
the 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 guarantee must be by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., 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 l7Ad-15 under the Exchange Act (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
Holder of any Notes listed therein, such Notes must be endorsed or accompanied
by a properly completed bond power, signed by such registered Holder as such
registered Holder's name appears on such Notes with the signature thereon
guaranteed by an Eligible Institution.
If the Letter of Transmittal or any 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,
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
Notes at the Depository for the purpose of facilitating the Exchange Offer,
and subject to the establishment thereof, any financial institution that is a
participant in the
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Depository's system may make book-entry delivery of the Notes by causing the
Depository to transfer such Notes into the Exchange Agent's account with
respect to the Notes in accordance with the Depository's procedures for such
transfer. Although delivery of the Notes may be effected through book-entry
transfer into the Exchange Agent's account at the Depository, an appropriate
Letter of Transmittal properly completed and duly executed with any required
signature guarantee and all other required documents must in each case be
transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures. Delivery of documents to the Depository does
not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered 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 Notes not properly tendered or any Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the right, in its reasonable judgment, to waive any
defects, irregularities or conditions of tender as to particular 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 Notes must be cured within such time as the Company
shall determine. Although the Company intends to notify Holders of defects or
irregularities with respect to tenders of Notes, neither the Company, the
Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
by the Exchange Agent to the tendering Holders, unless otherwise provided in
the Letter of Transmittal, as soon as practicable following the Expiration
Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed notice of
guaranteed delivery ("Notice of Guaranteed Delivery") (by facsimile
transmission, mail or hand delivery) setting forth the name and address of
the Holder, the certificate number(s) of such Notes and the principal
amount of Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the certificate(s) representing the Notes (or a confirmation
of book-entry transfer of such 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
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such 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 New York Stock Exchange trading days after the
Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
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WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of 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 Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at
its address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of Notes transferred by book-
entry transfer, the name and number of the account at the Depository to be
credited), (iii) be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal by which such Notes were tendered
(including any required signature guarantees) or be accompanied by documents
of transfer sufficient to have the Trustee with respect to the Notes register
the transfer of such Notes into the name of the person withdrawing the tender
and (iv) specify the name in which any such Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Notes so 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 Notes so withdrawn are validly retendered. Any
Notes which have been tendered but which are not accepted for exchange will be
returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Notes may be retendered by following one of
the procedures described above under "--Procedures for Tendering" at any time
prior to the Expiration Date.
CONDITIONS
The Exchange Offer will not be subject to any conditions, other than that
the Exchange Offer, or the making of any exchange by a Holder, does not
violate applicable law or any applicable interpretation of the staff of the
Commission and that the Company will not be required to consummate the
Exchange Offer if:
(a) there is in effect any law, statute, rule, regulation or
interpretation of the Commission or any other governmental authority, or
any order, decree or judgment, which, in the reasonable opinion of counsel
to the Company satisfactory to the Initial Purchasers, 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
(b) any governmental approval has not been obtained, which approval of
the Company shall, in its reasonable judgment, deem necessary for the
consummation of the Exchange Offer.
If any of the conditions are not satisfied, the Company may (i) refuse to
accept any Notes and return all tendered Notes to the tendering Holders, (ii)
extend the Exchange Offer and retain all Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of Holders
to withdraw such Notes (see "--Withdrawals of Tenders") or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered 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
State Street Bank and Trust Company of Missouri, N.A., will act as Exchange
Agent for the Exchange Offer.
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Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for copies of the
Notice of Guaranteed Delivery should be directed to the Exchange Agent,
addressed as follows:
By Registered or Certified Mail:
State Street Bank and Trust Company of Missouri, N.A.
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
Kellie Mullen
By Overnight Courier or By Hand:
State Street Bank and Trust Company of Missouri, N.A.
61 Broadway, 15th Floor
New York, NY 10016
Attention: Corporate Trust Department
By Facsimile (for eligible institutions only) :
(617) 664-5290
Attention: Corporate Trust Department
Confirm by Telephone:
(617) 664-5587
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone, facsimile 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 or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and
reimburse it for its 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 the Notes pursuant to the Exchange Offer. If, however, certificates
representing the Exchange Notes or the Notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be issued
in the name of, any person other than the registered Holder of the Notes
tendered, or if tendered Notes are registered in the name of any person other
than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of the 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.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Notes,
which is the aggregate principal amount of the 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 expenses of the Exchange Offer will be amortized over the
term of the Exchange Notes.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in exchange for Notes may be
offered for resale, resold and otherwise transferred by any Holder of such
Exchange Notes (other than any such Holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
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<PAGE>
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. Any Holder who
tenders in the Exchange Offer with the intention to participate, or for the
purpose of participating, in a distribution of the Exchange Notes may not rely
on the position of the staff of the Commission enunciated in Exxon Capital
Holdings Corporation (available April 13, 1989), Morgan Stanley & Co.,
Incorporated (available June 5, 1991) or similar no-action letters, but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with the resale of the Exchange Notes. 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 Notes,
where such Notes were 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.
By tendering in the Exchange Offer, each Holder will represent to the
Company that, among other things, (i) the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of
the person receiving such Exchange Notes, whether or not such person is a
Holder, (ii) neither the Holder nor any such other person is engaged or
intends to engage in, or has an arrangement or understanding with any person
to participate in, the distribution of such Exchange Notes and (iii) the
Holder and 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 or such other person incurring liability
under the Securities Act for which such persons are not indemnified by the
Company. Further, by tendering in the Exchange Offer, each Holder or person
receiving the Exchange Notes acquired pursuant thereto that may be deemed an
"affiliate" (as defined under 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 or such other person without registration under the
Securities Act or an exemption therefrom.
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. In connection with the
Note Offering, the Company entered into the Registration Rights Agreement
pursuant to which the Company agreed to file and maintain, subject to certain
limitations, a registration statement that would allow Merrill Lynch to engage
in market-making transactions with respect to the Notes or the Exchange Notes.
The Company has agreed to bear all registration expenses incurred under such
agreement, including printing and distribution expenses, reasonable fees of
counsel, blue sky fees and expenses, reasonable fees of independent
accountants in connection with the preparation of comfort letters, and
Commission and the National Association of Securities Dealers, Inc. filing
fees and expenses.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled certain of its obligations under the Registration Rights Agreement,
and Holders of Notes who do not tender their Notes generally will not have any
further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any Holder of Notes that does not exchange that
Holder's Notes for Exchange Notes will continue to hold the untendered 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.
30
<PAGE>
The Notes that are not exchanged for Exchange Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such 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 Notes are eligible for resale pursuant to Rule 144A, to a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act
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 (vi) to an
institutional 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. See
"Risk Factors--Restrictions on Transfer."
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders of the Notes 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 Notes in open
market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company has no present plans to acquire any Notes
that are not tendered in the Exchange Offer or to file a registration
statement to permit resales of any untendered Notes.
The Exchange Offer is not being made to, nor will the Company accept
surrenders for exchange from, Holders of Notes in any jurisdiction in which
the Exchange Offer or the acceptance thereof would not be in compliance with
the securities or blue sky laws of such jurisdiction. Prior to the Exchange
Offer, however, the Company will take such actions it deems necessary or
advisable to register or qualify the Exchange Notes for offer and sale under
the securities or blue sky laws of such jurisdictions as is necessary to
permit consummation of the Exchange Offer and to enable the offer and sale in
such jurisdiction of the Exchange Notes.
31
<PAGE>
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"), applicable Treasury
regulations, judicial authority and administrative rulings and practice. 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 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 a Note should consult his, her or its own
tax advisor as to the particular tax consequences of exchanging such Holder's
Notes for Exchange Notes, including the applicability and effect of any state,
local or foreign tax laws.
The issuance of the Exchange Notes to Holders of the Notes 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 of the Notes upon receipt of the Exchange Notes, and ownership of the
Exchange Notes will be considered a continuation of ownership of the 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 Notes exchanged therefor. A Holder's
holding period for the Exchange Notes should include the Holder's holding
period for the Notes exchanged therefor. The issue price and other tax
characteristics of the Exchange Notes should be identical to the issue price
and other tax characteristics of the Notes exchanged therefor.
See also "Description of Certain Federal Income Tax Consequences of an
Investment in the Exchange Notes."
32
<PAGE>
THE REFINANCING TRANSACTIONS
On April 21, 1998, the Company (i) issued the Fixed Rate Notes; (ii) issued
the Floating Rate Notes and (iii) entered into $450.0 million of the Senior
Credit Facilities, consisting of $350.0 million of term loans and a $100.0
million senior secured revolving credit facility. Approximately $170 million
of the term loan portion of the Senior Credit Facilities were available on a
delayed term basis, of which approximately $125 million was drawn as of May
31, 1998. On April 21, 1998, the Company caused UATC to repay the Prior Credit
Facilities. On May 1, 1998, the Company redeemed all of its outstanding
Preferred Stock and on May 21, 1998, the Company caused UATC to redeem UATC's
Senior Secured Notes. See "Use of Proceeds."
33
<PAGE>
USE OF PROCEEDS
The following table sets forth the actual sources and uses of funds in
connection with the Transactions. The proceeds to the Company from the
issuances of the Fixed Rate Notes, the Floating Rate Notes and the borrowings
under the Senior Credit Facilities were used: (i) to redeem all of the
outstanding Preferred Stock of the Company; (ii) to repay UATC's Prior Credit
Facilities; (iii) to redeem UATC's Senior Secured Notes; and (iv) to pay
related fees and expenses. See "The Transactions," "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Description of the Exchange Notes."
<TABLE>
<CAPTION>
AMOUNT
-------------
SOURCES OF FUNDS:
----------------- (IN MILLIONS)
<S> <C>
Senior Credit Facilities....................................... $303.5
Fixed Rate Notes............................................... 225.0
Floating Rate Notes............................................ 50.0
------
Total........................................................ $578.5
======
<CAPTION>
USES OF FUNDS:
--------------
<S> <C>
Redemption of Preferred Stock.................................. $159.2
Repayment of Prior Credit Facilities........................... 272.9
Redemption of Senior Secured Notes............................. 129.4
Transaction fees and expenses.................................. 17.0
------
Total........................................................ $578.5
======
</TABLE>
34
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization as of March 31, 1998, of
United Artists: (i) on an actual historical basis; and (ii) on a pro forma
basis after giving effect to the Transactions as if they had occurred on such
date. The following table should be read in conjunction with "The
Transactions," "Use of Proceeds," "Selected Historical Consolidated Financial
Information" and the Consolidated and Condensed Consolidated Financial
Statements of the Company, and the notes thereto, appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
------------------------
AS
ACTUAL ADJUSTED(1)
---------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents... $ 7.3 $ 7.3
========== ==========
Debt:
Senior Credit
Facilities(2)............ $ -- $ 279.7
Prior Credit Facilities... 243.5 --
Senior Secured Notes...... 125.0 --
Prop I Mortgage Notes(3).. 46.0 46.0
Other indebtedness(4)..... 15.2 15.2
Fixed Rate Notes.......... -- 225.0
Floating Rate Notes....... -- 50.0
---------- ----------
Total debt.............. 429.7 615.9
Stockholders' deficit:
Preferred Stock(5)........ 200.6 --
Common Stock.............. 0.1 0.1
Additional paid-in
capital(5)(6)............ 9.7 52.9
Accumulated deficit(5).... (228.5) (238.5)
Cumulative foreign
currency translation
adjustment............... (0.3) (0.3)
Less: Treasury stock...... (1.8) (1.8)
---------- ----------
Total stockholders'
deficit................ (20.2) (187.6)
---------- ----------
Total capitalization........ $ 409.5 $ 428.3
========== ==========
</TABLE>
- - --------
(1) Gives effect to the Transactions as if they had been consummated on March
31, 1998. The actual amounts required for (i) the redemption of the
Preferred Stock, (ii) the repayment of the Prior Credit Facilities, and
(iii) the redemption of the Senior Secured Notes were approximately $159.2
million, $272.9 million, and $129.4 million, respectively (including
accrued dividends, interest and prepayment premiums). See "Use of
Proceeds."
(2) The Company had additional availability of $146.5 million under the Senior
Credit Facilities after completion of the Transactions. See "Description
of Certain Indebtedness--Senior Credit Facilities."
(3) The Prop I Mortgage Notes (as defined) are obligations of a subsidiary of
the Company and bear interest at 11.15% per annum. Principal and interest
are payable in monthly installments with a lump sum payment of principal
and accrued but unpaid interest due on November 1, 1998. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources" and "Description of Certain
Indebtedness--Prop I Mortgage Notes." Approximately $45.0 million of the
Senior Credit Facilities is intended to be available for the repayment of
the Prop I Mortgage Notes upon the maturity thereof on a delayed draw
basis.
(4) Other indebtedness consists of: (i) $4.6 million of non-interest bearing
promissory notes issued by UAR; and (ii) $10.6 million of various term
loans, mortgage notes, capital leases and other borrowings of UATC.
(5) In connection with the redemption of the Preferred Stock, the repayment of
the Prior Credit Facilities and the redemption of the Senior Secured
Notes, United Artists recorded an increase to additional paid in capital
on redemption of the Preferred Stock and recorded an extraordinary loss on
the early extinguishment of debt. Had the redemption of the Preferred
Stock occurred on March 31, 1998, United Artists would have recorded the
difference of $43.2 million between the carrying value of $200.6 million
and the redemption value of $157.4 million as an increase to additional
paid in capital. Had the repayment of the Prior Credit Facilities and the
redemption of the Senior Secured Notes occurred on March 31, 1998, United
Artists would have recorded an extraordinary loss on the early
extinguishment of debt of approximately $10.0 million, consisting of $5.4
million in premiums and $4.6 million of deferred costs written-off. The
actual amount required for the redemption of the Preferred Stock was
approximately $159.2 million. See "Use of Proceeds."
(6) Pro forma additional paid-in capital reflects: (i) beginning additional
paid-in capital of $9.7 million and (ii) a $43.2 million increase
attributable to the difference between the Preferred Stock carrying value
of $200.6 million and the redemption value of $157.4 million.
35
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The selected historical consolidated financial information presented below
for each of the years ended December 31, 1993, 1994, 1995 and 1996 and 1997
has been derived from audited financial statements and notes thereto of the
Company. The selected historical consolidated financial information for the
three months ended March 31, 1997 and 1998 (unaudited) have been derived from
the consolidated financial statements of the Company and the notes thereto
which are included elsewhere in this Prospectus. Results for the three months
ended March 31, 1997 and 1998 are not necessarily indicative of results that
can be expected for an entire year. The information set forth below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated and Condensed
Consolidated Financial Statements of the Company, including the notes thereto,
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- --------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue:
Admissions............. $464.3 $447.6 $457.1 $466.5 $473.9 $121.7 $113.4
Concession sales....... 169.6 166.7 178.2 185.1 189.6 47.7 46.6
Other.................. 10.7 9.7 14.5 27.5 22.8 5.1 4.7
------ ------ ------ ------ ------ ------ ------
Total revenue.......... 644.6 624.0 649.8 679.1 686.3 174.5 164.7
------ ------ ------ ------ ------ ------ ------
Costs and expenses:
Operating expenses:
Film rental and
advertising........... 254.9 239.6 248.6 257.2 262.5 65.8 60.9
Direct concession...... 28.5 27.2 29.5 29.3 30.2 7.4 6.5
Occupancy.............. 54.4 55.0 58.8 64.6 67.8 16.5 17.0
Sales and leaseback
rental................ -- -- 0.5 11.0 12.8 3.0 3.5
Other operating........ 176.8 172.7 187.5 194.9 193.7 46.0 46.1
General and
administrative........ 30.9 33.4 35.5 35.1 24.3 6.6 5.4
Depreciation and
amortization.......... 72.1 66.7 69.8 74.9 60.7 18.4 13.7
Provision for
impairment(1)......... -- -- 21.0 9.5 36.0 -- --
Restructuring charge... 3.7 -- -- 1.9 0.8 -- --
------ ------ ------ ------ ------ ------ ------
Operating income
(loss)............... 23.3 29.4 (1.4) 0.7 (2.5) 10.8 11.6
Interest expense, net... 43.5 45.3 53.3 45.4 45.6 11.4 10.4
Loss (gain) on
disposition of assets,
net.................... 7.9 9.8 5.7 (2.7) (28.0) -- --
Other expense, net...... 2.6 2.8 2.6 2.7 5.4 1.2 0.9
------ ------ ------ ------ ------ ------ ------
Income (loss) before
income tax expense... (30.7) (28.5) (63.0) (44.7) (25.5) (1.8) 0.3
Income tax expense...... 1.6 1.4 1.8 1.1 1.5 0.4 0.3
------ ------ ------ ------ ------ ------ ------
Net income (loss)....... $(32.3) $(29.9) $(64.8) $(45.8) $(27.0) $ (2.2) $ --
====== ====== ====== ====== ====== ====== ======
OTHER FINANCIAL DATA:
EBITDA(2)............... $ 95.4 $ 96.1 $ 89.4 $ 85.1 $ 94.2 $ 29.2 $ 25.3
EBITDAR(2).............. 149.8 151.1 148.7 160.7 174.8 48.7 45.8
Adjusted EBITDA(3)...... 100.4 97.6 91.4 90.1 98.7 30.0 26.2
Adjusted EBITDAR(3)..... 153.5 151.1 148.7 162.6 175.6 48.7 45.8
Adjusted EBITDA
margin(4).............. 15.6% 15.6% 14.1% 13.3% 14.4% 17.2% 15.9%
Adjusted EBITDAR
margin(4).............. 23.8% 24.2% 22.9% 23.9% 25.6% 27.9% 27.8%
Ratio of EBITDA to
interest expense(5).... 2.28x 2.18x 1.72x 1.96x 2.14x 2.65x 2.53x
Ratio of EBITDAR to
interest and rent
expense(5)............. 1.56x 1.53x 1.34x 1.35x 1.40x 1.60x 1.50x
Ratio of Adjusted EBITDA
to interest
expense(5)............. 2.40x 2.22x 1.76x 2.07x 2.25x 2.73x 2.62x
Ratio of Adjusted
EBITDAR to interest and
rent expense(5)........ 1.60x 1.53x 1.34x 1.37x 1.41x 1.60x 1.50x
Statement of cash flow
information(6):
Net cash provided by
(used in) operating
activities............ $ 67.3 $ 49.7 $ 40.7 $ 30.8 $ 51.0 $ 20.7 $ (0.6)
Net cash used in
investing activities.. (31.2) (54.4) (1.6) (56.7) (4.6) (22.3) (20.2)
Net cash provided by
(used in) financing
activities............ (23.8) 1.1 (19.4) 3.5 (45.7) 2.7 17.3
------ ------ ------ ------ ------ ------ ------
Net cash flow.......... $ 12.3 $ (3.6) $ 19.7 $(22.4) $ 0.7 $ 1.1 $ (3.5)
====== ====== ====== ====== ====== ====== ======
Ratio of earnings to
fixed charges(7)....... -- -- -- -- -- -- 1.0x
<CAPTION>
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- -------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Adjusted EBITDAR:
Per weighted average
theatre............... $352.9 $365.0 $363.6 $411.6 $496.0 $133.4 $138.0
Per weighted average
screen................ 68.5 68.6 65.5 70.7 79.7 22.0 21.3
Admissions per weighted
average screen......... 207.1 203.3 201.4 202.9 215.0 55.1 52.6
Weighted average(8):
Operating theatres..... 435 414 409 395 354 365 332
Operating screens...... 2,242 2,202 2,270 2,299 2,204 2,209 2,154
Screens per operating
theatre............... 5.2 5.3 5.6 5.8 6.2 6.1 6.5
Screens added........... 32 90 137 138 132 61 23
Screens divested........ 128 28 81 245 170 12 24
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------- ---------
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....... $ 16.4 $ 12.8 $ 32.5 $ 10.1 $ 10.8 $ 7.3
Total assets.................... 737.5 717.6 665.8 612.7 563.0 560.5
Total debt...................... 463.1 451.7 453.7 453.1 414.0 429.7
Total stockholders' equity
(deficit)...................... 149.4 119.5 54.6 8.4 (20.3) (20.2)
</TABLE>
- - --------
(1) Reflects non-cash charges for the impairment of long-lived assets in
accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed Of" which the Company adopted in 1995.
(2) EBITDA represents operating income (loss) before depreciation,
amortization, and provision for impairment. EBITDAR represents operating
income (loss) before depreciation, amortization, provision for impairment,
and rent expense. While EBITDA and EBITDAR are not intended to represent
cash flow from operations as defined by GAAP and should not be considered
as an indicator of operating performance or an alternative to cash flow
(as measured by GAAP) as a measure of liquidity, they are included herein
to provide additional information with respect to the ability of United
Artists to meet its future debt service, capital expenditures, rental
obligations, and working capital requirements. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
(3) Adjusted EBITDA represents EBITDA before the effects of restructuring
charges, which are not expected to recur, and non-cash rent expense which
is excluded from Consolidated EBITDA as defined by the Indenture.
Adjusted EBITDAR represents EBITDAR before the effects of restructuring
charges. While Adjusted EBITDA and Adjusted EBITDAR are not intended to
represent cash flow from operations as defined by GAAP and should not be
considered as an indicator of operating performance or an alternative to
cash flow (as measured by GAAP) as a measure of liquidity, they are
included herein to provide additional information with respect to the
ability of United Artists to meet its future debt service, capital
expenditures, rental obligations, and working capital requirements. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
(4) Defined as Adjusted EBITDA and Adjusted EBITDAR as a percentage of total
revenue.
(5) "Interest expense" means interest expense recorded during the related
period excluding interest income and amortization of deferred financing
fees.
(6) Amounts derived from the Company's statements of cash flow.
(7) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges, and "fixed charges" consist of
interest, amortization of deferred financing costs and the component of
rental expense believed by United Artists to be representative of the
interest factor thereon. Earnings were insufficient to cover fixed charges
for each of the years ended December 31, 1993, 1994, 1995, 1996 and 1997
and for the three months ended March 31, 1997 by $29.3 million, $27.3
million, $61.7 million, $43.4 million, $22.6 million and $0.9 million,
respectively. In addition, on a pro forma basis after giving effect to the
Transactions as if they occurred on January 1, 1997, earnings would have
been insufficient to cover fixed charges for the year ended December 31,
1997 and the three months ended March 31, 1998 by $33.4 million and $3.3
million, respectively.
(8) Weighted average operating theatres and screens represent the number of
theatres and screens operated weighted by the number of days operated
during the period.
37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by reference to, the Consolidated and Condensed
Consolidated Financial Statements of the Company, including the notes thereto,
appearing elsewhere in this Prospectus.
OVERVIEW
Company Background
The Company's primary operating subsidiary, UATC, was founded in 1926 by
stockholders including Mary Pickford, Douglas Fairbanks, Sam Goldwyn and Joe
Schenck. During the 1980s UATC was acquired by Tele-Communications, Inc.
("TCI") and subsequently undertook a major acquisition program. By December
31, 1988, UATC operated 2,677 screens in 686 theatres principally in the
south, northeast, midwest and California.
In 1992, the Company acquired all of the outstanding stock of UATC (the
"Acquisition") and began to invest internationally, streamline and rejuvenate
UATC by developing new multi-screen theatres in existing and new areas of
operation, renovating existing properties on a limited basis and selling or
closing less productive or non-strategic theatres. In December 1996, the
Company implemented a corporate restructuring and refocused its investment
strategy on its core U.S. business by, among other things: (i) renovating,
rebuilding, or expanding existing key locations; and (ii) accelerating the
sale or closure of under-performing or non-strategic assets (including its
international investments). Since January 1992, UATC has sold or closed 226
theatres (826 screens) and has added 61 theatres (619 screens), primarily
through new construction. UATC's average number of screens per theatre has
increased 37.5% from 4.8 at January 1, 1992 to 6.6 at March 31, 1998. See
"Business--Business and Operating Strategy."
Revenue
United Artists' principal sources of revenue from its theatres are derived
from theatrical admissions and concession sales. For the twelve months ended
March 31, 1998, theatrical admissions and concession sales comprised
approximately 68.8% and 27.9%, respectively, of United Artists' revenue. The
remaining 3.3% of revenue for this period was derived primarily from on-screen
advertising, electronic video games located in theatre lobbies, theatre
rentals and other miscellaneous sources. Theatre rental revenue relates
primarily to the Satellite Theatre NetworkTM business unit that rents theatres
on a networked and non-networked basis for corporate meetings, seminars and
other training/educational uses.
Admissions. United Artists' admissions revenue is based on the level of
theatrical attendance and the mix of tickets sold. Theatre attendance is
dependent primarily upon the ability to license the most popular films. United
Artists' ticket prices vary throughout the circuit depending upon such things
as local competition, whether the theatre is showing first run or second run
movies and the local economy in which the theatre operates. Reduced ticket
prices are typically charged for senior citizens, children and matinee
showings. The mix of tickets sold is primarily related to the types of movies
available to and exhibited by United Artists. Admissions revenue is recorded
net of applicable sales taxes.
Concession Sales. Concession sales are a significant factor in the overall
profitability of a theatre. United Artists' primary concession products are
various sizes of popcorn, soft drinks, candy and certain other products such
as nachos and hot dogs. United Artists also sells pizza, pretzels, cookies,
ice cream, bottled water, fruit juices and other specialty items in many of
its theatres. Popcorn, soft drinks and packaged candy are generally sold in
three or four (including children's) sizes. Retail prices for concession items
vary by the size of the product and are generally market sensitive. Concession
sales are recorded net of applicable sales taxes.
38
<PAGE>
To further increase its concession sales, United Artists has introduced new
products and initiated programs intended to increase the percentage of patrons
who purchase concessions and increase the amount of concessions purchased by
each patron. To achieve these goals United Artists has implemented training
programs for all concession employees, remodeled concession stands at certain
existing theatres to make them more visible, attractive and efficient,
constructed new theatres with increased concession capacity, expanded
concession menus in selected locations, installed bulk candy stands in most
theatres and adopted certain seasonal and event-oriented promotional programs.
In addition, theatre managers and assistant managers are incentivized through
concession commission programs that represent a significant portion of their
total compensation.
Operating Expenses
United Artists' major operating expenses include film rental and
advertising, concession, personnel, occupancy, miscellaneous, general and
administrative and depreciation and amortization.
Film rental and advertising expenses. Film rental and advertising expense
includes the rental fees paid to film distribution companies as well as local
newspaper advertising expenditures. Film rental fees vary based upon the
amount and timing of admissions revenue for a particular film.
Film licenses typically specify rental fees equal to the higher of a
percentage of gross box office receipts or adjusted box office receipts. Under
the gross box office receipts formula, the film distributor receives a
specified weekly percentage of the gross box office receipts. Under the
adjusted box office receipts formula, the film distributor receives a
specified percentage of the excess of box office receipts over a periodically
negotiated amount of theatre expenses.
Most terms of the film licenses (and therefore the film rental costs) with
many film distributors are historically finalized after exhibition of the film
in a process known as "settlement." The settlement process considers, among
other things, the actual success of a film relative to original expectations,
an exhibitor's commitment to the film and the exhibitor's relationship with
the film distributor. United Artists has historically been able to license a
majority of the motion pictures available; however, there is no guarantee that
it can continue to do so in the future.
Local newspaper advertising expenditures include costs to advertise United
Artists' theatres and showtimes as well as a portion of the costs to promote
upcoming film releases. In most areas, multi-media advertisements for upcoming
film releases are paid by the film's distributor. In selected areas there is a
"co-op" arrangement whereby exhibitors and distributors share in the cost of
film advertisement in newspapers.
Concession costs. Concession costs include direct concession product costs
as well as concession promotional expenses. Concession product costs include
the cost of the concession items sold as well as the cost of spoiled or wasted
concession inventory. Concession promotional expenses include all costs
associated with the various concession promotions that United Artists
undertakes, including costs for promotional kiosks and literature and awards
granted to employees.
Personnel expense. Personnel expense includes the salary and wages of the
theatre manager and all theatre staff, commissions on concession sales,
payroll taxes and employee benefits. Theatre managers are typically paid a
base salary and a commission that varies based upon the theatre's concession
sales and overall theatre performance. The wages paid to the theatre staff
vary to a certain extent with the level of theatre attendance.
Occupancy expense. Occupancy expense includes base rentals as prescribed in
the theatre leases, contingency rentals that are a percentage of revenue over
a certain breakpoint and non-cash rent expense associated with "straight-
lining" leases that have escalating lease terms.
Miscellaneous operating expenses. Miscellaneous other expenses include
utilities, repairs and maintenance, insurance, real estate and other taxes and
supplies.
39
<PAGE>
General and administrative expense. General and administrative expense
consists primarily of costs associated with corporate theatre administration
and operating personnel, international staff, Satellite Theatre Network(TM)
sales and marketing staff and other support functions located at the Company's
corporate headquarters, two film booking offices, three regional operating
offices and 14 district theatre operations offices. At the end of 1996, United
Artists initiated a corporate restructuring plan intended to provide a higher
level of focus on United Artists' domestic theatrical business at a lower
annual cost.
Depreciation and Amortization and Provision for Asset
Impairments. Depreciation and amortization expense includes the depreciation
of theatre buildings and equipment, the amortization of theatre lease costs
and certain non-compete agreements and non-cash provisions for asset
impairments. The provision for asset impairments relates to non-cash charges
for the difference between the historical book value of individual theatres
(in some cases, groups of theatres) and the net discounted cash flow expected
to be received from the operation or future sale of the individual theatres
(or groups of theatres).
Other. As discussed under "Risk Factors--Potential Volatility of Operating
Results," the Company's operating results may fluctuate because of a number of
factors, including, among others, the availability of popular major motion
pictures. In the first quarter of 1997, the Company experienced favorable
operating results compared to the prior period, principally due to the release
of several popular motion pictures and the occurrence of Easter in such
quarter. See "-- Seasonality."
40
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
The following table summarizes certain operating data of United Artists'
theatres (dollars in millions, except admissions per weighted average
operating theatre, admissions per weighted average operating screen and
concession sales per weighted average operating theatre):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------- % INCREASE
1998 1997 (DECREASE)
-------- ------- ----------
<S> <C> <C> <C>
Operating Theatres(1)
Revenue:
Admissions..................................... $ 113.4 121.7 (6.8)
Concession sales............................... 46.6 47.7 (2.3)
Other.......................................... 4.7 5.1 (7.8)
Operating Expenses:
Film rental and advertising expenses........... 60.9 65.8 (7.4)
Concession costs............................... 6.5 7.4 (12.2)
Other Operating Expenses:
Personnel expense............................ 22.8 23.1 (1.3)
Occupancy expense............................ 20.5 19.5 5.1
Miscellaneous operating expenses............. 23.3 22.9 1.7
Weighted Avg. Operating Theatres(2).............. 332 365 (9.0)
Weighted Avg. Operating Screens(2)............... 2,154 2,209 (2.5)
Weighted Avg. Screens Per Avg. Theatre........... 6.5 6.1 6.6
Admissions Per Weighted Avg. Operating Theatre... $341,566 333,425 2.4
Admissions Per Weighted Avg. Operating Screen.... $ 52,646 55,093 (4.4)
Concession Sales Per Weighted Avg. Operating The-
atre............................................ $140,361 130,685 7.4
</TABLE>
- - --------
(1) The operating theatres include revenue and expenses of all theatres
operated by United Artists that are more than 50% owned.
(2) Weighted average operating theatres and screens represent the number of
theatres and screens operated weighted by the number of days operated
during the period.
Revenue from Operating Theatres for the Three Months Ended March 31, 1998
Compared to the Three Months Ended March 31, 1997
Admissions. Admissions revenue and admissions revenue per weighted average
operating screen decreased 6.8% and 4.4%, respectively, during the three
months ended March 31, 1998 as compared to the three months ended March 31,
1997. These decreases were primarily the result of a 10.0% decrease in
attendance, partially offset by a 3.6% increase in the average ticket price.
The decrease in attendance was primarily due to the success of several films
released and United Artists' disproportionately high market share of certain
films during the 1997 quarter, the occurrence of Easter during the 1997
quarter, as well as a decrease in the weighted average number of theatres and
screens. The increase in the average ticket price was primarily due to
selective increases in ticket prices during late 1997 and a higher percentage
of full price and adult tickets sold during 1998. Admissions per weighted
average operating theatre increased 2.4% during the three months ended March
31, 1998 as compared to the three months ended March 31, 1997 primarily as a
result of the increased ticket prices discussed above, the opening of several
new theatres which have higher admissions per theatre and the sale or closure
of several smaller (in terms of screens) less productive theatres, partially
offset by the decreased attendance.
Concession Sales. Concession sales revenue decreased 2.3% during the three
months ended March 31, 1998 as compared to the three months ended March 31,
1997, primarily as a result of the decreased attendance discussed above,
partially offset by an 8.6% increase in the average concession sale per
patron. Concession sales
41
<PAGE>
per weighted average operating theatre increased 7.4% during the three months
ended March 31, 1998 as compared to the three months ended March 31, 1997. The
increases in the average concession sale per patron and concession sales per
weighted average operating theatre were attributable to certain selective
price increases during late 1997, United Artists' increased emphasis on staff
training, the opening of several new theatres with more efficient concession
operations and the sale or closure of certain less productive theatres.
Other. Other revenue is derived primarily from on-screen advertising,
electronic video games located in theatre lobbies, theatre rentals, the rental
of theatres on a networked and non-networked basis for corporate meetings,
seminars and other training/educational uses by the Satellite Theatre
Network(TM) and other miscellaneous sources. Other revenue decreased 7.8% for
the three months ended March 31, 1998 as compared to the three months ended
March 31, 1997, primarily as a result of United Artists operating fewer
weighted average theatres and screens.
Operating Expenses for the Three Months Ended March 31, 1998
Compared to the Three Months Ended March 31, 1997
Film rental and advertising expenses. Film rental and advertising expenses
decreased 7.4% during the three months ended March 31, 1998 as compared to the
three months ended March 31, 1997, primarily as a result of the decrease in
admissions revenue discussed above. Film rental and advertising expenses as a
percentage of admissions revenue were 53.7% and 54.1% for the three months
ended March 31, 1998 and 1997, respectively. The slight decrease in film
rental and advertising expenses as a percentage of admissions revenue related
primarily to the long run during 1998 of several films released in late 1997.
Concession costs. Concession costs include direct concession product costs
and concession promotional expenses. Such costs decreased 12.2% during the
three months ended March 31, 1998 as compared to the three months ended March
31, 1997, primarily as a result of the decrease in concession sales revenue
discussed above. Concession costs as a percentage of concession sales revenue
were 14.0% and 15.5% for the three months ended March 31, 1998 and 1997,
respectively. The decrease in concession costs as a percent of concession
sales for the three months ended March 31, 1998 as compared to March 31, 1997
was primarily due to lower promotional expenses and the rebidding or
restructuring of the product and distribution contracts associated with many
of United Artists' concession supply products.
Personnel expense. Personnel expense includes the salary and wages of the
theatre manager and all theatre staff, commissions on concession sales,
payroll taxes and employee benefits. Personnel expense decreased 1.3% during
the three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. This decrease in personnel expense was primarily due to more
efficient theatre staffing and fewer weighted average operating theatres,
partially offset by the increase in the Federal minimum wage in late 1997. The
1997 increase in the Federal minimum wage resulted in a 7.9% increase in the
average hourly wage paid to theatre staff in 1998 versus 1997. Personnel
expense as a percentage of admissions and concessions revenue was 14.3% and
13.6% for the three months ended March 31, 1998 and 1997, respectively. The
increase in personnel expense as a percentage of admissions and concessions
was primarily attributable to the decrease in attendance discussed above
combined with the increase in the Federal minimum wage, partially offset by
the closure or sale of several less efficient theatres and the opening of
several new larger, more efficient multiplex theatres.
Occupancy expense. United Artists' typical theatre lease arrangement
provides for a base rental as well as contingent rentals that is a function of
the underlying theatre's revenue over an agreed upon breakpoint. Occupancy
expense increased 5.1% during the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997, primarily as a result of
higher base rentals on newly opened theatres, partially offset by fewer
weighted average operating theatres. In addition, occupancy expense for the
three months ended March 31, 1998 and 1997 includes $0.9 million and $0.8
million, respectively, of non-cash charges relating to the effect of
escalating leases which have been "straight-lined" for accounting purposes.
42
<PAGE>
Miscellaneous operating expenses. Miscellaneous operating expenses consist
of utilities, repairs and maintenance, insurance, real estate and other taxes,
supplies and other miscellaneous operating expenses. Miscellaneous operating
expenses increased 1.7% during the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997, primarily as a result of
increased real estate and other taxes, partially offset by lower insurance
expense and fewer weighted average theatres.
The revenue and operating expenses discussed above are incurred exclusively
within United Artists' theatres. The other expense discussions below reflect
the combined expenses of corporate, divisional, district and theatre
operations.
Other Expenses for the Three Months Ended March 31, 1998 and 1997
General and Administrative Expense
General and administrative expense consists primarily of costs associated
with corporate theatre administration and operating personnel, Satellite
Theatre Network sales and marketing staff and other support functions located
at United Artists' corporate headquarters, two film booking and three regional
operating offices and 14 district theatre operations offices (generally
located in theatres). At the end of 1996, United Artists initiated a corporate
restructuring plan intended to provide a higher level of focus on United
Artists' theatrical business at a lower annual cost. This corporate
restructuring was completed in January 1997. General and administrative
expense decreased $1.2 million, or 18.2%, for the three months ended March 31,
1998 as compared to the three months ended March 31, 1997, as certain aspects
of the corporate restructuring were not completed until later in 1997.
Depreciation and Amortization
Depreciation and amortization expense includes the depreciation of theatre
buildings and equipment, the amortization of theatre lease costs and certain
non-compete agreements and non-cash provisions for asset impairments.
Depreciation and amortization decreased $4.7 million during the three months
ended March 31, 1998 as compared to the three months ended March 31, 1997,
primarily due to lower amortization from non-compete agreements which were
fully amortized during 1997 and changing the estimated remaining useful lives
of certain assets during 1998, partially offset by increased depreciation
charges on United Artists' newly opened theatres. United Artists recorded
approximately $6.0 million of amortization expense during the three months
ended March 31, 1997 on non-compete agreements which were fully amortized in
May 1997. As a result, no amortization expense was recorded during the three
months ended March 31, 1998 on those non-compete agreements.
Operating Income
During the three months ended March 31, 1998, United Artists had operating
income of $11.6 million versus $10.8 million for the three months ended March
31, 1997. This 7.4% increase in operating income relates to higher gross
concession margins and reduced operating, general and administrative, and
depreciation and amortization expenses, partially offset by lower revenue.
Interest, Net
Interest, net decreased $1.0 million for the three months ended March 31,
1998 as compared to the three months ended March 31, 1997, due primarily to
lower average debt balances.
Net Income (Loss)
During the three months ended March 31, 1998, United Artists broke even from
a net income standpoint versus a net loss of $2.2 million for the three months
ended March 31, 1997. This increase relates primarily to the increase in
operating income and reduction in interest, net discussed above.
43
<PAGE>
RESULTS OF OPERATIONS FOR THE YEARS ENDED 1997, 1996 AND 1995
The following table summarizes certain operating data of United Artists'
theatres (dollars in millions, except admissions per weighted average
operating theatre, admissions per weighted average operating screen and
concession sales per weighted average operating theatre):
<TABLE>
<CAPTION>
YEARS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------------- --------------------------------
% %
INCREASE INCREASE
1997 1996 (DECREASE) 1996 1995 (DECREASE)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operating theatres(1)
Revenue:
Admissions............. $ 473.9 $ 466.5 1.6% $ 466.5 $ 457.1 2.1%
Concession sales....... 189.6 185.1 2.4 185.1 178.2 3.9
Other.................. 22.8 27.5 (17.1) 27.5 14.5 89.7
Operating expenses:
Film rental and
advertising expenses.. 262.5 257.2 2.1 257.2 248.6 3.5
Concession costs....... 30.2 29.3 3.1 29.3 29.5 (0.7)
Other operating
expenses:
Personnel expense...... 95.5 96.4 (0.9) 96.4 95.2 1.3
Occupancy expense:
Rent excluding sale
and leaseback........ 67.8 64.6 5.0 64.6 58.8 9.9
Sale and leaseback
rentals.............. 12.8 11.0 16.4 11.0 0.5 N/M
Misc. operating
expenses.............. 98.2 98.5 (0.3) 98.5 92.3 6.7
Weighted avg. operating
theatres(2)............ 354 395 (10.4) 395 409 (3.4)
Weighted avg. operating
screens(2)............. 2,204 2,299 (4.1) 2,299 2,270 1.3
Weighted avg. screens
per avg. theatre....... 6.2 5.8 6.9 5.8 5.6 3.6
Admissions per weighted
avg. operating
theatre................ $1,338,701 $1,181,013 13.4 $1,181,013 $1,117,604 5.7
Admissions per weighted
avg. operating screen.. $ 215,018 $ 202,914 6.0 $ 202,914 $ 201,366 0.8
Concession sales per
weighted avg. operating
theatre................ $ 535,593 $ 468,608 14.3 $ 468,608 $ 435,697 7.6
</TABLE>
- - --------
(1) The operating theatres include revenue and expenses of all theatres
operated by United Artists that are more than 50% owned.
(2) Weighted average operating theatres and screens represent the number of
theatres and screens operated weighted by the number of days operated
during the period.
Revenue from Operating Theatres for the Year Ended December 31, 1997
Compared to the Year Ended December 31, 1996
Admissions. Admissions revenue increased 1.6% during 1997 as compared to
1996, despite a 10.4% decline in the average number of theatres operated. This
increase was primarily due to a 7.0% increase in the average ticket price,
partially offset by a 5.0% decrease in attendance. The increase in the average
ticket price for 1997 was primarily due to an increase in the percentage of
full priced tickets purchased and certain selective increases in ticket prices
during 1997 and late 1996. The decrease in attendance for 1997 was primarily
due to decreases in the number of weighted average theatres and screens
operated during the year. Admissions per weighted average operating theatre
and screen increased 13.4% and 6.0%, respectively, during 1997 as compared to
1996. These admissions increases were primarily due to an increase in the
number of films released and the success of those films and the opening of
several new theatres, which have higher admissions per theatre and screen, the
sale or closure of several less productive theatres, and the 1997 and late
1996 increases in ticket prices, partially offset by decreased attendance.
44
<PAGE>
Concession sales. Concession sales revenue increased 2.4% during 1997 as
compared to 1996. This increase was primarily due to a 7.8% increase in the
average concession sale per patron, partially offset by the decreased
attendance discussed above. Concession sales per weighted average operating
theatre increased 14.3% during 1997 as compared to 1996. The increases in the
average concession sale per patron and concession sales per weighted average
operating theatre were primarily due to certain selective price increases
during 1997 and late 1996, United Artists' increased emphasis on sales staff
training, the opening of several new theatres with more efficient concession
operations, the sale or closure of several less productive theatres and the
introduction of new concession menu items at certain theatres.
The following table sets forth the admissions and concession sales revenue for
theatres operated throughout all of 1997 and 1996 (dollars in millions):
<TABLE>
<CAPTION>
THEATRES SCREENS 1997 1996 % INCREASE
-------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Theatres operated throughout both
periods............................ 312 1,922
Admissions.......................... $412.1 $410.8 0.3%
Concession sales.................... $162.0 $160.5 0.9%
</TABLE>
This "same theatre" analysis eliminates the effect of new theatre openings,
sales or closures during 1997 or 1996.
Other. Other revenue is derived primarily from on-screen advertising,
electronic video games located in theatre lobbies, theatre rentals, the rental
of theatres on a networked and non-networked basis for corporate meetings,
seminars and other training/educational uses by the Satellite Theatre
Network(TM), and other miscellaneous sources. Other revenue decreased 17.1%
during 1997 as compared to 1996 primarily as a result of United Artists
operating fewer weighted average operating theatres and a decrease in revenue
from on-screen advertising.
Revenue from Operating Theatres for the Year Ended December 31, 1996
Compared to the Year Ended December 31, 1995
Admissions. Admissions revenue increased 2.1% during 1996 as compared to
1995. This increase was primarily the result of a 2.7% increase in average
ticket prices, partially offset by a 0.6% decrease in attendance. The increase
in average ticket prices was due primarily to a decline in the number of
tickets sold for lower priced matinee shows and to an increase in ticket
prices during late 1996. The decrease in attendance for 1996 was primarily
related to the release of a fewer number of "blockbuster" films during the
Summer Olympic Games and the adverse effect of the Olympics on films which
were being shown. While Independence Day and A Time to Kill performed very
well during the Olympics, the attendance of several other films in the
marketplace during July and August appeared to be adversely impacted.
Admissions per weighted average operating theatre and screen increased 5.7%
and 0.8%, respectively, during 1996 as compared to 1995 primarily as a result
of several new theatres opened by United Artists which have higher admissions
per screen, the sale or closure of several smaller (in terms of screens) less
productive theatres, and the average ticket prices and attendance fluctuations
discussed above.
Concession sales. Concession sales revenue increased 3.9% during 1996 as
compared to 1995 primarily as a result of a 4.5% increase in the average
concession sale per patron, partially offset by the decreased attendance
discussed above. Concession sales per weighted average operating theatre
increased 7.6% during 1996 as compared to 1995. The increases in average
concession sales per patron and concession sales per weighted average
operating theatre were primarily attributable to certain selective price
increases in late 1996, United Artists' increased emphasis on training, the
installation of bulk candy stands in May 1995, the renovation of concession
stands at certain existing theatres, the opening of several new theatres and
the closure of certain less efficient older, smaller theatres.
45
<PAGE>
The following table sets forth the admissions and concession sales revenue for
theatres operated throughout all of 1996 and 1995 (dollars in millions):
<TABLE>
<CAPTION>
THEATRES SCREENS 1996 1995 % INCREASE
-------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Theatres operated throughout both
periods............................ 350 2,005
Admissions.......................... $417.6 $407.4 2.5%
Concession sales.................... $163.1 $157.2 3.8%
</TABLE>
Other. Other revenue increased 89.7% (or $13.0 million) during 1996, as
compared to 1995, primarily as a result of increased revenue from United
Artists' on-screen advertising and Satellite Theatre Network (TM).
Operating Expenses for the Year Ended December 31, 1997
Compared to the Year Ended December 31, 1996
Film rental and advertising expenses. Film rental and advertising expenses
increased 2.1% during 1997 as compared to 1996. Film rental and advertising
expenses as a percentage of admissions revenue were 55.4% for 1997 and 55.1%
for 1996. The increase in film rental and advertising expenses as a percentage
of admissions revenue for 1997 was primarily due to the shorter run of several
major films released in the second quarter of 1997, partially offset by
slightly lower advertising expenses. Typically, film rental as a percentage of
admissions revenue increases when a higher percentage of a film's total
admissions is collected in the opening weeks of a film's run. Advertising
expenses were lower as a result of more efficient buying of print advertising
by United Artists and distributors and to fewer number of theatres operated.
Concession costs. Concession costs include direct concession product costs
and concession promotional expenses. Such costs increased 3.1% during 1997 as
compared to 1996. Concession costs as a percentage of concession sales were
15.9% for 1997 and 15.8% for 1996. The slight increase in concession costs as
a percentage of concession sales for 1997 was primarily due to an increase in
the cost of certain commodity priced items such as corn seed and oil.
Personnel expense. Personnel expense includes the salary and wages of the
theatre manager and all theatre staff, commissions on concession sales,
payroll taxes and employee benefits. Personnel expense decreased 0.9% during
1997 as compared to 1996. This decrease in personnel expense in 1997 was
primarily due to more efficient theatre staffing and fewer weighted average
operating theatres, partially offset by the increases in the Federal (and
certain state) minimum wage in late 1996 and late 1997. These increases
resulted in a 7.4% increase in the average hourly wage paid to theatre staff
in 1997 versus 1996. Despite the increases in the Federal minimum wage in 1997
and 1996, personnel expense as a percentage of admissions and concession sales
revenue decreased to 14.4% in 1997 from 14.8% in 1996. These improved payroll
statistics relate to more efficient staffing and some increases in ticket and
concession sales. Additionally, United Artists' personnel expense efficiencies
have been positively impacted by the closure or sale of several less efficient
theatres and the opening of several new larger, more efficient multiplex
theatres and reduced expenses for fringe benefits.
Occupancy expense. United Artists' typical theatre lease arrangement
provides for a base rental as well as contingent rental that is a function of
the underlying theatre's revenue over an agreed upon breakpoint. Total
occupancy expense increased 6.6% during 1997 as compared to 1996. This
increase in 1997 relates to higher contingent rentals, rentals on newly opened
theatres and rentals related to the sale and leaseback transaction completed
in late 1996, partially offset by the decrease in the number of weighted
average operating theatres. Occupancy expense includes non-cash charges
relating to the effect of escalating leases which have been "straight lined"
for accounting purposes of $3.7 million and $3.1 million for 1997 and 1996,
respectively.
Miscellaneous operating expenses. Miscellaneous operating expenses consist
of utilities, repairs and maintenance, insurance, real estate and other taxes,
supplies and other miscellaneous operating expenses. Miscellaneous operating
expenses decreased 0.3% during 1997 as compared to 1996. This decrease in 1997
relates primarily to reduced utilities, repairs and maintenance and insurance
associated with fewer weighted average theatres, partially offset by
additional expenses associated with United Artists' Satellite Theatre
Network(TM).
46
<PAGE>
Operating Expenses for the Year Ended December 31, 1996
Compared to the Year Ended December 31, 1995
Film rental and advertising expenses. Film rental and advertising expenses
increased 3.5% during 1996 as compared to 1995. Film rental and advertising
expenses as a percentage of admissions revenue were 55.1% for 1996 and 54.4%
for 1995. The increase in film rental and advertising expense as a percentage
of admissions revenue for 1996 related primarily to an increase in the
percentage of revenue from higher cost "blockbuster" films released during
1996 and the absence of many very successful lower budget films. In addition,
due to an increase in the number of films released and the effect of the
Summer Olympic Games, during the summer of 1996, several films had shorter
runs with a higher percentage of their total admissions falling during the
opening weeks.
Direct concession costs. Direct concession costs decreased 0.7% during 1996
as compared to 1995. Direct concession costs as a percentage of concession
sales revenue were 15.8% for 1996 and 16.6% for 1995. The decrease in direct
concession costs during 1996 was primarily due to the sale of advertising on
popcorn and soft drink containers, partially offset by higher concession sales
revenue and costs attributable to increased sales of bulk candy.
Personnel expense. Personnel expense increased 1.3% during 1996 as compared
to 1995. The increase in personnel expense in 1996 is primarily attributable
to the increase of the Federal minimum wage law increase which went into
effect on October 1, 1996 and to an increase in the number of weighted average
operating screens, offset by more efficient theatre staffing. While the
increase in the Federal minimum wage affected a large number of United
Artists' theatres, it had a significant impact on the average hourly wage paid
to United Artists' theatre employees located in smaller and mid-sized markets.
Personnel expense as a percentage of admissions and concession sales revenue
declined in 1996 to 14.8% as compared to 15.0% in 1995. This decrease was
primarily attributable to changes in the theatre manager commission structure,
which focused on more efficient staffing of theatres.
Occupancy expense. Total occupancy expense increased 27.5% during 1996 as
compared to 1995. This increase in 1996 relates primarily to $10.5 million of
incremental rent in 1996 associated with those theatres that were part of the
1995 Sale and Leaseback and the 1996 Sale and Leaseback transactions and
incremental base rentals associated with newly opened theatres, partially
offset by fewer weighted average operating theatres. Additionally, occupancy
expense includes non-cash charges relating to the effect of escalating leases
which have been "straight-lined" for accounting purposes of $3.1 million and
$2.0 million for 1996 and 1995, respectively. Excluding the rent associated
with the 1995 Sale and Leaseback and the 1996 Sale and Leaseback transaction
and the non-cash rent, occupancy expense would have increased 8.3% during 1996
as compared to 1995.
Miscellaneous operating expenses. Miscellaneous operating expenses increased
6.7% during 1996 as compared to 1995. This increase relates primarily to
increased operating expenses associated with the Satellite Theatre Network(TM)
and normal inflationary increases.
Other Expenses for the Years Ended December 1997, 1996 and 1995
General and Administrative Expense and Restructuring Charges
General and administrative expense consists primarily of costs associated
with corporate theatre administrative and operating personnel, international
staff, Satellite Theatre Network(TM) sales and marketing staff and other
support functions located at United Artists' corporate headquarters, two film
booking and three regional operating offices and 13 district theatre
operations offices (generally located in theatres). At the end of 1996, United
Artists initiated a corporate restructuring plan intended to provide a higher
level of focus on United Artists' domestic theatrical business at a lower
annual cost. As a result of this corporate restructuring plan, which was
substantially completed in January 1997, general and administrative expenses
decreased $10.8 million in 1997, or 30.8%, as compared to 1996. During 1996,
administrative costs decreased $0.4 million primarily as a result of $2.1
million of non-recurring severance and litigation charges accrued in 1995,
partially offset by normal annual salary adjustments, as well as increased
professional and legal fees. During 1997 and 1996, United
47
<PAGE>
Artists recorded $0.8 million and $1.9 million, respectively, of restructuring
charges relating to severance and other related expenses associated with
United Artists' corporate restructuring.
Depreciation and Amortization and Provisions for Asset Impairments
Depreciation and amortization expense includes the depreciation of theatre
buildings and equipment, the amortization of theatre lease costs and certain
non-compete agreements and non-cash provisions for asset impairments. The
provision for asset impairments relates to non-cash charges for the difference
between the historical book value of individual theatres (in some cases,
groups of theatres) and the net discounted cash flow expected to be received
from the operation or future sale of the individual theatre (or groups of
theatres). Depreciation and amortization increased $12.3 million in 1997 as
compared to 1996 and decreased $6.4 million in 1996 as compared to 1995. The
1997 increase was primarily due to $36.0 million of non-cash provisions for
asset impairments offset by lower amortization of non-compete agreements. The
1996 decrease was primarily due to a decline in the amount of non-cash
provisions for asset impairments from $21.0 million in 1995 to $9.5 million in
1996, offset by depreciation charges on United Artists' newly opened theatres.
Included in depreciation and amortization expense for each of the years ending
December 31, 1997, 1996 and 1995 was $9.0 million, $24.0 million and $24.0
million, respectively, relating to certain assets, non-compete agreements and
other assets acquired as part of the Acquisition which were being amortized
over a five year life. In May 1997, such assets were fully amortized and, as a
result, no further amortization expense will be recorded related to those
assets.
Operating Loss
United Artists incurred operating losses of $2.5 million in 1997 and $1.4
million in 1995 and recognized operating income of $0.7 million in 1996. As
shown in the table below, prior to United Artists recording non-cash
provisions for asset impairments, United Artists recognized operating income
of $33.5 million in 1997, $10.2 million in 1996 and $19.6 million in 1995.
<TABLE>
<CAPTION>
1997 1996 1995
----- ---- ----
<S> <C> <C> <C>
Operating income (loss)................................ $(2.5) 0.7 (1.4)
Non-cash provisions for asset impairments.............. 36.0 9.5 21.0
----- ---- ----
Operating income before non-cash provision for asset
impairments........................................... $33.5 10.2 19.6
===== ==== ====
</TABLE>
The increase in operating income before non-cash provisions for asset
impairments in 1997 was primarily due to the operating improvements discussed
above, savings associated with United Artists' corporate restructuring in 1996
and reduced depreciation and amortization expense in 1997 versus 1996. The
reduction in operating income in 1996 before non-cash provisions for asset
impairments was primarily due to $10.5 million of incremental rent associated
with the 1995 Sale and Leaseback, partially offset by increased operating
margins.
Interest, Net
Interest, net increased $0.2 million in 1997 as compared to 1996 and
decreased $7.9 million in 1996 as compared to 1995. The 1997 increase was
primarily due to a slightly higher average outstanding debt balance. The 1996
decrease was primarily due to lower market interest rates on floating rate
borrowings and a lower average outstanding debt balance during 1996.
Gain (Loss) on Disposition of Assets, Net
During April 1997, United Artists sold its 50% interest in a Hong Kong
theatre company to its partner for approximately $17.5 million and during
September 1997, United Artists sold its theatre investments in Mexico and the
majority of its theatre assets in Argentina for approximately $25.0 million.
In addition, various non-strategic or underperforming operating theatres and
real estate assets were sold for net cash proceeds of approximately $27.5
million. In conjunction with these sales, United Artists recognized $28.0
million of gains. During 1996, United Artists sold certain theatres for which
cash proceeds of $23.5 million were received. In conjunction with these sales,
United Artists recognized $2.7 million of gains. During 1995, United Artists
incurred net losses on the disposition of assets of $5.7 million. These losses
relate primarily to the sale of certain theatres for which net cash proceeds
of $16.6 million were received, and the termination or non-renewal
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of leases related to theatres, which were closed. The theatres sold and closed
were non-strategic or underperforming.
Income Tax Expense
Income tax expense consists of current state and federal income taxes of
United Artists' less than 80%-owned consolidated subsidiaries. At December 31,
1997, United Artists has a net operating loss carryforward of approximately
$200.0 million. The income tax returns of the Company are currently being
audited by the Internal Revenue Service. The outcome of this audit may reduce
the amount of the Company's net operating loss carryforward and/or change the
basis (and thus future depreciation) related to certain assets. United Artists
believes that the result of the audit will not have a material adverse effect
on the financial condition or results of operations of United Artists.
Net Loss
During 1997, United Artists incurred a net loss of $27.0 million as compared
to $45.8 million in 1996. This decrease in net loss was primarily attributable
to an increase in the operating margins at United Artists' theatres and the
gain recognized on the sale of certain of United Artists' international
theatre operations and certain other operating theatres and real estate
assets, offset by non-cash provisions for asset impairments. During 1996,
United Artists incurred a net loss of $45.8 million as compared to $64.8
million in 1995. This decrease in net loss was due to a decrease in operating
loss, a $7.9 million decrease in interest expense and to $5.7 million of
losses recognized on the disposition of assets during 1995. Despite the $10.5
million increase in occupancy costs during 1996 associated with the sale
leaseback transactions, operating loss decreased primarily as a result of a
4.5% increase in total operating revenue and a $6.4 million decrease in
depreciation and amortization.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1998, $0.6 million of cash was used in
United Artists' operating activities, primarily to pay down accounts payable
and accrued liabilities. This operating use of cash, in addition to $20.2
million of cash used for capital expenditures and other investing activities,
was provided by $17.3 million of financing activities and $3.5 million of cash
balances available at December 31, 1997.
For the year ended December 31, 1997, net cash provided by United Artists'
operating activities increased to $51.0 million from $30.8 million for the
year ended December 31, 1996. This net cash provided by operating activities
was $46.4 million in excess of cash used in investment activities, which
provided for a $40.6 million reduction in net debt balances. During 1996, the
net cash provided by operating activities was $25.9 million less than cash
used in investment activities.
Substantially all of United Artists' admissions and concession sales revenue
are collected in cash. Due to the unfavorable interest rate spread between
bank facility borrowings and cash investments, United Artists seeks to use all
of its available cash to repay its revolving bank borrowings and borrow under
those facilities as cash is required. United Artists' benefits from the fact
that film expenses (except for films that require advances) are usually paid
15 to 45 days after the admissions revenue is collected.
During December 1996, United Artists initiated a new investment strategy
that focuses on the development of new theatres and renovation and expansion
of existing high revenue theatres in the United States where United Artists
has a significant operating presence. As part of this increased focus on its
U.S. operations, United Artists restructured and realigned its corporate
overhead functions and has sold most of its international investments. The
proceeds received from the sale of international investments and corporate
overhead savings were redeployed into new theatre developments or the
renovation of existing key theatres in United Artists' core areas and used to
repay existing debt. United Artists currently has an agreement to sell a
portion of its investments in Singapore and Thailand for $8.1 million. After
the consummation of such sale, United Artists' international investments will
only include a 10.0% interest in four theatres in Singapore and Thailand.
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As part of its strategic plan, United Artists intends to continue to dispose
of, through sale or lease terminations, certain of its non-strategic or
underperforming operating theatres and real estate in the United States. Net
proceeds, if any, from these increased disposition efforts are also expected
to be used to repay existing debt or redeployed into the renovation and/or
expansion of existing theatres and new, larger (in terms of screens), higher
margin theatres. While there can be no assurance that such sales or lease
termination efforts will be successful, negotiations are ongoing with respect
to several theatres and parcels of real estate. During the three months ended
March 31, 1998, United Artists closed or sold seven theatres (24 screens).
During the year ended December 31, 1997, United Artists closed or sold 44
theatres (170 screens). The theatres that were closed or sold were primarily
non-strategic or underperforming.
In an effort to limit the amount of investment exposure on any one project,
United Artists typically develops theatre projects where both the land and
building are leased through long-term operating leases. Where such lease
transactions are unavailable, however, United Artists will invest in the land
and development of the entire theatre facility (fee owned) and then seek to
enter into a sale and leaseback transaction. Regardless of whether the theatre
is leased or fee-owned, in most cases the equipment and other theatre fixtures
are owned by United Artists. For the three months ended March 31, 1998, United
Artists invested approximately $17.4 million on the development of two new
theatres (23 screens) which opened during the period, construction on eight
theatres (96 screens) and screen additions or renovations to 12 theatres
expected to open during the remainder of 1998 or in 1999 and recurring
maintenance to certain existing theatres. For the year ended December 31,
1997, United Artists invested approximately $67.4 million on the development
of 13 new theatres (132 screens) that opened during the period, construction
on ten theatres (119 screens), screen additions or renovations to 12 theatres
expected to open during 1998 and 1999, and recurring maintenance on certain
existing theatres.
In December 1995, United Artists entered into the 1995 Sale Leaseback
pursuant to which 27 of its operating theatres and the associated land and
buildings and four theatres and a four screen addition under development were
sold to, and leased back from, an unaffiliated third party for $97.6 million.
At December 31, 1996, approximately $7.8 million of sales proceeds were held
in escrow for the final theatre and the screen addition under construction.
These proceeds were paid to United Artists in 1997 when construction of the
remaining theatre and the screen addition was completed.
In November 1996, United Artists entered into the 1996 Sale Leaseback
pursuant to which three of its operating theatres and the associated land and
buildings and two theatres under development were sold to, and leased back
from, an unaffiliated third party for approximately $21.5 million. The sales
proceeds related to the two theatres under development (approximately $12.3
million) were deposited into an escrow account to be used to fund the related
construction costs. During 1997, United Artists opened one of the theatres
under development and received approximately $10.8 million of proceeds from
the escrow account.
In December 1997, United Artists entered into a sale and leaseback
transaction whereby two theatres currently under development were sold to, and
leased back from, an unaffiliated third party for approximately $18.1 million.
At March 31, 1998, approximately $13.5 million of the sales proceeds were
deposited into an escrow account and are to be paid under the terms of the
sale and leaseback to fund certain of the construction costs associated with
the two theatres.
At March 31, 1998, United Artists had entered into construction or lease
agreements for eight new theatres (96 screens) and for screen additions or
renovations to 12 existing theatres (117 screens) that United Artists intends
to open or renovate during the next two years. United Artists estimates that
capital expenditures associated with these theatres will aggregate
approximately $90.0 million. Such amounts relate only to projects in which
United Artists had executed a definitive lease and all significant lease
contingencies have been satisfied. United Artists expects additional capital
expenditures to be made as other projects are finalized. Of the committed
amount, approximately $15.0 million will be funded from proceeds of certain
sale and leaseback transactions currently held in escrow.
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At March 31, 1998, United Artists had approximately $243.5 million of
indebtedness outstanding under the Prior Credit Facilities and approximately
$38.8 million of unused revolving loan commitments thereunder (of which $9.6
million had been used for the issuance of letters of credit).
United Artists is party to interest rate cap agreements on $100.0 million of
floating rate debt which provide for a LIBOR interest rate cap of 7 1/2% per
annum and expire at various dates through July 1999. The terms of the Prior
Credit Facilities required United Artists to obtain interest rate hedges on a
certain portion of its indebtedness thereunder. United Artists amortizes the
cost of its interest rate cap agreements to interest expense over the life of
the underlying agreement. Amounts received from the counterparties to the
interest rate cap agreements are recorded as a reduction of interest expense.
The level of continued investing activities by United Artists is dependent
on, among other factors, its on-going operating liquidity and other sources of
liquidity. One measure commonly used in the theatrical industry to measure
operating liquidity is referred to as "Interest Coverage." Interest Coverage
is the ratio of Operating Cash Flow or EBITDA (defined as earnings before
interest, taxes, depreciation, amortization and other non-recurring or non-
cash operating credits or charges) to interest expense (excluding amortization
of deferred loan costs). As described previously, several non-recurring or
non-cash operating charges were recorded in the Consolidated Statements of
Operations during 1997, 1996 and 1995 which adversely affected United Artists'
Operating Income for such years. Following is a calculation of Operating Cash
Flow and Interest Coverage for each of the last three years and the three
months ended March 31, 1998 and 1997, including a reconciliation of Operating
Income to Operating Cash Flow:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------- ----------------
(DOLLARS IN MILLIONS)
1997 1996 1995 1998 1997
----- ----- ----- ------- -------
<S> <C> <C> <C> <C> <C>
Operating income (loss)................ $(2.5) $ 0.7 $(1.4) $ 11.6 $ 10.8
Depreciation and amortization and
provisions for asset impairments...... 96.7 84.4 90.8 13.7 18.4
Non-cash rent.......................... 3.7 3.1 2.0 0.9 0.8
Severance, litigation and restructuring
charges............................... 0.8 1.9 2.1 -- --
----- ----- ----- ------- -------
Operating cash flow.................... $98.7 $90.1 $93.5 $ 26.2 $ 30.0
===== ===== ===== ======= =======
Interest expense....................... $43.9 $43.5 $51.9 $ 10.0 $ 11.0
===== ===== ===== ======= =======
Interest coverage ratio................ 2.2x 2.1x 1.8x 2.6x 2.7x
===== ===== ===== ======= =======
</TABLE>
Operating Cash Flow is one measure of value and borrowing capacity commonly
used in the theatrical exhibition industry and is not intended to be a
substitute for Operating Cash Flow as defined in United Artists' debt
agreements or for cash flows provided by operating activities, a measure of
performance provided herein in accordance with generally accepted accounting
principles, and should not be relied upon as such. The Operating Cash Flow as
set forth above does not take into consideration certain costs of doing
business, and as such, should not be considered in isolation to other measures
of performance.
Another measure of liquidity is net cash provided by operating activities as
reflected in the accompanying Consolidated Statements of Cash Flow. For the
three months ended March 31, 1998, $0.6 million of net cash was used in United
Artists' operating activities, primarily to pay down accounts payable and
accrued liabilities. Net cash provided by operating activities was $51.0
million, $30.8 million and $40.7 million for the years ended December 31,
1997, 1996 and 1995, respectively. This measurement sets forth the net cash
from the operations of United Artists which was available for United Artists'
liquidity needs after taking into consideration certain additional costs of
doing business which are not reflected in the Operating Cash Flow calculations
discussed above.
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For the year ended December 31, 1997, net cash provided by operating
activities exceeded net cash used in investing activities by $46.4 million, as
compared to a deficit of $25.9 million for the year ended December 31, 1996.
For the year ended December 31, 1995, net cash provided by operating
activities exceeded net cash used in investing activities by $39.1 million
primarily due to the proceeds from the 1995 Sale and Leaseback.
On April 21, 1998, United Artists completed the offering of $225 million of
its 9.75% Senior Subordinated Notes due April 15, 2008 and the offering of $50
million of its Floating Rate Senior Subordinated Notes due October 15, 2007
(collectively, the "Senior Subordinated Notes"), and entered into the $450
million Senior Credit Facility with a final maturity of April 2007.
The securities referred to above have not been and will not be registered
under the Securities Act and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
The proceeds from the offerings of the Senior Subordinated Notes and a
portion of the borrowings under the Senior Credit Facilities were used to
repay the outstanding borrowings under UATC's Prior Credit Facilities ($272.5
million) on April 21, 1998, and to fund the redemption of United Artists'
Preferred Stock (approximately $159.2 million) on May 1, 1998. Additional
borrowings under the Senior Credit Facilities were used to fund the redemption
of UATC's $125 million Senior Secured Notes on May 21, 1998 at 102.875% of par
value plus accrued but unpaid interest of $0.8 million.
The Senior Credit Facilities consists of $100 million of reducing revolving
loan commitments and $350 million of delayed draw term loan commitments. The
Senior Credit Facilities contains certain provisions that require the
maintenance of certain financial ratios and place limitations on, among other
things, additional indebtedness, disposition of assets and payment of
dividends.
The Senior Credit Facilities are guaranteed, on a joint and several basis,
by UATC and by certain of United Artists' subsidiaries, including UAR and,
after the repayment of the Prop I mortgage notes, by Prop I (as defined). The
Senior Credit Facilities are secured by, among other things, the capital stock
of UATC, UAR, Prop I, and certain other subsidiaries of United Artists and an
intercompany note of UATC to United Artists established with respect to
borrowings by UATC from United Artists.
As a result of the repayment of the Prior Credit Facilities and the
redemption of the Senior Secured Notes, United Artists will recognize an
extraordinary loss during the second quarter of 1998 of approximately $8.2
million, consisting of the $3.6 million prepayment premium on the Senior
Secured Notes and approximately $4.6 million of unamortized deferred loan
costs.
United Artists leases many of its theatres and therefore has a significant
amount of commitments under noncancelable operating leases. Management
believes that the proceeds necessary to fund payments under these leases will
be provided by United Artists' operations, the excess commitment availability
under the Senior Credit Facilities, future asset dispositions and future sale
and leaseback transactions.
Certain notes of United Artists Properties I Corp. ("Prop I") outstanding
pursuant to an Indenture of Mortgage, dated October 1, 1988 (the "Prop I
Mortgage Notes"), mature on November 1, 1998. The outstanding principal
balance of the Prop I Mortgage Notes on the maturity date will be
approximately $45.7 million. Management believes that the proceeds necessary
to repay the Prop I Mortgage Notes at the maturity date will be provided by
United Artists' operating activities or such Prop I Mortgage Notes may be
refinanced under a $45.0 million delay draw portion of the Senior Credit
Facilities.
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United Artists believes that the net cash provided by operations and
borrowings available under the Senior Credit Facilities will be sufficient to
fund its future cash requirements. United Artists expects that future cash
requirements will principally be for repayments of indebtedness, working
capital requirements and capital expenditures. United Artists' future
operating performance and ability to service or refinance its current
indebtedness will be subject to future economic conditions and to financial,
business and other factors, many of which are beyond United Artists' control.
For a discussion of certain relevant factors, see "Risk Factors." The
Company's access to the cash generated by UATC's operations and United
Artists' ability to incur indebtedness, however, may be limited by the
restricted payments and debt incurrence tests in the Participation Agreement.
See "Risk Factors--Restrictions Imposed by the 1995 Sale Leaseback."
From time to time, United Artists evaluates the value of its theatres and
other assets in accordance with SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." To the
extent such values are less than the recorded values for such assets, United
Artists may recognize a non-cash charge against net income to reflect any
impairment.
INFLATION
Historically, the principal impact of inflation and changing prices upon
United Artists has been with respect to the construction of new theatres, the
purchase of theatre equipment and the utility and labor costs incurred in
connection with continuing theatre operations. Film rental fees, which are the
largest operating expense incurred by United Artists, are customarily paid as
a percentage of admission revenues and hence while the film rental fees may
increase on an absolute basis the percentages are not directly affected by
inflation. Inflation and changing prices have not had a significant impact on
United Artists' total revenues and results of operations.
SEASONALITY
United Artists' revenues have been seasonal, coinciding with the timing of
releases of motion pictures by the major distributors. Generally, the most
successful motion pictures have been released during the summer extending from
Memorial Day to Labor Day and the holiday season extending from Thanksgiving
through year-end. The unexpected emergence of a hit film during other periods
can alter this traditional trend. The timing of such film releases can have a
significant effect on United Artists' results of operations, and the results
of one quarter are not necessarily indicative of results for the next quarter
or for the same period in the following year. The seasonality of motion
picture exhibition, however, has become less pronounced in recent years as
studios have begun to release major motion pictures somewhat more evenly
throughout the year.
OTHER
In connection with the repayment of the Prior Credit Facilities and the
redemption of the Senior Secured Notes, United Artists expects to record an
extraordinary loss on the early extinguishment of debt of approximately $8.2
million during the second quarter of 1998 consisting of: (i) $4.6 million of
deferred financing costs written off related to the Prior Credit Facilities
and the Senior Secured Notes and (ii) $3.6 million of early payment premiums
recognized on the redemption of the Senior Secured Notes.
YEAR 2000
The Company has initiated a review of its internal information systems for
Year 2000 transition problems and, although such review is still in progress,
believes that conversion requirements will not result in significant
disruption of United Artists' business operations or have a material adverse
effect on its future liquidity or results of operations. The Company has not
extensively investigated the Year 2000 compliance of its customers, suppliers
and other third parties with whom it has business relationships, but intends
to make selected inquiries. Compliance by such third parties is voluntary and
failures could occur, in which case there is the possibility of a material
adverse effect on United Artists. However, the nature of United Artists'
business and its business relationships are not such that the Company
considers the potential Year 2000 compliance failure of a third party with
whom it has a direct business relationship likely to have a material adverse
effect on United Artists.
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BUSINESS
OVERVIEW
United Artists is a leading motion picture exhibitor in North America and,
in the United States operates 2,164 screens at 330 theatres located in 25
states. United Artists licenses films from all major and substantially all
independent film distributors and derives revenues primarily from theatre
admissions and concession sales. Through its geographically diverse theatre
locations, United Artists operates screens in seven of the ten largest DMAs in
the United States and approximately 50.0% of United Artists' screens are
located in the top 20 DMAs. In addition, approximately 28.6% of United
Artists' screens (619 screens) have been constructed since January 1, 1992.
United Artists believes that it is the largest single exhibitor, based on
number of screens, in many of its core areas of operation and that the
location of its theatres represents a competitive advantage in many of these
areas. Six states (California, New York, Florida, Texas, Pennsylvania and
Louisiana) accounted for approximately 57.9% and 56.5% of United Artists'
total theatres and screens, respectively, at March 31, 1998 and 61.5% and
65.6% of United Artists' theatrical revenue and theatrical EBITDA,
respectively, for the twelve months ended March 31, 1998.
In December 1996, United Artists implemented a corporate restructuring and
refocused its investment strategy on its core U.S. business. Since that time,
United Artists has: (i) reduced its corporate general administrative expenses
by 30.4%, or approximately $10.1 million, for the twelve months ended March
31, 1998, as compared to the twelve months ended March 31, 1997 and 30.8%, or
approximately $10.8 million for the year ended December 31, 1997 as compared
to the year ended December 31, 1996; (ii) increased its presence in its core
areas of operation through the development of new theatres and the
refurbishing or expansion of selected existing key theatres; (iii) implemented
operational improvements; and (iv) accelerated the divestitures of
underperforming and non-strategic theatres.
United Artists has invested more than $373.8 million since January 1, 1992
toward improving the quality of its asset base by, among other things,
renovating existing theatres and constructing new state-of-the-art theatres.
United Artists believes that this level of investment compares favorably with
other major North American theatre exhibitors. Almost all of the theatres
United Artists currently plans to build are state-of-the-art, 12 to 18 screen
multiplex theatres with stadium seating, high-backed rocking seats, digital
sound, expanded concession areas and other state-of-the-art design features
and amenities. As compared to the prior generation of theatres, these theatres
provide a higher quality entertainment experience for patrons and significant
operating efficiencies and improved economics for United Artists. At March 31,
1998, approximately 86.0% of United Artists' screens were located in theatres
with five or more screens. United Artists' average number of screens per
theatre has increased 37.5% in the last six years to 6.6 at March 31, 1998
from 4.8 at January 1, 1992.
The Company was incorporated in the State of Delaware in May 1992. The
Company's executive offices are located at 9110 E. Nichols Avenue, Suite 200,
Englewood, Colorado 80112-3405. The Company's telephone number at its
executive offices is (303) 792-3600.
INDUSTRY OVERVIEW
More than 460 participants in the domestic motion picture theatre exhibition
business operate in excess of 31,000 screens in North America. In 1996 the top
ten companies operated approximately 56.0% of the total screens as compared to
31.0% in 1986. The remainder of the domestic motion picture theatre exhibition
industry is highly fragmented, with the remaining 44.0% of the screens being
operated by approximately 450 exhibitors. United Artists has one of the
largest shares of total screens with approximately 7.0% of all screens in
North America.
The number of screens operated nationally has increased at an annual average
rate of approximately 4.8% since 1978, while the number of seats has increased
at a much slower rate. Exhibitors generally turned to multi-screen formats
with smaller auditoriums. Typically, multiplexes have six or more screens per
theatre, although in some instances multiplexes may have as many as 30 screens
in a single theatre. The multiplex format provides numerous benefits for
theatre operators, including allowing facilities (concession stands and
restrooms) and
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operating costs (lease rentals, utilities and personnel) to be allocated over
a larger base of screens and patrons. Multiplexes have varying seating
capacities (typically from 100 to 500 seats) that allow for multiple showtimes
of the same film and a variety of films with differing audience appeal to be
shown. They also provide the flexibility to shift films to larger or smaller
auditoriums depending on their popularity. To limit crowd congestion and
maximize the efficiency of floor and concession staff, the starting times of
films at multiplexes are staggered.
Certain trends in the theatre exhibition industry favor larger, better
capitalized companies, creating an environment for new construction and
consolidation. Foremost among these trends is larger exhibitors actively
seeking and building multiplexes or megaplexes. Moreover, many smaller theatre
owners who operate older cinemas without state-of-the art stadium seating and
projection and sound equipment may not have the capital required to maintain
or upgrade their circuits. The growth of the number of screens, strong
domestic consumer demand, and growing foreign theatrical and domestic and
foreign ancillary revenue opportunities have led to an increase in the volume
of major film releases. The greater number of screens has allowed films to be
produced for and marketed to specific audience segments (e.g., horror films
for teenagers) without using capacity required for mainstream product.
The greater number of screens has also prompted distributors to increase
promotion of new films. Not only are there more films in the market at any
given time, but the multiplex format allows for much larger simultaneous
national theatrical release. In prior years a studio might have released 1,000
prints of a major film, initially releasing the film only in major
metropolitan areas, then gradually releasing it in smaller cities and towns
nationwide. Today studios might release over 3,000 prints of a major film and
open it nationally in one weekend. These national openings have made up-front
promotion of films critical to attract audiences and stimulate word-of-mouth
advertising.
Motion pictures are generally made available through various distribution
methods at various dates after the theatrical release date. The release dates
of motion pictures in these other "distribution windows" begin four to six
months after the theatrical release date with video cassette rentals, followed
generally by off-air or cable television programming including pay-per-view,
pay television, other basic cable and broadcast network syndicated
programming. These new distribution windows have given producers the ability
to generate a greater portion of a film's revenues through channels other than
theatrical release. This increased revenue potential after a film's initial
domestic release has enabled major studios and certain independent producers
to increase film production and theatrical advertising. The additional non-
theatrical revenue has also allowed for higher individual film production and
marketing costs. The total cost of producing and distributing a picture
averaged approximately $53.4 million in 1997 compared with approximately $17.5
million in 1986. The average cost to advertise and promote a picture averaged
approximately $22.2 million in 1997 as compared with $5.4 million in 1986.
These higher costs have made a large successful theatrical release more
important. Distributors strive for a successful opening run at the theatre to
establish a film and substantiate the film's revenue potential both
internationally and through other release windows. The value of home video and
pay cable distribution agreements frequently depends on the success of a
film's theatrical release. Furthermore, the studios' revenue-sharing
percentage and ability to control who views the product within each of the
distribution windows generally declines as one moves farther from the
theatrical release window. Because theatrical distribution remains the
cornerstone of a film's financial success, it is the focal distribution window
for the public's evaluation of films and motion picture promotion.
Management expects that the overall supply of films will continue to
increase, although no assurance exists concerning any such increase. Over the
past three years there has been an increase of approximately 18.0% in the
number of motion pictures rated by the Classification and Rating
Administration. There has also been an increase in the number of major studios
and reissues of films as well as an increased popularity of films made by
independent producers. During the past three years the number of large budget
films and the level of marketing support provided by the production companies
has risen, as evidenced by the increase in average production costs and
average advertising costs per film of 55.7% and 38.2%, respectively from 1994
to 1997.
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BUSINESS AND OPERATING STRATEGY
United Artists' business and operating strategy is to continue focusing on
its core U.S. business and improving theatre-level operating efficiencies. Key
elements of this strategy include:
Refocus Overhead and Capital Investment Strategy. In December 1996, United
Artists implemented a corporate restructuring and refocused its investment
strategy on its core U.S. business. United Artists' core business strategy
focuses management's attention and capital resources on those geographic areas
where United Artists intends to strengthen and defend its current position.
United Artists has also implemented operational improvements and overhead
reductions intended to increase aggregate EBITDA and EBITDA per theatre and
has already sold or closed several underperforming or non-strategic theatres.
The corporate restructuring plan resulted in a higher level of focus by United
Artists on its domestic theatrical business and a reduction of corporate
general and administrative expenses of 30.4%, or approximately $10.1 million,
for the twelve months ended March 31, 1998 as compared to the twelve months
ended March 31, 1997 and 30.8%, or approximately $10.8 million for the year
ended December 31, 1997, as compared to the year ended December 31, 1996.
These savings were achieved primarily through headcount reductions and a
consolidation of regional administrative offices.
Develop New Theatres and Rebuild or Expand Existing Key Theatre
Locations. United Artists plans to continue increasing its number of screens
and operating margins by focusing its capital investment activities on
developing new theatre locations in United Artists' core areas of operation
and leveraging its favorable theatre locations through the renovation,
rebuilding, or expansion of existing theatres in those key locations. United
Artists is developing higher margin multiplexes of 12 to 18 screens and is
seeking to increase concession sales through, among other things, more
efficient theatre design. As a result, the average EBITDAR margin for theatres
built since January 1, 1992 was 31.1% for the twelve months ended March 31,
1998 as compared to 26.4% for United Artists' remaining theatres. United
Artists is also constructing its new theatres with stadium seating, digital
sound, more comfortable seats and other state-of-the-art design features and
amenities. United Artists believes that these theatres will have an optimal
relationship between the number of screens (12 to 18) and the size of the
auditoriums (125 to 400 seats). These theatres are designed to increase the
revenue per square foot generated by the facility and reduce the cost per
square foot of constructing and operating the theatres. This multi-screen
strategy, in combination with an emphasis on concession sales, is designed to
improve revenue and profitability by enhancing attendance and concession
sales, theatre utilization and operating efficiencies and provide more
efficient clustering around regional and district management centers. During
the three months ended March 31, 1998 and the year ended December 31, 1997,
United Artists developed and opened two theatres (23 screens) and 13 theatres
(132 screens), respectively. During the remainder of 1998 and 1999, United
Artists plans to open eight new theatres (96 screens), and make screen
additions to or renovate 12 existing theatres (117 screens).
Divestiture of Underperforming Theatres. United Artists' 1996 corporate
restructuring was also designed to rationalize underperforming or non-
strategic assets by: (i) terminating leases for theatres that have negative
EBITDA; (ii) selling real estate underlying non-strategic or underperforming
theatres; (iii) divesting theatres in non-core areas; and (iv) exchanging
theatres in non-core areas for theatres in core areas. During the three months
ended March 31, 1998, United Artists closed or sold seven theatres (24
screens). During 1997, United Artists received approximately $70.0 million
from the sale of substantially all of its international assets and certain
non-operating real estate assets and closed or sold 44 underperforming or non-
strategic theatres with 170 screens. Many of the theatres closed or sold were
not profitable or were located in areas that are not part of United Artists'
long-term strategic plans. United Artists has identified 43 theatres (225
screens) that are not considered strategically important or had negative
EBITDA for the twelve months ended March 31, 1998. United Artists currently
plans to sell or close these theatres during the next two years although there
can be no assurance that United Artists will be able to accomplish such
divestitures or closings. In conjunction with United Artists' core market
focus, these restructuring efforts have resulted in an Adjusted EBITDAR (as
defined) per weighted average operating theatre increase of 3.4% from $133,425
during the three months ended March 31, 1997 to $137,952 during the three
months ended March 31, 1998 and 20.5% from $411,649 during the year ended
December 31, 1996, to $496,045 during the year ended December 31, 1997.
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Implement Operational Improvements. In the past two years, United Artists
has recognized theatre and concession operating efficiencies through an
increased focus on increasing concession sales, managing theatre payrolls and
variable costs and increased staff training. United Artists increased
concession sales per capita by approximately 7.9% for the twelve months ended
March 31, 1998 versus the twelve months ended March 31, 1997 and 5.0% annually
on average from 1993 to 1997. Management believes that there are opportunities
to achieve additional operating efficiencies by disposing of less efficient
theatres, developing new multiplex theatres and continuing to improve theatre-
level operating expenses. Areas of focus in 1998 will include lowering
concession costs, improving entertainment center operations and implementing
new theatre point-of-sale computer systems and corporate level information
systems.
Manage Individual Theatre Capital Requirements. While United Artists plans
to continue to develop several new state-of-the-art theatres each year, United
Artists intends to seek to reduce individual theatre financial leverage and
capital requirements by also focusing on expanding, renovating and rebuilding
many of its key locations. In many cases, these existing key locations can be
transformed into state-of-the-art multiplex stadium theatres without competing
against other operators for new locations and incurring higher rent and
excessive preconstruction costs. Furthermore, existing structures can be
utilized while being refurbished to help reduce overall construction costs. In
addition, United Artists' renovation of theatres in desirable locations
eliminates much of the geographic risk related to a project's success. In
order to reduce the overall investment by United Artists in new theatres,
United Artists has entered into "build to suit" and other landlord leasing
arrangements or sale and leaseback transactions. United Artists also intends
to continue to sell non-strategic and underperforming assets (such as the sale
during 1997 of the majority of its international investments) and expects to
redeploy capital to its core U.S. business. This strategy is intended to
provide increased liquidity from the disposal of non-cash flow producing
investments and theatres with limited growth potential.
Enhance Studio/Distributor Relationships. Management intends to continue to
enhance and balance its studio relationships to obtain the optimal number of
marketable motion pictures. United Artists believes that it will continue to
increase the number of prints it obtains from each studio as it increases the
number of its screens in select locations and leverages its attractive theatre
locations through the development of new, larger (in terms of screens), higher
margin theatres. To the extent that theatrical exhibition remains the primary
distribution channel for new motion picture releases and the overall number of
movies produced continues to increase, management believes that United
Artists' focus on its core business will provide it with access to more prints
of each motion picture.
Develop Ancillary Revenue Opportunities. United Artists believes that there
are opportunities to increase its ancillary revenue from its Satellite Theatre
NetworkTM by renting theatres for seminars and business meetings, product and
customer research and other entertainment uses. Through its VIP/Premier
program, United Artists seeks to enhance theatre attendance by selling large
groups of tickets to businesses and groups through coupon books as well as
gift certificates. On-screen advertising also provides an additional
opportunity to increase revenue and profitability.
OPERATIONS
Overview. As of March 31, 1998, United Artists operated 330 theatres with an
aggregate of 2,164 screens in 25 states and, through joint ventures owned
50.0% or less by United Artists, operated 13 theatres with 53 screens in the
United States and certain foreign countries. The table below summarizes the
theatres operated by United Artists and its subsidiaries as of March 31, 1998:
<TABLE>
<CAPTION>
TOTAL NUMBER TOTAL NUMBER
OF THEATRES OF SCREENS
------------ ------------
<S> <C> <C>
Fee-Owned.......................................... 43 241
Leased:
From third parties............................... 254 1,626
Through sale and leaseback transactions.......... 33 297
--- -----
Total owned and leased theatres.................... 330 2,164
Theatres owned 50.0% or less....................... 13 53
--- -----
Total operating theatres....................... 343 2,217
=== =====
</TABLE>
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Almost all of United Artists' theatres are multiplexes with an average of
6.6 screens per theatre. In comparison to a single screen theatre, multiplex
theatres allocate facilities such as concession stands and restroom
facilities, and operating costs such as rent, utilities and personnel, over a
larger base of screens and patrons. Multiplexes allow for a variety of films
with different audience appeal to be shown in the same theatre and permit
multiple showtimes of popular films. Multiplexes also provide the flexibility
to shift films to larger or smaller auditoriums depending on the film's
popularity. To limit crowd congestion and maximize staff efficiency, United
Artists' theatres stagger the starting times of films. United Artists believes
that multiplex theatres designed with 12 to 18 screens generally provide the
optimal balance of return on invested capital and adequate screen numbers for
patrons and film distribution companies, as compared to even larger "megaplex"
theatres (20 or more screens). United Artists believes that megaplex theatres
do not provide a favorable relationship with respect to the revenue per square
foot generated and the cost per square foot to construct and operate such
theatres. United Artists believes that megaplex theatres are more susceptible
to competition from other new theatres as the drawing area for megaplex
theatres is generally required to be larger.
As set forth in the following table, even though United Artists operates
several smaller theatres (in terms of number of screens), approximately 86% of
United Artists' screens as of March 31, 1998 were located in theatres
containing five or more screens.
<TABLE>
<CAPTION>
NUMBER OF SCREENS NUMBER OF % OF CUMULATIVE
PER THEATRE THEATRES TOTAL SCREENS % OF TOTAL SCREENS
----------------- --------- ------------- ------------------
<S> <C> <C> <C>
Greater than 10................... 29 17% 17%
9--10............................. 54 24% 41%
7--8.............................. 64 23% 64%
5--6.............................. 85 22% 86%
3--4.............................. 66 12% 98%
1--2.............................. 32 2% 100%
</TABLE>
Consistent with its operating strategy, United Artists expects to
rationalize many of its smaller and less productive theatres over the next
several years although there can be no assurance with respect thereto. The
following table sets forth EBITDA, operating margins and other operating
statistics by EBITDA range. Generally, theatres with fewer screens are less
profitable than those with a greater number of screens. Although there can be
no assurance that the Company will effect such closings or sales, as reflected
in the table below, if theatres with negative EBITDA or with EBITDA of less
than $100,000 are closed or sold, the Company's EBITDA margins would be
expected to increase.
<TABLE>
<CAPTION>
EBITDA RANGE TOTAL TOTAL
DURING THEATRE REVENUE THEATRE EBITDA THEATRE EBITDA
WELVE MONTHST DURING DURING MARGIN DURING
ENDED NUMBER NUMBER AVERAGE TWELVE MONTHS TWELVE MONTHS TWELVE MONTHS
MARCH 31, OF OF SCREENS PER ENDED ENDED ENDED
1998 THEATRES SCREENS THEATRE MARCH 31, 1998 MARCH 31, 1998 MARCH 31, 1998
- - ------------- -------- ------- ----------- --------------- -------------- --------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
$1,000,000+............. 19 194 10.2 $113.0 $ 31.1 27.5 %
500,000-999,999........ 54 473 8.8 182.8 37.9 20.7 %
250,000-499,999........ 86 579 6.7 159.1 31.0 19.5 %
100,000-249,999........ 65 333 5.1 82.0 11.4 13.9 %
0-100,000.............. 51 217 4.3 43.9 2.6 5.9 %
0 (Negative)........... 55 368 6.7 62.3 (8.5) (13.6)%
--- ----- ---- ------ ------
Total................. 330 2,164 6.6 $643.1 $105.5 Average 16.4 %
=== ===== ==== ====== ======
</TABLE>
Centralized Management. United Artists operates its theatres from its
corporate headquarters in Englewood, Colorado, three regional operating
offices, fourteen district operating offices and two film booking offices. All
of United Artists' district offices and two of the regional operating offices
are located within theatres.
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There is active communication between the theatres and division management
and corporate management, which allows management to react on a daily basis to
revenue and staffing information. Division management provides guidance in
scheduling, staffing, screen allocation, and other operating decisions.
Management personnel with United Artists' marketing and concessions operations
are also continually involved with theatre management to promote strong
performance in those areas. This structure allows the theatre manager to focus
solely on the day-to-day operations of the theatre. A primary responsibility
of the theatre manager is on improving efficiency and managing costs at the
local theatre level.
Corporate and divisional management assists in the daily operations of
United Artists' theatres by booking and settling films, training new and
existing employees, setting admission and concessions pricing policies,
selecting concession products, advertising theatres and showtimes, selecting
new theatre sites and negotiating national purchasing contracts. Corporate
management also assists in theatre development and construction and capital
raising activities and provides cash management, accounting, tax and
management information services.
United Artists' reporting systems provide management and each theatre
manager with weekly and monthly operating reports for individual theatres.
This allows management to monitor theatre manager performance and progress in
attaining certain identifiable goals. United Artists' computer system,
installed in all of its theatres, allows United Artists to centralize all
theatre-level administrative functions at its three regional operating offices
and corporate headquarters. The system allows regional and corporate
management to monitor ticket revenue and concession sales. All accounting,
reporting and management information systems are centralized at the Company's
corporate headquarters. United Artists is currently upgrading its corporate
and theatre level computer systems to improve its reporting and point-of-sale
capabilities.
THEATRE PROPERTIES
The majority of United Artists' theatres are located in free-standing
buildings or are "anchor" tenants in regional malls or strip centers.
Typically, United Artists' third-party leases have remaining terms that range
from 10 to 25 years, and provide for options to extend for up to 20 additional
years at United Artists' election. The leases provide for annual base rent and
many require additional rent based upon a percentage of the leased theatres'
revenue over a certain breakpoint. Certain of the leases provide for
escalating minimum annual rentals during the term of the lease. The leases
typically require United Artists to pay for property taxes, insurance, and
certain of the lessors' overhead costs. United Artists expects that in the
normal course of business, desirable leases that expire will be renewed or
replaced by other leases, although such renewals or replacements may be on
materially different terms. United Artists owns directly or through its
subsidiaries substantially all of the theatre equipment used in all of its
theatres.
Construction. United Artists' construction strategy focuses on selecting
sites in its existing core areas of operation and enhancing the theatre-goer's
experience by building state-of-the-art theatres. Each new location is
selected after considering United Artists' relative strength in the particular
area, the number of existing competitive screens, growth potential of the area
and the minimum threshold population within a certain radius of the theatre.
As part of its construction strategy, United Artists intends to construct or
lease theatres that have a favorable balance between the number of screens (12
to 18) and the size of the auditoriums (125 to 400 seats). United Artists
believes that this balance will allow United Artists to provide an adequate
number of screens for film distributors and increased entertainment value to
patrons afforded by larger auditoriums. In addition to increasing the number
of screens in certain locations, United Artists is also constructing theatres
with stadium seating, more comfortable seats, analog and digital stereo sound
systems and other state-of-the-art design features and amenities.
As a result of new construction and the sale or closure of older, smaller
theatres, approximately 28.6% of United Artists' screens have been constructed
since January 1, 1992 and approximately 45.7% of theatres
operated on January 1, 1992 have been sold or closed. As a result of this new
construction and the sale or closure of older, smaller theatres, United
Artists' average number of screens per theatre has increased 37.5% from 4.8
screens at January 1, 1992 to 6.6 screens as of March 31, 1998.
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United Artists has historically financed, and plans to continue to finance,
a significant portion of the cost of construction of new theatres by entering
into long-term leases or sale and leaseback transactions. United Artists'
long-term leases typically have initial terms of 15 to 25 years with renewal
options and require the landlord to provide a significant portion of the up-
front construction costs. As a result, capital expenditures are often only
required for equipment and certain tenant finishes thereby reducing the net
capital expenditures required for new leased theatres. Although in certain
circumstances United Artists may choose to acquire an existing theatre, United
Artists believes that it is generally more cost effective to add a new theatre
location through construction. See "Risk Factors--Substantial Capital
Expenditures."
In addition to new construction, United Artists also intends to devote
significant resources to adding additional screens to existing theatres and
refurbishing or rebuilding existing theatres to strengthen its position in
existing areas. United Artists believes that renovating, expanding or
completely rebuilding certain of its existing theatre locations provides it
with a significant competitive advantage in many of the large metropolitan
areas where the availability of suitable theatre sites is limited.
Geographic Positioning. Geographic positioning and operating efficiencies
are key elements of United Artists' operating strategy. Geographic clustering
at both the regional and local level is important in providing United Artists
with access to attractive new theatre development opportunities and enhancing
film buying and operating efficiencies. United Artists achieves operating
efficiencies by concentrating regional corporate operations around fewer
strategic markets and reducing its number of less profitable, non-strategic
theatres.
Theatrical exhibitors depend upon strong geographic positioning to obtain
the most attractive film rental arrangements because film bookings are
negotiated on a market by market basis. Strong geographic positioning in terms
of both number of screens and locations enhances the attractiveness of a
theatre exhibitor to film distributors, in part due to the exhibitor's ability
to influence the local success of a film release.
United Artists' theatres are located in large and medium sized metropolitan
areas in California, southern New York (primarily New York City and Long
Island), New Jersey, Florida, Texas, eastern Pennsylvania (including
Philadelphia), Louisiana, Colorado (primarily Denver), Georgia and certain
areas in North and South Carolina. United Artists believes that it has strong
positions in many of these major metropolitan areas. The states that
represented the largest geographic concentration of theatres and screens
operated, accounting for approximately 57.9% and 56.5% of United Artists'
total theatres and screens, respectively, as of March 31, 1998 and
approximately 61.5% and 65.6% of United Artists' theatrical revenue and
theatrical EBITDA, respectively, for the twelve months ended March 31, 1998,
were as follows:
<TABLE>
<CAPTION>
TOTAL NUMBER TOTAL NUMBER PERCENT OF PERCENT OF
OF OF THEATRE TOTAL THEATRE
STATE THEATRES SCREENS REVENUE EBITDA
- - ----- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C>
California................... 63 356 20% 15%
New York..................... 31 171 14% 20%
Florida...................... 25 217 8% 9%
Pennsylvania................. 27 142 8% 11%
Texas........................ 26 195 8% 5%
Louisiana.................... 19 142 4% 5%
</TABLE>
FILM LICENSING
United Artists obtains licenses to exhibit films by directly negotiating
with film distributors on a film-by-film and theatre-by-theatre basis. United
Artists licenses films through its booking offices located in New York and Los
Angeles. Individuals in the booking offices are responsible for booking films
for theatres in their assigned regions. This regional film booking structure
allows United Artists to maintain better relationships with the film
distributors' regional representatives and provides better insight to the film
tastes of its patrons. United Artists licenses films from all of the major and
independent film distributors and is not overly dependent on any one film
distributor for film product. See "Risk Factors--Dependence on Films and
Distributors."
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United Artists licenses the majority of its first run films from
distributors owned by the major and independent film production companies.
Each film distributor establishes geographic areas known as "film zones," and
typically allocates each of its films to only one theatre within each film
zone. In most cases where there is more than one exhibitor in a film zone this
allocation process is based on long standing relationships between the
distributor and exhibitor or is done on an alternating basis. In certain very
limited cases where several exhibitors operate in a single film zone, films
are allocated based on an exhibitor bidding process. The size of a film zone
is based primarily upon population density. United Artists operates in
approximately 275 film zones and believes that it is the only exhibitor in 108
of these zones, and therefore does not currently compete with other exhibitors
for licensing specific film product at a given time in such film zones.
MARKETING AND ADVERTISING
United Artists relies principally upon newspaper advertisements, newspaper
film schedules and word of mouth to inform its patrons of film titles and
exhibition times. United Artists utilizes local newspaper advertisements to
promote its theatres and inform its patrons of the films being played and show
times. United Artists typically pays for this type of advertisement. In most
areas, multi-media advertisements for upcoming film releases are paid by film
distributors. In selected areas there is a "co-op" arrangement whereby the
exhibitors and distributors share in the cost of film advertisements in
newspapers. Film distributors will also typically pay for radio and television
spots to promote certain motion pictures and special events. During the three
months ended March 31, 1998 and 1997 and each of the years ended December 31,
1997, 1996, 1995, and 1994, United Artists' advertising expenditures were
approximately 3.9%, 4.0%, 3.8%, 4.0%, 4.5%, and 3.8%, respectively, of
admissions revenue.
Prior to the opening of a new theatre, United Artists typically initiates a
marketing campaign that advertises and promotes the new theatre for several
weeks to several months prior to the new theatre's opening date. The costs
associated with such marketing campaigns are capitalized and expensed as other
operating expenses over the twelve months subsequent to the new theatre's
opening date. In addition, in instances in which a theatre is performing below
management's expectations, United Artists may initiate a newspaper marketing
campaign with the objective of increasing attendance at the theatre.
COMPETITION
United Artists competes for the public's leisure time and disposable income
with all forms of entertainment including sporting events, concerts, live
theatre, and restaurants. United Artists also is subject to varying degrees of
competition from other theatre circuits and independent theatres, some of
which may have greater access to capital resources. The motion picture
exhibition industry is highly competitive, particularly with respect to film
licensing, attracting patrons and acquiring or leasing new theatre sites. Some
of United Artists' competitors may be better established in certain areas
where United Artists' theatres are located. Competition for patrons occurs
locally and depends upon factors such as: (i) which films a particular theatre
is showing; (ii) location of theatres; (iii) comfort and quality of theatres;
and (iv) ticket prices. Film patrons are not "brand" conscious and generally
choose a theatre because of film selection, location and quality of the
theatre.
Competition among theatre circuits for licensing popular films occurs
locally and is based on the prestige and location of an exhibitor's theatres,
quality of the theatres (especially projection and sound quality), seating
capacity, and the exhibitor's ability and willingness to promote the films.
United Artists believes that promoting good relations with film distribution
and production companies is important to consistently obtain the best mix of
available films.
Where real estate is readily available there are few barriers preventing
competitors from opening theatres near one of United Artists' theatres, which
may have a material adverse effect on United Artists' theatre. In addition,
"megaplexes" (theatres with 20 or more screens) have been built or are planned
to be built by competitors in certain areas in which United Artists operates,
which may result in excess capacity and adversely affect attendance and
pricing at other theatres in such areas.
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Alternative motion picture exhibition delivery systems, including cable
television, video cassettes, satellite and pay per view, also exhibit filmed
entertainment after its theatrical release. The expansion of such delivery
systems (such as video on demand) could have a material adverse effect upon
United Artists' business and results of operations.
Recent consolidation in the industry has included the merger of Sony Corp.'s
Loews Theatres Exhibit Group with Cineplex Odeon Corp. announced in October
1997 and consummated in May 1998; the acquisition by KKR of Act III Cinemas
Inc., also announced in October 1997 and consummated in December 1997; and the
joint acquisition of Regal Cinemas Inc. by affiliates of KKR and Hicks Muse
announced in January 1998 and consummated in May 1998. Such consolidation
could increase the level of competition for the industry.
SATELLITE THEATRE NETWORK(TM)
In an effort to utilize its existing theatres more effectively during
periods of low attendance (such as mornings and weekdays), United Artists has
developed a business unit called the Proteus NetworkTM or Satellite Theatre
NetworkTM. The Satellite Theatre NetworkTM rents theatre auditoriums for
seminars, corporate training, business meetings and other educational or
communication uses, product and customer research and other entertainment
uses. Theatre auditoriums are rented individually or on a networked basis. To
provide the "broadcast" network or "teleconferencing" equipment, a network of
theatres has been created by installing high quality (high definition-like)
video projection equipment within theatres that are networked via the
combination of satellite delivery from a single location or multiple locations
and telephonic communication.
As of March 31, 1998, the Satellite Theatre NetworkTM included 31 theatres
equipped with electronic video capability and additional 299 theatres that
were being rented for individual non-networked uses. All of United Artists'
theatres can be "networked" through the use of temporary equipment. Because
the Satellite Theatre NetworkTM operations within the theatre are managed by
existing personnel, very little incremental personnel expenditures are
required. Marketing of the Satellite Theatre NetworkTM services is performed
on a national basis by staff located in Englewood, Colorado. United Artists
recorded $1.4 million, $1.8 million, $6.2 million, $6.0 million and $1.6
million of revenue from the Satellite Theatre NetworkTM for the three months
ended March 31, 1998 and 1997 and the years ended December 31, 1997, 1996, and
1995, respectively.
TRADEMARKS AND TRADE NAMES
Pursuant to a Trademark Agreement, dated as of May 12, 1992, between UATC
and TCI, UATC's former parent corporation, and certain affiliates of TCI, UATC
was granted the right to use the names "United Artists" and "UA" and
derivatives thereof and other related intellectual property rights
(collectively, the "UA Marks") in connection with the motion picture theatre
business worldwide, except in the United Kingdom. TCI retained the right to
use the UA Marks in connection with any use in the United Kingdom and in
connection with any use other than the motion picture theatre business
worldwide, except in the United Kingdom. TCI is not an issuer or a guarantor
of, or otherwise obligated with respect to, the Notes. Neither UATC nor United
Artists owns any trademark registrations relating to any of the UA Marks. UATC
has used the name "United Artists" and derivatives thereof and other related
intellectual property rights since its formation in 1926.
United Artists Corporation and its affiliates ("MGM"), which is not
affiliated with United Artists, owns trademark registrations covering certain
uses of the "United Artists" name, including but not limited to the production
and distribution of motion pictures. In 1997, MGM and UATC entered into two
agreements regarding the use of the UA Marks. Pursuant to an agreement
relating to the United States, UATC has the exclusive right to use "United
Artists Theatres" in connection with the business of operating motion picture
theatres and the theatrical exhibition of motion pictures, and operations
which are directly incident thereto and ancillary therewith as well as the
business of presenting non-motion picture events, such as meetings, seminars,
training sessions and presentations, including such programs and interactive
events conducted simultaneously at more than one of UATC's motion picture
theatres which are linked together by communication equipment. Pursuant to the
same agreement, UATC has the non-exclusive right to use "United Artists
Theatres" in connection with the operation
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of entertainment centers in the nature of interactive arcades located in the
same theatre, or in the same building or complex as a theatre in which UATC is
engaged in the exhibition of motion pictures. The agreement further provides
that MGM has the exclusive right to the name "United Artists" in connection
with all of its present and future activities, including the business of
creating, producing, distributing and exploiting motion pictures, video tapes
and other entertainment goods and services, and operations which are directly
incident thereto and ancillary therewith. MGM also has the right to use and
authorize others to use the "UNITED ARTISTS" mark in connection with the
exhibition of motion pictures in theatres located in theme parks. This
agreement is terminable upon 60 days notice by either party. The international
agreement is for an initial term of 10 years with eight automatic ten-year
renewals. During the initial term, UATC has an exclusive, royalty-free license
to use "United Artists Theatres" outside the United States in connection with
the exhibition of motion pictures in motion picture theatres and operations
which are directly incident thereto and ancillary therewith, such as the sale
of concessions and a non-exclusive, royalty-free license during each of the
renewal terms. During the initial term and each of the renewal terms, UATC has
a non-exclusive royalty-free license to use "United Artists Theatres" outside
the United States in connection with the operation of entertainment centers in
the nature of interactive arcades located in the same theatre, or in the same
building or complex as a theatre in which UATC is engaged in the exhibition of
motion pictures and the presentation of non-motion picture programs and the
interactive events at UATC's motion picture theatres, such as meetings,
seminars, training sessions and presentations, including such programs and
interactive events conducted simultaneously at more than one of UATC's motion
picture theatres which are linked together by communication equipment.
GOVERNMENTAL REGULATIONS
The distribution of motion pictures is in large part regulated by federal
and state antitrust laws and has been the subject of numerous antitrust cases.
The most significant of these cases is United States v. Paramount Pictures
Corporation, et al., which was affirmed by the United States Supreme Court in
1950. Although United Artists was not a party in the Paramount case, the
consent decrees resulting from that litigation do have a material impact on
United Artists. Those consent decrees bind certain major film distributors and
require the films of such distributors to be offered and licensed to
exhibitors, including United Artists, on a theatre-by-theatre basis.
Consequently, United Artists cannot assure itself of a supply of films by
entering into long-term arrangements with major distributors, but must compete
for its licenses on a film-by-film and theatre-by-theatre basis.
The Americans with Disabilities Act of 1990 ("ADA") and certain state
statutes, among other things, require that places of public accommodation,
including theatres (both existing and newly constructed), be accessible to,
and that assistive listening devices be available for use by, certain patrons
with disabilities. With respect to access to theatres, the ADA may require
that certain modifications be made to existing theatres to make such theatres
accessible to certain theatre patrons and employees who are disabled. The ADA
requires that theatres be constructed in such a manner that persons with
disabilities have full use of the theatre and its facilities and reasonable
access to work stations. The ADA provides for a private right of action and
reimbursement of plaintiff's attorneys' fees and expenses under certain
circumstances. United Artists has established a program to review and evaluate
United Artists' theatres and to make any changes that may be required by the
ADA. In 1995, UATC settled the lawsuit styled Connie Arnold et al. v. UATC,
filed in 1991. This lawsuit involved allegations that certain of UATC's
theaters lacked accessibility to persons with mobility disabilities in
violation of the ADA. In the settlement agreement, UATC, the plaintiffs and
the Department of Justice established standards of modification which must be
made to UATC's theatres throughout the United States to make them more
accessible to persons with disabilities. United Artists believes that the cost
of complying with the ADA and the settlement agreement in the Connie Arnold
case will not have a material adverse effect on United Artists' financial
position or results of operations.
INSURANCE
United Artists' management believes that it maintains insurance coverage in
such amounts, with such deductibles and covering such risks as is customary
for companies engaged in similar businesses as United Artists.
63
<PAGE>
EMPLOYEES
As of March 31, 1998, United Artists employed approximately 9,400 employees,
of which approximately 1,300 were full time. Approximately 41.4% of United
Artists' employees (substantially all of whom are part-time employees who work
in the theatres) are paid based on the applicable state and federal minimum
wage regulations. Approximately 100 employees (primarily consisting of film
projectionists) are covered by collective bargaining agreements. United
Artists considers its relations with its employees to be satisfactory.
LEGAL PROCEEDINGS
United Artists is involved in various pending and threatened legal
proceedings involving allegations concerning contract breaches, torts,
employment matters, environmental issues, antitrust violations, local tax
disputes and miscellaneous other matters. In addition, there are various
claims against United Artists relating to certain of the leases held by United
Artists. Although it is not possible to predict the outcome of these
proceedings, United Artists believes that such legal proceedings will not have
a material adverse effect on United Artists' financial position, liquidity or
results of operations.
64
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding the directors
and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---- --- --------
<S> <C> <C>
Kurt C. Hall............ 39 President and Chief Executive Officer and Director
Dennis R. Daniels....... 50 Executive Vice President of Theatre Operations
Gene Hardy.............. 47 Executive Vice President and General Counsel
Michael L. Pade......... 48 Director and Executive Vice President of Film Operations
Jim Ruybal.............. 53 Executive Vice President of New Business Development
Bruce M. Taffet......... 51 Executive Vice President of Purchasing, Marketing, and National Concessions
Trent J. Carman......... 37 Chief Financial Officer
John W. Boyle........... 69 Director and Chairman of the Board
James J. Burke, Jr...... 46 Director
Albert J. Fitzgibbons,
III.................... 52 Director
Robert F. End........... 42 Director
Scott M. Shaw........... 35 Director
</TABLE>
Kurt C. Hall was named President and Chief Executive Officer of the Company
on March 6, 1998. Mr. Hall was Chief Operating Officer from February 24, 1997
until March 6, 1998 and Executive Vice President, Chief Financial Officer and
a director of the Company since May 12, 1992. Mr. Hall is also a director of
Showscan Entertainment Inc.
Dennis R. Daniels has been Executive Vice President of Theatre Operations of
the Company since 1993. He was previously a Vice President of UATC responsible
for Central U.S. operations. Mr. Daniels has served United Artists for 24
years in various operating capacities.
Gene Hardy has been Executive Vice President and General Counsel of the
Company since September 1994. From May 1992 to September 1994, Mr. Hardy was
Senior Vice President and General Counsel of United Artists.
Michael L. Pade has been Executive Vice President of Film Operations of the
Company since February 1997 and was appointed as a director on May 5, 1998.
Mr. Pade joined United Artists in October 1994 as a Senior Vice President of
Film Operations. Prior to joining United Artists, Mr. Pade worked for Mann
Theatres as the Senior Vice President in charge of domestic film booking.
Jim Ruybal has been Executive Vice President of New Business Development of
the Company since 1992. Mr. Ruybal's duties include supervision of the
Company's Satellite Theatre NetworkTM.
Bruce M. Taffet was promoted to Executive Vice President of Purchasing,
Marketing and National Concessions of the Company in January 1995. Prior to
January 1995, Mr. Taffet was the Senior Vice President in charge of national
concession operations of United Artists.
Trent J. Carman was named Chief Financial Officer of the Company on March 6,
1998. Mr. Carman was Senior Vice President and Treasurer of the Company from
September 1997 until March 6, 1998 and was Vice President of Finance from June
1992 to September 1997. He was previously with KPMG Peat Marwick for seven
years.
John W. Boyle was named Chairman of the Board of the Company on March 6,
1998. He has been a director of the Company since March 5, 1997. Mr. Boyle was
Chief Financial Officer of Eckerd Corporation from 1983 to 1995 and Vice
Chairman from 1992 to 1995. Mr. Boyle is a director of Supermarkets General
Holdings Corp.
65
<PAGE>
James J. Burke, Jr. has been a director of the Company since May 12, 1992.
Mr. Burke is a Partner and Director of Stonington Partners, Inc., a private
investment firm, a position that he has held since 1993, and a Partner and
Director of Stonington Partners, Inc. II since 1994. He has also been a member
of the Board of Directors of Merrill Lynch Capital Partners, Inc. ("MLCP"), a
private investment firm affiliated with Merrill Lynch & Co., Inc. since 1987
and a Consultant to MLCP since 1994. He was the Managing Partner of MLCP from
1993 to July 1994 and President of MLCP from 1987 to 1994. Mr. Burke was also
a Managing Director of the Investment Banking Division of Merrill Lynch,
Pierce, Fenner & Smith Incorporated from 1985 to 1994. Mr. Burke is a Director
of the following companies with publicly registered debt and equity
securities: Ann Taylor Stores Corporation, Education Management Corporation,
Pathmark Stores, Inc., and Supermarkets General Holdings Corporation.
Albert J. Fitzgibbons, III has been a director of the Company since May 12,
1992. Mr. Fitzgibbons is a Partner and a Director of Stonington Partners,
Inc., a private investment firm, a position that he has held since 1993 and a
Partner and a Director of Stonington Partners, Inc. II. He has also been a
Director of MLCP, since 1988 and a Consultant to MLCP since 1994. He was a
Partner of MLCP from 1993 to 1994 and Executive Vice President of MLCP from
1988 to 1993. Mr. Fitzgibbons was also a Managing Director of the Investment
Banking Division of ML&Co. from 1978 to July 1994. Mr. Fitzgibbons is a
Director of the following companies with public debt or equity securities:
Borg-Warner Security Corporation, Dictaphone Corporation, Merisel, Inc. and
U.S. Foodservice, Inc.
Robert F. End has been a director of the Company since February 17, 1993.
Mr. End is a Partner and a Director of Stonington Partners, Inc., a private
investment firm, a position that he has held since 1993 and is a Partner and
Director of Stonington Partners, Inc. II. He has also been a Director of MLCP,
since 1993 and a Consultant to MLCP since 1994. He was a Partner of MLCP from
1993 to 1994 and Vice President of MLCP from 1989 to 1993. Mr. End was also a
Managing Director of the Investment Banking Division of Merrill Lynch, Pierce,
Fenner & Smith Incorporated from 1993 to July 1994 and a Director of the
Investment Banking Division of MLPF&S from 1990 to 1993. Mr. End is a Director
of the following companies with publicly registered debt or equity securities:
Goss Graphic Systems, Inc. and Packard BioScience Company.
Scott M. Shaw has been a director of the Company since February 17, 1993.
Mr. Shaw is a Principal of Stonington Partners, Inc., a private investment
firm, a position that he has held since 1993. He has also been a Consultant to
MLCP, since 1994, and was formerly an Associate of MLCP from 1991 to July,
1994 and an Analyst of MLCP from 1986 to 1989. Mr. Shaw was also a Vice
President of the Investment Banking Division of ML&Co. from January to July
1994, an Associate of the Investment Banking Division of ML&Co. from 1991 to
1994, and an Analyst of the Investment Banking Division of ML&Co. from 1986 to
1989. Mr. Shaw is a Director of the following companies with publicly traded
debt securities: Dictaphone Corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Compensation Committee consisted of Messrs. Burke and
Fitzgibbons, neither of whom has ever been an officer or employee of United
Artists.
COMPENSATION OF DIRECTORS
Mr. Boyle received 10,000 performance options (with a $12.00 exercise price)
and $20,000 in cash for his services as a director during 1997. No other
directors of the Company received any compensation for their services as
directors or committee members.
LIMITATION ON DIRECTORS' LIABILITY
The Company's certificate of incorporation provides that no director of
United Artists shall be personally liable to United Artists or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or
66
<PAGE>
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for any unlawful dividend payments or stock
redemptions or repurchases or (iv) for any transaction from which the director
derived an improper personal benefit. The effect of these provisions is to
eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of fiduciary duty as a director
(including breaches resulting from grossly negligent behavior), except in the
situations described above. In addition, the Company's employment agreements
with certain of its executive officers, one of whom is also a director,
provide for indemnification of such persons.
COMPENSATION OF CERTAIN EXECUTIVE OFFICERS
The following table sets forth the compensation paid by the Company to the
Chief Operating Officer and Chief Financial Officer and the four next most
highly compensated executive officers who were officers of the Company on
December 31, 1997 (collectively, the "Named Executive Officers") for services
rendered in all capacities during fiscal 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS/
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING OTHER ANNUAL ALL OTHER
NAME AND SALARY BONUS STOCK COMPENSATION COMPENSATION
PRINCIPAL POSITIONS YEAR ($)(1) ($)(2) OPTIONS (#) ($)(3) ($)(4)
------------------- ---- ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Kurt C. Hall(5) ........ 1997 283,103 -- 80,000 2,877 4,684
Chief Operating Officer 1996 220,514 -- -- 920 22,182
and 1995 216,300 12,500 -- -- 23,127
Chief Financial Officer
Michael L. Pade ........ 1997 253,846 -- 12,000 6,083 41,079
Executive Vice 1996 220,080 -- -- 5,426 --
President 1995 185,000 -- -- -- --
Dennis R. Daniels ...... 1997 205,130 -- 12,000 2,287 4,800
Executive Vice 1996 195,473 -- -- 2,500 14,723
President 1995 185,640 4,375 -- -- 15,273
Jim Ruybal ............. 1997 193,481 -- 12,000 1,073 4,800
Executive Vice 1996 186,300 -- -- -- 18,630
President 1995 183,998 8,000 -- -- 19,297
Thomas C. Elliot(6) .... 1997 215,029 -- -- 4,603 4,800
Executive Vice 1996 204,244 -- 15,300 4,845 20,765
President 1995 198,000 8,000 -- -- 21,053
Stewart D. Blair(7) .... 1997 697,745 -- -- 7,000 445,760
Former Chief Executive 1996 681,882 -- -- 10,258 72,085
Officer 1995 642,467 47,250 -- -- 68,959
Robert E. Capps, Jr.(8) 1997 272,950 -- -- 908 22,448
....................... 1996 254,260 -- -- 2,545 10,498
Former Executive Vice 1995 242,022 25,000 -- -- 150,323
President
</TABLE>
- - --------
(1) Represents annual salary, including compensation deferred by the Named
Executive Officer pursuant to the UATC 401(k) Savings Plan and the UATC
Supplemental 401(k) Savings Plan (prior to January 1, 1997).
(2) The executive officers were entitled to receive bonuses depending on
United Artists' achievement of certain performance criteria. Bonus amounts
are reflected in the year paid but relate to the performance of the
previous year.
(3) Other annual compensation consists of reimbursement of membership dues.
(4) Consists primarily of matching contributions to employee benefit plans
except for amounts attributable to Mr. Blair which are in connection with
his severance package, Mr. Capps which are primarily related to
reimbursement of moving expense and to Mr. Pade which are related to a
loan which was forgiven.
(5) During 1997 the Company did not have a chief executive officer. Mr. Hall
was named President and Chief Executive Officer of the Company on March 6,
1998.
(6) Mr. Elliot resigned from the Company in 1998.
(7) Mr. Blair resigned as Chief Executive Officer of the Company in December
1996. Amounts received by Mr. Blair in 1997 are in connection with his
severance arrangements with the Company.
(8) Mr. Capps resigned from the Company in February 1997. A portion of the
amount received by Mr. Capps in 1997 is in connection with his severance
arrangements with the Company.
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<PAGE>
The following table sets forth all stock options granted to the Named
Executive Officers during 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------------- -------
NAME GRANTED 1997 SHARE DATE 5% 10%
---- ---------- ------------ --------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kurt C. Hall............ 80,000 40.6% $12.00 2007 $ 603,739 $ 1,529,993
Michael L. Pade......... 12,000 6.1 12.00 2007 90,561 229,499
Dennis R. Daniels....... 12,000 6.1 12.00 2007 90,561 229,499
Jim Ruybal.............. 12,000 6.1 12.00 2007 90,561 229,499
Thomas C. Elliot........ -- -- -- -- -- --
Stewart D. Blair........ -- -- -- -- -- --
Robert E. Capps, Jr..... -- -- -- -- -- --
</TABLE>
The following table sets forth the stock options held by the Named Executive
Officers as of December 31, 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXCERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997(1)
------------------------------- -------------------------
NAME OPTION TYPE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Kurt C. Hall............ Incentive 30,250 -- $60,500 --
Performance -- 107,500 -- $55,000
Premium -- 13,750 -- --
Michael L. Pade......... Incentive 6,200 1,550 7,502 1,876
Performance -- 18,750 -- 8,168
Premium -- 3,375 -- --
Dennis R. Daniels....... Incentive 10,000 -- 20,000 --
Performance -- 21,125 -- 18,250
Premium -- 6,063 -- --
Jim Ruybal.............. Incentive 13,850 -- 27,700 --
Performance -- 24,500 -- 25,000
Premium -- 6,250 -- --
Thomas C. Elliot........ Incentive 18,170 5,280 36,340 10,560
Performance -- 20,900 -- 41,800
Premium -- 10,300 -- --
Stewart D. Blair........ Incentive -- -- -- --
Performance -- -- -- --
Premium -- -- -- --
Robert E. Capps, Jr..... Incentive -- -- -- --
Performance -- -- -- --
Premium -- -- -- --
</TABLE>
- - --------
(1) As the Common Stock is not publicly held, the Company has valued the
unexercised stock options using the value attributable to the stock
options granted closest to, but not after, December 31, 1997 ($12.00).
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<PAGE>
LONG-TERM INCENTIVE AWARDS
No long-term incentive awards were granted to any Named Executive Officers
during 1996 or 1997.
EMPLOYEE BENEFIT PLANS
The Company established the United Artists Theatre Circuit, Inc. 401(k)
Savings Plan (the "Savings Plan") which allows electing employees to
contribute up to 10.0% of their compensation, subject to certain Internal
Revenue Service (the "IRS") limitations. Prior to January 1, 1997, the Company
matched 100.0% of the electing employee's contributions up to 10.0% of an
employee's compensation. As part of the corporate restructuring plan,
effective January 1, 1997, the Savings Plan was amended to provide for a
Company match of 100.0% of each employee's contribution up to 3.0% of their
compensation. Employees vest in the Company's matching contributions 20.0% per
year for every year of service, as defined in the Savings Plan.
Effective January 1, 1993, the Company established the United Artists
Theatre Circuit, Inc. Supplemental 401(k) Savings Plan (the "Supplemental
Plan") for certain employees who are highly compensated as defined by the IRS
and whose elective contributions to the Savings Plan exceed the Service's
limitations. Through December 31, 1996, such employees were allowed to
contribute to the Supplemental Plan, provided that the aggregate contributions
to the Savings Plan and Supplemental Plan did not exceed 10.0% of their
compensation. As part of the corporate restructuring plan, effective January
1, 1997, the Company suspended the Supplemental Plan. The Company matched
100.0% of the employee's contributions through the date of suspension of the
Supplemental Plan. Employees vest ratably in the Company's matching
contributions over five years from the date of participation in the
Supplemental Plan.
Matching contributions to the Savings Plan and the Supplemental Plan for the
Named Executive Officers have been included in the summary compensation table.
During 1997, the Company established a bonus plan for all non-commissioned
corporate employees that is based upon the Company achieving its operating
budgets and other financial and operating goals and the employee achieving
certain specified goals.
STOCK OPTION PLAN
The Company established a stock option plan that permits the grant of: (i)
incentive stock options; (ii) performance stock options; and (iii) premium
stock options. The incentive stock options vest in equal amounts each year
through the fifth anniversary of the date of grant, while the performance and
premium stock options vest based on certain calculations of United Artists'
value or the investment returns received by the Class A common stockholders of
the Company. Upon the occurrence of certain extraordinary corporate
transactions, the incentive stock options and the premium stock options will
become immediately exercisable. Each vested incentive or performance stock
options may be exercised for one Class B share of Common Stock at an exercise
price equal to the estimated market value of the Class B Common Stock at the
date of grant. Each vested premium stock option may be exercised for one Class
B share of Common Stock at an exercise price that increases from $30.00 to
$233.00. All options expire ten years after the date of grant. The Class A
Common Stock and the Class B Common Stock are identical except that the shares
of Class B Common Stock do not have any voting rights. The Class C Common
Stock vests over a four-year period and is identical to the Class B Common
Stock except for a $9.50 per share liquidation preference in favor of the
holders of the Class A and Class B common stockholders.
EMPLOYMENT AGREEMENTS
UATC entered into employment agreements (each an "Employment Agreement" and
collectively, the "Employment Agreements") with each of Kurt C. Hall, Edward
C. Cooper, Dennis R. Daniels, Gene Hardy, Robert A. McCormick, Michael L.
Pade, Jim Ruybal and Bruce M. Taffet. In May 1998, UATC extended the terms of
the Employment Agreements. As extended, the Employment Agreements with Messrs.
Daniels, Hardy,
69
<PAGE>
Ruybal and Taffet expire on December 31, 1998; the Employment Agreements with
Messrs. Cooper and McCormick expire on December 31, 1999; and the Employment
Agreements with Mr. Hall and Mr. Pade expire on December 31, 2000. Each of the
Employment Agreements provides for automatic one year renewals on its
expiration date and each one year anniversary of its expiration date absent
notice to the contrary by the Company or the employee except for the
Employment Agreements for Messrs. Hall and Pade which provide for automatic
two year renewals on their expiration dates and each two year anniversary of
their expiration date absent such notice.
Under the Employment Agreements, the employee receives a Base Salary (as
defined in the Employment Agreements) and certain customary benefits,
including health and disability insurance, participation in employee benefit
plans and certain perquisites. Each Employment Agreement provides that the
employee will be eligible to receive annual bonuses during the term of
employment, as determined by the Board of Directors.
In the event that Mr. Hall or Mr. Pade is terminated without cause, such
individual will be entitled to his Base Salary for two years and annual
bonuses for two years, in an amount based upon the average of the annual
bonuses awarded to him over the preceding two fiscal years.
In the event that Mr. McCormick or Mr. Cooper is terminated without cause,
such individual will be entitled to his Base Salary for the remainder of the
term of his employment agreement following his termination but not less than
12 months and annual bonuses for the remainder of the term of his employment
agreement but not less than 12 months, in an amount based upon the average
bonuses paid to him over the preceding two fiscal years.
In the event that Mr. Daniels, Mr. Ruybal, Mr. Hardy or Mr. Taffet is
terminated without cause, such individual will be entitled to his Base Salary
for the lesser of two years or the remainder of the term of his employment
agreement following termination, but not less than 12 months and annual
bonuses for the lesser of two years or the remainder of the term of his
employment agreement following termination, but not less than 12 months, in an
amount based upon the average bonuses paid to him over the preceding two
fiscal years.
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<PAGE>
CERTAIN TRANSACTIONS
The descriptions set forth below do not purport to be complete and are
qualified in their entirety by reference to the applicable agreements.
STOCKHOLDERS AGREEMENT
In connection with the Acquisition, the Company, the Merrill Lynch Group,
the Management Investors and Institutional Investors (as such terms are
defined therein) entered into a Stockholders Agreement, dated as of May 12,
1992 (the "Stockholders' Agreement"). The Stockholders' Agreement provides,
among other things, for certain (a) restrictions on transfers of shares of
Common Stock by the Management Investors and the Institutional Investors prior
to the tenth anniversary of the Acquisition, (b) "puts and calls" with respect
to shares of capital stock of the Company owned by the Management Investors
upon termination of a Management Investors' employment, (c) "tag-along and
drag-along rights" in the event of certain sales of capital stock of the
Company by any one or more of the members of the Merrill Lynch Group, (d)
registration rights, (e) rights for the Management Investors to exchange all
or any portion of their Class B Common Stock for an equal number of shares of
Class A Common Stock immediately prior to any registration and sale of any
such Class B Common Stock pursuant to the incidental registration rights under
the Stockholders' Agreement, (f) preemptive rights in favor of the
Institutional Investors and the Management Investors who are "Accredited
Investors" to acquire certain newly issued equity securities of the Company
which are sold to the Merrill Lynch Group, and (g) in the case of the
Institutional Investors, rights relating to access to information and the
ability to sell their shares of Common Stock after the fifth anniversary of
the Acquisition, subject to compliance with a right of first offer procedure.
The Stockholders' Agreement will terminate on May 12, 2002; except that the
provisions thereof relating to puts and calls, preemptive rights and certain
of the special provisions relating to the Institutional Investors will
terminate and be of no further force or effect upon the sale of any shares of
Common Stock pursuant to an effective registration statement (other than any
registration with respect to mergers, recapitalizations or other business
combinations or with respect to employee benefit plans) under the Securities
Act.
The Merrill Lynch Group owns approximately 90.8% of the outstanding voting
stock of the Company. Messrs. Burke, Fitzgibbons, End and Shaw serve as
representatives of the Merrill Lynch Group on the Board of Directors of the
Company and Messrs. Burke, Fitzgibbons and End also serve as directors of MLCP
and the other companies in which certain affiliates of the Merrill Lynch Group
have equity investments and for which they were serving as a director in July
1994. In this connection, each of Messrs. Burke, Fitzgibbons, End and Shaw
entered into a consulting agreement with MLCP which is effective through
December 31, 1998 and provides, among other things, for his continued
availability to serve on the Board of Directors of the Company and the
respective boards of directors of such other companies for which he was
serving as a director in July 1994 until requested to resign by MLCP, and for
his compensation (directly or indirectly) by MLCP for serving in such director
capacities and for other consulting services. See "Risk Factors--Controlling
Stockholders" and "Management--Directors and Executive Officers of the
Company."
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<PAGE>
PRINCIPAL STOCK OWNERSHIP
The following table sets forth certain information with respect to the
expected beneficial ownership of the Common Stock as of March 31, 1998 by: (i)
each person known by the Company to own beneficially more than 5.0% of the
outstanding shares of the Common Stock; (ii) each executive officer and
director of the Company; and (iii) all executive officers and directors of the
Company as a group. Unless noted otherwise, the address for each executive
officer is in care of the Company at 9110 E. Nichols Avenue, Englewood,
Colorado 80112-3405.
<TABLE>
<CAPTION>
BENEFICIAL PERCENTAGE BENEFICIAL PERCENTAGE BENEFICIAL PERCENTAGE
INTEREST OF INTEREST OF INTEREST OF PERCENTAGE
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C OF
NAME AND ADDRESS COMMON COMMON COMMON COMMON COMMON COMMON COMMON
BENEFICIAL OWNER STOCK STOCK STOCK STOCK STOCK STOCK STOCK
---------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Capital Partners, Inc.
("MLCP")(1)(5)(7).................. 8,409,761 72.8% 0 -- 0 -- 71.6%
Other affiliates of Merrill Lynch &
Co., Inc. (2)(5)................... 2,082,205 18.0% 0 -- 0 -- 17.7%
Institutional Investors(8).......... 1,059,417 9.2% 0 -- 0 -- 9.0%
Kurt C. Hall(3)(6).................. 0 -- 41,750 23.3% 0 -- 0.4%
Michael Pade(3)(6).................. 0 -- 6,775 3.8% 811 6.2% 0.1%
Dennis R. Daniels(3)(6)............. 0 -- 12,600 7.0% 0 -- 0.1%
Jim Ruybal(3)(6).................... 0 -- 20,850 11.6% 0 -- 0.2%
Thomas C. Elliot(3)(6).............. 0 -- 30,370 16.9% 550 4.2% 0.3%
James J. Burke, Jr.(4)(7)........... 0 -- 0 -- 0 -- --
Albert J. Fitzgibbons, III(4)(7).... 0 -- 0 -- 0 -- --
Robert F. End(4)(7)................. 0 -- 0 -- 0 -- --
Scott Shaw(4)....................... 0 -- 0 -- 0 -- --
John W. Boyle(9).................... 0 -- 0 -- 0 -- --
Directors and Executive Officers as
a group (12 persons)(6)............ 0 -- 141,995 79.2% 1,361 10.4% 1.2%
</TABLE>
- - --------
(1) Shares of Common Stock beneficially owned by MLCP are held as follows:
5,049,958.2 by Merrill Lynch Capital Appreciation Partnership No. B-XIX,
L.P. ("MLCAP B-XIX"); 46,396.0 by Merrill Lynch Capital Appreciation
Partnership No. B-XX, L.P. ("MLCAP B-XX"); 3,229,723.5 by Roman Nineteen
Offshore Fund Holdings N.V. ("Roman Holdings") and 83,683.3 by MLCP
Associates L.P. No. II ("MLCP II"). MLCP is the indirect managing general
partner of MLCAP B-XIX and MLCAP B-XX and the general partner of MLCP II.
Affiliates of MLCP are the sole stockholders of Roman Holdings. The
address of each of the aforementioned record holders is South Tower, World
Financial Center, New York, New York 10080 except for Roman Holdings for
which the address is c/o CIBC Bank & Trust, P.O. Box 696GT, Edward St.,
George Town, Grand Cayman, Cayman Islands BWI.
(2) Shares of Common Stock beneficially owned by other affiliates of Merrill
Lynch & Co., Inc. are owned of record as follows: 1,932,204.7 by ML IBK
Positions, Inc. and 150,000.0 by Merrill Lynch KECALP L.P. 1991. The
address for ML IBK Positions, Inc. and Merrill Lynch KECALP L.P. 1991 is
South Tower, World Financial Center, New York, New York 10080.
(3) The address for each of Messrs. Hall, Pade, Daniels, Ruybal and Elliot is
9110 E. Nichols Avenue, Englewood, Colorado 80112-3405.
(4) The address for each of Messrs. Burke, Fitzgibbons, End and Shaw is c/o
Stonington Partners, Inc., 767 Fifth Avenue, New York, New York 10153.
(5) Entities affiliated with Merrill Lynch & Co., Inc. own approximately
10,491,966 of the outstanding shares of Common Stock, which represents
approximately 89.3% of the outstanding shares.
(6) Includes vested incentive options that are exercisable within 60 days and
shares of Class C Common Stock.
(7) Each of Messrs. Burke, Fitzgibbons and End are members of the Board of
Directors of MLCP, but each disclaims beneficial ownership of the shares
of Common Stock.
(8) To the knowledge of the Company, none of the Institutional Investors
beneficially owns 5% or more of the outstanding shares of Common Stock.
(9) The address for Mr. Boyle is 7 North Pine Circle, Belleair, Florida 34616.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITIES
The following description of certain of the material terms of the Senior
Credit Facilities is based upon the Senior Credit Agreement (the "Credit
Agreement") and does not purport to be complete and is qualified in its
entirety to the full text of the Credit Agreement which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
execution of the Senior Credit Facilities and the delivery of the required
documentation thereunder occurred at the time of the closing of the Note
Offering. All capitalized terms used in this section without definition shall
have the meanings assigned to them in the Credit Agreement.
Facilities (Including Delayed Draws)
The Credit Agreement provides that, subject to the terms and conditions
thereof, the Senior Credit Facilities provide for a (i) $70.0 million term
loan (the "Tranche A Term Loan"), $20.0 million of which will be available at
Closing through December 31, 1998, $5.0 million of which was available for a
single delayed draw until May 31, 1998 (which was utilized to redeem a portion
of the Senior Secured Notes) and $45.0 million of which is available to
refinance the Prop I Mortgage Notes upon the maturity thereof, (ii) $118.0
million term loan (the "Tranche B Term Loan"), $100.0 million of which was
utilized at Closing and $18.0 million which was available for a single delayed
draw until May 31, 1998 (which was utilized to redeem a portion of the Senior
Secured Notes), (iii) $162.0 million term loan (the "Tranche C Term Loan"),
$60 million of which was available at Closing, $12.0 million which was
available for a single delayed draw until May 31, 1998 (which was utilized to
redeem a portion of the Senior Secured Notes) and $90 million of which was
available for a single delayed draw until May 31, 1998 (which was utilized to
redeem the remainder of the Senior Secured Notes) and (iv) $100 million
revolving credit facility (the "Revolving Loans"). Borrowings under the Senior
Credit Facilities are hereinafter referred to as "Loans."
The Senior Credit Facilities provide that the Company's ability to borrow
thereunder on and after the Closing Date are subject among other things to the
requirement that the representations and warranties contained therein are true
and correct in all material respects on and as of such borrowing date and that
no Default or Event of Default shall exist or result from such borrowing. The
Company's ability to draw the portions of the Tranche A Term Loan and Tranche
C Term Loan used to redeem the Senior Secured Notes, was subject among other
things to the pledge of the collateral contemplated by the Credit Agreement
and the Loan Documents, to the addition of UAR as a guarantor thereof and to
the absence of a Default or Event of Default thereunder or resulting from such
borrowing.
Guarantees and Collateral
The Senior Credit Facilities are guaranteed, on a joint and several basis,
by UATC and by certain of the Company's other subsidiaries, including UAR and,
after the repayment of the Prop I Mortgage Notes, will also be guaranteed by
Prop I. The Senior Credit Facilities are secured by among other things the
capital stock of UATC, UAR, Prop I, and certain other subsidiaries of the
Company and UATC and by an intercompany note of UATC to the Company.
Maturity, Amortization and Prepayment
The Revolving Loans and the Tranche A Term Loan have a final maturity date
of seven years from the Closing Date. The Tranche A Term Loan is subject to
mandatory amortization in installments aggregating 1% of the principal amount
thereof per annum in the first three years and is fully amortizing in years
four through seven. The maximum amount available in respect of the Revolving
Loans will reduce in years four through seven.
The Tranche B Term Loan has a maturity date of eight years from the Closing
Date and the Tranche C Term Loan has a maturity date of nine years from the
Closing Date. The Tranche B Term Loan and the Tranche C
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Term Loan are required to be amortized in installments aggregating 1% of the
principal amount thereof per annum until the final year, with the balance
payable during the final year.
The Credit Agreement provides that the Company must prepay Loans (or the
Commitments must be reduced) from (i) 100% of the proceeds of sales of assets
(with certain exceptions for among other things the reinvestment of the net
proceeds in the business and for the proceeds of certain sale and leaseback
transactions), (ii) from a specified percentage (ranging from 50% to 100%
based upon the then applicable Total Leverage Ratio) of the proceeds of equity
offerings (with certain permitted exceptions, including for up to $50 million
of proceeds used to redeem the Notes, the Exchange Notes, the Other Notes or
the Other Exchange Notes), (iii) 100% of the proceeds of additional debt
issuances, with certain exceptions and (iv) from a specified percentage
(ranging from 50% to 75% based upon the then applicable Total Leverage Ratio)
of Excess Cash Flow. If a Default or Event of Default exists, all of such
specified percentages will be 100%.
Interest
At the Company's option, with certain exceptions, the Loans may be comprised
of either Base Rate Borrowings or LIBOR Borrowings. Loans will bear interest
at LIBOR or the Reference Rate plus in each case an applicable spread (the
"Applicable Spread") determined from time to time by reference to the
Company's Total Leverage Ratio.
Covenants; Events of Default; Representations and Warranties
The Credit Agreement contains certain representations and warranties and
certain affirmative, negative and financial covenants. Affirmative covenants
include covenants with respect to, among other things, reporting and notices,
preservation of corporate existence, maintenance of properties, insurance,
payment of obligations, compliance with laws, environmental laws, ERISA, use
of proceeds and interest rate protection. Negative covenants include covenants
with respect to, among other things, limitations on indebtedness, liens and
Negative Pledges, dispositions of assets, consolidations and mergers, loans
and investments, affiliate transactions, conduct of business, compliance with
ERISA, lease obligations, capital stock and equity issuances, restricted
payments, priority of loan payments and amendments to certain other
agreements.
The Senior Credit Facilities also contain certain financial covenants
including with respect to maximum Total Leverage Ratio and maximum Senior
Leverage Ratio, a minimum ratio of Operating Cash Flow plus Pro Forma Lease
Expense to Pro Forma Debt Service and a minimum ratio of Operating Cash Flow
plus Consolidated Lease Expense to Consolidated Interest Expense plus
Consolidated Lease Expense. The Credit Agreement requires the establishment of
an interest rate protection program (including interest rate protection and/or
fixed debt) with respect to at least 50% of the aggregate Funded Indebtedness,
with certain exceptions.
The failure to satisfy any of the covenants constitutes an Event of Default
under the Credit Agreement. The Credit Agreement also includes other events of
default, including, without limitation, nonpayment, misrepresentation, cross-
default to other indebtedness and interest rate contracts, including without
limitation the Notes, the Exchange Notes, the Other Notes and the Other
Exchange Notes, material adverse change, bankruptcy, ERISA, judgments,
collateral, guarantees, involuntary closings and change of ownership or
control.
PROP I MORTGAGE NOTES
The Prop I Mortgage Notes were issued by Prop I under an Indenture of
Mortgage and Deed of Trust, dated October 1, 1988. The Prop I Mortgage Notes
constitute senior secured obligations of Prop I and will effectively rank
senior to the Notes and the Exchange Notes with respect to the assets of Prop
I. The Prop I Mortgage Notes bear interest at a rate of 11.15% per annum.
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Principal and interest on the Prop I Mortgage Notes are payable in monthly
installments with a lump sum payment of principal and accrued and unpaid
interest, due on November 1, 1998. The outstanding principal balance of the
Prop I Mortgage Notes on the maturity date will be approximately $45.7
million. The Prop I Mortgage Notes are secured by, among other things, a first
mortgage on Prop I's theatre properties and the assignment of the leases of
such theatres with UATC.
The Indenture of Mortgage contains certain restrictive covenants that impose
limitations on Prop I's ability to, among other things, sell or substitute any
of its properties or incur additional debt.
As of March 31, 1998, $46.0 million of aggregate principal amount of Prop I
Mortgage Notes was outstanding.
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DESCRIPTION OF THE OTHER EXCHANGE NOTES
Concurrently with this Exchange Offer, the Company is also offering in the
Other Exchange Offer to exchange up to an aggregate principal amount of
$50,000,000 of the Floating Rate Notes, or Other Notes, by a separate
Prospectus dated the date hereof. Consummation of the Other Exchange Offer is
not conditioned upon consummation of the Exchange Offer. The Floating Rate
Exchange Notes, issued pursuant to the Other Indenture, will rank pari passu
with the Exchange Notes offered hereby. The terms and conditions of the
Exchange Notes offered hereby and the Floating Rate Exchange Notes will be
substantially equivalent in all material respects, except for the final
maturity, interest rates thereon, the interest payment dates and the
redemption provisions. The Floating Rate Exchange Notes will mature on October
15, 2007. The Floating Rate Exchange Notes will bear interest at a rate per
annum, determined quarterly, equal to the Applicable LIBOR Rate (437.5 basis
points over the LIBOR Rate), as defined in the Other Indenture. Interest on
the Floating Rate Exchange Notes will accrue from their issue date and is
payable quarterly on January 15, April 15, July 15 and October 15 of each
year, commencing July 15, 1998.
The Floating Rate Exchange Notes are redeemable at the option of the
Company, in whole or in part, on any Interest Payment date on or after April
15, 1999 at the redemption prices set forth in the Other Indenture, together
with accrued and unpaid interest, if any, to the date of redemption.
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DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The Exchange Notes are to be issued under an Indenture, to be dated as of
April 21, 1998, between the Company, as issuer, and State Street Bank and
Trust Company of Missouri, N.A. (the "Trustee"). The following summary of
certain provisions of the Indenture and the Exchange Notes does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Indenture (which has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part), including the
definitions of certain terms therein and those terms made a part thereof by
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
Whenever particular defined terms of the Indenture not otherwise defined
herein are referred to, such defined terms are incorporated herein by
reference. For definitions of certain capitalized terms used in the following
summary, see "--Certain Definitions." For purposes of this section, references
to the Company mean United Artists Theatre Company (formerly named Oscar I
Corporation), excluding its subsidiaries.
On April 21, 1998, the Company issued $225.0 million aggregate principal
amount of Notes under the Indenture. The terms of the Exchange Notes are
substantially identical to the Notes, except for certain transfer restrictions
and registration and other rights relating to the exchange of the Notes for
the Exchange Notes. The Trustee will authenticate and deliver Exchange Notes
for original issue only in exchange for a like principal amount of Notes. Any
Notes that remain outstanding after the consummation of the Exchange Offer,
together with the Exchange Notes, will be treated as a single class of
securities under the Indenture. Accordingly, all references herein to
specified percentages in aggregate principal amount of the outstanding
Exchange Notes shall be deemed to mean, at any time after the Exchange Offer
is consummated, such percentage in aggregate principal amount of the Notes and
Exchange Notes then outstanding.
As of April 21, 1998, all of the Company's subsidiaries were Restricted
Subsidiaries. However, under certain circumstances, the Company will be able
to designate current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
Principal of, premium, if any, and interest on the Exchange Notes will be
payable, and the Exchange Notes may be exchanged or transferred, at the office
or agency of the Company in the Borough of Manhattan, the City of New York
(which initially will be the corporate trust office of the Trustee at 61
Broadway, 15th Floor, Corporate Trust Window, New York, New York 10006;
provided that, at the option of the Company, payment of interest may be made
by check mailed to the Holders at their addresses as they appear in the
Security Register.
The Exchange Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 of principal amount and any integral
multiple thereof. See "--Book-Entry; Delivery and Form." No service charge
will be made for any registration of transfer or exchange of the Exchange
Notes, but the Company may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will be unsecured senior subordinated obligations of the
Company, limited to $225.0 million aggregate principal amount, and will mature
on April 15, 2008. Each Exchange Note offered hereby will initially bear
interest at 9 3/4% per annum from April 21, 1998, or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semiannually (to Holders of record at the close of business on April 1 or
October 1 immediately preceding the Interest Payment Date) on April 15 and
October 15 of each year, commencing October 15, 1998. Interest on the Exchange
Notes will be computed on the basis of a 360-day year consisting of twelve 30-
day months.
OPTIONAL REDEMPTION
The Exchange Notes will be redeemable, at the Company's option, in whole or
in part, at any time or from time to time, on or after April 15, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first class mail to each Holder's last address as it appears in the
Security Register, at the
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following Redemption Prices (expressed in percentages of principal amount),
plus accrued and unpaid interest, if any, to the Redemption Date (subject to
the right of Holders of record on the relevant Regular Record Date that is on
or prior to the Redemption Date to receive interest due on an Interest Payment
Date), if redeemed during the 12-month period commencing April 15 of the years
set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
2003 ....................... 104.875%
2004 ....................... 103.250
2005 ....................... 101.625
2006 and thereafter ........ 100.000
</TABLE>
In addition, at any time prior to April 15, 2001, the Company may redeem up
to 35% of the principal amount of the Exchange Notes with the proceeds
received by the Company from one or more Public Equity Offerings following
which there is a Public Market, at any time or from time to time in part, at a
Redemption Price (expressed as a percentage of principal amount) of 109.75%,
plus accrued and unpaid interest to the Redemption Date (subject to the rights
of Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date); provided
that at least $146.25 million aggregate principal amount of Exchange Notes
remains outstanding after each such redemption. Notice of any such redemption
must be given not later than 90 days after consummation of such Public Equity
Offering.
SELECTION AND NOTICE
In the case of any partial redemption, selection of the 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 th Exchangee Notes are not listed on a national
securities exchange, by lot or by such other method as the Trustee in its sole
discretion shall deem to be fair and appropriate; provided that no Exchange
Note of $1,000 in principal amount or less shall be redeemed in part. If any
Exchange Note is to be redeemed in part only, the notice of redemption
relating 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. On and after the Redemption
Date, the Exchange Notes or portions thereof called for redemption shall cease
to accrue interest (unless the Company defaults in the payment of such
Exchange Notes at the Redemption Price and accrued interest to the Redemption
Date).
REPURCHASE OF EXCHANGE NOTES UPON A CHANGE OF CONTROL
The Company must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Exchange Notes then
outstanding, at a purchase price equal to 101% of the principal amount
thereof, plus accrued interest (if any) to the Payment Date.
If an Offer to Purchase is made, there can be no assurance that the Company
will have available funds sufficient to pay the purchase price for all
Exchange Notes delivered by Holders seeking to accept the Offer to Purchase.
An Offer to Purchase might constitute an event of default under the terms of
Senior Indebtedness, including the Credit Agreement. In addition, any
instruments governing Senior Indebtedness may prohibit the Company from
purchasing any Exchange Notes prior to their maturity (including pursuant to
an Offer to Purchase). If on the Payment Date for an Offer to Purchase the
Company does not have sufficient funds to pay the purchase price or is unable
to obtain the consent of the holders of such Senior Indebtedness or to repay
such Senior Indebtedness, an Event of Default would occur under the Exchange
Notes. In the event the Company is required to purchase outstanding Exchange
Notes pursuant to an Offer to Purchase, the Company expects that it would seek
third party financing to the extent it does not have available funds to meet
its obligations. However, there can be no assurance that the Company would be
able to obtain such financing.
The Company will not be required to make an Offer to Purchase pursuant to
this covenant if a third party makes an Offer to Purchase in compliance with
this covenant and repurchases all Exchange Notes validly tendered and not
withdrawn under such Offer to Purchase.
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The Company will comply with any tender offer rules under the Exchange Act,
including Rule 14e-1, in connection with any Offer to Purchase. To the extent
that the provisions of any applicable securities laws or regulations conflict
with the provisions of the Indenture, the Company will comply with such
securities laws and regulations and shall not be deemed to have breached its
obligations under the Indenture by virtue thereof.
RANKING AND SUBORDINATION
The Exchange Notes will be senior subordinated Indebtedness of the Company
and will rank pari passu with the Other Notes and Other Exchange Notes. The
payment of the Senior Subordinated Obligations will, to the extent set forth
in the Indentures, be subordinated in right of payment to the prior payment in
full, in cash or cash equivalents, of all Senior Indebtedness. In addition,
the Exchange Notes will be effectively subordinated to all existing and future
liabilities (including the guarantees of the Company's obligations under the
Credit Agreement and trade payables) of the subsidiaries of the Company. At
May 31, 1998, the Company and its subsidiaries had approximately $644.9
million of indebtedness (excluding trade payables) outstanding, consisting of
$310.0 million of Senior Indebtedness of the Company (guaranteed by certain of
the Company's subsidiaries), $59.9 million of other indebtedness of the
Company's subsidiaries, $225.0 million representing the Fixed Rate Notes and
$50.0 million representing the Floating Rate Notes. In addition, on May 31,
1998 the Company had additional delayed draw and revolving credit availability
of $140.0 million under the Senior Credit Facilities, all of which would be
Senior Indebtedness, if borrowed. Additional Senior Indebtedness may be
incurred by the Company and additional indebtedness may be incurred by the
Company and its subsidiaries, in each case from time to time, subject to
certain restrictions. The Notes and the Exchange Notes (which together will
have an aggregate principal amount of $225.0 million) will rank pari passu
with the Floating Rate Notes and Floating Rate Exchange Notes (which together
will have an aggregate principal amount of $50.0 million). See
"Capitalization." Although the Indenture contains limitations on the amount of
additional Indebtedness that the Company and its Restricted Subsidiaries may
incur, the amount of such Indebtedness could be substantial and such
Indebtedness could be Senior Indebtedness. See "Risk Factors--Subordination of
Exchange Notes" and "--Holding Company Structure; Source of Repayment of
Exchange Notes; Effective Subordination of Exchange Notes to Indebtedness of
Subsidiaries."
Upon any payment or distribution of assets or securities of the Company of
any kind or character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness (including any interest accruing on or after, or which
would accrue but for, an event of bankruptcy, whether or not such interest is
an allowed claim enforceable against the debtor under the United States
Bankruptcy Code) shall first be paid in full, in cash or cash equivalents,
before the Holders of the Exchange Notes or the Trustee on behalf of the
Holders of the Exchange Notes shall be entitled to receive any payment by (or
on behalf of) the Company on account of Senior Subordinated Obligations or any
payment to acquire any of the Exchange Notes for cash, property or securities
(other than any payment in the form of Junior Securities), or any distribution
with respect to the Exchange Notes of any cash, property or securities (other
than any payment in the form of Junior Securities). Before any payment may be
made by, or on behalf of, the Company on any Senior Subordinated Obligations,
upon any such dissolution, winding up, liquidation or reorganization, any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities (other than any payment in
the form of Junior Securities), to which the Holders of the Exchange Notes or
the Trustee on behalf of the Holders of the Exchange Notes would be entitled,
but for the subordination provisions of the Indenture, shall be made by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person making such payment or distribution or by the Holders
of the Exchange Notes or the Trustee if received by them or it, directly to
the holders of the Senior Indebtedness (pro rata to such holders on the basis
of the respective amounts of Senior Indebtedness held by such holders) or
their representatives or to any trustee or trustees under any indenture
pursuant to which any such Senior Indebtedness may have been issued, as their
respective interests
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appear, to the extent necessary to pay all such Senior Indebtedness in full,
in cash or cash equivalents after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
No direct or indirect payment (other than any payment in the form of Junior
Securities) by or on behalf of the Company of Senior Subordinated Obligations,
whether pursuant to the terms of the Exchange Notes or upon acceleration or
otherwise, shall be made if, at the time of such payment, there exists a
default in the payment of all or any portion of the obligations under or with
respect to any Senior Indebtedness of the Company and such default shall not
have been cured or waived or the benefits of this sentence waived by or on
behalf of the holders of such Senior Indebtedness. In addition, during the
continuance of any other event of default with respect to any Designated
Senior Indebtedness pursuant to which the maturity thereof may be accelerated,
upon receipt by the Trustee of written notice from the trustee or other
representative for the holders of such Designated Senior Indebtedness (or the
holders of at least a majority in principal amount of such Designated Senior
Indebtedness then outstanding), no payment of Senior Subordinated Obligations
may be made by or on behalf of the Company upon or in respect of the Exchange
Notes for a period (a "Payment Blockage Period") commencing on the date of
receipt of such notice and ending 179 days thereafter (unless, in each case,
such Payment Blockage Period shall be terminated by written notice to the
Trustee from such trustee of, or other representatives for, such holders or by
payment in full in cash or cash equivalents of such Designated Senior
Indebtedness or such event of default has been cured or waived). Not more than
one Payment Blockage Period may be commenced with respect to the Notes during
any period of 360 consecutive days. Notwithstanding anything in the Indenture
to the contrary, there must be 180 consecutive days in any 360-day period in
which no Payment Blockage Period is in effect. No event of default that
existed or was continuing (it being acknowledged that any subsequent action
that would give rise to an event of default pursuant to any provision under
which an event of default previously existed or was continuing shall
constitute a new event of default for this purpose) on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or shall
be made, the basis for the commencement of a second Payment Blockage Period by
the representative for, or the holders of, such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such event of default shall have been cured or waived for a period of not less
than 90 consecutive days.
To the extent any payment of Senior Indebtedness (whether by or on behalf of
the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as
if such payment had not occurred. To the extent the obligation to repay any
Senior Indebtedness is declared to be fraudulent, invalid, or otherwise set
aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then the obligation so declared fraudulent, invalid or otherwise
set aside (and all other amounts that would come due with respect thereto had
such obligation not been so affected) shall be deemed to be reinstated and
outstanding as Senior Indebtedness for all purposes hereof as if such
declaration, invalidity or setting aside had not occurred.
If the Company fails to make any payment on the Exchange Notes when due or
within any applicable grace period, whether or not on account of the payment
blockage provision referred to above, such failure would constitute an Event
of Default under the Indenture and would enable the Holders to accelerate the
maturity thereof. See"--Events of Default."
By reason of the subordination provisions described above, in the event of
liquidation or insolvency, creditors of the Company who are not holders of
Senior Indebtedness may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than Holders of the Exchange
Notes.
The subordination provisions described above will cease to be applicable to
the Exchange Notes upon any defeasance of the Exchange Notes described under
"--Defeasance."
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CERTAIN COVENANTS
Limitation on Indebtedness
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Exchange Notes and
Indebtedness existing on the Closing Date, including Acquired Indebtedness at
United Artists Realty Company and United Artists Properties I Corp.); provided
that the Company may Incur Indebtedness, and any Restricted Subsidiary may
Incur Acquired Indebtedness, if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, (i)
the Consolidated Leverage Ratio would be less than 6:1 and (ii) the
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding the incurrence of such Indebtedness for which internal
financial statements are available, taken as one period (and after giving pro
forma effect to (A) the incurrence of such Indebtedness and (if applicable)
the application of the net proceeds therefrom, including to refinance other
Indebtedness, as if such Indebtedness was incurred, and the application of
such proceeds occurred, on the first day of such four-quarter period, (B) the
incurrence, repayment or retirement of any other Indebtedness by the Company
and its Restricted Subsidiaries since the first day of such four-quarter
period as if such Indebtedness was incurred, repaid or retired on the first
day of such four-quarter period (except that, in making such computation, the
amount of Indebtedness under any revolving credit facility shall be computed
based upon the average daily balance of such Indebtedness during such four-
quarter period) and (C) the acquisition (whether by purchase, merger or
otherwise) or disposition (whether by sale, merger or otherwise) of any
company, entity or business acquired or disposed of by the Company or its
Restricted Subsidiaries, as the case may be, since the first day of such four-
quarter period, as if such acquisition or disposition occurred on the first
day of such four-quarter period), would have been at least equal to 1.75 to
1.0.
Notwithstanding the foregoing, the Company and any Restricted Subsidiary
(except as specified below) may Incur each and all of the following: (i)
Indebtedness under the Credit Agreement in an aggregate principal amount
outstanding at any time not to exceed $450 million, less any amount of such
Indebtedness permanently repaid as provided under the "Limitation on Asset
Sales" covenant described below and less any Indebtedness Incurred in reliance
on clause (ix) below; (ii) Indebtedness owed (A) to the Company or (B) to any
Restricted Subsidiary; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness not permitted by this clause (ii); (iii) Indebtedness issued in
exchange for, or the net proceeds of which are used to refinance or refund,
then outstanding Indebtedness (other than the Prop I Mortgage Notes and
Indebtedness Incurred under clause (i), (ii), (iv), (vi) or (viii) of this
paragraph) and any refinancings thereof in an amount not to exceed the amount
so refinanced or refunded (plus premiums, prepayment penalties, accrued
interest, fees and expenses); provided that Indebtedness the proceeds of which
are used to refinance or refund the Exchange Notes or Indebtedness that is
pari passu with, or subordinated in right of payment to, the Exchange Notes
shall only be permitted under this clause (iii) if (A) in case the Exchange
Notes are refinanced in part or the Indebtedness to be refinanced is pari
passu with the Exchange Notes, such new Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which such new Indebtedness
is outstanding, is expressly made pari passu with, or subordinate in right of
payment to, the remaining Exchange Notes, (B) in case the Indebtedness to be
refinanced is subordinated in right of payment to the Exchange Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is issued or remains outstanding, is
expressly made subordinate in right of payment to the Exchange Notes at least
to the extent that the Indebtedness to be refinanced is subordinated to the
Exchange Notes and (C) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the Stated
Maturity of the Indebtedness to be refinanced or refunded, and the Average
Life of such new Indebtedness is at least equal to the remaining Average Life
of the Indebtedness to be refinanced or refunded; and provided further that in
no event may Indebtedness of the Company (other than Indebtedness in the form
of a Guarantee of Indebtedness of a Restricted Subsidiary permitted to be
incurred by such Subsidiary, which Guarantee is released upon a subsequent
refinancing of such Subsidiary's Indebtedness) be refinanced by means of any
Indebtedness of any Restricted Subsidiary pursuant to this clause (iii); (iv)
Indebtedness (A) in respect of performance, bid, surety or appeal bonds
provided in the ordinary course of business, (B) under Currency Agreements and
Interest Rate
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Agreements; provided that such agreements (a) are designed solely to protect
the Company or its Restricted Subsidiaries against fluctuations in foreign
currency exchange rates or interest rates and (b) do not increase the
Indebtedness of the obligor outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable thereunder, and (C) arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds or
bid or performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted Subsidiary
for the purpose of financing such acquisition), in a principal amount not to
exceed the gross proceeds actually received by the Company or any Restricted
Subsidiary in connection with such disposition; (v) Indebtedness of the
Company, to the extent the net proceeds thereof are promptly (A) used to
purchase Exchange Notes tendered in an Offer to Purchase made as a result of a
Change in Control or (B) deposited to defease the Exchange Notes as described
below under "Defeasance"; (vi) Guarantees of the Exchange Notes and Guarantees
of Indebtedness of the Company by any Restricted Subsidiary provided the
Guarantee of such Indebtedness is permitted by and made in accordance with the
"Limitation on Issuance of Guarantees by Restricted Subsidiaries" covenant
described below; (vii) Indebtedness represented by Capitalized Leases,
mortgage financings or purchase money obligations Incurred to finance all or
any part of the purchase price or cost of construction or improvement of
property in an aggregate principal amount outstanding at any time (together
with any refinancings thereof) not to exceed $25 million; (viii) Indebtedness
(in addition to Indebtedness permitted under clauses (i) through (vii) above
and clause (ix) below) (A) of the Company in an aggregate principal amount
outstanding at any time not to exceed $50 million and (B) of the Company or
any Restricted Subsidiaries in an aggregate principal amount outstanding at
any time not to exceed $15 million, and (ix) Indebtedness Incurred to extend,
renew, refinance or replace any Indebtedness in respect of the Prop I Mortgage
Notes outstanding on the Closing Date or any Indebtedness Incurred to extend,
renew, refinance or replace any such Indebtedness so Incurred (including
successive extensions, renewals, refinancings and replacements thereof).
(b) Notwithstanding any other provision of this "Limitation on Indebtedness"
covenant, the maximum amount of Indebtedness that the Company or a Restricted
Subsidiary may Incur pursuant to this "Limitation on Indebtedness" covenant
shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness due solely to the result of fluctuations in the exchange rates of
currencies.
(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (1) Indebtedness Incurred under
the Credit Agreement on or prior to the Closing Date shall be treated as
Incurred pursuant to clause (i) of the second paragraph of this "Limitation on
Indebtedness" covenant, (2) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (3) any
Liens granted pursuant to the equal and ratable provisions referred to in the
"Limitation on Liens" covenant shall not be treated as Indebtedness. For
purposes of determining compliance with this "Limitation on Indebtedness"
covenant, in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described in the above clauses (other
than Indebtedness referred to in clause (1) of the preceding sentence), the
Company, in its sole discretion, shall classify (and from time to time may
reclassify) such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of such clauses.
Limitation on Senior Subordinated Indebtedness
The Company shall not Incur any Indebtedness that is subordinate in right of
payment to any Senior Indebtedness unless such Indebtedness is pari passu
with, or subordinated in right of payment to, the Exchange Notes; provided
that the foregoing limitation shall not apply to distinctions between
categories of Senior Indebtedness of the Company that exist by reason of any
Liens or Guarantees arising or created in respect of some but not all such
Senior Indebtedness.
Limitation on Liens
The Company shall not Incur any Indebtedness secured by a Lien ("Secured
Indebtedness") which is not Senior Indebtedness (or Indebtedness that would
constitute Senior Indebtedness except that it is without recourse
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to the Company) unless contemporaneously therewith effective provision is made
to secure the Exchange Notes equally and ratably with (or, if the Secured
Indebtedness is subordinated in right of payment to the Exchange Notes, prior
to) such Secured Indebtedness for so long as such Secured Indebtedness is
secured by a Lien.
Limitation on Restricted Payments
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any
distribution on or with respect to its Capital Stock (other than (x) dividends
or distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire shares
of such Capital Stock and (y) pro rata dividends or distributions on Capital
Stock of Restricted Subsidiaries held by minority stockholders) held by
Persons other than the Company or any of its Restricted Subsidiaries, (ii)
purchase, redeem, retire or otherwise acquire for value any shares of Capital
Stock of (A) the Company or an Unrestricted Subsidiary (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Person (other than with respect to the Capital Stock of an Unrestricted
Subsidiary, Permitted Investments) or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock)
held by any Affiliate of the Company (other than a Wholly Owned Restricted
Subsidiary or a Restricted Subsidiary in which no Affiliate of the Company
(other than the Company or any Restricted Subsidiary) or holder of 5% or more
of the aggregate value of the Capital Stock of the Company has an interest) or
any holder (or any Affiliate (other than a Wholly Owned Restricted Subsidiary
or a Restricted Subsidiary in which no Affiliate of the Company (other than
the Company or any Restricted Subsidiary) or holder of 5% or more of the
aggregate value of the Capital Stock of the Company has an interest) of such
holder) of 5% or more of the aggregate value of the Capital Stock of the
Company, (iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of the Company that is subordinated in
right of payment to the Exchange Notes or (iv) make any Investment, other than
a Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and
be continuing, (B) the Company could not Incur at least $1.00 of Indebtedness
under the first paragraph of the "Limitation on Indebtedness" covenant or (C)
the aggregate amount of all Restricted Payments (the amount, if other than in
cash, to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution) made
after the Closing Date shall exceed the sum of (1) Consolidated EBITDA accrued
on a cumulative basis during the period (taken as one accounting period)
beginning on the first day of the fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal quarter preceding
the Determination Date for which reports have been filed with the Commission
or provided to the Trustee pursuant to the "Commission Reports and Reports to
Holders" covenant less two times Consolidated Interest Expense for such
period, plus (2) the aggregate Net Cash Proceeds received by the Company after
the Closing Date as a capital contribution or from the issuance and sale of
its Capital Stock (other than Disqualified Stock) to a Person who is not a
Subsidiary of the Company, including an issuance or sale permitted by the
Indenture of Indebtedness of the Company for cash subsequent to the Closing
Date upon the conversion or exchange of such Indebtedness into Capital Stock
(other than Disqualified Stock) of the Company, or from the issuance to a
Person who is not a Subsidiary of the Company of any options, warrants or
other rights to acquire Capital Stock of the Company (in each case, exclusive
of any Disqualified Stock or any options, warrants or other rights that are
redeemable at the option of the holder, or are required to be redeemed, prior
to the Stated Maturity of the Exchange Notes) plus (3) an amount equal to the
net reduction in Investments (other than reductions in Permitted Investments)
in any Person resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets, in each case to
the Company or any Restricted Subsidiary or from the Net Cash Proceeds from
the sale of any such Investment (except, in each case, to the extent any such
payment or proceeds are included in the calculation of Consolidated EBITDA),
or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments"), not to
exceed, in each case, the amount of Investments previously made by the Company
or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (i) the payment
of any dividend or other distribution within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
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comply with the foregoing paragraph; (ii) the redemption, repurchase,
defeasance or other acquisition or retirement for value of Indebtedness that
is subordinated in right of payment to the Exchange Notes including premium,
if any, and accrued and unpaid interest, with the proceeds of, or in exchange
for, Indebtedness Incurred under clause (iii) of the second paragraph of part
(a) of the "Limitation on Indebtedness" covenant; (iii) the repurchase,
redemption or other acquisition of Capital Stock of the Company or an
Unrestricted Subsidiary (or options, warrants or other rights to acquire such
Capital Stock) in exchange for, or out of the proceeds of a substantially
concurrent offering of, shares of Capital Stock (other than Disqualified
Stock) of the Company (or options, warrants or other rights to acquire such
Capital Stock); (iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment to the
Exchange Notes in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock (other than Disqualified
Stock) of the Company (or options, warrants or other rights to acquire such
Capital Stock); (v) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a consolidation,
merger or transfer of assets that complies with the provisions of the
Indenture applicable to mergers, consolidations and transfers of all or
substantially all of the property and assets of the Company; (vi) Investments
acquired as a capital contribution to or in exchange for Capital Stock (other
than Disqualified Stock) of the Company; (vii) the declaration or payment of
dividends on the Common Stock of the Company following a Public Equity
Offering, of up to 6% per annum of the Net Cash Proceeds received by the
Company in such Public Equity Offering; (viii) the purchase, redemption,
retirement or other acquisition for value of shares of Capital Stock of the
Company, options to purchase such shares or Indebtedness of the Company that
is subordinated in right of payment to the Exchange Notes issued in exchange
for any of the foregoing or issued in lieu of cash interest thereon (the
"Junior Notes"), held by directors, employees, or former directors or
employees of the Company or any Restricted Subsidiary (or their estates or
beneficiaries under their estates), upon their death, disability, retirement,
termination of employment or pursuant to the terms of any agreement under
which such shares of Capital Stock, options or Junior Notes were issued;
provided that the aggregate consideration paid (other than in the form of
Junior Notes) for such purchase, redemption, retirement or other acquisition
for value of such shares of Capital Stock, options or Junior Notes after the
Closing Date does not exceed $2 million in any fiscal year, plus the aggregate
Net Cash Proceeds received by the Company from the reissuance of such shares
during such fiscal year or $10 million in the aggregate, plus the aggregate
Net Cash Proceeds received by the Company from the reissuance of such shares
(unless such repurchases are made with the proceeds of insurance policies and
the shares of Capital Stock are repurchased from the executors,
administrators, testamentary trustees, heirs, legatees or beneficiaries); or
(ix) the redemption or other acquisition of the Preferred Stock as
contemplated by the Transactions; provided that, except in the case of clauses
(i), (iii) and (ix), no Default or Event of Default shall have occurred and be
continuing or occur as a consequence of the actions or payments set forth
therein.
Each Restricted Payment permitted pursuant to the preceding paragraph (other
than the Restricted Payment referred to in clause (ii) and (ix) thereof, an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock
referred to in clauses (iii), (iv) or (viii) shall be included in calculating
whether the conditions of clause (C) of the first paragraph of this
"Limitation on Restricted Payments" covenant have been met with respect to any
subsequent Restricted Payments; provided that the payment of any dividend or
other distribution shall not be included in calculating whether the conditions
of clause (C) of the first paragraph of this "Limitation on Restricted
Payments" covenant have been met if the declarations of such dividend or other
distribution has been included in such calculation. In the event the proceeds
of an issuance of Capital Stock of the Company are used for the redemption,
repurchase or other acquisition of the Exchange Notes, or Indebtedness that is
pari passu with the Exchange Notes, then the Net Cash Proceeds of such
issuance shall be included in clause (C) of the first paragraph of this
"Limitation on Restricted Payments" covenant only to the extent such proceeds
are not used for such redemption, repurchase or other acquisition of
Indebtedness.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
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Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary, (ii) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (iii)
make loans or advances to the Company or (iv) transfer any of its property or
assets to the Company.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Agreement, the
Indenture or any other agreements in effect on the Closing Date, and any
extensions, refinancings, renewals or replacements of such agreements;
provided that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements are no less favorable in any material
respect to the Holders than those encumbrances or restrictions that are then
in effect and that are being extended, refinanced, renewed or replaced; (ii)
existing under or by reason of applicable law; (iii) existing with respect to
any Person or the property or assets of such Person acquired by the Company or
any Restricted Subsidiary, existing at the time of such acquisition and not
incurred in contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person other than
such Person or the property or assets of such Person so acquired and any
extensions, refinancings, renewals or replacements thereof; provided that the
encumbrances and restrictions in any such extensions, refinancings, renewals
or replacements are no less favorable in any material respect to the Holders
than those encumbrances or restrictions that are then in effect and that are
being extended, refinanced, renewed or replaced; (iv) in the case of clause
(iv) of the first paragraph of this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant, (A) that restrict in
a customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset, (B) existing by virtue of any transfer of, agreement to transfer,
option or right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by the Indenture
or (C) arising or agreed to in the ordinary course of business, not relating
to any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of the Company or any Restricted
Subsidiary in any manner material to the Company and the Restricted
Subsidiaries, taken as a whole; (v) with respect to a Restricted Subsidiary
and imposed pursuant to an agreement that has been entered into for the sale
or disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary; or (vi) contained in the
terms of any Indebtedness or any agreement pursuant to which such Indebtedness
was issued if (A) the encumbrance or restriction applies only in the event of
a payment default or a default with respect to a financial covenant contained
in such Indebtedness or agreement, (B) the encumbrance or restriction is not
materially more disadvantageous to the Holders of the Exchange Notes than is
customary in comparable financings (as determined by the Company) and (C) the
Company determines that any such encumbrance or restriction will not
materially affect the Company's ability to make principal or interest payments
on the Exchange Notes. Nothing contained in this "Limitation on Dividend and
Other Payment Restrictions Affecting Restricted Subsidiaries" covenant shall
prevent the Company or any Restricted Subsidiary from (1) creating, incurring,
assuming or suffering to exist any Liens otherwise permitted in the
"Limitation on Liens" covenant or (2) restricting the sale or other
disposition of property or assets of the Company or any of its Restricted
Subsidiaries that secure Indebtedness of the Company or any of its Restricted
Subsidiaries.
Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries
The Company will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except (i) to the Company or a Wholly Owned
Restricted Subsidiary; (ii) issuances of director's qualifying shares or sales
to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law; (iii) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such issuance or sale would have been
permitted to be made under the "Limitation on Restricted Payments" covenant if
made on the date of such issuance or sale; or (iv) sales of Common Stock of a
Restricted Subsidiary, provided that the Company or such Restricted Subsidiary
applies the Net Cash Proceeds, if any, from any such sale under this clause
(iv) in accordance with clause (A) or (B) of the "Limitation on Asset Sales"
covenant described below.
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Limitation on Issuances of Guarantees by Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Exchange Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a
Guarantee (a "Subsidiary Guarantee") of payment of the Exchange Notes by such
Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee until such time as the
Exchange Notes have been paid in full; provided that this paragraph shall not
be applicable to any Guarantee of any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Exchange
Notes, then the Guarantee of such Guaranteed Indebtedness shall be pari passu
with, or subordinated to, the Subsidiary Guarantee or (B) subordinated to the
Exchange Notes, then the Guarantee of such Guaranteed Indebtedness shall be
subordinated to the Subsidiary Guarantee at least to the extent that the
Guaranteed Indebtedness is subordinated to the Exchange Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the
Company's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by the Indenture) or (ii) the release
or discharge of the Guarantee which resulted in the creation of such
Subsidiary Guarantee, except a discharge or release by or as a result of
payment under such Guarantee.
Limitation on Transactions with Shareholders and Affiliates
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of the aggregate value of the Capital
Stock of the Company or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or, if such transaction is pursuant to a written agreement,
at the time of the execution of the agreement providing therefor, in a
comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized
investment banking firm stating that the transaction is fair to the Company or
such Restricted Subsidiary from a financial point of view; (ii) any
transaction solely between the Company and any of its Wholly Owned Restricted
Subsidiaries or solely between Wholly Owned Restricted Subsidiaries; (iii) the
payment of reasonable and customary regular fees to directors of the Company
who are not employees of the Company; (iv) any payments or other transactions
pursuant to any tax-sharing agreement between the Company and any other Person
with which the Company files a consolidated tax return or with which the
Company is part of a consolidated group for tax purposes; (v) the payment of
fees to Merrill Lynch or any of its Affiliates for consulting, investment
banking or financial advisory services rendered by such Person to the Company
or any of its Subsidiaries; (vi) loans or advances to officers and employees
of the Company and its Restricted Subsidiaries made in the ordinary course of
business; provided that the aggregate amount of such loans or advances
outstanding at any time shall not exceed $1 million; (vii) any Restricted
Payments not prohibited by the "Limitation on Restricted Payments" covenant or
(viii) transactions pursuant to agreements in effect on the Closing Date that
are referred to herein or in the Company's filings with the Commission.
Notwithstanding the foregoing, any transaction or series of related
transactions
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covered by the first paragraph of this "Limitation on Transactions with
Shareholders and Affiliates" covenant and not covered by clauses (ii) through
(viii) of this paragraph, the aggregate amount of which exceeds $5 million in
value, must be approved or determined to be fair in the manner provided for in
clause (i)(A) or (B) above.
Limitation on Asset Sales
The Company will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (i) the consideration received by the
Company or such Restricted Subsidiary is at least equal to the fair market
value of the assets sold or disposed of and (ii) at least 75% of the
consideration received consists of cash or Temporary Cash Investments or the
assumption of Indebtedness of the Company or any Restricted Subsidiary,
provided that the Company or such Subsidiary is irrevocably released from all
liability under such Indebtedness. If the Company or any Restricted Subsidiary
engages in an Asset Sale, the Company may use the Net Cash Proceeds thereof,
to (i) within twelve months after the date of such Asset Sale, (A) apply an
amount equal to such excess Net Cash Proceeds to permanently repay Senior
Indebtedness of the Company or any Restricted Subsidiary in each case owing to
a Person other than the Company or any of its Restricted Subsidiaries or (B)
invest an equal amount, or the amount not so applied pursuant to clause (A)
(or enter into a definitive agreement committing to so invest within 12 months
after the date of such agreement), in property or assets (other than current
assets) of a nature or type or that are used in a business (or in a company
having property and assets of a nature or type, or engaged in a business)
similar or related to the nature or type of the property and assets of, or the
business of, the Company and its Restricted Subsidiaries existing on the date
of such investment and (ii) apply (no later than the end of the 12-month
period referred to in clause (i)) such excess Net Cash Proceeds (to the extent
not applied pursuant to clause (i)) as provided in the following paragraph of
this "Limitation on Asset Sales" covenant. The amount of such Net Cash
Proceeds required to be applied (or to be committed to be applied) during such
12-month period as set forth in clause (i) of the preceding sentence and not
applied as so required by the end of such period shall constitute "Excess
Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to
this "Limitation on Asset Sales" covenant totals at least $10 million, the
Company must commence, not later than the fifteenth Business Day of such
month, and consummate an Offer to Purchase from the Holders of the Exchange
Notes and the Floating Rate Notes (and if required by the terms of any
Indebtedness that is pari passu with the Exchange Notes ("Pari Passu
Indebtedness"), from the holders of such Pari Passu Indebtedness) on a pro
rata basis an aggregate principal amount of Exchange Notes, Floating Rate
Notes and Pari Passu Indebtedness equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount thereof, plus, in
each case, accrued interest (if any) to the Payment Date. Upon consummation of
an Offer to Purchase, any Excess Proceeds subject to such Offer to Purchase
remaining after all Exchange Notes, Floating Rate Notes and Pari Passu
Indebtedness validly tendered and not withdrawn are purchased by the Company
shall no longer constitute "Excess Proceeds" and may be used for general
corporate purposes.
The Company will comply with any tender offer rules under the Exchange Act,
including Rule 14e-1, in connection with any Offer to Purchase subject to the
provisions of this "Limitation on Asset Sales" covenant. To the extent that
the provisions of any applicable securities laws or regulations conflict with
the provisions of the Indenture, the Company will comply with such securities
laws and regulations and shall not be deemed to have breached its obligations
under the Indenture by virtue thereof.
COMMISSION REPORTS AND REPORTS TO HOLDERS
At all times from and after the earlier of (i) the date of the commencement
of this Exchange Offer or the effectiveness of the Shelf Registration
Statement (the "Registration") and (ii) the date that is six months after the
Closing Date, in either case, whether or not the Company is then required to
file reports with the Commission, the Company shall file with the Commission
all such reports and other information as it would be required to file with
the Commission by Section 13(a) or 15(d) under the Exchange Act if it were
subject thereto (unless the Commission will not accept such a filing, in which
case the Company shall provide such documents to the Trustee). The Company
shall supply the Trustee and each Holder or shall supply to the Trustee for
forwarding to each such Holder, without cost to such Holder, copies of such
reports and other information; provided, however, that copies of such reports
may omit exhibits, which the Company shall deliver at its cost to any Holder
upon request. In addition, at all times prior to the earlier of the date of
the Registration and six months after the Closing
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Date, the Company shall, at its cost, deliver to each Holder of the Exchange
Notes quarterly and annual reports substantially equivalent to those which
would be required by the Exchange Act; provided, however, that copies of such
reports may omit exhibits, which the Company shall supply at its cost to any
Holder upon request. In addition, at all times prior to the Registration, upon
the request of any Holder or any prospective purchaser of the Exchange Notes
designated by a Holder, the Company shall supply to such Holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Exchange Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions described above under "--Ranking and
Subordination"; (b) default in the payment of interest on any Exchange Note
when the same becomes due and payable, and such default continues for a period
of 30 days, whether or not such payment is prohibited by the provisions
described above under "--Ranking and Subordination"; (c) default in the
performance or breach of the provisions of the Indenture applicable to
mergers, consolidations and transfers of all or substantially all of the
assets of the Company or the failure to make or consummate an Offer to
Purchase in accordance with the "Limitation on Asset Sales" or "Repurchase of
Exchange Notes upon a Change of Control" covenant; (d) the Company defaults in
the performance of or breaches any other covenant or agreement of the Company
in the Indenture or under the Exchange Notes (other than a default specified
in clause (a), (b) or (c) above) and such default or breach continues for a
period of 60 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Exchange Notes;
(e) there occurs with respect to any issue or issues of Indebtedness of the
Company or any Significant Subsidiary having an outstanding principal amount
of $10 million or more in the aggregate for all such issues of all such
Persons, whether such Indebtedness now exists or shall hereafter be created,
(I) an event of default that has caused the holder thereof to declare such
Indebtedness to be due and payable prior to its Stated Maturity and such
Indebtedness has not been discharged in full or such acceleration has not been
rescinded or annulled within 30 days of such acceleration and/or (II) the
failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or
extended within 30 days of such payment default; (f) any final judgment or
order (to the extent not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or
retention as not so covered) shall be rendered against the Company or any
Significant Subsidiary and shall not be paid, discharged or vacated, and there
shall be any period of 30 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all such
Persons to exceed $10 million during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; (g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant Subsidiary
in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Company or any Significant Subsidiary or for all or substantially all of
the property and assets of the Company or any Significant Subsidiary or (C)
the winding up or liquidation of the affairs of the Company or any Significant
Subsidiary and, in each case, such decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; (h) the Company or any
Significant Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case under any
such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of creditors;
(i) the Company fails to redeem all of its outstanding Preferred Stock within
60 days after the Closing Date; and (j) UATC fails to redeem the Senior
Secured Notes within 60 days after the Closing Date.
If an Event of Default (other than an Event of Default specified in clause
(g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25%
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in aggregate principal amount of the Exchange Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by
the Holders), may, and the Trustee at the request of such Holders shall,
declare the principal of, premium, if any, and accrued interest on the
Exchange Notes to be immediately due and payable. Upon a declaration of
acceleration (an "Acceleration Notice"), such principal of, premium, if any,
and accrued interest shall be immediately due and payable; provided, however,
that if there are any amounts outstanding under the Credit Agreement, such
declaration shall not become effective until the earlier of (i) an
acceleration of the Indebtedness under the Credit Agreement and (ii) 5
Business Days after receipt by the Company and the Bank Agent of such
Acceleration Notice. In the event of a declaration of acceleration because an
Event of Default set forth in clause (e) above has occurred and is continuing,
such declaration of acceleration shall be automatically rescinded and annulled
if the event of default triggering such Event of Default pursuant to clause
(e) shall be remedied or cured by the Company or the relevant Significant
Subsidiary or waived by the holders of the relevant Indebtedness within 60
days after the declaration of acceleration with respect thereto. If an Event
of Default specified in clause (g) or (h) above occurs with respect to the
Company, the principal of, premium, if any, and accrued interest on the
Exchange Notes then outstanding shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. The Holders of at least a majority in aggregate principal amount
of the outstanding Exchange Notes by written notice to the Company and to the
Trustee, may waive all past defaults and rescind and annul a declaration of
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of the principal of, premium, if any, and interest on the
Exchange Notes that have become due solely by such declaration of
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. For
information as to the waiver of defaults, see "--Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Exchange Notes may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee. However, the Trustee may refuse to follow
any direction that conflicts with law or the Indenture, that may involve the
Trustee in personal liability, or that the Trustee determines in good faith
may be unduly prejudicial to the rights of Holders of Exchange Notes not
joining in the giving of such direction and may take any other action it deems
proper that is not inconsistent with any such direction received from Holders
of Exchange Notes. A Holder may not pursue any remedy with respect to the
Indenture or the Exchange Notes unless: (i) the Holder gives the Trustee
written notice of a continuing Event of Default; (ii) the Holders of at least
25% in aggregate principal amount of outstanding Exchange Notes make a written
request to the Trustee to pursue the remedy; (iii) such Holder or Holders
offer the Trustee indemnity satisfactory to the Trustee against any costs,
liability or expense; (iv) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and (v)
during such 60-day period, the Holders of a majority in aggregate principal
amount of the outstanding Exchange Notes do not give the Trustee a direction
that is inconsistent with the request. However, such limitations do not apply
to the right of any Holder of an Exchange Note to receive payment of the
principal of, premium, if any, or interest on, such Exchange Note or to bring
suit for the enforcement of any such payment, on or after the due date
expressed in the Exchange Notes, which right shall not be impaired or affected
without the consent of the Holder.
The Indenture requires certain officers of the Company to certify, on or
before a date not more than 120 days after the end of each fiscal year, that a
review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's and its Restricted Subsidiaries' performance
under the Indenture and that the Company has fulfilled all obligations
thereunder, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof.
The Company will also be obligated to notify the Trustee of any default or
defaults in the performance of any covenants or agreements under the
Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person or permit any
Person to merge with or into the
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Company unless: (i) the Company shall be the continuing Person, or the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of the
Company shall be a corporation organized and validly existing under the laws
of the United States of America or any jurisdiction thereof and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, all of the obligations of the Company on all of the Exchange Notes
and under the Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction on a pro
forma basis the Company, or any Person becoming the successor obligor of the
Exchange Notes, as the case may be, could Incur at least $1.00 of Indebtedness
under clause (i) of the first paragraph of the "Limitation on Indebtedness"
covenant; and (iv) the Company delivers to the Trustee an Officers'
Certificate (attaching the arithmetic computations to demonstrate compliance
with clause (iii)) and Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture complies
with this provision and that all conditions precedent provided for herein
relating to such transaction have been complied with; provided, however, that
clause (iii) above does not apply if, in the good faith determination of the
Board of Directors of the Company, whose determination shall be evidenced by a
Board Resolution, the principal purpose of such transaction is to change the
state of incorporation of the Company and any such transaction shall not have
as one of its purposes the evasion of the foregoing limitations.
DEFEASANCE
Defeasance and Discharge. The Indenture provides that the Company will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Exchange Notes on the 123rd day after the deposit referred to
below, and the provisions of the Indenture will no longer be in effect with
respect to the Exchange Notes (except for, among other matters, certain
obligations to register the transfer or exchange of the Exchange Notes, to
replace stolen, lost or mutilated Exchange Notes, to maintain paying agencies
and to hold monies for payment in trust) if, among other things, (A) the
Company has deposited with the Trustee, in trust, money and/or U.S. Government
Obligations that through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, premium, if any, and accrued interest on
the Exchange Notes on the Stated Maturity of such payments in accordance with
the terms of the Indenture and the Exchange Notes, (B) the Company has
delivered to the Trustee (i) either (x) an Opinion of Counsel to the effect
that Holders will not recognize income, gain or loss for federal income tax
purposes as a result of the Company's exercise of its option under this
"Defeasance" provision and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would have been the
case if such deposit, defeasance and discharge had not occurred, which Opinion
of Counsel must be based upon (and accompanied by a copy of) a ruling of the
Internal Revenue Service to the same effect unless there has been a change in
applicable federal income tax law after the Closing Date such that a ruling is
no longer required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect as the aforementioned Opinion of
Counsel and (ii) an Opinion of Counsel to the effect that the creation of the
defeasance trust does not violate the Investment Company Act of 1940 and after
the passage of 123 days following the deposit (except with respect to holders
who may be deemed to be insiders), the trust fund will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section 15 of
the New York Debtor and Creditor Law, (C) immediately after giving effect to
such deposit on a pro forma basis, no Event of Default, or event that after
the giving of notice or lapse of time or both would become an Event of
Default, shall have occurred and be continuing on the date of such deposit or
during the period ending on the 123rd day after the date of such deposit, and
such deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound, (D) the Company is not prohibited from making payments
in respect of the Exchange Notes by the provisions described under "--Ranking
and Subordination" and (E) if at such time the Exchange Notes are listed on a
national securities exchange, the Company has delivered to the Trustee an
Opinion of Counsel to the effect that the Exchange Notes will not be delisted
as a result of such deposit, defeasance and discharge.
Defeasance of Certain Covenants and Certain Events of Default. The Indenture
further provides that the provisions of the Indenture will no longer be in
effect with respect to clause (iii) under "Consolidation, Merger and Sale of
Assets" and all the covenants described herein under "Repurchase of Exchange
Notes Upon a
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Change of Control" and "Certain Covenants," clause (c) under "Events of
Default," clause (d) under "Events of Default" with respect to such other
covenants and clauses (e) and (f) under "Events of Default" shall be deemed
not to be Events of Default upon, among other things, the deposit with the
Trustee, in trust, of money and/or U.S. Government Obligations that through
the payment of interest and principal in respect thereof in accordance with
their terms will provide money in an amount sufficient to pay the principal
of, premium, if any, and accrued interest on the Exchange Notes on the Stated
Maturity of such payments in accordance with the terms of the Indenture and
the Exchange Notes, the satisfaction of the provisions described in clauses
(B)(ii), (C) (without any requirement relating to the 123-day period), and (E)
of the preceding paragraph and the delivery by the Company to the Trustee of
an Opinion of Counsel to the effect that, among other things, the Holders will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and defeasance of certain covenants and Events of Default and
will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit and
defeasance had not occurred.
Defeasance and Certain Other Events of Default. In the event the Company
exercises its option to omit compliance with certain covenants and provisions
of the Indenture with respect to the Exchange Notes as described in the
immediately preceding paragraph and the Exchange Notes are declared due and
payable because of the occurrence of an Event of Default that remains
applicable, the amount of money and/or U.S. Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Exchange Notes
at the time of their Stated Maturity but may not be sufficient to pay amounts
due on the Exchange Notes at the time of the acceleration resulting from such
Event of Default. However, the Company will remain liable for such payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Exchange Notes; provided,
however, that no such modification or amendment may, without the consent of
each Holder affected thereby, (i) change the Stated Maturity of the principal
of, or any installment of interest on, any Exchange Note or alter the optional
redemption or repurchase provisions of any such Exchange Note or the Indenture
in a manner adverse to the Holders, (ii) reduce the principal amount of, or
premium, if any, or interest on, any Exchange Note, (iii) change the place or
currency of payment of principal of, or premium, if any, or interest on, any
Exchange Note, (iv) impair the right to institute suit for the enforcement of
any payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Exchange Note, (v) reduce the above-
stated percentage of outstanding Exchange Notes the consent of whose Holders
is necessary to modify or amend the Indenture, (vi) waive a default in the
payment of principal of, premium, if any, or interest on the Exchange Notes,
(vii) modify the subordination provisions in a manner adverse to the Holders,
(viii) amend, change or modify the obligation of the Company to make and
consummate an Excess Proceeds Offer with respect to any Asset Sale in
accordance with the "Limitation on Sale of Assets" covenant or the obligation
of the Company to make and consummate a Change of Control Offer in the event
of a Change of Control in accordance with the "Purchase of Exchange Notes Upon
a Change in Control" covenant, including, in each case, amending, changing or
modifying any definition relating thereto in any manner materially adverse to
the holders of the Exchange Notes affected thereby, or (ix) reduce the
percentage or aggregate principal amount of outstanding Exchange Notes the
consent of whose Holders is necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS, OR
EMPLOYEES
The Indenture provides that no recourse for the payment of the principal of,
premium, if any, or interest on any of the Exchange Notes or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon
any obligation, covenant or agreement of the Company in the Indenture, or in
any of the Exchange Notes or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator, stockholder,
officer, director, employee or controlling person of the Company or of any
successor Person thereof or of any subsidiary guarantor or of any successor
person as such. Each Holder, by accepting the Exchange Notes, waives and
releases all such liability.
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of a Default, the
Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indenture. If a Default has occurred
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and is continuing, the Trustee will use the same degree of care and skill in
its exercise of the rights and powers vested in it under the Indenture as a
prudent person would exercise under the circumstances in the conduct of such
person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain 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 by it in respect of any such
claims, as security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest,
it must eliminate such conflict or resign.
BOOK-ENTRY; DELIVERY AND FORM
The Exchange Notes initially issued in exchange for the Notes generally will
be represented by one or more fully-registered global notes (collectively, the
"Global Exchange Note"). Notwithstanding the foregoing, Notes held in
certificated form will be exchanged solely for Exchange Notes in certificated
form, as discussed below. The Global Exchange Note will be deposited upon
issuance with the Depository and registered in the name of the Depository or a
nominee of the Depository (the "Global Exchange Note Registered Owner").
Except as set forth below, the Global Exchange Note may be transferred, in
whole and not in part, only to another nominee of the Depository or to a
successor of the Depository or its nominee.
The Company understands that DTC is a limited-purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its
participants (collectively, the "Participants" or the "Depository's
Participants") and to facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants, thereby eliminating the need for physical
movement of certificates and certain other organizations. The Depository's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain
other organizations. Access to the Depository's system is also available to
other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants" or the "Depository'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 Depository only
through the Depository's Participants or the Depository's Indirect
Participants.
The Company expects that pursuant to procedures established by the
Depository, (i) upon deposit of the Global Exchange Note, the Depository will
credit the accounts of Participants designated by the Exchange Agent with
portions of the principal amount of the Global Exchange Note and (ii)
ownership of such interests in the Global Exchange Note will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by the Depository (with respect to the interests of the
Depository's Participants), the Depository's Participants and the Depository's
Indirect Participants. 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 is limited to that
extent. For certain other restrictions on the transferability of the Exchange
Notes. See "Risk Factors--Restrictions on Transfer."
Except as described below, owners of interests in the Global Exchange Note
will not have Exchange Notes registered in their names, will not receive
physical delivery of Exchange Notes in definitive form and will not be
considered the registered owners or holders thereof under the Indenture for
any purpose.
Payments in respect of the principal of and premium, if any, and interest on
any Exchange Notes registered in the name of the Global Exchange Note
Registered Owner will be payable by the Trustee to the Global Exchange Note
Registered Owner in its capacity as the registered Holder under the Indenture.
Under the terms of the Indenture, the Company and the Trustee will treat the
persons in whose names the Exchange Notes, including the Global Exchange Note,
are registered as the owners thereof for the purpose of receiving such
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payments and for any and all other purposes whatsoever. Consequently, neither
the Company, the Trustee nor any agent of the Company or the Trustee has or
will have any responsibility or liability for (i) any aspect of the
Depository's records or any Participant's records relating to or payments made
on account of beneficial ownership interests in the Global Exchange Note, or
for maintaining, supervising or reviewing any of the Depository's records or
any Participant's records relating to the beneficial ownership interests in
the Global Exchange Note or (ii) any other matter relating to the actions and
practices of the Depository or any of its Participants. The Company believes,
however, that it is the current practice of the Depository, upon receipt of
any payment in respect of securities such as the Exchange Notes (including
principal and interest), to credit the accounts of the relevant Participants
with the payment on the payment date, in the amounts proportionate to their
respective holdings in principal amount of beneficial interests in the
relevant security as shown on the records of the Depository unless the
Depository has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of the Exchange Notes will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility
of the Depository, the Trustee or the Company. Neither the Company nor the
Trustee will be liable for any delay by the Depository or any of its
Participants in identifying the beneficial owners of the Exchange Notes, and
the Company and the Trustee may conclusively rely on and will be protected in
relying on instruction from the Global Exchange Note Registered Owner for all
purposes.
The Global Exchange Note is exchangeable for definitive Exchange Notes if
(i) the Depository notifies the Company that it is unwilling or unable to
continue as Depository of the Global Exchange Note and the Company thereupon
fails to appoint a successor Depository, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Exchange Notes in definitive registered form, (iii) there shall have occurred
and be continuing an Event of Default or any event which after notice or lapse
of time or both would be an Event of Default with respect to the Exchange
Notes or (iv) as provided in the following paragraph. Such definitive Exchange
Notes shall be registered in the names of the owners of the beneficial
interests in the Global Exchange Note as provided by the Participants.
Exchange Notes issued in definitive form will be in fully registered form,
without coupons, in minimum denominations of $1,000 and integral multiples
thereof. Upon issuance of Exchange Notes in definitive form, the Trustee is
required to register the Exchange Notes in the name of, and cause the Exchange
Notes to be delivered to, the person or persons (or the nominee thereof)
identified as the beneficial owners as the Depository shall direct.
Subject to the restrictions on the transferability of the Exchange Notes
described in "Risk Factors-- Restrictions on Transfer," an Exchange Note in
definitive form will be issued (i) in the Exchange Offer solely in exchange
for certificated Notes or (ii) following the Exchange Offer, upon the resale,
pledge or other transfer of any Exchange Note or interest therein to any
person or entity that does not participate in the Depository. The exchange of
certificated notes in the Exchange Offer may be made only by presentation of
the Notes, duly endorsed, together with a duly completed Letter of Transmittal
and other required documentation as described under "The Exchange Offer--
Procedures for Tendering" and "--Guaranteed Delivery Procedures." Transfers of
certificated Exchange Notes may be made only by presentation of Exchange
Notes, duly endorsed, to the Trustee for registration of transfer on the Note
Register maintained by the Trustee for such purposes.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
If (i) the Company notifies the Trustee in writing that the Depository is no
longer willing or able to act as a depository 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 evidenced by registered, definitive certificates
("Certificated Securities") under the Indenture, then, upon surrender by the
Global Exchange Note Holder of its Global Exchange Notes, Exchange Notes in
such form will be issued to each person that the Global Exchange Note Holder
and the Depository identify as being the beneficial owner of the related
Exchange Note.
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Neither the Company nor the Trustee will be liable for any delay by the
Global Exchange Note Holder or the Depository 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 Depository for all purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the full definition of all terms as well as any other
capitalized term used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by a Restricted Subsidiary and not Incurred in connection
with, or in anticipation of, such Person becoming a Restricted Subsidiary or
such Asset Acquisition; provided that Indebtedness of such Person which is
redeemed, defeased, retired or otherwise repaid at the time of or immediately
upon consummation of the transactions by which such Person becomes a
Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries; provided that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
investment or (ii) an acquisition by the Company or any of its Restricted
Subsidiaries of the property and assets of any Person other than the Company
or any of its Restricted Subsidiaries that constitute substantially all of a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of
the Company and its Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or
a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the Company or any
of its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed
by the provisions of the Indenture applicable to mergers, consolidations and
sales of assets of the Company; provided that "Asset Sale" shall not include
(a) sales or other dispositions of inventory, receivables and other current
assets, (b) sales, transfers or other dispositions of assets constituting a
Restricted Payment permitted to be made under the "Limitation on Restricted
Payments" covenant, (c) sales, transfers or other dispositions of assets with
a fair market value not in excess of $500,000 in any transaction or series of
related transactions, (d) sales, transfers or other dispositions of theatres
which are determined in good faith by the Board of Directors to be
nonstrategic and underperforming ("Underperforming Theatres") for
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consideration at least equal to the fair market value of the Underperforming
Theatre disposed of, (e) sales, transfers or other dispositions of Temporary
Cash Investments in the ordinary course of business for consideration at least
equal to the fair market value of the Temporary Cash Investments disposed of
or (f) sales or other dispositions of assets for consideration at least equal
to the fair market value of the assets sold or disposed of, to the extent that
the consideration received would satisfy clause (B) of the "Limitation on
Asset Sales" covenant.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the
amount of such principal payment by (ii) the sum of all such principal
payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) other than the
Permitted Holders becomes the ultimate "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed
to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), of more than a majority of the total voting power of the
Voting Stock of the Company on a fully diluted basis; (ii) the Company
consolidates with, or merges with or into, another Person or conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with, or merges with or into,
the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction (a) where
the outstanding Voting Stock of the Company is not converted or exchanged at
all (except to the extent necessary to reflect a change in the jurisdiction of
incorporation of the Company) or is converted into or exchanged for (x) Voting
Stock (other than Disqualified Stock) of the surviving or transferee
corporation or (y) Voting Stock (other than Disqualified Stock) of the
surviving or transferee corporation and cash, securities and other property
(other than Capital Stock of the surviving or transferee corporation) in an
amount that could be paid by the Company as a Restricted Payment as described
under the "Limitation on Restricted Payments" covenant and (b) immediately
after such transaction, no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders,
is the ultimate "beneficial owner" directly or indirectly, of more than a
majority of the total outstanding Voting Stock of the surviving or transferee
corporation; or (iii) individuals who on the Closing Date constitute the Board
of Directors (together with any new directors whose election by the Board of
Directors or whose nomination by the Board of Directors for election by the
Company's stockholders was approved (x) by a vote of at least a majority of
the members of the Board of Directors then in office who either were members
of the Board of Directors on the Closing Date or whose election or nomination
for election was previously so approved or (y) in writing by the Permitted
Holders) cease for any reason to constitute a majority of the members of the
Board of Directors then in office.
"Closing Date" means April 21, 1998, the date of the Indenture.
"Consolidated EBITDA" means, for any period, the operating income of the
Company and its Restricted Subsidiaries for such period plus, to the extent
such amount was deducted in calculating such operating income (i) Consolidated
Interest Expense, (ii) income taxes (other than income taxes (either positive
or negative)
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attributable to extraordinary and non-recurring gains or losses or sales of
assets), (iii) depreciation expense, (iv) amortization expense and (v) all
other non-cash items reducing such operating income, less all non-cash items
increasing such operating income, all as determined on a consolidated basis
for the Company and its Restricted Subsidiaries in conformity with GAAP;
provided that, (a) Consolidated EBITDA shall not include (x) the operating
income (or operating loss) of any Person that is not a Restricted Subsidiary,
except (I) with respect to operating income, to the extent the amount of
dividends or other distributions actually paid to the Company or any of its
Restricted Subsidiaries by such Person during such period and (II) with
respect to operating losses, to the extent of the amount of Investments made
by the Company or any Restricted Subsidiary in such Person during such period;
(y) solely for the purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of the
"Limitation on Restricted Payments" covenant described below (and in such
case, except to the extent includable pursuant to clause (x) above), the
operating income (or operating loss) of any Person accrued prior to the date
it becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially all of
the property and assets of such Person are acquired by the Company or any of
its Restricted Subsidiaries; and (z) the operating income of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary of such operating income
is not at the time permitted by the operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary; and (b)
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) (I) except for purposes of calculating the amount of
Restricted Payments that may be made pursuant to clause (C) of the first
paragraph of the "Limitation on Restricted Payments" covenant described above,
by any amount paid (but only to the extent not accrued in a prior period) or
accrued as dividends on preferred stock of the Company (other than dividends
payable in Capital Stock (other than Disqualified Stock) and other than
dividends accruing on the outstanding Preferred Stock) or any Restricted
Subsidiary owned by Persons other than the Company and any of its Restricted
Subsidiaries and (II) if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, by an amount equal to (A) the amount of the operating
income attributable to such Restricted Subsidiary multiplied by (B) the
percentage ownership interest in the income of such Restricted Subsidiary not
owned on the last day of such period by the Company or any of its Restricted
Subsidiaries.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (a) the sum of Consolidated EBITDA for such period to (b)
the Consolidated Interest Expense for such period.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers'
acceptance financing; the net costs associated with Interest Rate Agreements;
and the aggregate amount of interest in respect of Indebtedness that is
Guaranteed or secured by the Company or any of its Restricted Subsidiaries)
and all but the principal component of rentals in respect of Capitalized Lease
Obligations paid, accrued or scheduled to be paid or to be accrued by the
Company and its Restricted Subsidiaries during such period (other than
Capitalized Lease Obligations paid during such period if such obligations were
accrued in a prior period); excluding, however, (i) any amount of such
interest of any Restricted Subsidiary if the operating income of such
Restricted Subsidiary is excluded in the calculation of Consolidated EBITDA
pursuant to clause (z) of the definition thereof (but only in the same
proportion as the operating income of such Restricted Subsidiary is excluded
from the calculation of Consolidated EBITDA pursuant to clause (z) of the
definition thereof) and (ii) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the Transactions, all as
determined on a consolidated basis (without taking into account Unrestricted
Subsidiaries) in conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Determination Date, the ratio of
(i) the aggregate amount of Indebtedness of the Company and its Restricted
Subsidiaries on a consolidated basis outstanding on such Determination Date to
(ii) the aggregate amount of Consolidated EBITDA for the then most recent
fiscal quarter
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for which financial statements of the Company have been filed with the
Commission pursuant to the "Commission Reports and Reports to Holders"
covenant described above (such fiscal quarter being the "Quarter"), multiplied
by four; provided that, in making the foregoing calculation, (A) pro forma
effect shall be given to any Indebtedness to be Incurred or repaid on the
Determination Date; (B) pro forma effect shall be given to Asset Dispositions
and Asset Acquisitions (including giving pro forma effect to the application
of proceeds of any Asset Disposition) that occur from the beginning of the
Quarter through the Determination Date (the "Reference Period"), as if they
had occurred and such proceeds had been applied on the first day of such
Reference Period; and (C) pro forma effect shall be given to asset
dispositions and asset acquisitions (including giving pro forma effect to the
application of proceeds of any asset disposition) that have been made by any
Person that has become a Restricted Subsidiary or has been merged with or into
the Company or any Restricted Subsidiary during such Reference Period and that
would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (B) or (C) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the full fiscal quarter immediately
preceding the Determination Date of the Person, or division or line of
business of the Person, that is acquired or disposed of for which financial
information is available.
"Credit Agreement" means the credit agreement entered into by the Company on
the Closing Date, together with any agreements, instruments and documents
executed or delivered pursuant to or in connection with such credit agreement,
in each case as such credit agreement or such agreements, instruments or
documents may be amended, supplemented, extended, renewed, refinanced,
replaced or otherwise modified from time to time; provided, for purposes of
the provisions described under "Ranking and Subordination," that with respect
to any agreement providing for the refinancing or replacement of Indebtedness
under the Credit Agreement, such agreement shall be the Credit Agreement under
the Indenture only if a notice to that effect is delivered by the Company to
the Trustee and there shall be at any time only one instrument that is
(together with the aforementioned related agreements, instruments and
documents) the Credit Agreement under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means the Indebtedness specified in clause
(i) of the definition of Senior Indebtedness and any other Indebtedness
constituting Senior Indebtedness that, at the date of determination, has an
aggregate principal amount outstanding of at least $25 million and that is
specifically designated by the Company, in the instrument creating or
evidencing such Senior Indebtedness as "Designated Senior Indebtedness."
"Determination Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and, with respect to any Restricted
Payment, the date such Restricted Payment is to be made.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Exchange Notes, (ii) redeemable at the option of
the holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the Exchange Notes or (iii) convertible into or
exchangeable for Capital Stock referred to in clause (i) or (ii) above or
Indebtedness having a scheduled maturity prior to the Stated Maturity of the
Exchange Notes; provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
Stated Maturity of the Exchange Notes shall not constitute Disqualified Stock
if the "asset sale" or "change of control" provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions contained in "Limitation on Asset Sales" and "Repurchase of
Exchange Notes upon a Change of Control" covenants described above and such
Capital
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Stock specifically provides that such Person will not repurchase or redeem any
such stock pursuant to such provision prior to the Company's repurchase of
such Exchange Notes as are required to be repurchased pursuant to the
"Limitation on Asset Sales" and "Repurchase of Exchange Notes upon a Change of
Control" covenants described above.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy.
"Floating Rate Notes" means the $50,000,000 aggregate principal amount
Floating Rate Senior Subordinated Notes due 2007 of the Company to be issued
on the Issue Date or the Floating Rate Exchange Notes to the extent exchanged
therefor.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as approved by a significant
segment of the accounting profession. All ratios and computations contained or
referred to in the Indenture shall be computed in conformity with GAAP applied
on a consistent basis, except that calculations made for purposes of
determining compliance with the terms of the covenants and with other
provisions of the Indenture shall be made without giving effect to (i) the
amortization of any fees, expenses or goodwill incurred in connection with the
Transactions, (ii) losses incurred for the early extinguishment of debt in
connection with the Transactions and (iii) except as otherwise provided, the
amortization of any amounts required or permitted by Accounting Principles
Board Opinion Nos. 16 and 17.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or
by agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion in value of non-interest bearing or
other discount Indebtedness shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v),
(vi) or (vii) below) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if drawn
upon, to the extent such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for reimbursement),
(iv) all obligations of such Person to pay the deferred and unpaid purchase
price of property or services, which purchase price is due more than six
months after the date of placing such property in service or taking delivery
and title thereto or the completion of such services, except Trade Payables,
(v) all Capitalized
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Lease Obligations, (vi) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of
(A) the fair market value of such asset at such date of determination and (B)
the amount of such Indebtedness, (vii) all Indebtedness of other Persons
Guaranteed by such Person to the extent such Indebtedness is Guaranteed by
such Person and (viii) to the extent not otherwise included in this
definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding principal balance at such date of all unconditional obligations as
described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the
obligation, provided (A) that the amount outstanding at any time of any non-
interest bearing or other discount Indebtedness is the principal amount of
such Indebtedness at such time that would be shown on the balance sheet of
such Person prepared in conformity with GAAP, (B) that money borrowed and set
aside at the time of the Incurrence of any Indebtedness in order to prefund
the payment of the interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the payment of such
interest and (C) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee
or similar arrangement; but excluding advances to customers, suppliers or
lessors in the ordinary course of business that are, in conformity with GAAP,
recorded as accounts receivable, prepaid expenses or deposits on the balance
sheet of the Company or its Restricted Subsidiaries and negotiable instruments
held for collection) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital
Stock, bonds, notes, debentures or other similar instruments issued by, such
Person and shall include (i) the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary and (ii) the fair market value of the Capital Stock
(or any other Investment), held by the Company or any of its Restricted
Subsidiaries, of (or in) any Person that has ceased to be a Restricted
Subsidiary, including, without limitation, by reason of any transaction
permitted by clause (iii) of the "Limitation on the Issuance and Sale of
Capital Stock of Restricted Subsidiaries" covenant; provided that the fair
market value of the Investment remaining in any Person that has ceased to be a
Restricted Subsidiary shall not exceed the aggregate amount of Investments
previously made in such Person valued at the time such Investments were made
less the net reduction of such Investments. For purposes of the definition of
"Unrestricted Subsidiary" and the "Limitation on Restricted Payments" covenant
described below, (i) "Investment" shall include the fair market value of the
assets (net of liabilities (other than liabilities to the Company or any of
its Restricted Subsidiaries)) of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary, (ii) the
fair market value of the assets (net of liabilities (other than liabilities to
the Company or any of its Restricted Subsidiaries)) of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary, and the fair market value of the outstanding
Investments in any Person other than an Unrestricted Subsidiary that
thereafter becomes a Restricted Subsidiary at the time such Person becomes a
Restricted Subsidiary, shall be considered a reduction in outstanding
Investments and (iii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer.
"Junior Securities" means (i) Capital Stock of the Company (other than any
Capital Stock which, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part), (ii) securities of the Company or any other corporation
authorized by an order or decree giving effect, and stating in such order or
decree that effect is given, to the subordination of the Exchange Notes to the
Senior Indebtedness, and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy, insolvency or other
similar law, or (iii) any securities of the Company provided for by a plan of
reorganization or readjustment that
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are subordinated in right of payment to all Senior Indebtedness that may at
the time be outstanding to substantially the same extent as, or to a greater
extent than, the Exchange Notes are so subordinated.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof or any
agreement to give any security interest).
"Majority Owned Subsidiary" means any corporation, association or other
business entity that is not a Subsidiary of the Company but of which 50% of
the voting power of the outstanding Voting Stock is owned, directly or
indirectly, by the Company or one or more of its Restricted Subsidiaries as of
the Issue Date.
"ML Funds" means Merrill Lynch Capital Appreciation Partnership No. B-XIX,
L.P., Merrill Lynch Capital Appreciation Partnership No. B-XX, L.P., Roman
Nineteen Offshore Fund Holdings N.V., MLCP Associates L.P. No. II, ML IBK
Positions, Inc., and Merrill Lynch KECALP L.P. 1991 and any Affiliates of the
foregoing and any of their respective successors.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to the Company or any Restricted Subsidiary) and
proceeds from the conversion of other property received when converted to cash
or cash equivalents, net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes (whether or not such
taxes will actually be paid or are payable) as a result of such Asset Sale
without regard to the consolidated results of operations of the Company and
its Restricted Subsidiaries, taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset
Sale that either (A) is secured by a Lien on the property or assets sold or
(B) is required to be paid as a result of such sale and (iv) appropriate
amounts to be provided by the Company or any Restricted Subsidiary as a
reserve against any liabilities associated with such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as determined
in conformity with GAAP and (b) with respect to any issuance or sale of
Capital Stock, the proceeds of such issuance or sale in the form of cash or
cash equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not interest,
component thereof) when received in the form of cash or cash equivalents
(except to the extent such obligations are financed or sold with recourse to
the Company or any Restricted Subsidiary) and proceeds from the conversion of
other property received when converted to cash or cash equivalents, net of
attorney's fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Offer to Purchase" means an offer to purchase Exchange Notes by the Company
from the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that
all Exchange Notes validly tendered will be accepted for payment on a pro rata
basis; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date"); (iii) that any Exchange Note not
validly tendered will continue to accrue interest pursuant to its terms; (iv)
that, unless the Company defaults in the payment of the purchase price, any
Exchange Note accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest on and after the Payment Date; (v) that Holders
electing to have an Exchange Note purchased pursuant to the Offer to Purchase
will be required to surrender the Exchange Note, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side of the
Exchange Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day
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immediately preceding the Payment Date; (vi) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the third Business Day immediately preceding the Payment Date,
a telegram, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Exchange Notes delivered for purchase and a
statement that such Holder is withdrawing his election to have such Exchange
Notes purchased; and (vii) that Holders whose Exchange Notes are being
purchased only in part will be issued new Exchange Notes equal in principal
amount to the unpurchased portion of the Exchange Notes surrendered; provided
that each Exchange Note purchased and each new Exchange Note issued shall be
in a principal amount of $1,000 or integral multiples thereof. On the Payment
Date, the Company shall (i) accept for payment on a pro rata basis Exchange
Notes or portions thereof validly tendered pursuant to an Offer to Purchase;
(ii) deposit with the Paying Agent money sufficient to pay the purchase price
of all Exchange Notes or portions thereof so accepted; and (iii) deliver, or
cause to be delivered, to the Trustee all Exchange Notes or portions thereof
so accepted together with an Officers' Certificate specifying the Exchange
Notes or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail to the Holders of Exchange Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Exchange Note equal in principal
amount to any unpurchased portion of the Exchange Note surrendered; provided
that each Exchange Note purchased and each new Exchange Note issued shall be
in a principal amount of $1,000 or integral multiples thereof. The Company
will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase.
"Permitted Holders" means any of the ML Funds or any of their respective
Affiliates.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Majority Owned Subsidiary or a Person which will,
upon the making of such Investment, become a Restricted Subsidiary or be
merged or consolidated with or into or transfer or convey all or substantially
all its assets to, the Company or a Restricted Subsidiary; provided that such
person's primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
Investment; (ii) Temporary Cash Investments; (iii) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses in accordance with GAAP; (iv) loans or
advances to officers and employees of the Company and its Restricted
Subsidiaries made in the ordinary course of business; provided that the
aggregate amount of such loans or advances outstanding at any time shall not
exceed $1 million; (v) Investments in Interest Rate Agreements and Currency
Agreements designed solely to protect the Company or its Restricted
Subsidiaries against fluctuations in foreign currency exchange rates or
interest rates; (vi) Investments in any Person the primary business of which
is related, ancillary or complementary to the business of the Company and its
Restricted Subsidiaries on the date of such Investments; provided that the
aggregate amount of Investments made pursuant to this clause (vi) does not
exceed $25 million; (vii) Investments received in consideration for sales of
Underperforming Theatres; (viii) stock, obligations or securities received in
satisfaction of judgments or in settlement of debts owing to the Company or
any Restricted Subsidiary that arose in the ordinary course of business,
received pursuant to any plan of reorganization or similar arrangement in
satisfaction of liabilities owing to the Company or a Restricted Subsidiary
that arose in the ordinary course of business or received upon the foreclosure
or enforcement of a Lien in favor of the Company or any Restricted Subsidiary
that arose in the ordinary course of business and (ix) non-cash proceeds of
Asset Sales conducted in accordance with the provisions of "Certain
Covenants--Limitation on Asset Sales."
"Public Equity Offering" means an underwritten primary public offering of
Capital Stock (other than Disqualified Stock) of the Company, pursuant to an
effective registration statement under the Securities Act.
A "Public Market" shall be deemed to exist if (i) a Public Equity Offering
has been consummated and (ii) at least 10% of the total issued and outstanding
aggregate value of the voting Capital Stock of the Company has been
distributed by means of an effective registration statement under the
Securities Act or sales pursuant to Rule 144 under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
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"Senior Indebtedness" means the following obligations of the Company,
whether outstanding on the Closing Date or thereafter Incurred: (i) all
Indebtedness and all other monetary obligations (including expenses, fees and
other monetary obligations) of the Company under the Credit Agreement and (ii)
all other Indebtedness and all other monetary obligations of the Company
(other than the Exchange Notes), including principal and interest on such
Indebtedness, unless such Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued, is pari
passu with, or subordinated in right of payment to, the Exchange Notes;
provided that the term "Senior Indebtedness" shall not include (a) any
Indebtedness of the Company that, when Incurred, was without recourse to the
Company, (b) any Indebtedness of the Company to a Subsidiary of the Company,
or to a joint venture in which the Company has an interest, (c) any
Indebtedness of the Company, to the extent not permitted by the "Limitation on
Indebtedness" covenant or the "Limitation on Senior Subordinated Indebtedness"
covenant described above (but as to any such Indebtedness under the Credit
Agreement, no such violation shall be deemed to exist for purposes of this
clause (c) if the Bank Agent shall have received a representation from an
Officer of the Company to the effect that the issuance of such Indebtedness
does not violate such covenants), (d) any Indebtedness to any employee of the
Company or any of its respective Subsidiaries, (e) any liability for taxes
owed or owing by the Company or (f) any Trade Payables. Senior Indebtedness
will also include interest accruing on or after, or which would accrue but
for, events of bankruptcy of the Company and its respective Subsidiaries at
the rate provided for in the document governing such Senior Indebtedness,
whether or not such interest is an allowed claim enforceable against the
debtor in a bankruptcy case under bankruptcy law.
"Senior Subordinated Obligations" means any principal of, premium, if any,
or interest on the Exchange Notes or the Floating Rate Notes payable pursuant
to the terms of the Exchange Notes or the Floating Rate Notes or upon
acceleration, including any amounts received upon the exercise of rights of
rescission or other rights of action (including claims for damages) or
otherwise, to the extent relating to the purchase price of the Exchange Notes
or the Floating Rate Notes or amounts corresponding to such principal,
premium, if any, or interest on the Exchange Notes or the Floating Rate Notes.
"Significant Subsidiary" means, at any date of determination, any Restricted
Subsidiary that, together with its Subsidiaries, (i) for the most recent
fiscal year of the Company, accounted for more than 10% of the consolidated
revenues of the Company and its Restricted Subsidiaries or (ii) as of the end
of such fiscal year, was the owner of more than 10% of the consolidated assets
of the Company and its Restricted Subsidiaries, all as set forth on the most
recently available consolidated financial statements of the Company for such
fiscal year.
"S&P" means Standard & Poor's Ratings Services and its successors.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii)
with respect to any scheduled installment of principal of or interest on any
debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the voting power of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or
obligations fully and unconditionally guaranteed by the United States of
America or any agency thereof, (ii) time-deposit accounts, certificates of
deposit and money-market deposits maturing within 360 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$250 million (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank or trust
company meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than 270 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence
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under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P, (v) securities
with maturities of six months or less from the date of acquisition issued or
fully and unconditionally guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or Moody's and (vi) overnight
and demand deposits in a bank or trust company meeting the qualifications
described in clause (ii) above.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors (including
film payables) created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof at any time
prior to the Stated Maturity of the Exchange Notes, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for
the account of the holder of a depository receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below; and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary
of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns
any Capital Stock of, or owns or holds any Lien on any property of, the
Company or any Restricted Subsidiary; provided that (A) any Guarantee by the
Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary
being so designated shall be deemed an "Incurrence" of such Indebtedness and
an "Investment" by the Company or such Restricted Subsidiary (or both, if
applicable) at the time of such designation; (B) either (I) the Subsidiary to
be so designated has total assets of $1,000 or less or (II) if such Subsidiary
has assets greater than $1,000, such designation would be permitted under the
"Limitation on Restricted Payments" covenant described above and (C), if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under the "Limitation on
Indebtedness" and "Limitation on Restricted Payments" covenants described
above. The Board of Directors may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary; provided that (i) no Default or Event of Default
shall have occurred and be continuing at the time of or after giving effect to
such designation and (ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately after such designation would, if Incurred
at such time, have been permitted to be Incurred (and shall be deemed to have
been Incurred) for all purposes of the Indenture. Any such designation by the
Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the Board Resolution giving effect to such designation
and an Officers' Certificate certifying that such designation complied with
the foregoing provisions.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.
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EXCHANGE OFFER; REGISTRATION RIGHTS
The Company and the Initial Purchasers entered into the Registration Rights
Agreement on April 21, 1998, pursuant to which the Company agreed, for the
benefit of the holders of the Notes, that it will, at its own expense, (i)
file the Exchange Offer Registration Statement with the Commission with
respect to the Exchange Offer to exchange the Notes for Exchange Notes having
substantially identical terms in all material respects to the Notes (except
that the Exchange Notes will not contain terms with respect to transfer
restrictions or interest rate increases as described herein) within 60
calendar days after the Issuance Date, (ii) use its best efforts to cause the
Exchange Offer Registration Statement to be declared effective by the
Commission under the Securities Act within 120 calendar days after the
Issuance Date and (iii) use its best efforts to consummate the Exchange Offer
within 150 calendar days after the Issuance Date. Upon the Exchange Offer
Registration Statement being declared effective, the Company will offer the
Exchange Notes in exchange for surrender of the Notes. The Company will keep
the Exchange Offer open for at least 20 business days (or longer if required
by applicable law) after the date that notice of the Exchange Offer is mailed
to holders of the Notes. For each Note surrendered to the Company pursuant to
the Exchange Offer, the holder who surrendered such Note will receive an
Exchange Note having a principal amount equal to that of the surrendered Note.
Interest on each Exchange Note will accrue from the last interest payment date
on which interest was paid on the Note surrendered in exchange therefor or, if
no interest has been paid on such Note, from the original issue date of such
Note.
Each holder of the Notes (other than certain specified holders) who wishes
to exchange Notes for Exchange Notes in the Exchange Offer will be required to
make certain representations, including representations that (i) any Exchange
Notes to be received by it will be acquired in the ordinary course of
business, (ii) it has no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes, (iii) it is not an "affiliate" (as defined in Rule 405
under the Securities Act) of the Company or, if it is such an affiliate, it
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable and (iv) it is not acting on behalf of
any person who could not truthfully make the foregoing representations.
In the event that (i) any changes in law or the applicable interpretations
of the staff of the Commission do not permit the Company to effect the
Exchange Offer, (ii) for any other reason the Exchange Offer is not
consummated within 150 days after the Issuance Date, (iii) under certain
circumstances, if the Initial Purchasers shall so request or (iv) any holder
of Notes (other than the Initial Purchasers) is not eligible to participate in
the Exchange Offer, the Company will, at its expense, (a) as promptly as
practicable, file with the Commission the Shelf Registration Statement
covering resales of the Notes, (b) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act on or
prior to 150 days after the Issuance Date and (c) use its best efforts to keep
effective the Shelf Registration Statement until the earlier of two years
after its Issuance Date or such shorter period ending when all Notes covered
by the Shelf Registration Statement have been sold in the manner set forth and
as contemplated in the Shelf Registration Statement or when the Notes become
eligible for resale pursuant to Rule 144 under the Securities Act without
volume restrictions, if any. The Company, will, in the event of the filing of
the Shelf Registration Statement, provide to each holder of the Notes copies
of the prospectus which is a part of the Shelf Registration Statement, notify
each such holder when the Shelf Registration Statement has become effective
and take certain other actions as are required to permit unrestricting resales
of the Notes. A holder of Notes that sells its Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to such a
holder (including certain indemnification rights and obligations thereunder).
In addition, each holder of the Notes will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and to benefit from the provisions regarding
liquidated damages set forth in the following paragraph.
In the event that either (a) the Exchange Offer Registration Statement is
not filed with the Commission on or prior to the 60th calendar day following
the Issuance Date, (b) the Exchange Offer Registration Statement has
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not been declared effective on or prior to the 120th calendar day following
the Issuance Date or (c) the Exchange Offer is not consummated or a Shelf
Registration Statement is not declared effective on or prior to the 150th
calendar day following the Issuance Date, the interest rate borne by the Notes
shall be increased by one-quarter of one percent per annum following such 60-
day period in the case of clause (a) above, following such 120-day period in
the case of clause (b) above or following such 150-day period in the case of
clause (c) above, which rate will be increased by an additional one-quarter of
one percent per annum for each 90-day period that any additional interest
continues to accrue; provided, that the aggregate increase in such annual
interest rate may in no event exceed one percent. Upon (x) the filing of the
Exchange Offer Registration Statement after the 60-day period described in
clause (a) above, (y) the effectiveness of the Exchange Offer Registration
Statement after the 120-day period described in clause (b) above or (z) the
consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the 150-day period described
in clause (c) above, the interest rate borne by the Notes from the date of
such filing, effectiveness or consummation, as the case may be, will be
reduced to the original interest rate if the Company is otherwise in
compliance with this paragraph; provided, however, that if, after any such
reduction in interest rate, a different event specified in clause (a), (b) or
(c) above occurs, the interest rate may again be increased pursuant to the
foregoing provisions. Pending the announcement of a material corporate
transaction, if the Company issues a notice that the Shelf Registration
Statement is unusable, or such a notice is required under applicable
securities laws to be issued by the Company, and the aggregate number of days
in any consecutive twelve-month period for which all such notices are issued
or required to be issued exceeds 30 days per occurrence or more than 60 days
in the aggregate in a calendar year, then the interest rate borne by the Notes
will be increased by one-quarter of one percent per annum following the date
that such Shelf Registration Statement ceases to be usable for a period of
time in excess of that permitted above, which rate shall be increased by an
additional one-quarter of one percent per annum at the beginning of each
subsequent 90-day period; provided that the aggregate increase in such annual
interest rate may in no event exceed one percent per annum. Upon the Company
declaring that the Shelf Registration Statement is usable after the period of
time described in the preceding sentence, the interest rate borne by the Notes
will be reduced to the original interest rate if the Company is otherwise in
compliance with this paragraph; provided, however, that if after any such
reduction in interest rate a different event of the kind described in the
preceding sentence occurs, the interest rate may again be increased pursuant
to the foregoing provisions.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by, all the provisions of the Registration Rights Agreement,
which has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part and is incorporated by reference herein.
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RESTRICTIONS IMPOSED BY THE 1995 SALE LEASEBACK
In December 1995, the United Artists Theatre Circuit, Inc. 1995-A Pass
Through Trust (the "Trust") issued $116.8 million of Pass Through
Certificates, Series 1995-A (the "Certificates"). In connection with the
issuance of the Certificates, UATC and UAR sold an aggregate of 31 theatre
properties to a trust (the "Owner Trust"). UATC then entered into a lease with
the Owner Trust to lease back these theatres. To finance the purchase price,
the Owner Trust issued a mortgage note to the Trust, which in turn obtained
the funds to loan to the Owner Trust from issuing the Certificates. UATC and
certain other persons then entered into a Participation Agreement (the
"Participation Agreement") to undertake and clarify their obligations and
rights in the transaction.
The Participation Agreement imposes certain restrictions on UATC. Among
other things, these restrictions limit the ability of UATC and its
subsidiaries to incur indebtedness, pay dividends or make distributions, make
investments, enter into transactions with affiliates, guarantee indebtedness,
and transfer assets.
Under the debt incurrence restriction, UATC generally, with certain
exceptions, may not incur additional indebtedness (or permit its subsidiaries
to incur additional indebtedness) unless its "consolidated fixed charge
coverage ratio" (as defined in the Participation Agreement), which includes
"consolidated operating rental expense" (as defined in the Participation
Agreement) for the preceding four fiscal quarters is at least 1.40 to 1 after
giving effect to the incurrence of the additional indebtedness. On a pro forma
basis after giving effect to the Transactions, UATC's consolidated fixed
charge coverage ratio for the twelve months ended March 31, 1998 would have
been 1.49 to 1. Such restriction applies to draws under the Senior Credit
Facilities since such indebtedness is guaranteed by UATC. As of March 31,
1998, on such pro forma basis United Artists would have been able to draw
approximately $369.0 million under the Senior Credit Facilities in compliance
with such covenants.
Under the distribution restriction, UATC is prohibited from making
"restricted payments," which generally constitute UATC making distributions on
its capital stock, acquiring its stock or the stock of an affiliate or making
certain investments (or permitting its subsidiaries to engage in any of the
foregoing activities) unless UATC could incur additional indebtedness pursuant
to the debt incurrence test described above, the amount of such distributions
and payments does not exceed the amount available under a "basket" and no
"default" or "event of default" exists thereunder. The amount of this basket
includes 50.0% of UATC's "consolidated adjusted net income" (as defined in the
Participation Agreement) accumulated since May 12, 1992 (or if UATC has a
loss, less 100.0% of such loss) and the aggregate net proceeds received by
UATC after May 12, 1992 as capital contributions from the Company. At March
31, 1998 the basket was approximately $45.8 million. After giving effect to
the Transactions and the contribution to UATC of certain of the proceeds of
this Offering and the Other Note Offering, the basket would have been
approximately $155.8 million at March 31, 1998. The amounts available for
distribution to the Company under the basket, therefore, will be initially
insufficient to repay the principal amount of the indebtedness of the Company.
Accordingly, unless the amount of the basket increases, the Company will be
unable to obtain funds from UATC to repay the Notes and the Exchange Notes at
their maturity and will be required to attempt to refinance them. In addition,
any distributions to the Company or other restricted payments by UATC
(including distributions, if any, to repay the Floating Rate Notes and
Floating Rate Exchange Notes which mature six months prior to the Fixed Rate
Notes and Exchange Notes) will decrease the basket available to permit the
Company to make interest and principal payments on the Notes and the Exchange
Notes or otherwise. For UATC to make distributions to the Company after the
$158.8 million basket is utilized, UATC will need to generate net income or
receive additional equity contributions. UATC is generally prohibited from
transferring assets to the Company. To the extent that the 1995 Sale Leaseback
requirements are not met so that UATC cannot distribute amounts to the Company
to pay the interest and principal payments on the Notes, UATC will not be able
to make such distributions unless the 1995 Sale Leaseback is amended or
unwound, which could be at a substantial cost to the Company. There also can
be no assurance that United Artists would be able to amend or unwind the 1995
Sale Leaseback.
The computations of the "consolidated fixed charge coverage ratio" and the
restricted payments basket are based on estimates and interpretations. There
can be no assurance that the Company's above computations of
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such ratio and basket will not be contested. For example, GAAP may require
UATC to recognize the interest expense on the Senior Credit Facilities because
UATC will guarantee these facilities, which will decrease the restricted
payments basket. If UATC distributes cash to the Company to pay such interest
expense, the Participation Agreement could be interpreted as requiring a
second decrease to the basket in the amount of the distribution, resulting in
a "double-counting" of the interest expense when computing the basket.
If a Lease Event of Default (as defined in the 1995 Sale Leaseback) occurs,
the owner trustee under the 1995 Sale Leaseback may terminate the lease and
may transfer the properties to UATC (in which case UATC would be required to
pay liquidated damages as calculated pursuant to the 1995 Sale Leaseback) or
may repossess or relet the properties. The 1995 Sale Leaseback also contains
certain other restrictive covenants. The Participation Agreement and certain
other agreements related to the 1995 Sale Leaseback have been filed by United
Artists with the Commission and the foregoing discussion of the terms and
conditions of such agreements is qualified in its entirety to reference to the
agreements themselves. See "Available Information."
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DESCRIPTION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN THE EXCHANGE NOTES
The following is a summary of certain federal income tax consequences
associated with the acquisition, ownership, and disposition of the Exchange
Notes by investors who acquire the Exchange Notes in the Exchange Offer. The
following summary does not discuss all of the aspects of federal income
taxation that may be relevant to such a prospective holder of the Exchange
Notes in light of his or her particular circumstances, or to certain types of
holders (including dealers in securities, insurance companies, tax-exempt
organizations, financial institutions, broker-dealers, S corporations, and
except as discussed below, foreign corporations, persons who are not citizens
or residents of the United States and persons who hold the Exchange Notes as
part of a hedge, straddle, "synthetic security" or other integrated
investment) which are subject to special treatment under the federal income
tax laws. This discussion also does not address the tax consequences to
nonresident aliens or foreign corporations that are subject to United States
federal income tax on a net basis on income with respect to an Exchange Note
because such income is effectively connected with the conduct of a U.S. trade
or business. Such holders generally are taxed in a similar manner to U.S.
Holders (as defined below); however, certain special rules apply. In addition,
this discussion is limited to holders who hold the Exchange Notes as capital
assets within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended (the "Code"). This summary also does not describe any tax
consequences under state, local, or foreign tax laws.
The discussion is based upon the Code, Treasury Regulations, IRS rulings and
pronouncements and judicial decisions all in effect as of the date hereof, all
of which are subject to change at any time by legislative, judicial or
administrative action. Any such changes may be applied retroactively in a
manner that could adversely affect a holder of the Exchange Notes. The Company
has not sought and will not seek any rulings or opinions from the IRS or
counsel with respect to the matters discussed below. There can be no assurance
that the IRS will not take positions concerning the tax consequences of the
purchase, ownership or disposition of the Exchange Notes that are different
from those discussed herein.
PERSONS CONSIDERING THE ACQUISITION, OWNERSHIP OR DISPOSITION OF EXCHANGE
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL
INCOME TAX CONSEQUENCES THAT MAY APPLY TO THEM, AS WELL AS THE APPLICATION OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS
A U.S. Holder is any holder who or which is (i) a citizen or resident of the
United States; (ii) a domestic corporation or domestic partnership; (iii) an
estate other than a "foreign estate" as defined in Section 7701(a)(31) of the
Code; or (iv) a trust if a court within the United States 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.
Taxation of Stated Interest. In general, U.S. Holders of the Exchange Notes
will be required to include interest received thereon in taxable income as
ordinary income at the time it accrues or is received, in accordance with the
holder's regular method of accounting for federal income tax purposes.
Effect of Optional Redemption and Repurchase. Under certain circumstances
the Company may be entitled to redeem a portion of the Exchange Notes. In
addition, under certain circumstances, each holder of Exchange Notes will have
the right to require the Company to repurchase all or any part of such
holder's Exchange Notes. Treasury Regulations contain special rules for
determining the yield to maturity and maturity on a debt instrument in the
event the debt instrument provides for a contingency that could result in the
acceleration or deferral of one or more payments. The Company does not believe
that these rules are likely to apply to either the Company's right to redeem
the Exchange Notes or to the holders' rights to require the Company to
repurchase the Exchange Notes. Therefore, the Company does not intend to treat
such redemption and repurchase provisions of the Exchange Notes as affecting
the computation of the yield to maturity or maturity date of the Exchange
Notes.
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Sale or other Taxable Disposition of the Exchange Notes. The sale, exchange,
redemption, retirement or other taxable disposition of an Exchange Note will
result in the recognition of gain or loss to a U.S. Holder in an amount equal
to the difference between (a) the amount of cash and fair market value of
property received in exchange therefor (except to the extent attributable to
the payment of accrued but unpaid stated interest) and (b) the holder's
adjusted tax basis in such Exchange Note.
A U.S. Holder's basis in an Exchange Note acquired in exchange for a Note
pursuant to the terms set forth in this Prospectus should be the same as such
U.S. Holder's basis in the Notes exchanged therefor. See "Certain Federal
Income Tax Consequences of the Exchange Offer," above. Otherwise, a U.S.
Holder's initial tax basis in an Exchange Note purchased by such Holder will
be equal to the price paid for the Exchange Note.
Any gain or loss on the sale or other taxable disposition of an Exchange
Note generally will be capital gain or loss. Payments on such disposition for
accrued interest not previously included in income will be treated as ordinary
interest income.
Market Discount and Bond Premium. If a U.S. Holder of an Exchange Note has a
tax basis in the Exchange Note that is less than its "stated redemption price
at maturity," the amount of the difference will be treated as "market
discount" for U.S. federal income tax purposes, unless such difference is less
than a specified de minimis amount. Under the market discount rules of the
Code, a U.S. Holder will be required to treat any principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, an Exchange
Note as ordinary income to the extent of any accrued market discount that has
not previously been included in income. Market discount generally accrues on a
straight-line basis over the term of a debt instrument remaining after the
acquisition. A U.S. Holder may not be allowed to deduct immediately all or a
portion of the interest expense on any indebtedness incurred or continued to
purchase or to carry such Exchange Note (or the Note for which the Exchange
Note was exchanged, as the case may be). A U.S. Holder may elect to include
market discount in income currently as it accrues (either on a straight-line
basis or, if the U.S. Holder so elects, on a constant yield basis), in which
case the interest deferral rule set forth in the preceding sentence will not
apply. Such an election will apply to all bonds acquired by the U.S. Holder on
or after the first day of the first taxable year to which such election
applies and may be revoked only with the consent of the IRS.
If a U.S. Holder purchases an Exchange Note (or purchased the Note for which
the Exchange Note was exchanged, as the case may be) for an amount greater
than the sum of all amounts payable on the Exchange Note (or Note) after the
purchase date, other than stated interest, such holder will be considered to
have purchased such Exchange Note (or such Note) with "amortizable bond
premium" equal in amount to such excess, and may elect (in accordance with
applicable Code provisions) to amortize such premium, using a constant yield
method over the remaining term. The amount amortized in any year will be
treated as a reduction of the U.S. Holder's interest income from the Exchange
Note in such year. A U.S. Holder that elects to amortize bond premium must
reduce its tax basis in the Exchange Note by the amount of the premium
amortized in any year. An election to amortize bond premium applies to all
taxable debt obligations then owned and thereafter acquired by the U.S. Holder
and may be revoked only with the consent of the IRS.
Backup Withholding. The backup withholding rules require a payor to deduct
and withhold a tax if (i) the payee fails to furnish a taxpayer identification
number ("TIN") in the prescribed manner, (ii) the IRS notifies the payor that
the TIN furnished by the payee is incorrect, (iii) the payee has failed to
report properly the receipt of "reportable payments" and the IRS has notified
the payor that withholding is required, or (iv) the payee fails to certify
under the penalty of perjury that such payee is not subject to backup
withholding. If any one of the events discussed above occurs with respect to a
holder of Exchange Notes, the Company, its paying agent or other withholding
agent will be required to withhold a tax equal to 31% of any "reportable
payment" made in connection with the Exchange Notes of such holder. A
"reportable payment" includes, among other things, amounts paid in respect of
interest on an Exchange Note. Any amounts withheld from a payment to a holder
under the backup withholding rules will be allowed as a refund or credit
against such holder's federal income
109
<PAGE>
tax, provided that the required information is furnished to the IRS. Certain
holders (including, among others, corporations and certain tax-exempt
organizations) are not subject to backup withholding.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES FOR NON-U.S. HOLDERS
This section discusses special rules applicable to a Non-U.S. Holder (as
defined below) of Exchange Notes. This summary does not address the tax
consequences to stockholders, partners or beneficiaries in a Non-U.S. Holder.
For purposes hereof, a "Non-U.S. Holder" is any person who is not a U.S.
Holder and is not subject to U.S. federal income tax on a net basis on income
with respect to an Exchange Note because such income is effectively connected
with the conduct of a U.S. trade or business.
Interest. Payments of interest to a Non-U.S. Holder that do not qualify for
the portfolio interest exception discussed below will be subject to
withholding of U.S. federal income tax at a rate of 30% unless a U.S. income
tax treaty applies to reduce, or eliminate, the rate of withholding. To claim
a treaty reduced rate, the Non-U.S. Holder must provide a properly executed
Form 1001 or applicable successor form.
Interest that is paid to a Non-U.S. Holder on an Exchange Note will not be
subject to U.S. income or withholding tax if the interest qualifies as
"portfolio interest." Generally, interest on the Exchange Notes that is paid
by the Company will qualify as portfolio interest if (i) the Non-U.S. Holder
does not own, actually or constructively, 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote; (ii) the
Non-U.S. Holder is not a controlled foreign corporation that is related to the
Company actually or constructively through stock ownership for U.S. federal
income tax purposes; (iii) the Non-U.S. Holder is not a bank receiving
interest on a loan entered into in the ordinary course of business; and (iv)
either (x) the beneficial owner of the Exchange Note provides the Company or
its paying agent with a properly executed certification on IRS Form W-8 (or a
suitable substitute form), signed under penalties of perjury, that the
beneficial owner is not a "U.S. person" for U.S. federal income tax purposes
and that provides the beneficial owner's name and address, or (y) a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its business holds the
Exchange Note and certifies to the Company or its agent under penalties of
perjury that the IRS Form W-8 (or a suitable substitute) has been received by
it from the beneficial owner of the Exchange Note or a qualifying intermediary
and furnishes the payor a copy thereof.
Treasury regulations that will be effective with respect to payments made
after December 31, 1999 (the "Withholding Regulations") provide alternative
methods for satisfying the certification requirements described in clause (iv)
above. The Withholding Regulations also will require, in the case of Exchange
Notes held by a foreign partnership, that (x) the certification described in
clause (iv) above be provided by each partner and (y) the partnership provide
certain information, including its taxpayer identification number. A look-
through rule will apply in the case of tiered partnerships.
Sale, Exchange or Retirement of Exchange Notes. Any gain realized by a Non-
U.S. Holder on the sale, exchange or retirement of the Exchange Notes, will
generally not be subject to U.S. federal income tax or withholding unless (i)
the Non-U.S. Holder is an individual who was present in the U.S. for 183 days
or more in the taxable year of the disposition and meets certain other
requirements; or (ii) the Non-U.S. Holder is subject to tax pursuant to
certain provisions of the Code applicable to certain individuals who renounce
their U.S. citizenship or terminate long-term U.S. residency. If a Non-U.S.
Holder falls under (ii) above, the holder will be taxed on the net gain
derived from the sale under the graduated U.S. federal income tax rates that
are applicable to U.S. citizens and resident aliens, and may be subject to
withholding under certain circumstances. If a Non-U.S. Holder falls under (i)
above, the holder generally will be subject to U.S. federal income tax at a
rate of 30% on the gain derived from the sale (or reduced treaty rate) and may
be subject to withholding in certain circumstances.
U.S. Information Reporting and Backup Withholding Tax. Back-up withholding
generally will not apply to an Exchange Note issued in registered form that is
beneficially owned by a Non-U.S. Holder if the certification
110
<PAGE>
of Non-U.S. Holder status is provided to the Company or its agent as described
above in "Certain U.S. Federal Income Tax Consequences for Non-U.S. Holders--
Interest," provided that the payor does not have actual knowledge that the
holder is a U.S. person. The Company may be required to report annually to the
IRS and to each Non-U.S. Holder the amount of interest paid to, and the tax
withheld, if any, with respect to each Non-U.S. Holder.
If payments of principal and interest are made to the beneficial owner of an
Exchange Note by or through the foreign office of a custodian, nominee or
other agent of such beneficial owner, or if the proceeds of the sale of
Exchange Notes are paid to the beneficial owner of an Exchange Note through a
foreign office of a "broker" (as defined in the pertinent Regulations), the
proceeds will not be subject to backup withholding (absent actual knowledge
that the payee is a U.S. person). Information reporting (but not backup
withholding) will apply, however, to a payment by a foreign office of a
custodian, nominee, agent or broker that is (i) a U.S. person, (ii) a
controlled foreign corporation for U.S. federal income tax purposes, or (iii)
a foreign person that derives 50% or more of its gross income from the conduct
of a U.S. trade or business for a specified three-year period or, effective
after December 31, 1999, by a foreign office of certain other persons, unless
the broker has in its records documentary evidence that the holder is a Non-
U.S. Holder and certain conditions are met (including that the broker has no
actual knowledge that the holder is a U.S. Holder) or the holder otherwise
establishes an exemption. Payment through the U.S. office of a custodian,
nominee, agent or broker is subject to both backup withholding at a rate of
31% and information reporting, unless the holder certifies that it is a Non-
U.S. Holder under penalties of perjury or otherwise establishes an exemption.
Any amount withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a credit against, or refund of, such
holder's U.S. federal income tax liability, provided that certain information
is provided by the holder to the IRS.
111
<PAGE>
PLAN OF DISTRIBUTION
Each 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 broker-dealer
in connection with resales of Exchange Notes received in exchange for Notes
where such Notes were acquired as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180
days after the Registration Statement is declared effective, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
The Company will not receive any proceeds from any sales of the Exchange
Notes by broker-dealers. Exchange Notes received by 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, or negotiated prices. Any such resale
may be made directly to the purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells the Exchange Notes that were received by it for its
own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange 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 broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the Registration Statement is declared
effective, the Company will promptly send additional copies of this Prospectus
and any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal. The Company has agreed
to pay certain expenses incident to the Exchange Offer, other than commission
or concessions of any brokers or dealers, and will indemnify the holders of
the Exchange Notes (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes for its own account pursuant to the Exchange Offer agrees that,
upon receipt of notice from the Company of the happening of any event which
makes any statement in the Prospectus untrue in any material respect or which
requires the making of any changes in the Prospectus in order to make the
statements therein not misleading (which notice the Company agrees to deliver
promptly to such broker-dealer), such broker-dealer will suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended
or supplemental Prospectus to such broker-dealer.
Merrill Lynch has in the past and may in the future provide investment
banking and financial advisory services to the Company and United Artists.
Merrill Lynch acted as purchasers in connection with the initial sale of the
Fixed Rate Notes and the Floating Rate Notes and received an aggregate
underwriting discount of approximately $4.5 million in connection therewith.
An affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated is a lender
and acted as a co-syndication agent under the Senior Credit Facilities for
which it received usual and customary fees. The Merrill Lynch Group are
affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated and currently
own approximately 90.8% of the voting stock of the Company. See "Principal
Stock Ownership." If Merrill Lynch conducts any market-making activities in
the Exchange Notes, it may be required to deliver a "market-making
prospectus," registered with the Commission, when effecting offers and sales
in the Exchange Notes because of such equity ownership of the Company by the
Merrill Lynch Group. Merrill Lynch has no obligation to make a market in the
Notes or the Exchange Notes, and may discontinue its market-making activities
at any time without notice, at its sole discretion.
112
<PAGE>
VALIDITY OF THE EXCHANGE NOTES
The validity of the Exchange Notes will be passed on for the Company by
Wachtell, Lipton, Rosen & Katz, New York, New York, counsel to the Company.
EXPERTS
The consolidated financial statements of Oscar I Corporation (subsequently
renamed United Artists Theatre Company) and subsidiaries as of December 31,
1997 and December 31, 1996 and for the years then ended 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 giving said report.
The consolidated statements of operations, stockholders' equity and cash
flow of Oscar I Corporation (subsequently renamed United Artists Theatre
Company) and subsidiaries for the year ended December 31, 1995, have been
included herein and in the Registration Statement in reliance upon the report,
dated March 27, 1996, of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
covering the December 31, 1995 consolidated financial statements contains an
explanatory paragraph that states the Company adopted the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
in 1995.
113
<PAGE>
INDEX TO FINANCIAL STATEMENTS
OSCAR I CORPORATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants--Arthur Andersen LLP............ F-2
Independent Auditors' Report--KPMG Peat Marwick LLP...................... F-3
Consolidated Balance Sheets, December 31, 1997 and 1996.................. F-4
Consolidated Statements of Operations, Years Ended December 31, 1997,
1996 and 1995........................................................... F-5
Consolidated Statements of Stockholders' Equity (Deficit)................ F-6
Consolidated Statements of Cash Flow, Years Ended December 31, 1997, 1996
and 1995................................................................ F-7
Notes to Consolidated Financial Statements............................... F-8
Condensed Consolidated Balance Sheets, March 31, 1998 and December 31,
1997.................................................................... F-20
Condensed Consolidated Statements of Operations, Three Months Ended March
31, 1998 and 1997 ...................................................... F-21
Condensed Consolidated Statement of Stockholder's Equity (Deficit), March
31, 1998................................................................ F-22
Condensed Consolidated Statements of Cash Flow, Three Months Ended March
31, 1998 and 1997 ...................................................... F-23
Notes to Condensed Consolidated Financial Statements..................... F-24
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To OSCAR I Corporation:
We have audited the accompanying consolidated balance sheets of OSCAR I
Corporation and subsidiaries (the "Company") as of December 31, 1997 and 1996,
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flow for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of OSCAR I
Corporation and subsidiaries as of December 31, 1997 and 1996 and the results
of their operations and their cash flow for the years then ended in conformity
with generally accepted accounting principles.
Arthur Andersen LLP
Denver, Colorado
March 23, 1998
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
OSCAR I Corporation:
We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flow of OSCAR I Corporation and subsidiaries
(the "Company") for the year ended December 31, 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flow of OSCAR I Corporation and subsidiaries for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
As discussed in note 10 to the consolidated financial statements, the
Company adopted the provisions of Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of," in 1995.
KPMG Peat Marwick LLP
Denver, Colorado
March 27, 1996
F-3
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1996
------- ------
<S> <C> <C>
ASSETS
Cash and cash equivalents..................................... $ 10.8 10.1
Receivables, net:
Notes....................................................... 1.3 1.7
Other....................................................... 13.5 30.3
------- ------
14.8 32.0
------- ------
Prepaid expenses and concession inventory..................... 18.4 15.4
Investments and related receivables........................... 15.4 30.2
Property and equipment, at cost (note 10):
Land........................................................ 54.7 62.2
Theatre buildings, equipment and other...................... 499.0 453.2
------- ------
553.7 515.4
Less accumulated depreciation and amortization.............. (158.4) (130.4)
------- ------
395.3 385.0
------- ------
Intangible assets, net (notes 3 and 10)....................... 101.5 127.5
Other assets, net (note 3).................................... 6.8 12.5
------- ------
$ 563.0 612.7
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable:
Film rentals................................................ $ 29.8 28.0
Other....................................................... 57.3 51.9
------- ------
87.1 79.9
------- ------
Accrued liabilities:
Salaries and wages.......................................... 7.9 9.4
Interest.................................................... 5.6 5.7
Other....................................................... 13.2 13.0
------- ------
26.7 28.1
------- ------
Other liabilities (note 2).................................... 48.3 36.2
Debt (note 5)................................................. 414.0 453.1
------- ------
Total liabilities....................................... 576.1 597.3
Minority interests in equity of consolidated subsidiaries..... 7.2 7.0
Stockholders' Equity (Deficit) (note 7):
Preferred stock............................................. 193.9 170.1
Common stock:
Class A................................................... 0.1 0.1
Class B................................................... -- --
Class C................................................... -- --
Additional paid-in capital.................................. 16.4 40.2
Accumulated deficit......................................... (228.5) (201.5)
Cumulative foreign currency translation adjustment.......... (0.4) (0.5)
Treasury stock.............................................. (1.8) --
------- ------
(20.3) 8.4
------- ------
$ 563.0 612.7
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1997 1996 1995
------ ----- -----
<S> <C> <C> <C>
Revenue:
Admissions............................................. $473.9 466.5 457.1
Concession sales....................................... 189.6 185.1 178.2
Other.................................................. 22.8 27.5 14.5
------ ----- -----
686.3 679.1 649.8
------ ----- -----
Costs and expenses:
Film rental and advertising expenses................... 262.5 257.2 248.6
Direct concession costs................................ 30.2 29.3 29.5
Other operating expenses............................... 261.5 259.5 246.3
Sale and leaseback rentals (note 2).................... 12.8 11.0 0.5
General and administrative (note 9).................... 24.3 35.1 35.5
Restructuring charge (note 8).......................... 0.8 1.9 --
Depreciation and amortization (note 10)................ 96.7 84.4 90.8
------ ----- -----
688.8 678.4 651.2
------ ----- -----
Operating income (loss)............................ (2.5) 0.7 (1.4)
Other income (expense):
Interest, net (note 5):
Interest expense..................................... (43.9) (43.5) (51.9)
Amortization of deferred loan costs.................. (2.2) (2.2) (1.9)
Interest income...................................... 0.5 0.3 0.5
------ ----- -----
(45.6) (45.4) (53.3)
Gain (loss) on disposition of assets, net (note 11).... 28.0 2.7 (5.7)
Share of earnings (losses) of affiliates, net.......... (1.6) (0.5) 0.7
Minority interests in earnings of consolidated
subsidiaries.......................................... (1.3) (0.8) (1.2)
Other, net............................................. (2.5) (1.4) (2.1)
------ ----- -----
(23.0) (45.4) (61.6)
------ ----- -----
Loss before income tax expense..................... (25.5) (44.7) (63.0)
Income tax expense (note 12)............................. (1.5) (1.1) (1.8)
------ ----- -----
Net loss........................................... (27.0) (45.8) (64.8)
Dividend on preferred stock (note 7)..................... (23.8) (20.9) (18.3)
------ ----- -----
Net loss available to common stockholders.......... $(50.8) (66.7) (83.1)
====== ===== =====
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
CUMULATIVE
COMMON COMMON COMMON FOREIGN TOTAL
STOCK STOCK STOCK ADDITIONAL CURRENCY STOCKHOLDERS'
PREFERRED CLASS CLASS CLASS PAID-IN ACCUMULATED TRANSLATION TREASURY EQUITY
STOCK A B C CAPITAL DEFICIT ADJUSTMENT STOCK (DEFICIT)
--------- ------ ------ ------ ---------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995................... $130.9 0.1 -- -- 79.4 (90.9) -- -- 119.5
Accretion of dividends
on preferred stock... 18.3 -- -- -- (18.3) -- -- -- --
Foreign currency
translation
adjustment........... -- -- -- -- -- -- (0.1) -- (0.1)
Net loss.............. -- -- -- -- -- (64.8) -- -- (64.8)
------ --- --- --- ----- ------ ---- ---- -----
Balance at December 31,
1995................... 149.2 0.1 -- -- 61.1 (155.7) (0.1) -- 54.6
Accretion of dividends
on preferred stock... 20.9 -- -- -- (20.9) -- -- -- --
Foreign currency
translation
adjustment........... -- -- -- -- -- -- (0.4) -- (0.4)
Net loss.............. -- -- -- -- -- (45.8) -- -- (45.8)
------ --- --- --- ----- ------ ---- ---- -----
Balance at December 31,
1996................... 170.1 0.1 -- -- 40.2 (201.5) (0.5) -- 8.4
Accretion of dividends
on preferred stock... 23.8 -- -- -- (23.8) -- -- -- --
Foreign currency
translation
adjustment........... -- -- -- -- -- -- 0.1 -- 0.1
Purchase of treasury
stock................ -- -- -- -- -- -- -- (1.8) (1.8)
Net loss.............. -- -- -- -- -- (27.0) -- -- (27.0)
------ --- --- --- ----- ------ ---- ---- -----
Balance at December 31,
1997................... $193.9 0.1 -- -- 16.4 (228.5) (0.4) (1.8) (20.3)
====== === === === ===== ====== ==== ==== =====
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
-----------------------
1997 1996 1995
------- ------ ------
<S> <C> <C> <C>
Net cash provided by operating activities............. $ 51.0 30.8 40.7
------- ------ ------
Cash flow from investing activities:
Capital expenditures................................ (60.0) (68.6) (91.4)
(Increase) decrease in construction in progress,
net................................................ (7.4) 1.5 (5.1)
Increase in receivable from sale and leaseback
escrow............................................. (12.8) (19.5) --
Proceeds from sale and leaseback transaction and
escrow............................................. 23.2 22.9 90.9
Cash paid for minority interest holding............. -- -- (10.3)
Proceeds from disposition of assets, net............ 70.0 23.5 16.6
Investments in and receivables from theatre joint
ventures, net...................................... (18.3) (14.3) (2.3)
Other, net.......................................... 0.7 (2.2) --
------- ------ ------
Net cash used in investing activities............. (4.6) (56.7) (1.6)
------- ------ ------
Cash flow from financing activities:
Debt borrowings..................................... 150.9 129.8 187.5
Debt repayments..................................... (191.5) (132.7) (188.9)
Increase (decrease) in cash overdraft............... (2.8) 6.2 (14.1)
Other, net.......................................... (2.3) 0.2 (3.9)
------- ------ ------
Net cash provided by (used in) financing
activities....................................... (45.7) 3.5 (19.4)
------- ------ ------
Net increase (decrease) in cash and cash
equivalents...................................... 0.7 (22.4) 19.7
Cash and cash equivalents:
Beginning of period................................. 10.1 32.5 12.8
------- ------ ------
End of period....................................... $ 10.8 10.1 32.5
======= ====== ======
Reconciliation of net loss to net cash provided by
operating activities:
Net loss............................................ $ (27.0) (45.8) (64.8)
Effect of leases with escalating minimum annual
rentals............................................ 3.7 3.1 2.0
Depreciation and amortization....................... 96.7 84.4 90.8
(Gain) loss on disposition of assets, net........... (28.0) (2.7) 5.7
Share of (earnings) losses of affiliates, net....... 1.6 0.5 (0.7)
Minority interests in earnings of consolidated
subsidiaries....................................... 1.3 0.8 1.2
(Increase) decrease in receivables, prepaid expenses
and other assets, net.............................. 1.3 0.9 (3.7)
Increase (decrease) in accounts payable, accrued
liabilities and other liabilities, net............. 1.4 (10.4) 10.2
------- ------ ------
Net cash provided by operating activities......... $ 51.0 30.8 40.7
======= ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
(1) ORGANIZATION
Oscar I Corporation ("OSCAR I"), a Delaware corporation, was formed in
February 1992 for the purpose of purchasing United Artists Theatre Circuit,
Inc. ("UATC") from an affiliate of Tele-Communications, Inc. ("TCI"). OSCAR I
is owned by an investment fund managed by affiliates of Merrill Lynch Capital
Partners, Inc. ("MLCP") and certain institutional investors (collectively, the
"Non-Management Investors"), and certain members of UATC's management. On May
12, 1992, OSCAR I purchased all of the outstanding common stock of UATC from
an affiliate of TCI (the "Acquisition").
Simultaneously with the Acquisition, the Non-Management Investors formed
OSCAR II Corporation, ("OSCAR II"), a Delaware corporation, and acquired from
an affiliate of TCI all of the outstanding capital stock of United Artists
Realty Company ("UAR") and its subsidiaries, United Artists Properties I Corp.
("Prop I") and United Artists Properties II Corp. ("Prop II"). UAR, Prop I and
Prop II were the owners and lessors of certain operating theatre properties
leased to and operated by UATC and its subsidiaries. On February 28, 1995,
OSCAR II was merged into OSCAR I effected by a one-for-one share exchange.
(2) SALE AND LEASEBACK TRANSACTIONS
On December 13, 1995, OSCAR I entered into a sale and leaseback transaction
(the "1995 Sale and Leaseback") whereby the buildings and land underlying 27
of its operating theatres and four theatres currently under development were
sold to, and leased back from, the 1995-A United Artists Pass Through Trust
(the "Pass Through Trust"), an unaffiliated third party, for approximately
$97.6 million. A portion of the sale proceeds were used to pay certain
transaction expenses, repay certain existing indebtedness and the remainder
was held in short-term cash investments. The proceeds related to three of the
theatres under development (approximately $14.2 million) were initially
deposited into an escrow account and were funded during 1996 after
construction of the theatres was completed. The proceeds related to one of the
new theatres and a four screen addition to an existing theatre under
development (approximately $7.8 million) were deposited into the same escrow
account and were paid to the Company in 1997 when construction of the new
theatre and the screen addition was completed.
The net book value of the land and buildings included in the 1995 Sale and
Leaseback was approximately $85.5 million, and OSCAR I realized a net gain of
approximately $12.1 million as a result of the Sale and Leaseback. For
financial statement purposes, this gain has been deferred and will be
recognized over the term of the lease as a reduction of rent expense. The 1995
Sale and Leaseback requires UATC to lease the underlying theatres for a period
of 21 years and one month, with the option to extend for up to an additional
10 years. An agreement with the Pass Through Trust requires the maintenance of
certain financial covenants by UATC.
On November 8, 1996, OSCAR I entered into a sale and leaseback transaction
whereby the buildings and land underlying three of its operating theatres and
two theatres currently under development were sold to, and leased back from,
an unaffiliated third party for approximately $21.5 million. The sales
proceeds relating to the three operating theatres (approximately $9.2 million)
were used to pay certain transaction expenses and repay outstanding bank debt
of UATC. The sales proceeds related to the two theatres under development
(approximately $12.3 million) were deposited into an escrow account and are to
be paid under the terms of the sale and leaseback to fund certain of the
construction costs associated with the two theatres. During 1997, OSCAR I
opened one of the theatres under development and received approximately $10.8
million of proceeds from the escrow account. The lease has a term of 20 years
and nine months with options to extend for an additional 10 years.
On December 31, 1997, OSCAR I entered into a sale and leaseback transaction
whereby two theatres currently under development were sold to, and leased back
from, an unaffiliated third party for approximately
F-8
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
$18.1 million. At December 31, 1997, approximately $13.5 million of the sales
proceeds were deposited into an escrow account and are to be paid under the
terms of the sale and leaseback to fund certain of the construction costs
associated with the two theatres. The lease has a term of 22 years with
options to extend for an additional 10 years.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the accounts of OSCAR I and
its majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
(b) Nature of Operations
OSCAR I, through its subsidiaries, is principally engaged in the operation
and ownership of motion picture theatres.
(c) Cash and Cash Equivalents
OSCAR I considers investments with initial maturities of three months or
less to be cash equivalents.
(d) Investments
Investments in which OSCAR I's ownership is 20% to 50% are accounted for
using the equity method. Under this method, the investment, originally
recorded at cost, is adjusted to recognize dividends received and OSCAR I's
share of net earnings or losses of the investee as they occur. Investments in
which OSCAR I's ownership is less than 20% are accounted for using the cost
method. Under this method, the investments are recorded at cost and any
dividends received are recorded as income.
(e) Property and Equipment
Property and equipment are stated at cost, including acquisition costs
allocated to tangible assets acquired. Construction costs, including
applicable direct overhead, are capitalized. Repairs and maintenance are
charged to operations.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets that range from 3 to 40 years. Leasehold
improvements are amortized over the terms of the leases, including certain
renewal periods or, in the case of certain improvements, the estimated useful
lives of the assets, if shorter. Costs associated with new theatre
construction are depreciated once such theatres are placed in service.
F-9
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(f) Intangible Assets
Intangible assets consist of theatre lease acquisition costs and non-compete
agreements. Amortization of theatre lease acquisition costs and non-compete
agreements is calculated on a straight-line basis over the terms of the
underlying leases including certain renewal periods (weighted average life of
approximately 17 years) and non-compete agreements (primarily 5 years). During
1997, approximately $100 million of non-compete agreements relating to the
Acquisition were fully amortized. Intangible assets and related accumulated
amortization are summarized as follows (amounts in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1997 1996
------ ------
<S> <C> <C>
Theatre lease acquisition costs.............................. $156.9 169.7
Non-compete agreements....................................... 3.0 103.0
------ ------
159.9 272.7
Accumulated amortization..................................... (58.4) (145.2)
------ ------
$101.5 127.5
====== ======
</TABLE>
(g) Other Assets
Other assets primarily consist of deferred loan and acquisition costs.
Amortization of the deferred loan costs is calculated on a straight-line basis
over the terms of the underlying loan agreements (average life of
approximately seven years) and is included as a component of interest expense.
Amortization of the deferred acquisition costs is calculated on a straight
line basis over five years. During 1997, approximately $18.4 million of
deferred acquisition costs relating to the Acquisition and approximately $7.2
million of other assets were fully amortized. Other assets and related
accumulated amortization are summarized as follows (amounts in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1997 1996
------ -----
<S> <C> <C>
Deferred loan costs........................................... $ 16.2 16.2
Deferred acquisition costs.................................... -- 18.4
Other......................................................... 2.2 8.6
------ -----
18.4 43.2
Accumulated amortization...................................... (11.6) (30.7)
------ -----
$ 6.8 12.5
====== =====
</TABLE>
(h) Operating Costs and Expenses
Film rental and advertising expenses include film rental and co-op and
directory advertising costs. Film advertising costs are expensed as incurred.
Direct concession costs include direct concession product costs and concession
promotional expenses. Concession promotional expenses are expensed as
incurred. Other operating expenses include joint facility costs such as
employee costs, theatre rental and utilities that are common to both ticket
sales and concession operations. As such, other operating expenses are
reported as a combined amount as the allocation of such costs to exhibition
and concession activities would be arbitrary and not meaningful. Rental
expense for operating leases which provide for escalating minimum annual
rentals during the term of the lease are accounted for on a straight-line
basis over the terms of the underlying leases.
(i) 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 at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
F-10
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(j) Reclassification
Certain prior year amounts have been reclassified for comparability with the
1997 presentation.
(4) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest for the years ended December 31, 1997, 1996 and
1995, were $42.8 million, $44.6 million and $47.3 million, respectively.
Cash payments by certain less than 80% owned entities for income taxes for
the years ended December 31, 1997, 1996 and 1995, were $1.4 million, $1.4
million and $0.7 million, respectively.
OSCAR I accrued $23.8 million, $20.9 million and $18.3 million of dividends
during the years ended December 31, 1997, 1996 and 1995, respectively, on its
preferred stock (see note 7).
During 1997, 1996 and 1995, OSCAR I incurred $1.1 million, $1.4 million and
$2.4 million, respectively, of capital lease obligations relating to new
equipment.
(5) DEBT
Debt is summarized as follows (amounts in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1997 1996
------ -----
<S> <C> <C>
UATC Bank Credit Facility(a).................................... $226.5 255.6
UATC Senior Secured Notes(b).................................... 125.0 125.0
UATC Other(c)................................................... 10.7 8.4
UAR Promissory Notes(d)......................................... 5.6 10.0
Prop I Mortgage Notes(e)........................................ 46.2 54.1
------ -----
$414.0 453.1
====== =====
</TABLE>
- - --------
(a) UATC's bank credit facility (the "Bank Credit Facility") currently
provides for term loans aggregating $203.5 million (the "Term Loans"), a
reducing revolving loan with commitments aggregating $78.8 million (the
"Revolving Facility") and standby letters of credit aggregating $12.5
million (the "Standby Letters of Credit"). Principal on the Term Loans is
payable in escalating semi-annual installments through March 31, 2002. The
aggregate commitments available for borrowing under the Revolving Facility
decline $8.75 million at December 31, 1998, $13.125 million at December
31, 1999 and 2000 and $21.875 million at December 31, 2001 and March 31,
2002. Borrowings under the Bank Credit Facility provide for interest to be
accrued at varying rates depending on the ratio of indebtedness to
annualized operating cash flow, as defined. Interest is payable at varying
dates depending on the type of rate selected by UATC, but no less
frequently than once each quarter. The Bank Credit Facility contains
certain provisions that require the maintenance of certain financial
ratios and place limitations on additional indebtedness, disposition of
assets, capital expenditures and payment of dividends. The Bank Credit
Facility is secured by the stock of UATC and substantially all of UATC's
subsidiaries and is guaranteed by OSCAR I and substantially all of UATC's
subsidiaries. During 1997, UATC repaid $10.8 million on the Term Loans in
conjunction with certain asset dispositions. This repayment will be
applied pro rata against the remaining semi-annual Term Loan principal
installments.
(b) The senior secured notes (the "Senior Secured Notes") are due May 1, 2002
and require repayments prior to maturity of $31.25 million on May 1, 2000
and on May 1, 2001. The Senior Secured Notes accrue interest at 11 1/2%
per annum, which is payable semi-annually. The Senior Secured Notes place
limitations on,
F-11
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
among other things, additional indebtedness, disposition of assets and
payment of dividends. The Senior Secured Notes are secured on a pari-passu
basis with the Bank Credit Facility by the stock of UATC and substantially
all of UATC's subsidiaries, and are guaranteed on a pari-passu basis with
the Bank Credit Facility by OSCAR I and substantially all of UATC's
subsidiaries. The Senior Secured Notes are redeemable at the option of UATC.
The redemption price of the Senior Secured Notes at December 31, 1997 was
104.313% of the outstanding principal balance.
(c) UATC's other debt at December 31, 1997 consists of various term loans,
mortgage notes, capital leases and other borrowings. This other debt
carries interest rates ranging from 7% to 12%. Principal and interest are
payable at various dates through June 2007.
(d) In conjunction with the acquisitions of certain theatres prior to the
Acquisition, UAR issued non-interest bearing promissory notes to the
sellers. Principal on the promissory notes is due quarterly through October
1999. For financial statement purposes, the promissory notes were
discounted at UAR's effective borrowing rate on the date the promissory
notes were executed. The undiscounted amount payable under the promissory
notes at December 31, 1997 was approximately $6.2 million.
(e) The Prop I first mortgage notes (the "Prop I Notes") bear interest at
11.15% per annum. Principal and interest are payable in monthly
installments, with a lump sum payment of principal and accrued, but unpaid,
interest due on November 1, 1998. The Prop I Notes are secured by a first
mortgage on Prop I's theatre properties, an assignment of the lease
agreement with UATC, and $12.5 million of bank Standby Letters of Credit
provided by UATC. The Indenture of Mortgage, among its other provisions,
contains limitations on the sale and/or substitution of properties and a
limitation on any additional debt incurred by Prop I other than
intercompany advances.
At December 31, 1997, UATC was party to interest rate cap agreements on
$100.0 million of floating rate debt which provide for a LIBOR interest rate
cap of 7 1/2% and expire at various dates through July 1999. UATC is subject to
credit risk exposure from non-performance of the counterparties to the interest
rate cap agreements. As UATC has historically received payments relating to
such interest rate cap agreements, it does not anticipate such non-performance
in the future. UATC amortizes the cost of its interest rate cap agreements to
interest expense over the life of the underlying agreement. Amounts received
from the counterparties to the interest rate cap agreements are recorded as a
reduction of interest expense.
At December 31, 1997, UATC had approximately $55.8 million of unused
revolving loan commitments pursuant to the Bank Credit Facility, $11.1 million
of which has been used for the issuance of letters of credit. Commitment fees
of 3/8% per annum are paid on the average unused revolver commitments.
Annual maturities of debt for each of the next five years and thereafter are
as follows (amounts in millions):
<TABLE>
<S> <C>
1998................................................................ $ 81.7
1999................................................................ 50.8
2000................................................................ 83.8
2001................................................................ 83.7
2002................................................................ 110.2
Thereafter.......................................................... 3.8
------
$414.0
======
</TABLE>
(6) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair value
because of its short maturity.
F-12
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Financial Instruments
The carrying amount and estimated fair value of OSCAR I's financial
instruments at December 31, 1997 are summarized as follows (amounts in
millions):
<TABLE>
<CAPTION>
CARRYING ESTIMATED
AMOUNT FAIR VALUE
-------- ----------
<S> <C> <C>
UATC Bank Credit Facility and Other Debt................. $237.2 237.2
====== =====
UATC Senior Secured Notes................................ $125.0 130.6
====== =====
UAR Promissory Notes..................................... $ 5.6 5.6
====== =====
Prop I Mortgage Notes.................................... $ 46.2 47.1
====== =====
Interest Rate Cap Agreements............................. $ 0.1 0.1
====== =====
</TABLE>
UATC Bank Credit Facility and Other Debt: The carrying amount of UATC's
borrowings under the Bank Credit Facility and other debt approximates fair
value because the interest rates on the majority of this debt floats with
market interest rates.
UATC Senior Secured Notes: The fair value of the Senior Secured Notes is
estimated based upon quoted market prices at December 31, 1997.
UAR Promissory Notes: The fair value of the UAR Promissory Notes is
estimated based upon dealer quotes for similar agreements at December 31,
1997.
Prop I Mortgage Notes: The fair value of the Prop I Mortgage Notes is
estimated based upon dealer quotes for similar agreements at December 31,
1997.
Interest Rate Cap Agreements: The fair value of the interest rate cap
agreements is estimated based upon dealer quotes for similar agreements at
December 31, 1997.
(7) STOCKHOLDERS' EQUITY
Preferred Stock
The OSCAR I preferred stock is redeemable any time at the option of OSCAR I
at its stated liquidation value plus accrued and unpaid dividends. Dividends
accrue at a rate of 8% through December 31, 1995, 9% through December 31, 1996
and 14% thereafter, and are payable in cash or in kind through December 31,
1996. Dividends subsequent to December 31, 1996 are required to be paid in
cash unless any senior debt facility of OSCAR I or UATC restricts such cash
payment. Currently, such restrictions exist. The preferred stock contains
certain restrictions on, among other things, the incurrence of additional
indebtedness by OSCAR I or its subsidiaries. Due to the perpetual nature of
the preferred stock and the escalating terms of the required dividend rates,
for financial reporting purposes dividends have been accrued at a 14% per
annum rate for all periods since issuance. At December 31, 1997, the actual
redemption value in accordance with the terms of the preferred stock was
approximately $152.1 million, or approximately $41.8 million less than the
carrying amount at December 31, 1997.
OSCAR I is authorized to issue 5,000,000 shares of preferred stock.
F-13
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Common Stock
At December 31, 1997, OSCAR I had outstanding 11,551,383 shares of Class A
common stock, $0.01 par value per share, 48,425 shares of Class B common
stock, $0.01 par value per share and has granted 15,462 shares of Class C
common stock, $0.01 par value to certain members of management. The Class A
and Class B shares are identical except that the Class B shares do not have
any voting rights. The Class C shares vest over a four-year period and are
identical to the Class B common stock except for a $9.50 per share liquidation
preference in favor of the holders of the Class A and Class B common stock. As
of December 31, 1997, 13,001 shares of the Class C common stock had vested.
OSCAR I is authorized to issue 23,200,000 shares of Class A common stock,
1,818,000 shares of Class B common stock and 57,000 shares of Class C common
stock.
Stock Options
In connection with the Acquisition, the OSCAR I Management Stock Plan was
established. The OSCAR I Management Stock Plan established three types of
options, those being: the Incentive Options (the "Incentive Plan"),
Performance Options (the "Performance Plan"), and Premium Options (the
"Premium Plan" and collectively, the "Option Plans"). The options covered
under the Incentive Plan vest in equal amounts each year through the fifth
anniversary of the date of grant, while options covered under the Performance
and Premium Plans vest based on certain calculations of UATC's value or the
investment returns received by the Class A common stockholders. Each option
granted under either the Incentive or Performance Plans may be exercised for
one Class B share at an exercise price equal to the estimated market value of
the Class B share at the date of grant provided that such options have been
vested under the terms of the respective plan. Each option granted under the
Premium Plan may be exercised for one Class B share at an exercise price,
which increases from $30 to $233, provided that such options have vested under
the terms of the Premium Plan. All options granted expire 10 years after the
date of grant.
OSCAR I applies the provisions of Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," and related Interpretations in
accounting for its Option Plans. No compensation cost has been recognized by
OSCAR I for any of the Option Plans. OSCAR I's compensation expense would not
have been materially different had OSCAR I recorded compensation expense for
its Option Plans in accordance with SFAS No. 123, "Accounting for Stock Based
Compensation," and accordingly, the pro forma net loss disclosure as if SFAS
No. 123 had been applied are not presented.
A summary of OSCAR I's Incentive Plan as of December 31, 1997, 1996 and
1995, and changes during those years is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ---------------------- ----------------------
WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG.
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- ------------- ------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January
1...................... 544,320 $10.06 594,720 $10.05 593,970 $10.04
Granted............... -- -- 6,600 $10.79 3,000 $10.79
Exercised............. -- -- -- -- -- --
Forfeited............. (413,487) $10.04 (57,000) $10.00 (2,250) $10.00
-------- ------- -------
Outstanding at December
31..................... 130,833 $10.12 544,320 $10.06 594,720 $10.05
======== ======= =======
</TABLE>
F-14
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table summarizes information about the Incentive Plan at
December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -------------------
WEIGHTED AVG.
EXERCISE NUMBER REMAINING
PRICE OUTSTANDING CONTRACTUAL LIFE NUMBER EXERCISABLE
-------- ----------- ---------------- -------------------
<S> <C> <C> <C>
$10.00 111,233 4.5 111,233
$10.79 19,600 6.8 9,470
------- -------
130,833 5.0 120,703
======= =======
</TABLE>
A summary of OSCAR I's Performance Plan as of December 31, 1997, 1996 and
1995, and changes during those years is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ---------------------- ----------------------
WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG.
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- ------------- ------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January
1...................... 528,975 $10.05 573,450 $10.04 572,825 $10.04
Granted............... 197,250 $12.00 5,900 $10.79 2,500 $10.79
Exercised............. -- -- -- -- -- --
Forfeited............. (414,350) $10.04 (50,375) $10.00 (1,875) $10.00
-------- ------- -------
Outstanding at December
31..................... 311,875 $11.31 528,975 $10.05 573,450 $10.04
======== ======= =======
</TABLE>
The following table summarizes information about the Performance Plan at
December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -------------------
WEIGHTED AVG.
EXERCISE NUMBER REMAINING
PRICE OUTSTANDING CONTRACTUAL LIFE NUMBER EXERCISABLE
-------- ----------- ---------------- -------------------
<S> <C> <C> <C>
$10.00 103,500 4.5 0
$10.79 11,125 6.8 0
$12.00 197,250 9.3 0
------- ---
311,875 7.6 0
======= ===
</TABLE>
A summary of OSCAR I's Premium Plan as of December 31, 1997, 1996 and 1995,
and changes during those years is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ---------------------- ----------------------
WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG.
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- ------------- ------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January
1...................... 265,403 $66.00 287,791 $48.25 287,479 $35.25
Granted............... -- -- 2,800 $48.25 1,250 $35.25
Exercised............. -- -- -- -- -- --
Forfeited............. (208,972) $66.00 (25,188) $48.25 (938) $35.25
-------- ------- -------
Outstanding at December
31..................... 56,431 $66.00 265,403 $48.25 287,791 $35.25
======== ======= =======
Options Exercisable at
December 31............ 0 0 0
======== ======= =======
</TABLE>
As of December 31, 1997, the 56,431 Premium Plan options had an exercise
price of $66.00 and a weighted average remaining contractual life of 5.0
years.
F-15
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(8) RESTRUCTURING CHARGE
At the end of 1996, OSCAR I initiated a corporate restructuring plan
intended to provide a higher level of focus on OSCAR I's domestic theatrical
business at a lower annual cost. This corporate restructuring was
substantially completed in January 1997. In conjunction with this corporate
restructuring plan, OSCAR I recorded $0.8 million and $1.9 million
restructuring charges in 1997 and 1996, respectively, for severance and other
related expenses.
(9) EMPLOYEE BENEFIT PLANS
The UATC 401(k) Savings Plan (the "Savings Plan") provides that employees
may contribute up to 10% of their compensation, subject to IRS limitations, to
the Savings Plan. Employee contributions are invested in various investment
funds based upon elections made by the employee. Prior to January 1, 1997,
OSCAR I matched 100% of each employee's contributions up to 10% of an
employee's compensation. As part of the corporate restructuring plan (see note
8), effective January 1, 1997, the Savings Plan was amended to provide for an
OSCAR I match of 100% of each employee's contribution up to 3% of their
compensation. Employees vest in OSCAR I's matching contributions 20% per year
for every year of service, as defined.
Effective January 1, 1993, OSCAR I established the UATC Supplemental 401(k)
Savings Plan (the "Supplemental Plan") for certain employees who are highly
compensated as defined by the IRS and whose elective contributions to the
Savings Plan exceed the IRS limitations. Through December 31, 1996, such
employees were allowed to contribute to the Supplemental Plan provided that
the aggregate contributions to the Savings Plan and Supplemental Plan did not
exceed 10% of their compensation. As part of the corporate restructuring plan
(see note 8), effective January 1, 1997, OSCAR I suspended the Supplemental
Plan. OSCAR I matched 100% of the employee's contributions through the date of
suspension of the Supplemental Plan. Employees vest ratably in OSCAR I's
matching contributions over 5 years from the date of participation in the
Supplemental Plan.
Contributions to the various employee benefit plans for the years ended
December 31, 1997, 1996 and 1995, were $0.6 million, $2.3 million and $2.1
million, respectively.
(10) PROVISION FOR IMPAIRMENT
OSCAR I adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," during 1995. Upon
adoption of SFAS No. 121 in 1995, a non-cash charge of $21.0 million was
recorded by OSCAR I. During 1997 and 1996, OSCAR I recorded non-cash charges
for the impairment of its long-lived assets of $36.0 million and $9.5 million,
respectively. These non-cash charges relate to the difference between the
historical book value of the individual theatres (in some cases groups of
theatres) and the discounted cash flow expected to be received from the
operation or future sale of the individual theatres (or groups of theatres).
(11) GAIN ON DISPOSITION OF ASSETS
During April 1997, OSCAR I sold its 50% interest in Hong Kong theatre
company to its partner for approximately $17.5 million and, during September
1997, OSCAR I sold its theatre investments in Mexico and the majority of its
theatre assets in Argentina for approximately $25.0 million. During the year
ended December 31, 1997, OSCAR I sold various other non-strategic or
underperforming theatres for net cash proceeds of approximately $27.5 million.
Additionally, OSCAR I has entered into an agreement to sell a portion of its
theatre investments in Singapore and Thailand for approximately $8.1 million.
(12) INCOME TAXES
Consolidated subsidiaries in which OSCAR I owns less than 80% file separate
Federal income tax returns. The current and deferred Federal and state income
taxes of such subsidiaries are calculated on a separate return basis and are
included in the accompanying consolidated financial statements of OSCAR I.
F-16
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The current state income tax expense of OSCAR I and Federal income tax
expense of OSCAR I's less than 80%-owned consolidated subsidiaries and
deferred state and Federal income tax expense are as follows (amounts in
millions):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Current income taxes:
State expense............................................... $0.2 0.1 0.7
Federal expense............................................. 1.3 1.0 1.1
---- --- ---
1.5 1.1 1.8
---- --- ---
Deferred income taxes:
State expense............................................... -- -- --
Federal expense............................................. -- -- --
---- --- ---
$1.5 1.1 1.8
==== === ===
</TABLE>
Income tax expense differed from the amount computed by applying the U.S.
Federal income tax rate (35% for all periods) to loss before income tax
expense as a result of the following (amounts in millions):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Expected tax benefit.................................... $(8.9) (15.7) (22.0)
Change in valuation allowance........................... 11.1 16.1 22.3
State tax, net of Federal benefit....................... 0.1 -- 0.5
Adjustment of net operating loss carryforward........... 0.1 2.9 --
Other................................................... (0.9) (2.2) 1.0
----- ----- -----
$ 1.5 1.1 1.8
===== ===== =====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1997 and
1996 are as follows (amounts in millions):
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............................. $75.1 68.0
Intangible and other assets.................................. 3.7 3.9
Accrued liabilities.......................................... 3.6 2.8
Deferred gain on Sale and Leaseback.......................... 3.5 4.6
Other........................................................ 1.2 1.1
----- -----
87.1 80.4
Less: valuation allowance.................................... (80.5) (69.4)
----- -----
Net deferred tax assets.................................... 6.6 11.0
----- -----
Deferred tax liabilities:
Property and equipment....................................... 3.5 8.1
Deferred intercompany gains.................................. 1.6 1.6
Other........................................................ 1.5 1.3
----- -----
Net deferred tax liabilities............................... 6.6 11.0
----- -----
Net............................................................ $ -- --
===== =====
</TABLE>
F-17
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1997, OSCAR I had a net operating loss carryforward for
Federal income tax purposes of approximately $200.0 million which will begin
to expire in 2007.
The income tax returns of OSCAR I are currently being audited by the
Internal Revenue Service. The outcome of this audit may reduce the amount of
OSCAR I's net operating loss carryforward and/or change the basis (and thus
future depreciation) related to certain assets. Management believes that the
result of the audit will not have a material adverse effect on the
consolidated financial condition or results of operations of OSCAR I.
(13) COMMITMENTS AND CONTINGENCIES
OSCAR I conducts a significant portion of its theatre and corporate
operations in leased premises. These leases have noncancelable terms expiring
at various dates after December 31, 1997. Many leases have renewal options.
Most of the leases provide for contingent rentals based on the revenue results
of the underlying theatre and require the payment of taxes, insurance, and
other costs applicable to the property. Also, certain leases contain
escalating minimum rental provisions that have been accounted for on a
straight-line basis over the initial term of the leases.
Rent expense for theatre and corporate operations is summarized as follows
(amounts in millions):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------
1997 1996 1995
----- ---- ----
<S> <C> <C> <C>
Minimum rental.............................................. $76.5 72.0 55.8
Contingent rental........................................... 3.7 3.4 3.2
Effect of leases with escalating minimum annual rentals..... 3.7 3.1 2.0
Rent tax.................................................... 0.5 0.6 0.7
----- ---- ----
$84.4 79.1 61.7
===== ==== ====
</TABLE>
Approximately $12.8 million, $11.0 million and $0.5 million of the minimum
rentals reflected in the preceding table for the years ended December 31,
1997, 1996 and 1995, respectively, were incurred pursuant to the sale and
leaseback transactions (see note 2).
Future minimum lease payments under noncancelable operating leases for each
of the next five years and thereafter are summarized as follows (amounts in
millions):
<TABLE>
<S> <C>
1998................................................................ $ 79.3
1999................................................................ 78.5
2000................................................................ 75.2
2001................................................................ 73.1
2002................................................................ 70.4
Thereafter.......................................................... 689.0
</TABLE>
Included in the future minimum lease payments table above are lease payments
relating to theatres which OSCAR I intends to sell or close. To the extent
OSCAR I is successful in disposing of these theatres, the future minimum lease
payments will be decreased.
It is expected that in the normal course of business, desirable leases that
expire will be renewed or replaced by other leases.
At December 31, 1997, OSCAR I had entered into theatre construction and
equipment commitments aggregating approximately $100 million for ten new
theatres and screen additions or renovations to 12 existing
F-18
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
theatres which OSCAR I intends to open during the next two years. Such amount
relates only to projects in which OSCAR I had executed a definitive lease
agreement and all significant lease contingencies have been satisfied. Of the
committed amount, approximately $15.0 million will be reimbursed to OSCAR I
from proceeds of the sale and leaseback transactions currently held in escrow
(see note 2). The lease agreements have terms of between 15 and 20 years and,
upon the opening of the theatres, require future minimum lease payments over
the terms of the leases averaging $13.8 million per annum.
OSCAR I and/or its subsidiaries are involved in various pending and
threatened legal proceedings involving allegations concerning contract
breaches, torts, employment matters, environmental issues, anti-trust
violations, local tax disputes and miscellaneous other matters. In addition,
there are various claims against OSCAR I and/or its subsidiaries relating to
certain of the leases held by OSCAR I and/or its subsidiaries. Although it is
not possible to predict the outcome of these proceedings, OSCAR I believes
that such legal proceedings will not have a material adverse effect on OSCAR
I's financial position, liquidity or results of operations.
The Americans with Disabilities Act of 1990 (the "ADA"), and certain state
statutes among other things, require that places of public accommodation,
including theatres (both existing and newly constructed) be accessible to and
that assistive listening devices be available for use by certain patrons with
disabilities. With respect to access to theatres, the ADA may require that
certain modifications be made to existing theatres to make such theatres
accessible to certain theatre patrons and employees who are disabled. The ADA
requires that theatres be constructed in such a manner that persons with
disabilities have full use of the theatre and its facilities and reasonable
access to work stations. The ADA provides for a private right of action and
reimbursement of plaintiff's attorneys' fees and expenses under certain
circumstances. OSCAR I has established a program to review and evaluate OSCAR
I's theatres and to make any changes which may be required by the ADA. In
1995, OSCAR I settled the lawsuit styled Connie Arnold et al. vs. UATC, filed
in 1991. This lawsuit involved allegations that certain of OSCAR I's theatres
lacked accessibility to persons with mobility disabilities in violation of the
ADA. In the settlement agreement, OSCAR I, the plaintiffs and the Department
of Justice established standards of modifications that must be made to OSCAR I
theatres throughout the United States to make them more accessible to persons
with disabilities. OSCAR I believes that the cost of complying with the ADA
and the settlement agreement in the Connie Arnold case will not have a
material adverse effect on the OSCAR I's financial position, liquidity or
results of operations.
F-19
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents.............................. $ 7.3 10.8
Notes and other receivables, net....................... 19.2 14.8
Prepaid expenses and concession inventory.............. 22.2 18.4
Investments and related receivables.................... 16.4 15.4
Property and equipment, at cost:
Land................................................. 54.3 54.7
Theatre buildings, equipment and other............... 503.3 499.0
------ ------
557.6 553.7
Less accumulated depreciation and amortization (note
4).................................................. (166.8) (158.4)
------ ------
390.8 395.3
------ ------
Intangible assets, net................................. 98.4 101.5
Other assets, net...................................... 6.2 6.8
------ ------
$560.5 563.0
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable....................................... $ 69.2 87.1
Accrued liabilities.................................... 24.9 26.7
Other liabilities (note 3)............................. 49.7 48.3
Debt (notes 2 and 6)................................... 429.7 414.0
------ ------
Total liabilities.................................... 573.5 576.1
------ ------
Minority interests in equity of consolidated
subsidiaries.......................................... 7.2 7.2
Stockholders' equity (deficit) (note 2):
Preferred stock (note 8)............................. 200.6 193.9
Common stock:
Class A............................................ 0.1 0.1
Class B............................................ -- --
Class C............................................ -- --
Additional paid-in capital (note 8).................. 9.7 16.4
Accumulated deficit.................................. (228.5) (228.5)
Cumulative foreign currency translation adjustment... (0.3) (0.4)
Treasury stock....................................... (1.8) (1.8)
------ ------
(20.2) (20.3)
------ ------
$560.5 563.0
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-20
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Revenue:
Admissions.............................................. $ 113.4 121.7
Concession sales........................................ 46.6 47.7
Other................................................... 4.7 5.1
--------- --------
164.7 174.5
--------- --------
Costs and expenses:
Film rental and advertising expenses.................... 60.9 65.8
Direct concession costs................................. 6.5 7.4
Other operating expenses (note 3)....................... 66.6 65.5
General and administrative.............................. 5.4 6.6
Depreciation and amortization (note 4).................. 13.7 18.4
--------- --------
153.1 163.7
--------- --------
Operating income.................................... 11.6 10.8
Other income (expense):
Interest, net (notes 2 and 6)........................... (10.4) (11.4)
Share of earnings (losses) of affiliates, net........... -- (0.5)
Minority interests in earnings of consolidated subsidi-
aries.................................................. (0.4) (0.3)
Other, net.............................................. (0.5) (0.4)
--------- --------
(11.3) (12.6)
--------- --------
Income (loss) before income tax expense............. 0.3 (1.8)
Income tax expense (note 9)............................... (0.3) (0.4)
--------- --------
Net income (loss)................................... -- (2.2)
Dividends on preferred stock (notes 2 and 8).............. (6.7) (5.9)
--------- --------
Net loss available to common stockholders........... $ (6.7) (8.1)
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-21
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(AMOUNTS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN TOTAL
COMMON COMMON COMMON ADDITIONAL CURRENCY STOCKHOLDERS'
PREFERRED STOCK STOCK STOCK PAID-IN ACCUMULATED TRANSLATION TREASURY EQUITY
STOCK CLASS A CLASS B CLASS C CAPITAL DEFICIT ADJUSTMENT STOCK (DEFICIT)
--------- ------- ------- ------- ---------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1998................... $193.9 0.1 -- -- 16.4 (228.5) (0.4) (1.8) (20.3)
Accretion of dividends
on preferred stock.... 6.7 -- -- -- (6.7) -- -- -- --
Foreign currency trans-
lation adjustment..... -- -- -- -- -- -- 0.1 -- 0.1
Net income............. -- -- -- -- -- -- -- -- --
------ --- --- --- ---- ------ ---- ---- -----
Balance at March 31,
1998................... $200.6 0.1 -- -- 9.7 (228.5) (0.3) (1.8) (20.2)
====== === === === ==== ====== ==== ==== =====
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-22
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(AMOUNTS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Net cash provided by (used in) operating activities...... $ (0.6) 20.7
--------- --------
Cash flow from investing activities:
Capital expenditures................................... (20.8) (19.5)
(Increase) decrease in construction in progress, net... 3.4 (2.3)
Increase in receivable from sale and leaseback escrow.. (0.8) (2.1)
Proceeds from sale and leaseback escrow................ -- 7.8
Investments in and receivables from theatre joint ven-
tures, net.. (1.0) (5.9)
Other, net............................................. (1.0) (0.3)
--------- --------
Net cash used in investing activities.............. (20.2) (22.3)
--------- --------
Cash flow from financing activities:
Debt borrowings........................................ 42.0 35.0
Debt repayments........................................ (26.4) (26.4)
Increase (decrease) in cash overdraft.................. 1.8 (6.3)
Other, net............................................. (0.1) 0.4
--------- --------
Net cash provided by financing activities.......... 17.3 2.7
--------- --------
Net increase (decrease) in cash.................... (3.5) 1.1
Cash and cash equivalents:
Beginning of period.................................... 10.8 10.1
--------- --------
End of period.......................................... $ 7.3 11.2
========= ========
Reconciliation of net income (loss) to net cash provided
by (used in) operating activities:
Net income (loss)........................................ $ -- (2.2)
Effect of leases with escalating minimum annual rentals.. 0.9 0.8
Depreciation and amortization............................ 13.7 18.4
Share of (earnings) losses of affiliates, net............ -- 0.5
Minority interests in earnings of consolidated subsidiar-
ies..................................................... 0.4 0.3
Increase in receivables, prepaid expenses and other as-
sets, net............................................... (3.4) (1.3)
Increase (decrease) in accounts payable, accrued liabili-
ties
and other liabilities, net............................. (12.2) 4.2
--------- --------
Net cash provided by (used in) operating activi-
ties.............................................. $ (0.6) 20.7
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-23
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
(1) GENERAL INFORMATION
OSCAR I Corporation ("OSCAR I"), a Delaware corporation, was formed in
February 1992 for the purpose of purchasing United Artists Theatre Circuit,
Inc. ("UATC") from an affiliate of Tele-Communications, Inc. ("TCI"). OSCAR I
is owned by an investment fund managed by affiliates of Merrill Lynch Capital
Partners, Inc. ("MLCP") and certain institutional investors (collectively, the
"Non-Management Investors"), and certain members of UATC's management. On May
12, 1992, OSCAR I purchased all of the outstanding common stock of UATC from
an affiliate of TCI (the "Acquisition").
Simultaneously with the Acquisition, the Non-Management Investors formed
OSCAR II Corporation, ("OSCAR II"), a Delaware corporation, and acquired from
an affiliate of TCI all of the outstanding capital stock of United Artists
Realty Company ("UAR"). UAR and its subsidiary, United Artists Properties I
Corp. ("Prop I"), are the owners and lessors of certain operating theatre
properties leased to and operated by UATC and its subsidiaries. On February
28, 1995, OSCAR II was merged into OSCAR I effected by a one-for-one share
exchange.
Certain prior period amounts have been reclassified for comparability with
the 1998 presentation.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) have been made in the accompanying interim condensed
consolidated financial statements that are necessary to present fairly the
financial position of OSCAR I and the results of its operations. Interim
results are not necessarily indicative of the results for the entire year
because of fluctuations of revenue and related expenses resulting from the
seasonality of attendance and the availability of popular motion pictures.
These financial statements should be read in conjunction with the audited
December 31, 1997 consolidated financial statements and notes thereto included
as part of UATC's Form 10-K.
(2) SUBSEQUENT EVENT--RECAPITALIZATION
On April 21, 1998, OSCAR I completed the offering of $225 million of its
9.75% senior subordinated notes due April 15, 2008 and the offering of $50
million of its floating rate senior subordinated notes due October 15, 2007
(collectively, the "Senior Subordinated Notes"), and entered into a $450
million bank credit facility (the "New Bank Credit Facility") with a final
maturity of April 2007.
The securities referred to herein have not been and will not be registered
under the Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable exemption from
registration requirements.
The proceeds from the offerings of the Senior Subordinated Notes and a
portion of the borrowings under the New Bank Credit Facility were used to
repay the outstanding borrowings under UATC's existing bank credit facility
(the "Bank Credit Facility") (approximately $272.5 million) on April 21, 1998
and to fund the redemption of OSCAR I's preferred stock (approximately $159.2
million) on May 1, 1998. Additional borrowings under the New Bank Credit
Facility are expected to be used to fund the redemption of UATC's $125 million
senior secured notes (the "Senior Secured Notes") on May 21, 1998 at 102.875%
of par value plus accrued but unpaid interest of approximately $0.8 million.
On April 21, 1998, UATC gave notice of the redemption of the Senior Secured
Notes. In addition, OSCAR I expects to use a portion of the New Bank Credit
Facility (approximately $45.7 million) to repay certain Prop I mortgage notes
maturing on November 1, 1998.
F-24
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The net proceeds from the offerings of the Senior Subordinated Notes in
excess of the OSCAR I preferred stock redemption value were contributed to
UATC, as an equity contribution, from OSCAR I.
The New Bank Credit Facility consists of $100 million of reducing revolving
loan commitments and $350 million of delayed draw term loan commitments. The
New Bank Credit Facility contains certain provisions that require the
maintenance of certain financial ratios and place limitations on, among other
things, additional indebtedness, disposition of assets and payment of
dividends.
The New Bank Credit Facility will be guaranteed, on a joint and several
basis, by UATC and by certain of OSCAR I's other subsidiaries, including UAR
and, after the repayment of the Prop I mortgage notes, by Prop I. The New Bank
Credit Facility will be secured by among other things the capital stock of
UATC, UAR, Prop I, and certain other subsidiaries of OSCAR I and UATC and by
an intercompany note of UATC to OSCAR I established with respect to borrowings
by UATC from OSCAR I.
As a result of the repayment of the Bank Credit Facility and redemption of
the Senior Secured Notes, UATC will recognize an extraordinary loss during the
second quarter of 1998 of approximately $8.2 million, consisting of the $3.6
million prepayment premium on the Senior Secured Notes and approximately $4.6
million of unamortized deferred loan costs that will be written off.
(3) SALE AND LEASEBACK
In December 1995, UATC and UAR entered into a sale and leaseback transaction
whereby the buildings and land underlying 31 of their operating theatres and
four theatres and a screen addition under development were sold to, and leased
back from, an unaffiliated third party.
OSCAR I realized a net gain of approximately $12.1 million as a result of
this sale and leaseback transaction. For financial statement purposes, this
gain has been deferred and is being recognized over the term of the lease as a
reduction of rent expense.
In November 1996, UATC entered into a sale and leaseback transaction whereby
the buildings and land underlying three of its operating theatres and two
theatres under development were sold to, and leased back from, an unaffiliated
third party. During 1997, UATC opened one of the theatres under development.
At March 31, 1998, approximately $1.5 million of sales proceeds were held in
escrow and will be used to fund substantially all of the remaining
construction costs associated with the one remaining theatre under
development.
In December 1997, UATC entered into a sale and leaseback transaction whereby
two theatres currently under development were sold to, and leased back from,
an unaffiliated third party for approximately $18.1 million. At March 31,
1998, approximately $13.5 million of the sales proceeds were held in escrow
and will be paid under the terms of the sale and leaseback to fund certain of
the construction costs associated with the two theatres.
(4) CHANGE IN ESTIMATED USEFUL LIVES
During 1998, OSCAR I revised the estimated useful lives of certain equipment
and leasehold improvements to more closely reflect the actual lives of these
assets. The effect of this change in estimated useful lives was to decrease
depreciation and amortization expense for the three months ended March 31,
1998 by approximately $0.7 million.
F-25
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(5) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest were $7.3 million and $8.2 million for the three
months ended March 31, 1998 and 1997, respectively.
OSCAR I accrued $6.7 million and $5.9 million of dividends during the three
months ended March 31, 1998 and 1997, respectively, on its preferred stock.
(6) DEBT
Debt is summarized as follows (amounts in millions):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------- ------------
<S> <C> <C>
Bank Credit Facility (a).......................... $243.5 226.5
Senior Secured Notes (a).......................... 125.0 125.0
Other (b)......................................... 10.6 10.7
UAR Promissory Notes (c).......................... 4.6 5.6
Prop I Mortgage Notes (d)......................... 46.0 46.2
------ -----
<CAPTION>
$429.7 414.0
====== =====
</TABLE>
- - --------
(a) As discussed in note (2), Subsequent Event-Recapitalization, the Bank
Credit Facility was repaid on April 21, 1998, and the Senior Secured Notes
are to be redeemed on May 21, 1998 from proceeds of the offerings of the
Senior Subordinated Notes and the New Bank Credit Facility. The Senior
Secured Notes will be redeemed at par plus a prepayment premium of 2.875%,
or approximately $3.6 million.
(b) Other debt at March 31, 1998 consists of various term loans, mortgage
notes, capital leases and other borrowings. This other debt carries
interest rates ranging from 7% to 12%. Principal and interest are payable
at various dates through March 1, 2006.
(c) In conjunction with the acquisitions of certain theatres prior to 1992,
UAR issued $51.6 million of non-interest bearing promissory notes to the
sellers. Principal on the promissory notes is due quarterly through
October 1999. For financial statement purposes, the promissory notes were
discounted at UAR's effective borrowing rate on the date the promissory
notes were executed.
(d) The Prop I mortgage notes (the "Prop I Notes") bear interest at 11.15% per
annum. Principal and interest are payable in monthly installments, with a
lump sum payment of principal and accrued, but unpaid, interest due on
November 1, 1998. The Prop I Notes are secured by a first mortgage on Prop
I's theatre properties, an assignment of the lease agreement with UATC,
and $12.5 million of bank letters of credit. The Indenture of Mortgage,
among its other provisions, contains limitations on the sale and/or
substitution of properties and a limitation on any additional debt
incurred by Prop I other than intercompany advances. As discussed in note
(2), Subsequent Event-Recapitalization, additional borrowings under the
New Bank Credit Facility are expected to be used to fund the remaining
principal balance due on November 1, 1998 (approximately $45.7 million).
At March 31, 1998, UATC was party to interest rate cap agreements on $100.0
million of floating rate debt which provide for a LIBOR interest rate cap of 7
1/2% and expire at various dates through July 1999. UATC is subject to credit
risk exposure from non-performance of the counterparties to the interest rate
cap agreements. As OSCAR I has historically received payments relating to such
interest rate cap agreements, it does not
F-26
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
anticipate such non-performance in the future. OSCAR I amortizes the cost of
its interest rate cap agreements to interest expense over the life of the
agreement. Amounts received from the counterparties to the interest rate cap
agreements are recorded as a reduction of interest expense.
For the three months ended March 31, 1998 and 1997, interest, net includes
$0.5 million of amortization of deferred loan costs and $0.1 million of
interest income.
(7) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
At March 31, 1998, the fair value of OSCAR I's cash and cash equivalents,
outstanding borrowings under the Bank Credit Facility, the other debt, the
promissory notes, and the Prop I Notes, and interest rate cap agreements
approximated their carrying amount and the fair value of the Senior Secured
Notes was approximately $129.1 million.
(8) PREFERRED STOCK
The OSCAR I preferred stock is redeemable any time at the option of OSCAR I
at its stated liquidation value plus accrued and unpaid dividends. Dividends
accrue at a rate of 8% through December 31, 1995, 9% through December 31, 1996
and 14% thereafter, and are payable in cash or in kind through December 31,
1996. Due to the perpetual nature of the preferred stock and the escalating
terms of the required dividend rates, for financial reporting purposes,
dividends have been accrued at a 14% per annum rate for all periods since
issuance. At March 31, 1998, the actual redemption value in accordance with
the terms of the preferred stock was approximately $157.4 million, or
approximately $43.2 million less than the carrying amount at March 31, 1998.
As discussed in note (2), Subsequent Event-Recapitalization, the proceeds
from the Senior Subordinated Notes and a portion of the borrowings under the
New Bank Credit Facility were used to fund the redemption of OSCAR I's
preferred stock on May 1, 1998. At the redemption date, the actual redemption
value of the preferred stock was approximately $159.2 million, or
approximately $43.7 million less than the carrying amount at the redemption
date. This difference will be shown as an increase in additional paid-in
capital subsequent to the redemption date.
(9) INCOME TAXES
Consolidated subsidiaries in which OSCAR I owns less than 80% file separate
federal income tax returns. The current and deferred federal and state income
taxes of such subsidiaries are calculated on a separate return basis and are
included in the accompanying condensed consolidated financial statements of
OSCAR I.
At March 31, 1998, OSCAR I had deferred tax assets and deferred tax
liabilities of approximately $87.0 million and $6.3 million, respectively,
relating primarily to OSCAR I's net operating loss carry-forward and the
difference between the financial statement and income tax basis in OSCAR I's
property and equipment. At March 31, 1998, OSCAR I had recorded a valuation
allowance of approximately $80.7 million against the net deferred tax asset.
(10) COMMITMENTS AND CONTINGENCIES
OSCAR I and/or its subsidiaries are involved in various pending and
threatened legal proceedings involving allegations concerning contract
breaches, torts, employment matters, environmental issues, anti-trust
violations, local tax disputes, and miscellaneous other matters. In addition,
there are various claims against OSCAR I and/or its subsidiaries relating to
certain of the leases held by OSCAR I and/or its subsidiaries. Although it is
not possible to predict the outcome of these proceedings, OSCAR I believes
that such legal proceedings will not have a material adverse effect on the
OSCAR I's financial position, liquidity or results of operations.
F-27
<PAGE>
OSCAR I CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Americans With Disabilities Act of 1990 (the "ADA"), and certain state
statutes among other things, require that places of public accommodation,
including theatres (both existing and newly constructed) be accessible to and
that assistive listening devices be available for use by certain patrons with
disabilities. With respect to access to theatres, the ADA may require that
certain modifications be made to existing theatres to make such theatres
accessible to certain theatre patrons and employees who are disabled. The ADA
requires that theatres be constructed in such a manner that persons with
disabilities have full use of the theatre and its facilities and reasonable
access to work stations. The ADA provides for a private right of action and
reimbursement of plaintiff's attorneys' fees and expenses under certain
circumstances. OSCAR I has established a program to review and evaluate OSCAR
I's theatres and to make any changes that may be required by the ADA. OSCAR I
believes that the cost of complying with the ADA will not have a material
adverse affect on OSCAR I's financial position, liquidity or results of
operations.
F-28
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SE-
CURITIES 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
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN 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.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 16
The Exchange Offer....................................................... 24
Certain Federal Income Tax Consequences of the Exchange Offer............ 32
The Refinancing Transactions............................................. 33
Use of Proceeds.......................................................... 34
Capitalization........................................................... 35
Selected Historical Consolidated Financial Information................... 36
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 38
Business................................................................. 54
Management............................................................... 65
Certain Transactions..................................................... 71
Principal Stock Ownership................................................ 72
Description of Certain Indebtedness...................................... 73
Description of the Other Exchange Notes.................................. 76
Description of the Exchange Notes........................................ 77
Exchange Offer; Registration Rights...................................... 104
Restrictions Imposed by the 1995 Sale Leaseback.......................... 106
Description of Certain Federal Income Tax Consequences of an Investment
in the Exchange Notes................................................... 108
Plan of Distribution..................................................... 112
Validity of the Exchange Notes........................................... 112
Experts.................................................................. 112
Index to Financial Statements............................................ F-1
</TABLE>
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UNITED ARTISTS THEATRE COMPANY
OFFER TO EXCHANGE
9 3/4% SERIES B SENIOR SUBORDINATED NOTES
DUE 2008
($225,000,000 PRINCIPAL AMOUNT)
FOR
9 3/4% SENIOR SUBORDINATED NOTES
DUE 2008
($225,000,000 PRINCIPAL AMOUNT OUTSTANDING)
UNITED ARTISTS[LOGO]
THEATRES
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<PAGE>
[ALTERNATIVE COVER FOR MARKET-MAKING PROSPECTUS]
UNITED ARTISTS THEATRE COMPANY
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
---------------
The 9 3/4% Series B Senior Subordinated Notes due 2008 (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
this Prospectus is a part, were issued in exchange for the 9 3/4% Senior
Subordinated Notes due 2008 (the "Notes" or the "Fixed Rate Notes") by United
Artists Theatre Company (the "Company"), a Delaware corporation (formerly
named Oscar I Corporation).
The Exchange Notes are unsecured senior subordinated obligations of the
Company, rank pari passu with the Fixed Rate Notes, the Floating Rate Notes
(as defined) and the Floating Rate Exchange Notes (as defined) and will be
subordinated in right of payment to all existing and future Senior
indebtedness (as defined) of the Company, including Indebtedness (as defined)
under the Senior Credit Facilities (as defined). At May 31, 1998, the Company
and its subsidiaries had approximately $644.9 million of indebtedness
(excluding trade payables) outstanding, consisting of $310.0 million of Senior
Indebtedness of the Company (guaranteed by certain of the Company's
subsidiaries), $59.9 million of other indebtedness of the Company's
subsidiaries, $225.0 million representing the Notes and $50.0 million
representing the Floating Rate Notes. In addition, on May 31, 1998, the
Company had additional delayed draw and revolving credit availability of
$140.0 million under the Senior Credit Facilities, all of which would be
Senior Indebtedness, if borrowed. Additional Senior Indebtedness may be
incurred by the Company and additional indebtedness may be incurred by the
Company and its subsidiaries, in each case from time to time, subject to
certain restrictions. See "The Transaction" and "Capitalization."
The Exchange Notes will bear interest from April 21, 1998, the date of
issuance of the Notes that are tendered in exchange for the Exchange Notes (or
the most recent Interest Payment Date (as defined) to which interest on such
Notes has been paid), at a rate equal to 9 3/4% per annum. Interest on the
Exchange Notes will be payable semiannually on April 15 and October 15 of each
year, commencing October 15, 1998. The Exchange Notes are redeemable at the
option of the Company, in whole or in part, at any time on or after April 15,
2003, and prior to maturity, at the redemption prices set forth herein,
together with accrued and unpaid interest, if any, to the date of redemption.
See "Description of the Exchange Notes."
In addition, at any time prior to April 15, 2001, the Company may redeem up
to 35% of the aggregate principal amount of the Notes and Exchange Notes with
the net proceeds of one or more Public Equity Offerings (as defined) at
109.75% of the principal amount together with accrued and unpaid interest, if
any, to the date of redemption; provided that at least $146.25 million
aggregate principal amount of Notes and Exchange Notes remains outstanding
immediately after such redemption. Upon the occurrence of a Change of Control
(as defined), each holder of the Exchange Notes shall have the right to
require the Company to purchase all or any 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, if any, to the date of purchase.
See "Risk Factors -- Purchase of Exchange Notes Upon a Change of Control" and
"Description of the Exchange Notes."
The Exchange Offer is being made in reliance on certain no-action positions
that have been published by the staff of the Securities and Exchange
Commission (the "Commission"), which require each tendering holder to
represent that it acquired the Notes in the ordinary course of its business
and that such holder does not intend to participate and has no arrangement or
understanding with any person to participate in a distribution of the Exchange
Notes. In some cases, certain broker-dealers may be required to deliver a
prospectus in connection with the resale of Exchange Notes that they receive
in the Exchange Offer. See "Prospectus Summary -- The Note Offering -- The
Exchange Offer."
Prior to the consummation of the Exchange Offer, there was no public market
for the Notes or 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 a national
securities exchange. There can be no assurance that an active public market
for the Exchange Notes will develop.
SEE "RISK FACTORS," COMMENCING ON PAGE , FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF NOTES BEFORE TENDERING THEIR
NOTES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus is to be used by Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") in connection with offers and sales of the
Exchange Notes in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Merrill Lynch may act as
principal or as agent in such transactions. The Company will receive no
portion of the proceeds of the sales of such Exchange Notes and will bear the
expenses incident to the registration thereof under the Securities Act of
1933, as amended. See "Principal Stock Ownership" for a description of the
ownership of capital stock of the Company by affiliates of Merrill Lynch.
MERRILL LYNCH & CO.
The date of this Prospectus is , 1998.
<PAGE>
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
No dealer, salesperson or other person has been authorized to give
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or Merrill Lynch. This
Prospectus does not constitute an offer to sell or the solicitation of an
offer to buy any security other than the Exchange Notes offered hereby, nor
does it constitute an offer to sell or the solicitation of an offer to buy any
of the Exchange Notes to any person in any jurisdiction in which it is
unlawful to make such an offer or solicitation to such person. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any date subsequent to the date hereof.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 under the Securities Act
for the registration of the Exchange Notes offered hereby (the "Registration
Statement"). This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits and
schedules to the Registration Statement as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company or the Exchange Notes offered hereby, reference is made to the
Registration Statement, including the exhibits and financial statement
schedules thereto. With respect to each such document filed with the
Commission 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.
The Company and UATC are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports and other information with the Commission.
The Registration Statement, such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; the Chicago Regional Office, Suite 1400, 500 West Madison Street,
Citicorp Center, Chicago, Illinois 60661; and the New York Regional Office,
Suite 1300, 7 World Trade Center, New York, New York 10048. Copies of such
material also can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site on the Internet that contains
reports and other information regarding registrants that file electronically
with the Commission. The address of this site on the Internet is
http://www.sec.gov.
The Company will send to each Holder of Exchange Notes copies of annual
reports and quarterly reports containing the information required to be filed
under the Exchange Act. So long as the Company is subject to the periodic
reporting requirements of the Exchange Act, it is required to furnish the
information required to be filed with the Commission to the Trustee and the
Holders of the Notes and the Exchange Notes. The Company has agreed that, even
if it is not required under the Exchange Act to furnish such information to
the Commission, it will nonetheless continue to furnish information that would
be required to be furnished by the Company by Section 13 of the Exchange Act
to the Trustee and the Holders of the Notes or Exchange Notes as if it were
subject to such periodic reporting requirements.
A-2
<PAGE>
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
TRADING MARKET FOR THE EXCHANGE NOTES
There is no existing trading market for the Exchange Notes, and there can be
no assurance regarding the future development of a market for the Exchange
Notes or the ability of the Holders of the Exchange Notes to sell their
Exchange Notes or the price at which such Holders may be able to sell their
Exchange Notes. If such market were to develop, the Exchange Notes could trade
at prices that may be higher or lower than their initial
offering price depending on many factors, including prevailing interest rates,
the Company's operating results and the market for similar securities.
Although it is not obligated to do so, Merrill Lynch intends to make a
market in the Exchange Notes. Any such market-making activity may be
discontinued at any time, for any reason, without notice at the sole
discretion of Merrill Lynch. No assurance can be given as to the liquidity of
or the trading market for the Exchange Notes.
Merrill Lynch is affiliated with entities that beneficially own a majority
of the voting power of the capital stock of the Company. If Merrill Lynch
conducts any market-making activities, it may be required to deliver a
prospectus when effecting offers and sales in the Exchange Notes because
Merrill Lynch is affiliated with such entities. Pursuant to the Registration
Rights Agreement, the Company agreed to file and maintain a registration
statement that would allow Merrill Lynch to engage in market-making
transactions in the Exchange Notes. Subject to certain exceptions set forth in
the Registration Rights Agreement, the registration statement will remain
effective for as long as Merrill Lynch may be required to deliver a prospectus
in connection with market-making transactions in the Exchange Notes. The
Company has agreed to bear substantially all the costs and expenses related to
such registration statement.
A-3
<PAGE>
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
USE OF PROCEEDS
This Prospectus is delivered in connection with the sale of the Exchange
Notes by Merrill Lynch in market-making transactions. The Company will not
receive any of the proceeds from such transactions.
A-4
<PAGE>
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
PLAN OF DISTRIBUTION
This Prospectus is to be used by Merrill Lynch in connection with offers and
sales of the Exchange Notes in market-making transactions effected from time
to time. Merrill Lynch may act as a principal or agent in such transactions,
including as agent for the counterparty when acting as principal or as agent
for both counterparties, and may receive compensation in the form of discounts
and commissions, including from both counterparties when it acts as agent for
both. Such sales will be made at prevailing market prices at the time of sale,
at prices related thereto or at negotiated prices.
Affiliates of Merrill Lynch currently own approximately 90.8% of the
Company's outstanding voting stock. See "Principal Stock Ownership." Merrill
Lynch has informed the Company that it does not intend to confirm sales of the
Exchange Notes to any accounts over which it exercises discretionary authority
without the prior specific written approval of such transactions by the
customer.
The Company has been advised by Merrill Lynch that, subject to applicable
laws and regulations, Merrill Lynch currently intends to make a market in the
Exchange Notes following completion of the Exchange Offer. However, Merrill
Lynch is not obligated to do so and any such market-making may be interrupted
or discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. There can be no assurance that an active trading market will
develop or be sustained. See "Risk Factors--Absence of Public Market for the
Exchange Notes."
Merrill Lynch has provided investment banking services to the Company in the
past and may provide such services and financial advisory services to the
Company and United Artists in the future. Merrill Lynch acted as purchasers in
connection with the initial sale of the Fixed Rate Notes and the Floating Rate
Notes and received an aggregate underwriting discount of approximately $4.5
million in connection therewith. An affiliate of Merrill Lynch is a lender and
acted as a co-syndication agent under the Senior Credit Facilities for which
it received usual and customary fees.
Merrill Lynch and the Company have entered into a registration rights
agreement with respect to the use by Merrill Lynch of this Prospectus.
Pursuant to such agreement, the Company agreed to bear substantially all
registration expenses incurred under such agreement, and the Company agreed to
indemnify Merrill Lynch against certain liabilities, including liabilities
under the Securities Act.
A-5
<PAGE>
[ALTERNATE BACK COVER FOR MARKET-MAKING PROSPECTUS]
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SE-
CURITIES 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
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN 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.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................
Risk Factors.............................................................
The Refinancing Transactions.............................................
Use of Proceeds..........................................................
Capitalization...........................................................
Selected Historical Consolidated Financial Information...................
Management's Discussion and Analysis of Financial Condition and Results
of Operations...........................................................
Business.................................................................
Management...............................................................
Certain Transactions.....................................................
Principal Stock Ownership................................................
Description of Certain Indebtedness......................................
Description of the Other Exchange Notes..................................
Description of the Exchange Notes........................................
Exchange Offer; Registration Rights......................................
Restrictions Imposed by the 1995 Sale Leaseback..........................
Description of Certain Federal Income Tax Consequences of an Investment
in the Exchange Notes...................................................
Plan of Distribution.....................................................
Validity of the Exchange Notes...........................................
Experts..................................................................
Index to Financial Statements............................................
</TABLE>
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UNITED ARTISTS THEATRE COMPANY
9 3/4% SERIES B SENIOR SUBORDINATED NOTES
DUE 2008
($225,000,000 PRINCIPAL AMOUNT)
UNITED ARTISTS[LOGO]
THEATRES
PROSPECTUS
- - --------------------------------------------------------------------------------
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A-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation in such capacity at another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe that such person's conduct was unlawful.
Section 145 of the DGCL also provides that a corporation may indemnify any
person who was or is a party or threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such
person acted under similar standards, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
Section 145 of the DGCL also provides that to the extent that a director,
officer, employee or agent of a corporation is successful on the merits or
otherwise in the defense of any action referred to above, or in defense of any
claim, issue or matter therein, the corporation must indemnify such person
against expenses (including attorneys' fees) actually and reasonably incurred
by such person in connection therewith.
In accordance with Section 145 of the DGCL, the Registrant's Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation")
provides that the Registrant will indemnify and hold harmless, to the fullest
extent authorized by the DGCL (as existing or amended, but in the case of such
amendment, only to the extent such amendment permits the Registrant to provide
broader indemnification rights than prior to such amendment), each person who
was or is made a party or is threatened to be made a party to or is involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is, or a person of whom he
or she is the legal representative, is or was a director or officer of the
Registrant or is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection with such action, suit or proceeding, and such indemnification will
continue as to a person who has ceased to be a director, officer, employee or
agent and will inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in the Certificate
of Incorporation of the Registration, the Registration will indemnify any such
person seeking indemnification in connection with a proceeding initiated by
such person only if such proceeding was authorized by the Board of Directors.
The Registrant's Certificate of Incorporation also provides that the right
to indemnification is a contract right and includes the right to be paid by
the Registrant the expenses incurred in defending any such proceeding in
II-1
<PAGE>
advance of its final disposition; provided, however, that, if the DGCL
requires, the payment of such expenses incurred by a director or officer in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, will be made only upon delivery of
an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall be ultimately be determined that such director
or officer is not entitled to be indemnified by the Registrant by law or
pursuant to the Registrant's Certificate of Incorporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of a corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the directors' duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (regarding certain illegal distributions) or (iv) for any
transaction from which the director derived an improper personal benefit. The
Registrant's Certificate of Incorporation provides that the personal liability
of the Registrant's directors to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director is limited to the
fullest extent permitted by Delaware law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(1) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of United Artists
Theatre Company
3.2 By-Laws of United Artists Theatre Company
4.1 Indenture, dated as of April 21, 1998, by and among the Company and
State Street Bank and Trust Company of Missouri, N.A. with respect to
the 9 3/4% Senior Subordinated Notes due 2008
4.2 Indenture, dated as of April 21, 1998, by and among the Company and
State Street Bank and Trust Company of Missouri, N.A. with respect to
the Floating Rate Senior Subordinated Notes due 2007
4.3 Form of 9 3/4% Senior Subordinated Note (included in Exhibit 4.1)
4.4 Form of Floating Rate Senior Subordinated Note (included in Exhibit
4.2)
4.5 Form of 9 3/4% Series B Senior Subordinated Note (included in Exhibit
4.1)
4.6 Form of Floating Rate Series B Senior Subordinated Note (included in
Exhibit 4.2)
5.1* Opinion of Wachtell, Lipton, Rosen & Katz with respect to the 9 3/4%
Series B Senior Subordinated Notes due 2008
10.1 Registration Rights Agreement, dated as of April 21, 1998, by and
among the Company and Merrill Lynch & Co., Merrill Lynch Pierce,
Fenner & Smith Incorporated, BancAmerica Robertson Stephens, Morgan
Stanley & Co. Incorporated, BancBoston Securities Inc. and
NationsBanc Montgomery Securities LLC
10.2 Registration Rights Agreement, dated as of April 21, 1998, by and
among the Company and Merrill Lynch & Co., Merrill Lynch Pierce,
Fenner & Smith Incorporated
10.3 Credit Agreement, dated as of April 21, 1998, among the Company, Bank
of American National Trust and Savings Association, BankBoston, N.A.,
NationsBank Texas, N.A., Merrill Lynch Capital Corporation and Morgan
Stanley Senior Funding, Inc. and the lenders party thereto
10.4 Trust Indenture and Security Agreement dated as of December 13, 1995,
between Wilmington Trust Company, William J. Wade and Fleet National
Bank of Connecticut, and Alan B. Coffey (3)
10.5 Pass Through Certificates, Series 1995-A Registration Rights
Agreement, dated as of December 13, 1995 among United Artists Theatre
Circuit, Inc., Morgan Stanley & Co. Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated (3)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.6 Participation Agreement, dated as of December 13, 1995, among United
Artists Theatre Circuit, Inc., Wilmington Trust Company, William J.
Wade, Theatre Investors, Inc., Northway Mall Associates, LLC,
Wilmington Trust Company, William J. Wade, Fleet National Bank of
Connecticut, Alan B. Coffey and Fleet National Bank of Connecticut
(3)
10.7 Pass Through Trust Agreement, dated as of December 13, 1995, between
United Artists Theatre Circuit, Inc. and Fleet National Bank of
Connecticut (3)
10.8 Lease Agreement, dated as of December 13, 1995, between Wilmington
Trust Company and William J. Wade and United Artists Theatre Circuit,
Inc. (3)
10.9 Lease Agreement, dated as of October 1, 1988, between United Artists
Properties I Corporation and United Artists Theatre Circuit, Inc. (1)
10.10* United Artists Theatre Company Stock Incentive Plan
10.11 Stockholders' Agreement, dated as of May 12, 1992, by and among OSCAR
I Corporation, Merrill Lynch Capital Appreciation Partnership No. B-
XIX, L.P., Roman Nineteen Offshore Fund B.V., ML IBK Positions, Inc.,
MLCP Associates L.P. No. II, Equitable Capital Private Income and
Equity Partnership II, L.P. and Equitable Deal Flow Fund, L.P. and
the holders of Options or Restricted Stock awards under the
Management Stock Option Plan (1)
10.12 Stock Subscription Agreement, dated as of May 12, 1992, by and among
OSCAR I Corporation, Merrill Lynch Capital Appreciation Partnership
No. B-XIX, L.P., Roman Nineteen Offshore Fund B.V., ML IBK Positions,
Inc., MLCP Associates L.P. No. II, Equitable Capital Private Income
and Equity Partnership II, L.P. and Equitable Deal Flow Fund, L.P.
(1)
10.13 Non-Competition Agreement, dated as of May 12, 1992, by and among
Tele-Communications, Inc., United Artists Theatre Circuit, Inc. and
OSCAR I Corporation (1)
10.14 Trademark Agreement as of May 12, 1992 by United Artists Entertainment
Company, United Artists Holdings, Inc., United Artists Cable
Holdings, Inc., United Artists Theatre Holding Company, on the one
hand and United Artists Theatre Circuit, Inc., United Artists Realty
Company, UAB, Inc., and UAB II, Inc., on the other hand (1)
10.15 United Artists Theatre Circuit 401(k) Savings Plan (1)
10.16 United Artists Theatre Circuit Supplemental 401(k) Savings Plan (2)
10.17 Tax Sharing Agreement, dated as of May 12, 1992, between OSCAR I
Corporation and United Artists Theatre Circuit, Inc. (1)
10.18 Employment Agreement, dated as of May 12, 1992, between the Company
and Kurt C. Hall (1)
10.19 Employment Agreement Extention Letter, dated as of May 12, 1998,
between the Company and Kurt C. Hall
12.1 Statement re computation of ratios
21.1 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1)
24.1 Powers of Attorney
25.1 Statement of Eligibility and Qualification of trustee on Form T-1 of
State Street Bank and Trust Company of Missouri, N.A. under the Trust
Indenture Act of 1939
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal for the 9 3/4% Senior Subordinated Notes
due 2008
99.2 Form of Notice of Guaranteed Delivery
99.3 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
</TABLE>
(b) Financial Statement Schedule
- - --------
(1) Incorporated herein by reference from Form S-1 dated October 5, 1992.
(2) Incorporated herein by reference from Form 10-K for the year ended
December 31, 1993.
(3) Incorporated herein by reference from Form S-2 dated January 31, 1996.
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
The 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 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 end of the estimated maximum offering
range may be reflected in 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) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(c) 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, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Englewood, State of
Colorado, on June 16, 1998.
United Artists Theatre Company
/s/ Kurt C. Hall
By: _________________________________
Name:Kurt C. Hall
Title:President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 16, 1998.
NAME TITLE
/s/ Kurt C. Hall President, Chief Executive
------------------------------------- Officer and Director
KURT C. HALL (principal executive
officer)
/s/ Trent J. Carman Senior Vice President, Chief
------------------------------------- Financial Officer and
TRENT J. CARMAN Treasurer (principal
financial and accounting
officer)
/s/ John W. Boyle Chairman of the Board and
------------------------------------- Director
JOHN W. BOYLE
/s/ Albert J. Fitzgibbons, III Director
-------------------------------------
ALBERT J. FITZGIBBONS, III
/s/ James J. Burke, Jr. Director
-------------------------------------
JAMES J. BURKE, JR.
/s/ Scott M. Shaw Director
-------------------------------------
SCOTT M. SHAW
/s/ Robert F. End Director
-------------------------------------
ROBERT F. END
/s/ Michael L. Pade Director
-------------------------------------
MICHAEL L. PADE
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- - ------ ------------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of United Artists
Theatre Company
3.2 By-Laws of United Artists Theatre Company
4.1 Indenture, dated as of April 21, 1998, by and among the Company and
State Street Bank and Trust Company of Missouri, N.A. with respect to
the 9 3/4% Senior Subordinated Notes due 2008
4.2 Indenture, dated as of April 21, 1998, by and among the Company and
State Street Bank and Trust Company of Missouri, N.A. with respect to
the Floating Rate Senior Subordinated Notes due 2007
4.3 Form of 9 3/4% Senior Subordinated Note (included in Exhibit 4.1)
4.4 Form of Floating Rate Senior Subordinated Note (included in Exhibit
4.2)
4.5 Form of 9 3/4% Series B Senior Subordinated Note (included in Exhibit
4.1)
4.6 Form of Floating Rate Series B Senior Subordinated Note (included in
Exhibit 4.2)
5.1* Opinion of Wachtell, Lipton, Rosen & Katz with respect to the 9 3/4%
Series B Senior Subordinated Notes due 2008
10.1 Registration Rights Agreement, dated as of April 21, 1998, by and
among the Company and Merrill Lynch & Co., Merrill Lynch Pierce,
Fenner & Smith Incorporated, BancAmerica Robertson Stephens, Morgan
Stanley & Co. Incorporated, BancBoston Securities Inc. and
NationsBanc Montgomery Securities LLC
10.2 Registration Rights Agreement, dated as of April 21, 1998, by and
among the Company and Merrill Lynch & Co., Merrill Lynch Pierce,
Fenner & Smith Incorporated
10.3 Credit Agreement, dated as of April 21, 1998, among the Company, Bank
of American National Trust and Savings Association, BankBoston, N.A.,
NationsBank Texas, N.A., Merrill Lynch Capital Corporation and Morgan
Stanley Senior Funding, Inc. and the lenders party thereto
10.4 Trust Indenture and Security Agreement dated as of December 13, 1995,
between Wilmington Trust Company, William J. Wade and Fleet National
Bank of Connecticut, and Alan B. Coffey (3)
10.5 Pass Through Certificates, Series 1995-A Registration Rights
Agreement, dated as of December 13, 1995 among United Artists Theatre
Circuit, Inc., Morgan Stanley & Co. Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated (3)
10.6 Participation Agreement, dated as of December 13, 1995, among United
Artists Theatre Circuit, Inc., Wilmington Trust Company, William J.
Wade, Theatre Investors, Inc., Northway Mall Associates, LLC,
Wilmington Trust Company, William J. Wade, Fleet National Bank of
Connecticut, Alan B. Coffey and Fleet National Bank of Connecticut
(3)
10.7 Pass Through Trust Agreement, dated as of December 13, 1995, between
United Artists Theatre Circuit, Inc. and Fleet National Bank of
Connecticut (3)
10.8 Lease Agreement, dated as of December 13, 1995, between Wilmington
Trust Company and William J. Wade and United Artists Theatre Circuit,
Inc. (3)
10.9 Lease Agreement, dated as of October 1, 1988, between United Artists
Properties I Corporation and United Artists Theatre Circuit, Inc. (1)
10.10* United Artists Theatre Company Stock Incentive Plan
10.11 Stockholders' Agreement, dated as of May 12, 1992, by and among OSCAR
I Corporation, Merrill Lynch Capital Appreciation Partnership No. B-
XIX, L.P., Roman Nineteen Offshore Fund B.V., ML IBK Positions, Inc.,
MLCP Associates L.P. No. II, Equitable Capital Private Income and
Equity Partnership II, L.P. and Equitable Deal Flow Fund, L.P. and
the holders of Options or Restricted Stock awards under the
Management Stock Option Plan (1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- - ------ ------------
<C> <S>
10.12 Stock Subscription Agreement, dated as of May 12, 1992, by and among
OSCAR I Corporation, Merrill Lynch Capital Appreciation Partnership
No. B-XIX, L.P., Roman Nineteen Offshore Fund B.V., ML IBK Positions,
Inc., MLCP Associates L.P. No. II, Equitable Capital Private Income
and Equity Partnership II, L.P. and Equitable Deal Flow Fund, L.P.
(1)
10.13 Non-Competition Agreement, dated as of May 12, 1992, by and among
Tele-Communications, Inc., United Artists Theatre Circuit, Inc. and
OSCAR I Corporation (1)
10.14 Trademark Agreement as of May 12, 1992 by United Artists Entertainment
Company, United Artists Holdings, Inc., United Artists Cable
Holdings, Inc., United Artists Theatre Holding Company, on the one
hand and United Artists Theatre Circuit, Inc., United Artists Realty
Company, UAB, Inc., and UAB II, Inc., on the other hand (1)
10.15 United Artists Theatre Circuit 401(k) Savings Plan (1)
10.16 United Artists Theatre Circuit Supplemental 401(k) Savings Plan (2)
10.17 Tax Sharing Agreement, dated as of May 12, 1992, between OSCAR I
Corporation and United Artists Theatre Circuit, Inc. (1)
10.18 Employment Agreement, dated as of May 12, 1992, between the Company
and Kurt C. Hall (1)
10.19 Employment Agreement Extention Letter, dated as of May 12, 1998,
between the Company and Kurt C. Hall
12.1 Statement re computation of ratios
21.1 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1)
24.1 Powers of Attorney
25.1 Statement of Eligibility and Qualification of trustee on Form T-1 of
State Street Bank and Trust Company of Missouri, N.A. under the Trust
Indenture Act of 1939
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal for the 9 3/4% Senior Subordinated Notes
due 2008
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
(b) Financial Statement Schedule
- - --------
(1) Incorporated herein by reference from Form S-1 dated October 5, 1992.
(2) Incorporated herein by reference from Form 10-K for the year ended
December 31, 1993.
(3) Incorporated herein by reference from Form S-2 dated January 31, 1996.
* To be filed by amendment.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
--------------------
CERTIFICATE OF INCORPORATION
OF
UNITED ARTISTS THEATRE COMPANY
------------------------------
ARTICLE I
---------
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
United Artists Theatre Company
------------------------------
ARTICLE II
----------
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
-----------
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE>
ARTICLE IV
----------
Section 1. The Corporation shall be authorized to issue 30,075,000 shares of
- - ----------
capital stock, of which 23,200,000 shares shall be Class A Voting Common Stock,
$.01 par value ("Class A Common Stock"), 1,818,000 shares shall be Class B Non-
Voting Common Stock, $.01 par value ("Class B Non-Voting Common Stock"), 57,000
shares shall be Class C Non-Voting Common Stock, $.01 par value ("Class C Non-
Voting Common Stock"), and 5,000,000 shares shall be Preferred Stock, $.10 par
value ("Preferred Stock"). The Class B Non-Voting Common Stock and the Class C
Non-Voting Common Stock are sometimes hereinafter together referred to as the
"Non-Voting Common Stock." The Non-Voting Common Stock and the Class A Common
Stock are sometimes hereinafter together referred to as the "Common Stock." All
shares of Common Stock outstanding upon the effectiveness of this Restated
Certificate of Incorporation shall be automatically deemed to be shares of Class
A Common Stock.
Section 2. Shares of Preferred Stock may be issued from time to time in one
- - ----------
or more series. The Board of Directors of the Corporation (the "Board") is
hereby authorized to fix the voting rights, if any, designations, powers,
preferences and the relative, participation, optional or other rights, if any,
and the qualifications, limitations or restrictions thereof, of any unissued
series of Preferred Stock; and to fix the number of shares constituting such
series, and to increase or decrease the number of shares of any such series (but
not below the number of shares thereof then outstanding).
Section 3. (a) Except as otherwise provided by law or by the resolution or
- - ----------
resolutions adopted by the Board designating the rights, powers and preferences
of any series of Preferred Stock, each outstanding share of Class A Common Stock
shall be entitled to vote on
-2-
<PAGE>
each matter on which the stockholders of the Corporation shall be entitled to
vote. Each holder of Class A Common Stock shall be entitled to one vote for each
share of such stock held by such holder.
(b) Except as set forth herein or as otherwise required by law, each
outstanding share of Non-Voting Common Stock shall not be entitled to vote
on any matter, including on any matter on which the holders of the Class A
Common Stock shall be entitled to vote, and shares of Non-Voting Common
Stock shall not be included in determining the number of shares voting or
entitled to vote on any such matters. On any matter on which the holders
of shares of any of the Class A Common Stock, Class B Non-Voting Common
Stock and Class C Non-Voting Common Stock may be entitled to vote, except
as otherwise required by law, all classes of Common Stock entitled to vote
shall vote together as a single class, and each holder of shares of Non-
Voting Common Stock entitled to vote shall be entitled to one vote for each
share of such stock held by such holder; provided that, notwithstanding the
foregoing, holders of shares of Non-Voting Common Stock shall be entitled
to vote as a separate class on any amendment to this subsection 3(b) and on
any amendment, repeal or modification of any provision of this Restated
Certificate of Incorporation that adversely affects the powers, preferences
or special rights of holders of shares of Non-Voting Common Stock.
Notwithstanding the foregoing and without limiting the first sentence of
this Section 3(b), no vote or consent of the holders of any Class B Non-
Voting Common Stock or any Class C Non-Voting Common Stock will be required
for (i) the creation or incurrence of any indebtedness of any kind of the
Corporation or any of its subsidiaries, (ii) the creation, issuance, or
increase or decrease in the amount, of any class or series of capital stock
of the Corporation, whether ranking prior to, on a parity with, or junior
to the
-3-
<PAGE>
Class B Non-Voting Common Stock or any Class C Non-Voting Common Stock as
to dividends or upon liquidation, dissolution or winding up of the
Corporation, (iii) any merger, consolidation or similar transaction
involving the Corporation or any sale, lease or other conveyance of all or
substantially all of the assets of the Corporation, or (iv) any other
action by the Corporation or any of its subsidiaries.
Section 4. Subject to the provisions of any series of Preferred Stock which
- - ----------
may at the time be outstanding, the Board of Directors of the Corporation may
declare or make and cause to be paid, dividends or other distributions to the
holders of shares of Class A Common Stock or Non-Voting Common Stock out of any
funds of the Corporation legally available for the payment of dividends or
assets legally available for such distributions; provided, however, that
-------- -------
dividends and distributions shall be declared, made and paid pro rata on a
share-for-share basis on the Class A Common Stock and the Class B Non-Voting
Common Stock; provided further that no dividends or other distributions shall be
-------- -------
declared, made or paid on the Class C Non-Voting Common Stock until the
aggregate fair market value (as determined in good faith by the Board of
Directors of Oscar I) of dividends and distributions (other than dividends or
distributions in shares of Class A Common Stock or Class B Non-Voting Common
Stock of Oscar I) paid or distributed per share of Class A Common Stock and per
share of Class B Non-Voting Common Stock after May 5, 1992 shall be equal in the
aggregate to $9.50 per share of Class A Common Stock and $9.50 per share of
Class B Non-Voting Common Stock, respectively (the "Common Stock Dividend
Amount"); and provided further that thereafter any dividends or other
-------- -------
distributions declared, made or paid by the Corporation shall be declared, made
and paid pro rata,
-4-
<PAGE>
on a share-for-share basis, on the Class A Common Stock, the Class B Non-Voting
Common Stock and the Class C Non-Voting Common Stock.
Section 5. In the event of any liquidation, dissolution or winding up of the
- - ----------
Corporation, whether voluntary or involuntary, after payment to the holders of
any shares of Preferred Stock then outstanding of all amounts to which they are
entitled, if any, (i) the holders of shares of Class A Common Stock and the
Class B Non-Voting Common Stock then outstanding shall each first be entitled to
receive an amount equal to $9.50 per share (less the aggregate fair market value
(as determined as of the date of such dividend or distribution in good faith by
the Board of Directors of Oscar I) of dividends and distributions (other than
dividends or distributions in shares of capital stock of Oscar I) paid or
distributed per share of Class A Common Stock and per share of Class B Non-
Voting Common Stock after May 5, 1992, respectively, and prior to the time of
such liquidation, dissolution or winding up) (the "Common Stock Liquidation
Amount") and (ii) thereafter all of the holders of shares of Class A Common
Stock or Non-Voting Common Stock shall be entitled to share ratably, on a share-
for-share basis, in any remaining assets of the Corporation available for
distribution to its stockholders. In structuring a merger, recapitalization,
sale of substantially all of the assets of the Corporation or other
extraordinary capital transaction to transactions involving the Corporation, the
relative differentials between the Class A Common Stock, the Class B Non-Voting
Common Stock and the Class C Non-Voting Common Stock set forth in this Article
shall be taken into account and preserved (to the extent practicable).
Section 6. If the Corporation shall in any manner subdivide (by stock split,
- - ----------
stock dividend or otherwise) or combine (by reverse stock split or otherwise)
the outstanding
-5-
<PAGE>
shares of the Class A Common Stock, the Class B Non-Voting Common Stock or the
Class C Non-Voting Common Stock, then the outstanding shares of each other class
of Common Stock shall be subdivided or combined, as the case may be, to the same
extent, share and share alike, and appropriate adjustment shall be made in the
Common Stock Liquidation Amount and the Common Stock Dividend Amount.
Section 7. Except as otherwise expressly provided in this Certificate of
- - ----------
Incorporation, all shares of Common Stock shall entitle the holders thereof to
the same rights and privileges.
ARTICLE V
---------
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
----------
In furtherance and not in limitation of the powers conferred by law,
the Board is expressly authorized and empowered to make, alter and repeal the
By-Laws of the Corporation by a majority vote at any regular or special meeting
of the Board or by written consent, subject to the power of the stockholders of
the Corporation to alter or repeal any By-Laws made by the Board.
ARTICLE VII
-----------
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other pro-
-6-
<PAGE>
visions authorized by the laws of the State of Delaware at the time in force may
be added or inserted, in the manner now or hereafter prescribed by law; and all
rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant to this
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article VII.
ARTICLE VIII
------------
Section 1. Elimination of Certain Liability of Directors. A director of the
- - ---------- ---------------------------------------------
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
Section 2. Indemnification and Insurance.
- - ---------- -----------------------------
(a) Right to Indemnification. Each person who was or is made a party or is
------------------------
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director
or officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis
of such proceeding is
-7-
<PAGE>
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; provided,
--------
however, that, except as provided in paragraph (b) hereof, the Corporation
-------
shall indemnify any such person seeking indemnification in connection with
a proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition;
provided, however, that, if the General Corporation Law of the State of
-------- -------
Delaware requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not
entitled to be indemnified under
-8-
<PAGE>
this Section or otherwise. The Corporation may, by action of the Board,
provide indemnification to employees and agents of the Corporation with the
same scope and effect as the foregoing indemnification of directors and
officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this
-------------------------------
Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim.
It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant has not
met the standards of conduct which make it permissible under the General
Corporation Law of the State of Delaware for the Corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the applicable
standard of conduct.
-9-
<PAGE>
(c) Non-Exclusivity of Rights. The right to indemnification and the payment of
-------------------------
expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-law, agreement, vote of
stockholders or disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense, to
---------
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the General Corporation Law of the
State of Delaware.
-10-
<PAGE>
Exhibit 3.2
BY-LAWS
OF
UNITED ARTISTS THEATRE COMPANY
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of Oscar I
Corporation (the "Corporation") shall be established and maintained at the
office of The Corporation Trust Company at The Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
board of directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the board of directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the board of directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a board of directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the board of directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all
<PAGE>
other questions shall be decided by majority vote except as otherwise provided
by the Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the Corporation, not less than ten nor
more than sixty days before the date of the meeting. No business other than that
stated in the notice shall be transacted at any meeting without the unanimous
consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
-2-
<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a board of directors. The
number of directors shall be fixed at seven and may thereafter be fixed from
time to time by the board of directors. Directors shall be elected at the annual
meeting of stockholders and each director shall be elected to serve until his
successor shall be elected and shall qualify. A director need not be a
stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director is or becomes
vacant, such vacancy may be filled either (i) if a quorum of the directors is
then present, by a majority vote of the remaining directors in office or (ii) by
the affirmative vote of the holders of shares constituting a majority of the
voting power of the Corporation. In either case, the board of directors or the
holders of shares constituting a majority of the voting power of the Corporation
shall appoint any qualified person to fill such vacancy, who shall hold office
for the unexpired term and until his successor shall be duly chosen. Except as
otherwise required by law, by the Certificate of Incorporation of the
Corporation or by these By-Laws, if the office of any director becomes vacant
and there are no remaining directors, the stockholders, by the affirmative vote
of the holders of shares constituting a majority of the voting power of the
Corporation, by written consent or at a special meeting called for such purpose,
may appoint any qualified person to fill such vacancy.
SECTION 4. REMOVAL -- Any director or directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of the voting power entitled to vote for the election of directors, at
an annual meeting or a special meeting called for the purpose, and the vacancy
thus created may be filled, at such meeting, by the affirmative vote of holders
of shares constituting a majority of the voting power of the Corporation.
SECTION 5. COMMITTEES -- The board of directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more directors of the
Corporation.
Any such committee, to the extent provided in the resolution of the
board of directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
-3-
<PAGE>
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent of all the directors.
Regular meetings of the directors may be held without notice at such
places and times as shall be determined from time to time by resolution of the
directors .
Special meetings of the board of directors may be called by the Chairman
of the Board or the President, and shall be called by the Secretary within one
day after (or such longer period as such director may specify) on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the directors, or as
shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the board of directors, or any
committee designated by the board of directors, may participate in any meeting
of the board of directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the directors shall constitute a
quorum for the transaction of business. If the Corporation shall have an even
number of directors then in office, a majority of the directors for purposes of
determining whether a quorum is present shall be more than half of the directors
then in office. If at any meeting of the board of directors there shall be less
than a quorum present, a majority of those present may adjourn the meeting from
time to time until a quorum is obtained, and no further notice thereof need be
given other than by announcement at the meeting which shall be so adjourned. The
vote of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the board of directors unless the Certificate of
Incorporation of the Corporation or these By-Laws shall require the vote of a
greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board of directors a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted to
be taken at any meeting of the board of directors or of any committee thereof
may (whether or not so expressly stated herein) be taken without a meeting if a
written consent thereto is signed by all members of the board of directors or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the board of directors or such committee.
-4-
<PAGE>
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and
a Secretary, all of whom shall be elected by the board of directors and shall
hold office until their successors are elected and qualified. In addition, the
board of directors may elect such Assistant Secretaries and Assistant Treasurers
as they may deem proper. The board of directors may appoint such other officers
and agents as it may deem advisable, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall be
the Chief Executive Officer of the Corporation. He shall preside at all meetings
of the board of directors and shall have and perform such other duties as may be
assigned to him by the board of directors. The Chairman of the Board shall have
the power to execute bonds, mortgages and other contracts on behalf of the
Corporation, and to cause the seal of the Corporation to be affixed to any
instrument requiring it, and when so affixed, the seal shall be attested to by
the signature of the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief Operating
Officer of the Corporation. He shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE-PRESIDENTS -- Each Vice-President shall have such powers
and shall perform such duties as shall be assigned to him by the board of
directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He shall have the custody of the Corporate funds and
securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He shall deposit all moneys
and other valuables in the name and to the credit of the Corporation in such
depositaries as may be designated by the board of directors. He shall disburse
the funds of the Corporation as may be ordered by the board of directors, the
Chairman of the Board, or the President, taking proper vouchers for such
disbursements. He shall render to the Chairman of the Board, the President and
board of directors at the regular meetings of the board of directors, or
whenever they may request it, an account of all his transactions as Treasurer
and of the financial condition of the Corporation. If required by the board of
directors, he shall give the Corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the board of directors shall
prescribe.
-5-
<PAGE>
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman of the Board or the President, or by the directors, upon whose
request the meeting is called as provided in these By-Laws. He shall record all
the proceedings of the meetings of the board of directors, any committees
thereof and the stockholders of the Corporation in a book to be kept for that
purpose, and shall perform such other duties as may be assigned to him by the
board of directors, the Chairman of the Board or the President. He shall have
the custody of the seal of the Corporation and shall affix the same to all
instruments requiring it, when authorized by the board of directors, the
Chairman of the Board or the President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the board of directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be issued
in the place of any certificate theretofore issued by the Corporation, alleged
to have been lost or destroyed, and the board of directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other person as the board of directors may designate, by whom they shall
be cancelled, and new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer .
-6-
<PAGE>
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stock holders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and which
record date: (1) in the case of determination of stockholders entitled to vote
at any meeting of stockholders or adjournment thereof, shall, unless otherwise
required by law, not be more than sixty nor less than ten days before the date
of such meeting; (2) in the case of determination of stockholders entitled to
express consent to corporate action in writing without a meeting, shall not be
more than ten days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (3) in the case of any other
action, shall not be more than sixty days prior to such other action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law, shall be the
first day on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the board of directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the directors shall deem conducive to the interests of the Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the board of directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the board of directors.
-7-
<PAGE>
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, agent or agents of the
Corporation, and in such manner as shall be determined from time to time by
resolution of the board of directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the Corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
board of directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
-8-
<PAGE>
EXHIBIT 4.1
================================================================================
OSCAR I CORPORATION
Company
and
STATE STREET
BANK AND TRUST COMPANY
OF MISSOURI, N.A.
Trustee
---------------
INDENTURE
Dated as of April 21, 1998
---------------
$225,000,000
9 3/4% Senior Subordinated Notes due 2008
9 3/4% Series B Senior Subordinated Notes due 2008
================================================================================
<PAGE>
OSCAR I CORPORATION
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of April 21, 1998
-------------------------------------------------
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
--------------- ---------
<S> <C>
(S) 310(a)(1).................................... 607
(a)(2).................................... 607
(b)....................................... 608
(S) 312(c)....................................... 701
(S) 314(a)....................................... 703
(a)(4).................................... 1004
(c)(1).................................... 102
(c)(2).................................... 102
(e)....................................... 102
(S) 315(b)....................................... 601
(S) 316(a)(last sentence)........................ 101 ("Outstanding")
(a)(1)(A)................................. 502, 512
(a)(1)(B)................................. 513
(b)....................................... 508
(c)....................................... 104(d)
(S) 317(a)(1).................................... 503
(a)(2).................................... 504
(b)....................................... 1003
(S) 318(a)....................................... 111
</TABLE>
- - -------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES..................................................................... 1
RECITALS OF THE COMPANY..................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions................................................... 1
-----------
Acquired Indebtedness.............................................. 2
Act................................................................ 2
Affiliate.......................................................... 2
Agent Bank......................................................... 2
Agent Members...................................................... 2
Asset Acquisition.................................................. 2
Asset Disposition.................................................. 3
Asset Sale......................................................... 3
Authenticating Agent............................................... 3
Average Life....................................................... 4
Bankruptcy Law..................................................... 4
Board of Directors................................................. 4
Board Resolution................................................... 4
Business Day....................................................... 4
Capital Stock...................................................... 4
Capitalized Lease.................................................. 4
Capitalized Lease Obligations...................................... 4
cash equivalents................................................... 4
Change of Control.................................................. 5
Commission......................................................... 6
Common Stock....................................................... 6
Company............................................................ 6
Company's Preferred Stock.......................................... 6
Company Request or Company Order................................... 6
Consolidated EBITDA................................................ 6
Consolidated Fixed Charge Coverage Ratio........................... 7
Consolidated Interest Expense...................................... 7
Consolidated Leverage Ratio........................................ 8
Corporate Trust Office............................................. 8
</TABLE>
<PAGE>
ii
<TABLE>
<S> <C>
corporation....................................................... 8
Credit Agreement.................................................. 8
Currency Agreement................................................ 9
Custodian......................................................... 9
Default........................................................... 9
Defaulted Interest................................................ 9
Depositary........................................................ 9
Designated Senior Indebtedness.................................... 9
Determination Date................................................ 9
Disinterested Director............................................ 9
Disqualified Stock................................................ 9
Dollar or $....................................................... 10
Event of Default.................................................. 10
Exchange Act...................................................... 10
Exchange Notes.................................................... 10
Exchange Offer.................................................... 10
Exchange Offer Registration Statement............................. 10
fair market value................................................. 10
Floating Rate Notes............................................... 10
GAAP.............................................................. 10
Global Notes...................................................... 11
Guarantee......................................................... 11
Holder............................................................ 11
Incur............................................................. 11
Indebtedness...................................................... 11
Indenture......................................................... 12
Initial Notes..................................................... 12
Institutional Accredited Investor................................. 12
Interest Payment Date............................................. 12
Interest Rate Agreement........................................... 12
Investment........................................................ 12
Issuance Date or Closing Date..................................... 13
Junior Securities................................................. 13
Lien.............................................................. 13
Majority Owned Subsidiary......................................... 14
Maturity.......................................................... 14
ML Funds.......................................................... 14
Moody's........................................................... 14
Net Cash Proceeds................................................. 14
Non-U.S. Person................................................... 15
Note Register and Note Registrar.................................. 15
</TABLE>
<PAGE>
iii
<TABLE>
<S> <C>
Notes............................................................. 15
Offer to Purchase................................................. 15
Officers' Certificate............................................. 16
Offshore Global Note.............................................. 16
Offshore Note Exchange Date....................................... 16
Offshore Physical Note............................................ 16
Opinion of Counsel................................................ 16
Outstanding....................................................... 16
Pari Passu Indebtedness........................................... 17
Paying Agent...................................................... 17
Payment Blockage Period........................................... 17
Payment Default................................................... 17
Permitted Holders................................................. 17
Permitted Investment.............................................. 17
Person............................................................ 18
Place of Payment.................................................. 18
Predecessor Note.................................................. 18
Preferred Stock................................................... 18
Private Placement Legend.......................................... 18
Public Equity Offering............................................ 18
purchase money obligations........................................ 18
QIB............................................................... 19
Redemption Date................................................... 19
Redemption Price.................................................. 19
Registration Rights Agreement..................................... 19
Registration Statement............................................ 19
Regular Record Date............................................... 19
Regulation S...................................................... 19
Representative.................................................... 19
Responsible Officer............................................... 19
Restricted Subsidiary............................................. 19
Rule 144A......................................................... 19
S&P............................................................... 19
Securities Act.................................................... 20
Senior Indebtedness............................................... 20
Senior Subordinated Obligations................................... 20
Shelf Registration Statement...................................... 20
Significant Subsidiary............................................ 20
Special Record Date............................................... 21
Stated Maturity................................................... 21
Subordinated Indebtedness......................................... 21
</TABLE>
<PAGE>
iv
<TABLE>
<S> <C>
Subsidiary........................................................ 21
Temporary Cash Investment......................................... 21
Trade Payables.................................................... 21
Trust Indenture Act or TIA........................................ 22
Trustee........................................................... 22
UATC.............................................................. 22
United States..................................................... 22
Unrestricted Subsidiary........................................... 22
U.S. Global Note.................................................. 22
U.S. Government Obligations....................................... 23
U.S. Physical Note................................................ 23
Vice President.................................................... 23
Voting Stock...................................................... 23
Wholly Owned...................................................... 23
SECTION 102. Compliance Certificates and Opinions......................... 23
SECTION 103. Form of Documents Delivered to Trustee....................... 24
SECTION 104. Acts of Holders.............................................. 25
SECTION 105. Notices, Etc., to Trustee, Company and Agent Bank............ 26
SECTION 106. Notice to Holders; Waiver.................................... 26
SECTION 107. Effect of Headings and Table of Contents..................... 27
SECTION 108. Successors and Assigns....................................... 27
SECTION 109. Separability Clause.......................................... 27
SECTION 110. Benefits of Indenture........................................ 27
SECTION 111. Governing Law................................................ 28
SECTION 112. Legal Holidays............................................... 28
SECTION 113. Trust Indenture Act Controls................................. 28
SECTION 114. No Recourse Against Others................................... 28
SECTION 115. Counterparts................................................. 29
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally.............................................. 29
SECTION 202. Form of Trustee's Certificate of Authentication.............. 30
SECTION 203. Restrictive Legends.......................................... 31
SECTION 204. Form of Certificate to Be Delivered After the Offshore
Note Exchange Date....................................... 33
</TABLE>
<PAGE>
v
ARTICLE THREE
THE NOTES
<TABLE>
<S> <C>
SECTION 301. Amount.................................................. 34
SECTION 302. Denominations........................................... 35
SECTION 303. Execution, Authentication, Delivery and Dating.......... 35
SECTION 304. Temporary Notes......................................... 36
SECTION 305. Registration, Registration of Transfer and Exchange..... 37
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes............. 38
SECTION 307. Payment of Interest; Interest Rights Preserved.......... 39
SECTION 308. Persons Deemed Owners................................... 40
SECTION 309. Cancellation............................................ 40
SECTION 310. Computation of Interest................................. 41
SECTION 311. Book-Entry Provisions for Global Notes.................. 41
SECTION 312. Transfer Provisions..................................... 42
SECTION 313. Form of Accredited Investor Certificate................. 51
SECTION 314. Form of Regulation S Certificate........................ 54
SECTION 315. Form of Rule 144A Certificate........................... 56
SECTION 316. CUSIP Numbers........................................... 57
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture................. 57
SECTION 402. Application of Trust Money.............................. 58
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default....................................... 59
SECTION 502. Acceleration of Maturity; Rescission and Annulment...... 61
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.......................................... 61
SECTION 504. Trustee May File Proofs of Claim........................ 62
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.. 63
SECTION 506. Application of Money Collected.......................... 63
SECTION 507. Limitation on Suits..................................... 64
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest................................ 65
</TABLE>
<PAGE>
vi
<TABLE>
<S> <C>
SECTION 509. Restoration of Rights and Remedies............................. 65
SECTION 510. Rights and Remedies Cumulative................................. 65
SECTION 511. Delay or Omission Not Waiver................................... 65
SECTION 512. Control by Holders............................................. 66
SECTION 513. Waiver of Past Defaults........................................ 66
SECTION 514. Waiver of Stay or Extension Laws............................... 67
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities............................ 67
SECTION 602. Notice of Defaults............................................. 68
SECTION 603. Certain Rights of Trustee...................................... 69
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes...... 70
SECTION 605. May Hold Notes................................................. 71
SECTION 606. Money Held in Trust............................................ 71
SECTION 607. Compensation and Reimbursement................................. 71
SECTION 608. Corporate Trustee Required; Eligibility........................ 72
SECTION 609. Resignation and Removal; Appointment of Successor.............. 72
SECTION 610. Acceptance of Appointment by Successor......................... 74
SECTION 611. Merger, Conversion, Consolidation or Succession to Business.... 74
SECTION 612. Appointment of Authenticating Agent............................ 75
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses................. 77
SECTION 702. Disclosure of Names and Addresses of Holders................... 77
SECTION 703. Reports by Trustee............................................. 77
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms........... 78
SECTION 802. Successor Substituted.......................................... 78
</TABLE>
<PAGE>
vii
ARTICLE NINE
SUPPLEMENTAL INDENTURES
<TABLE>
<S> <C>
SECTION 901. Supplemental Indentures Without Consent of Holders............. 79
SECTION 902. Supplemental Indentures with Consent of Holders................ 80
SECTION 903. Execution of Supplemental Indentures........................... 80
SECTION 904. Effect of Supplemental Indentures.............................. 80
SECTION 905. Conformity with Trust Indenture Act............................ 81
SECTION 906. Reference in Notes to Supplemental Indentures.................. 81
SECTION 907. Notice of Supplemental Indentures.............................. 81
SECTION 908. Effect on Senior Indebtedness.................................. 81
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest........... 81
SECTION 1002. Maintenance of Office or Agency............................... 82
SECTION 1003. Money for Notes Payments to Be Held in Trust.................. 82
SECTION 1004. Corporate Existence........................................... 84
SECTION 1005. Payment of Taxes and Other Claims............................. 84
SECTION 1006. Maintenance of Properties..................................... 84
SECTION 1007. Statement by Officers as to Default........................... 85
SECTION 1008. Limitation on Indebtedness.................................... 85
SECTION 1009. Limitation on Restricted Payments............................. 88
SECTION 1010. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries................................... 91
SECTION 1011. Limitation on Transactions with Shareholders and Affiliates... 91
SECTION 1012. Limitation on Liens........................................... 92
SECTION 1013. Purchase of Notes upon Change in Control...................... 92
SECTION 1014. Limitation on Sale of Assets.................................. 93
SECTION 1015. Limitations on Issuances of Guarantees by Restricted
Subsidiaries.............................................. 94
SECTION 1016. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries......................... 95
SECTION 1017. [Intentionally Omitted]....................................... 96
SECTION 1018. Limitation on Senior Subordinated Indebtedness................ 96
SECTION 1019. [Intentionally Omitted]....................................... 96
SECTION 1020. Reports....................................................... 96
SECTION 1021. Waiver of Certain Covenants................................... 97
</TABLE>
<PAGE>
viii
ARTICLE ELEVEN
REDEMPTION OF NOTES
<TABLE>
<S> <C>
SECTION 1101. Redemption................................................... 97
SECTION 1102. Applicability of Article..................................... 97
SECTION 1103. Election to Redeem; Notice to Trustee........................ 98
SECTION 1104. Selection by Trustee of Notes to Be Redeemed................. 98
SECTION 1105. Notice of Redemption......................................... 98
SECTION 1106. Deposit of Redemption Price.................................. 99
SECTION 1107. Notes Payable on Redemption Date............................. 100
SECTION 1108. Notes Redeemed in Part....................................... 100
ARTICLE TWELVE
SUBORDINATION OF NOTES
SECTION 1201. Notes Subordinate to Senior Indebtedness..................... 101
SECTION 1202. Payment over of Proceeds upon Dissolution, etc............... 101
SECTION 1203. Suspension of Payment When Designated Senior Indebtedness
in Default................................................ 103
SECTION 1204. Payment Permitted If No Default.............................. 104
SECTION 1205. Subrogation to Rights of Holders of Senior Indebtedness...... 104
SECTION 1206. Provisions Solely to Define Relative Rights.................. 105
SECTION 1207. Trustee to Effectuate Subordination.......................... 105
SECTION 1208. No Waiver of Subordination Provisions........................ 105
SECTION 1209. Notice to Trustee............................................ 106
SECTION 1210. Reliance on Judicial Order or Certificate of Liquidating
Agent..................................................... 107
SECTION 1211. Trustee's Relation to Senior Indebtedness.................... 107
SECTION 1212. Article Applicable to Paying Agents.......................... 108
SECTION 1213. No Suspension of Remedies.................................... 108
SECTION 1214. Trust Moneys Not Subordinated................................ 108
SECTION 1215. Consent of Holders of Senior Indebtedness Under the
Credit Agreement.......................................... 108
ARTICLE THIRTEEN
[INTENTIONALLY OMITTED]
</TABLE>
<PAGE>
ix
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
<TABLE>
<S> <C>
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance................................................. 109
SECTION 1402. Defeasance and Discharge..................................... 109
SECTION 1403. Covenant Defeasance.......................................... 112
SECTION 1404. [Intentionally Omitted]...................................... 113
SECTION 1405. Deposited Money and Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions.................. 113
SECTION 1406. Reinstatement................................................ 114
</TABLE>
EXHIBIT A - Form of Note
<PAGE>
INDENTURE, dated as of April 21, 1998, among OSCAR I CORPORATION
(which is expected to be renamed United Artists Theatre Company), a corporation
duly organized and existing under the laws of the State of Delaware (herein
called the "Company"), having its principal office at 9110 E. Nichols Avenue,
Suite 200, Englewood, Colorado 80112-3405, and STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A., a National Banking Association, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issuance of its 9
3/4% Senior Subordinated Notes due 2008 (the "Initial Notes"), and its 9 3/4%
Series B Senior Subordinated Notes due 2008 (the "Exchange Notes" and, together
with the Initial Notes, the "Notes"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
Upon the issuance of the Exchange Notes, if any, or the effectiveness
of the Shelf Registration Statement (as defined herein), this Indenture will be
subject to, and shall be governed by the provisions of the Trust Indenture Act
of 1939, as amended, that are required to be part of or deemed to be part of and
to govern the indentures qualified thereunder.
All things necessary have been done to make the Notes, when duly
executed and duly issued by the Company and authenticated and delivered
hereunder by the Trustee or the Authenticating Agent, the valid obligations of
the Company and to make this Indenture a valid agreement of the Company, in
accordance with their and its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE>
2
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and "self-
liquidating paper", as used in TIA Section 311, shall have the meanings
assigned to them in the rules of the Commission adopted under the Trust
Indenture Act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition by a Restricted Subsidiary and not Incurred in connection
with, or in anticipation of, such Person becoming a Restricted Subsidiary or
such Asset Acquisition; provided that Indebtedness of such Person which is
redeemed, defeased, retired or otherwise repaid at the time of or immediately
upon consummation of the transactions by which such Person becomes a Restricted
Subsidiary or such Asset Acquisition shall not be Acquired Indebtedness.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent Bank" means Bank of America National Trust and Savings Association
in its capacity as administrative agent under the Credit Agreement and any
future or successor or replacement administrative agent under the Credit
Agreement.
"Agent Members" has the meaning specified in Section 311.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary
<PAGE>
3
or shall be merged into or consolidated with the Company or any of its
Restricted Subsidiaries; provided that such Person's primary business is
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such investment or (ii) an acquisition by
the Company or any of its Restricted Subsidiaries of the property and assets of
any Person other than the Company or any of its Restricted Subsidiaries that
constitute substantially all of a division or line of business of such Person;
provided that the property and assets acquired are related, ancillary or
complementary to the businesses of the Company and its Restricted Subsidiaries
on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets (other than the Capital Stock or other
Investment in an Unrestricted Subsidiary) of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business of the Company
or such Restricted Subsidiary and, in each case, that is not governed by the
provisions of the Indenture applicable to mergers, consolidations and sales of
assets of the Company; provided that "Asset Sale" shall not include (a) sales or
other dispositions of inventory, receivables and other current assets, (b)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Section 1009, (c) sales, transfers or other
dispositions of assets with a fair market value not in excess of $500,000 in any
transaction or series of related transactions, (d) sales, transfers or other
dispositions of theatres which are determined in good faith by the Board of
Directors to be nonstrategic and underperforming ("Underperforming Theatres")
for consideration at least equal to the fair market value of the Underperforming
Theatre disposed of, (e) sales, transfers or other dispositions of Temporary
Cash Investments in the ordinary course of business for consideration at least
equal to the fair market value of the Temporary Cash Investments disposed of or
(f) sales or other dispositions of assets for consideration at least equal to
the fair market value of the assets sold or disposed of, to the extent that the
consideration received would satisfy clause (B) of the Section 1014.
"Authenticating Agent" means any Person authorized by the Trustee to act
on behalf of the Trustee to authenticate Notes.
<PAGE>
4
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Board of Directors" means, with respect to any Person, the board of
directors of such Person or any duly authorized committee of such board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day," when used with respect to any Place of Payment or any
other particular location referred to in this Indenture or in the Notes, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment or other location are authorized
or obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"cash equivalents" means any of the following: (i) direct obligations of
the United States of America or any agency thereof or obligations fully and
unconditionally guaranteed by the United States of America or any agency
thereof, (ii) time-deposit accounts, certificates of deposit and money-market
deposits maturing within 360 days of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the United States of
America, any state
<PAGE>
5
thereof or any foreign country recognized by the United States of America, and
which bank or trust company has capital, surplus and undivided profits
aggregating in excess of $250 million (or the foreign currency equivalent
thereof) and has outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any money-
market fund sponsored by a registered broker dealer or mutual fund distributor,
(iii) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
or trust company meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than 270 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P, (v) securities with
maturities of six months or less from the date of acquisition issued or fully
and unconditionally guaranteed by any state, commonwealth or territory of the
United States of America, or by any political subdivision or taxing authority
thereof, and rated at least "A" by S&P or Moody's and (vi) overnight and demand
deposits in a bank or trust company meeting the qualifications described in
clause (ii) above.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) other than the
Permitted Holders becomes the ultimate "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), of more than a majority of the total voting power of the Voting Stock
of the Company on a fully diluted basis; (ii) the Company consolidates with, or
merges with or into, another Person or conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding Voting Stock of the Company
is converted into or exchanged for cash, securities or other property, other
than any such transaction (a) where the outstanding Voting Stock of the Company
is not converted or exchanged at all (except to the extent necessary to reflect
a change in the jurisdiction of incorporation of the Company) or is converted
into or exchanged for (x) Voting Stock (other than Disqualified Stock) of the
surviving or transferee corporation or (y) Voting Stock (other than Disqualified
Stock) of the surviving or transferee corporation and cash, securities and other
property (other than Capital Stock of the surviving or transferee corporation)
in an amount that could be paid by the Company as a Restricted Payment as
described under Section 1009 and (b) immediately after such transaction, no
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than Permitted Holders, is the ultimate "beneficial owner"
directly or indirectly, of more than a majority of the total outstanding Voting
Stock of the surviving or transferee corporation; or (iii) individuals who on
the Closing Date constitute the Board of Directors (together with any new
directors whose election by the Board of Directors or whose nomination by the
Board of Directors for election by the Company's
<PAGE>
6
stockholders was approved (x) by a vote of at least a majority of the members of
the Board of Directors then in office who either were members of the Board of
Directors on the Closing Date or whose election or nomination for election was
previously so approved or (y) in writing by the Permitted Holders) cease for any
reason to constitute a majority of the members of the Board of Directors then in
office.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated, whether voting or
non-voting) of such Person's common stock, whether outstanding on the Issuance
Date or issued after the Issuance Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the Person named as the "Company" in the first paragraph
of this Indenture until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company's Preferred Stock" shall mean the Preferred Stock of the Company
outstanding on the date hereof and accrued dividends thereon.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Operating Officer, its Chief
Financial Officer, any Vice President, its Treasurer or an Assistant Treasurer,
and delivered to the Trustee.
"Consolidated EBITDA" means, for any period, the operating income of the
Company and its Restricted Subsidiaries for such period plus, to the extent such
amount was deducted in calculating such operating income (i) Consolidated
Interest Expense, (ii) income taxes (other than income taxes (either positive or
negative) attributable to extraordinary and non-recurring gains or losses or
sales of assets), (iii) depreciation expense, (iv) amortization expense and (v)
all other non-cash items reducing such operating income, less all non-cash items
increasing such operating income, all as determined on a consolidated basis for
the Company and its Restricted Subsidiaries in conformity with GAAP; provided
that, (a) Consolidated EBITDA shall not include (x) the operating income (or
operating loss) of any Person that is not a Restricted Subsidiary, except (I)
with respect to operating income, to the extent the amount of dividends or other
distributions actually paid to the Company or any of its Restricted Subsidiaries
by such Person during such period and (II) with respect to operating losses, to
the extent of the amount of Investments made by the Company or any Restricted
Subsidiary in such Person during such period; (y) solely for the purposes of
calculating
<PAGE>
7
the amount of Restricted Payments that may be made pursuant to clause (C) of the
first paragraph of Section 1009 (and in such case, except to the extent
includable pursuant to clause (x) above), the operating income (or operating
loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary
or is merged into or consolidated with the Company or any of its Restricted
Subsidiaries or all or substantially all of the property and assets of such
Person are acquired by the Company or any of its Restricted Subsidiaries; and
(z) the operating income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary of such operating income is not at the time permitted by the
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
Restricted Subsidiary; and (b) Consolidated EBITDA shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) (I) except for purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 1009, by any amount paid (but only
to the extent not accrued in a prior period) or accrued as dividends on
preferred stock of the Company (other than dividends payable in Capital Stock
(other than Disqualified Stock) and other than dividends accruing on the
Company's Preferred Stock) or any Restricted Subsidiary owned by Persons other
than the Company and any of its Restricted Subsidiaries and (II) if any
Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, by an amount
equal to (A) the amount of the operating income attributable to such Restricted
Subsidiary multiplied by (B) the percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (i) the sum of Consolidated EBITDA for such period to (ii)
the Consolidated Interest Expense for such period.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and the
aggregate amount of interest in respect of Indebtedness that is Guaranteed or
secured by the Company or any of its Restricted Subsidiaries) and all but the
principal component of rentals in respect of Capitalized Lease Obligations paid,
accrued or scheduled to be paid or to be accrued by the Company and its
Restricted Subsidiaries during such period (other than Capitalized Lease
Obligations paid during such period if such obligations were accrued in a prior
period); excluding, however, (i) any amount of such interest of any Restricted
Subsidiary if the operating income of such Restricted Subsidiary is excluded in
the calculation of Consolidated EBITDA pursuant to clause (z) of the definition
thereof (but only in the same proportion as the operating income of such
Restricted Subsidiary is excluded from the calculation of Consolidated EBITDA
pursuant to clause (z) of the definition thereof) and (ii) any
<PAGE>
8
premiums, fees and expenses (and any amortization thereof) payable in connection
with the Transactions, all as determined on a consolidated basis (without taking
into account Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Determination Date, the ratio
of (i) the aggregate amount of Indebtedness of the Company and its Restricted
Subsidiaries on a consolidated basis outstanding on such Determination Date to
(ii) the aggregate amount of Consolidated EBITDA for the then most recent fiscal
quarter for which financial statements of the Company have been filed with the
Commission pursuant to Section 1020 (such fiscal quarter being the "Quarter"),
multiplied by four; provided that, in making the foregoing calculation, (A) pro
forma effect shall be given to any Indebtedness to be Incurred or repaid on the
Determination Date; (B) pro forma effect shall be given to Asset Dispositions
and Asset Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition) that occur from the beginning of the Quarter
through the Determination Date (the "Reference Period"), as if they had occurred
and such proceeds had been applied on the first day of such Reference Period;
and (C) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of proceeds
of any asset disposition) that have been made by any Person that has become a
Restricted Subsidiary or has been merged with or into the Company or any
Restricted Subsidiary during such Reference Period and that would have
constituted Asset Dispositions or Asset Acquisitions had such transactions
occurred when such Person was a Restricted Subsidiary as if such asset
dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions
that occurred on the first day of such Reference Period; provided that to the
extent that clause (B) or (C) of this sentence requires that pro forma effect be
given to an Asset Acquisition or Asset Disposition, such pro forma calculation
shall be based upon the full fiscal quarter immediately preceding the
Determination Date of the Person, or division or line of business of the Person,
that is acquired or disposed of for which financial information is available.
"Corporate Trust Office" means a corporate trust office of the Trustee
which office on the date of execution of this Indenture is located at 61
Broadway, 15/th/ Floor, Corporate Trust Window, New York, New York 10006.
"corporation" includes corporations, associations, companies and business
trusts.
"Credit Agreement" means the credit agreement dated as of April 21, 1998,
among the Company, the several lenders parties thereto, Banc of America National
Trust and Savings Association, as Administrative Agent, BankBoston, NA, as
Documentation Agent, NationsBank of Texas, N.A., as syndication agent and
Merrill Lynch Capital Corporation and Morgan Stanley Senior Funding, Inc., as
co-syndication agents, together with any agreements, instruments and documents
executed or delivered pursuant to or in connection with such credit agreement,
in each case as such credit agreement or such agreements, instruments or
documents may be amended, supplemented, extended, renewed, refinanced, replaced
or otherwise modified from time to time; provided that, for
<PAGE>
9
purposes of the provisions of Article Twelve, with respect to any agreement
providing for the refinancing or replacement of Indebtedness under the Credit
Agreement, such agreement shall be the Credit Agreement under the Indenture only
if a notice to that effect is delivered by the Company to the Trustee and there
shall be at any time only one instrument that is (together with the
aforementioned related agreements, instruments and documents) the Credit
Agreement under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Indebtedness" means the Indebtedness specified in
clause (i) of the definition of Senior Indebtedness and any other Indebtedness
constituting Senior Indebtedness that, at the date of determination, has an
aggregate principal amount outstanding of at least $25 million and that is
specifically designated by the Issuer, in the instrument creating or evidencing
such Senior Indebtedness as "Designated Senior Indebtedness."
"Determination Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under this Indenture, a member of
the Board of Directors who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of
transactions.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for
<PAGE>
10
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the Stated Maturity of the Notes shall
not constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Section 1013 and Section
1014 and such Capital Stock specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Section 1013 and Section 1014.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" has the meaning stated in the first recital of this
Indenture and refers to any Exchange Notes containing terms substantially
identical to the Initial Notes (except that (i) such Exchange Notes shall not
contain terms with respect to transfer restrictions and shall be registered
under the Securities Act, and (ii) certain provisions relating to an increase in
the stated rate of interest thereon shall be eliminated) that are issued and
exchanged for the Initial Notes in accordance with the Exchange Offer, as
provided for in the Registration Rights Agreement and this Indenture.
"Exchange Offer" means the offer by the Company to the Holders of the
Initial Notes to exchange all of the Initial Notes for Exchange Notes, as
provided for in the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in the Registration Rights Agreement.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy.
"Floating Rate Notes" means the $50,000,000 aggregate principal amount
Floating Rate Senior Subordinated Notes due 2007 of the Company to be issued on
the Issue Date.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public
<PAGE>
11
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession. All ratios and computations
contained or referred to in this Indenture shall be computed in conformity with
GAAP applied on a consistent basis, except that calculations made for purposes
of determining compliance with the terms of the covenants and with other
provisions of the Indenture shall be made without giving effect to (i) the
amortization of any fees, expenses or goodwill incurred in connection with the
Transactions, (ii) losses incurred for the early extinguishment of debt in
connection with the Transactions and (iii) except as otherwise provided, the
amortization of any amounts required or permitted by Accounting Principles Board
Opinion Nos. 16 and 17.
"Global Notes" has the meaning set forth in Section 201.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Holder" means the Person in whose name a Note is registered in the Note
Register.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion in value of non-interest bearing or other
discount Indebtedness shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent
<PAGE>
12
such letters of credit are not drawn upon or, if drawn upon, to the extent such
drawing is reimbursed no later than the third Business Day following receipt by
such Person of a demand for reimbursement), (iv) all obligations of such Person
to pay the deferred and unpaid purchase price of property or services, which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all Capitalized Lease Obligations,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; provided
that the amount of such Indebtedness shall be the lesser of (A) the fair market
value of such asset at such date of determination and (B) the amount of such
Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person and (viii) to the
extent not otherwise included in this definition, obligations under Currency
Agreements and Interest Rate Agreements. The amount of Indebtedness of any
Person at any date shall be the outstanding principal balance at such date of
all unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided (A) that the amount outstanding at any time of
any non-interest bearing or other discount Indebtedness is the principal amount
of such Indebtedness at such time that would be shown on the balance sheet of
such Person prepared in conformity with GAAP, (B) that money borrowed and set
aside at the time of the Incurrence of any Indebtedness in order to prefund the
payment of the interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the payment of such
interest and (C) that Indebtedness shall not include any liability for federal,
state, local or other taxes.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Initial Notes" has the meaning specified in the recitals to this
Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act.
"Interest Payment Date," when used with respect to any Note, means the
Stated Maturity of an installment of interest on such Note.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding
<PAGE>
13
advances to customers, suppliers or lessors in the ordinary course of business
that are, in conformity with GAAP, recorded as accounts receivable, prepaid
expenses or deposits on the balance sheet of the Company or its Restricted
Subsidiaries and negotiable instruments held for collection) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair
market value of the Capital Stock (or any other Investment), held by the Company
or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to
be a Restricted Subsidiary, including, without limitation, by reason of any
transaction permitted by clause (iii) of Section 1010; provided that the fair
market value of the Investment remaining in any Person that has ceased to be a
Restricted Subsidiary shall not exceed the aggregate amount of Investments
previously made in such Person valued at the time such Investments were made
less the net reduction of such Investments. For purposes of the definition of
"Unrestricted Subsidiary" and Section 1009, (i) "Investment" shall include the
fair market value of the assets (net of liabilities (other than liabilities to
the Company or any of its Restricted Subsidiaries)) of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary, (ii) the fair market value of the assets (net of liabilities (other
than liabilities to the Company or any of its Restricted Subsidiaries)) of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary, and the fair market value of the outstanding
Investments in any Person other than an Unrestricted Subsidiary that thereafter
becomes a Restricted Subsidiary at the time such Person becomes a Restricted
Subsidiary, shall be considered a reduction in outstanding Investments and (iii)
any property transferred to or from an Unrestricted Subsidiary shall be valued
at its fair market value at the time of such transfer.
"Issuance Date" or "Closing Date" means the date of the Indenture, which
will be the date on which the Notes are originally issued under the Indenture.
"Junior Securities" means (i) Capital Stock of the Company (other than any
Capital Stock which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part), (ii) securities of the Company or any other corporation
authorized by an order or decree giving effect, and stating in such order or
decree that effect is given, to the subordination of the Notes to the Senior
Indebtedness, and made by a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy, insolvency or other similar law, or
(iii) any securities of the Company provided for by a plan of reorganization or
readjustment that are subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding to substantially the same
extent as, or to a greater extent than, the Notes are so subordinated.
<PAGE>
14
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Majority Owned Subsidiary" means any corporation, association or other
business entity that is not a Subsidiary of the Company but of which 50% of the
voting power of the outstanding Voting Stock is owned, directly or indirectly,
by the Company or one or more of its Restricted Subsidiaries as of the Issue
Date.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity with respect to such principal or by declaration
of acceleration, call for redemption or purchase or otherwise.
"ML Funds" means Merrill Lynch Capital Appreciation Partnership No. B-XIX,
L.P., Merrill Lynch Capital Appreciation Partnership No. B-XX, L.P., Roman
Nineteen Offshore Fund Holdings N.V., MLCP Associates L.P. No. II, ML IBK
Positions, Inc., and Merrill Lynch KECALP L.P. 1991 and any Affiliates of the
foregoing and any of their respective successors.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means (i) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (a) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (b) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (c) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (I) is
secured by a Lien on the property or assets sold or (II) is required to be paid
as a result of such sale and (d) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and (ii) with respect
to any issuance or sale of Capital Stock, the proceeds of such issuance or sale
in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal, but
not interest, component thereof) when received in the form of cash or cash
equivalents (except to the extent such obligations are financed or sold with
recourse to the Company or any Restricted Subsidiary) and
<PAGE>
15
proceeds from the conversion of other property received when converted to cash
or cash equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Non-U.S. Person" means a person who is not a U.S. person as defined in
Regulation S.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 305.
"Notes" has the meaning stated in the first recital of this Indenture and
more particularly means any Notes authenticated and delivered under this
Indenture.
"Offer to Purchase" means an offer to purchase Notes by the Company from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not validly tendered will continue to
accrue interest pursuant to its terms; (iv) that, unless the Company defaults in
the payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) 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; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof. On the Payment Date, the Company shall
(i) accept for payment on a pro rata basis Notes or portions thereof validly
tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly
<PAGE>
16
announce the results of an Offer to Purchase as soon as practicable after the
Payment Date. The Trustee shall act as the Paying Agent for an Offer to
Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Offshore Global Note" has the meaning set forth in Section 201.
"Offshore Note Exchange Date" has the meaning set forth in Section 201.
"Offshore Physical Note" has the meaning set forth in Section 201.
"Opinion of Counsel" means a written opinion of legal counsel, which and
who may be counsel for the Company, including an employee of the Company, and
who shall be reasonably acceptable to the Trustee.
"Outstanding," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption or
repayment at the option of the Holder money in the necessary amount has
been theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of such
Notes; provided that, if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Notes, except to the extent provided in Sections 1402 and 1403,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Fourteen; and
(iv) Notes which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in respect
of which there shall have been presented to the Trustee proof satisfactory
to it that such Notes are held by a bona fide purchaser in whose hands such
Notes are valid obligations of the Company;
<PAGE>
17
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding
(provided that in connection with any offer by the Company or any obligor to
purchase the Notes, Notes tendered for purchase will be deemed to be Outstanding
and held by the tendering Holder until the date of purchase), except that, in
determining whether the Trustee shall be protected in making such calculation or
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded. Notes so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right to act with
respect to such Notes and that the pledgee is not the Company or any other
obligor upon the Notes or any Affiliate of the Company or such other obligor.
"Pari Passu Indebtedness" means (a) the Floating Rate Notes and (b) any
other Indebtedness that ranks pari passu in right of payment to the Notes.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (or premium, if any,
on) or interest on any Notes on behalf of the Company.
"Payment Blockage Period" has the meaning specified in Section 1203.
"Payment Default" means any default in the payment (whether at stated
maturity, upon scheduled installment, by acceleration or otherwise) of principal
of, or premium, if any, or interest on Designated Senior Indebtedness.
"Permitted Holders" means any of the ML Funds or any of their respective
Affiliates.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Majority Owned Subsidiary or a Person which will,
upon the making of such Investment, become a Restricted Subsidiary or be merged
or consolidated with or into or transfer or convey all or substantially all its
assets to, the Company or a Restricted Subsidiary; provided that such person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such Investment; (ii)
Temporary Cash Investments; (iii) payroll, travel and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses in accordance with GAAP; (iv) loans or advances to officers and
employees of the Company and its Restricted Subsidiaries made in the ordinary
course of business; provided that the aggregate amount of such loans or advances
outstanding at any time shall not exceed $1 million; (v) Investments in Interest
Rate Agreements and Currency Agreements designed
<PAGE>
18
solely to protect the Company or its Restricted Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates; (vi)
Investments in any Person the primary business of which is related, ancillary or
complementary to the business of the Company and its Restricted Subsidiaries on
the date of such Investments; provided that the aggregate amount of Investments
made pursuant to this clause (vi) does not exceed $25 million; (vii) Investments
received in consideration for sales of Underperforming Theatres; (viii) stock,
obligations or securities received in satisfaction of judgments or in settlement
of debts owing to the Company or any Restricted Subsidiary that arose in the
ordinary course of business, received pursuant to any plan of reorganization or
similar arrangement in satisfaction of liabilities owing to the Company or a
Restricted Subsidiary that arose in the ordinary course of business or received
upon the foreclosure or enforcement of a Lien in favor of the Company or any
Restricted Subsidiary that arose in the ordinary course of business and (ix)
non-cash proceeds of Asset Sales conducted in accordance with the provisions of
Section 1014.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment" means the office or agency maintained by the Company
where the principal of (and premium, if any, on) and interest on the Notes are
payable as specified in Section 1002.
"Predecessor Note" of any particular Note, means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding, or issued after
the Issuance Date, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Private Placement Legend" has the meaning set forth in Section 203.
"Public Equity Offering" means an underwritten primary public offering of
Capital Stock (other than Disqualified Stock) of the Company, pursuant to an
effective registration statement under the Securities Act.
"purchase money obligations" means, with respect to any Person,
obligations, other than Capitalized Lease Obligations, incurred or assumed in
the ordinary course of business in connection with the purchase of property to
be used in the business of such Person within 90 days of such
<PAGE>
19
purchase, provided that the amount of any purchase money obligation shall not
exceed the purchase price of the property purchased.
"QIB" means a "Qualified Institutional Buyer" within the meaning of Rule
144A under the Securities Act.
"Redemption Date," when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of April 21, 1998, among the Company and the Holders of Initial Notes.
"Registration Statement" means the Registration Statement as defined in
the Registration Rights Agreement.
"Regular Record Date" has the meaning specified in Section 301.
"Regulation S" means Regulation S under the Securities Act.
"Representative" means (i) with respect to the Credit Agreement, the Agent
Bank and (ii) with respect to any other Senior Indebtedness, the indenture
trustee or other trustee, agent or representative for the holders of such Senior
Indebtedness.
"Responsible Officer," when used with respect to the Trustee, means any
vice president, any assistant secretary, any assistant treasurer, any trust
officer or assistant trust officer, 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
or her knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Services and its successors.
<PAGE>
20
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Indebtedness" means the following obligations of the Company,
whether outstanding on the Closing Date or thereafter Incurred: (i) all
Indebtedness and all other monetary obligations (including expenses, fees and
other monetary obligations) of the Company under the Credit Agreement and (ii)
all other Indebtedness and all other monetary obligations of the Company (other
than the Notes), including principal and interest on such Indebtedness, unless
such Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, is pari passu with, or
subordinated in right of payment to, the Notes; provided that the term "Senior
Indebtedness" shall not include (a) any Indebtedness of the Company that, when
Incurred, was without recourse to the Company, (b) any Indebtedness of the
Company to a Subsidiary of the Company, or to a joint venture in which the
Company has an interest, (c) any Indebtedness of the Company, to the extent not
permitted by Section 1008 or Section 1018 (but as to any such Indebtedness under
the Credit Agreement, no such violation shall be deemed to exist for purposes of
this clause (c) if the Bank Agent shall have received a representation from an
Officer of the Company to the effect that the issuance of such Indebtedness does
not violate Section 1008 or Section 1018), (d) any Indebtedness to any employee
of the Company or any of its respective Subsidiaries, (e) any liability for
taxes owed or owing by the Company or (f) any Trade Payables. Senior
Indebtedness will also include interest accruing on or after, or which would
accrue but for, events of bankruptcy of the Company and its respective
Subsidiaries at the rate provided for in the document governing such Senior
Indebtedness, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under bankruptcy law.
"Senior Subordinated Obligations" means any principal of, premium, if any,
or interest on the Notes or the Floating Rate Notes payable pursuant to the
terms of the Notes or the Floating Rate Notes or upon acceleration, including
any amounts received upon the exercise of rights of rescission or other rights
of action (including claims for damages) or otherwise, to the extent relating to
the purchase price of the Notes or the Floating Rate Notes or amounts
corresponding to such principal, premium, if any, or interest on the Notes or
the Floating Rate Notes.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
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21
"Special Record Date" for the payment of any Defaulted Interest on the
Notes means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company that is
expressly subordinated in right of payment to the Notes.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time-deposit accounts, certificates of deposit and money-
market deposits maturing within 360 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $250 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank or trust company meeting the qualifications
described in clause (ii) above, (iv) commercial paper, maturing not more than
270 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's or "A-1"
(or higher) according to S&P, (v) securities with maturities of six months or
less from the date of acquisition issued or fully and unconditionally guaranteed
by any state, commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, and rated at least "A" by
S&P or Moody's and (vi) overnight and demand deposits in a bank or trust company
meeting the qualifications described in clause (ii) above.
"Trade Payables" means, with respect to any Person, any accounts payable
or any other indebtedness or monetary obligation to trade creditors (including
film payables) created, assumed
<PAGE>
22
or Guaranteed by such Person or any of its Subsidiaries arising in the ordinary
course of business in connection with the acquisition of goods or services.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was executed, except as provided in
Section 905.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder.
"UATC" means United Artists Theatre Circuit, Inc., a wholly owned
subsidiary of the Company.
"United States" means the United States of America (including the states
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below; and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 1009 and (C), if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 1008 and Section
1009. The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that (i) no Default or Event of Default shall
have occurred and be continuing at the time of or after giving effect to such
designation and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation would, if Incurred at such time,
have been permitted to be Incurred (and shall be deemed to have been Incurred)
for all purposes of the Indenture. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Global Note" has the meaning set forth in Section 201.
<PAGE>
23
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"U.S. Physical Note" has the meaning set forth in Section 201.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company and any other
obligor on the Notes (if applicable) shall, at the request of the Trustee,
furnish to the Trustee an Officers' Certificate in form and substance reasonably
acceptable to the Trustee stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and, at the request of the Trustee, an Opinion of Counsel to the
effect that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that in the case of any such application or
request as to which the furnishing of any such documents is specifically
required by any provision of this
<PAGE>
24
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Each certificate or opinion with respect to compliance with a covenant
or condition provided for in this Indenture (other than pursuant to Section
1007) shall include:
(1) a statement that each individual or firm signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual or such
firm, he or it has made such examination or investigation as is necessary
to enable him or it to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
individual or such firm, such covenant or condition has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or any other
obligor on the Notes may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his or her
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company or any other obligor on the Notes stating that the information with
respect to such factual matters is in the possession of the Company or any other
obligor on the Notes.
<PAGE>
25
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. Except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Note Register.
(d) If the Company shall solicit from the Holders of Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request,
<PAGE>
26
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Notes shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than eleven months after the
record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
SECTION 105. Notices, Etc., to Trustee, Company and Agent Bank.
-------------------------------------------------
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or any other obligor
on the Notes shall be sufficient for every purpose hereunder if made,
given, furnished or delivered in writing and mailed, first-class postage
prepaid, or delivered by recognized overnight courier, to or with the
Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or delivered in writing, or mailed, first-class
postage prepaid, or delivered by recognized overnight courier, to the
Company addressed to it at the address of its principal office, for the
attention of the Chief Financial Officer, specified in the first paragraph
of this Indenture or at any other address previously furnished in writing
to the Trustee by the Company, or
(3) the Agent Bank by the Company, the Trustee or any Holder shall be
sufficient for any purpose hereunder if made, given, furnished or delivered
in writing to or with the Agent Bank addressed to it as set forth in the
Credit Agreement, or at any other address previously furnished in writing
to the Company and the Trustee by the Agent Bank.
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice of any event to Holders of
Notes by the Company or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-
class postage prepaid, to each such Holder affected by such event, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier
<PAGE>
27
than the earliest date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice.
In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be sufficient giving of
such notice for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 109. Separability Clause.
-------------------
In case any provision in this Indenture or in any Note 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 110. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, any Authenticating Agent, any
Paying Agent, any Notes Registrar and their successors hereunder and the Holders
and, with respect to any provisions hereof relating to the subordination of the
Notes or the rights of holders of Senior Indebtedness, the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
<PAGE>
28
SECTION 111. Governing Law.
-------------
This Indenture and the Notes shall be governed by and construed in
accordance with the law of the State of New York. Upon the effectiveness of the
Shelf Registration Statement or the consummation of the Exchange Offer, this
Indenture will be subject to the provisions of the Trust Indenture Act that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 112. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity or Maturity of any Note shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture or of
any Note) payment of principal (and premium, if any) or interest need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date or at the Stated
Maturity or Maturity; provided that no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date, Stated Maturity or
Maturity, as the case may be.
SECTION 113. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by Section 318(c) of the TIA, the imposed duties shall
control.
SECTION 114. No Recourse Against Others.
--------------------------
No recourse for the payment of the principal of, premium, if any, or
interest on any of the Notes or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or in any of the Notes or because of
the creation of any Indebtedness represented by this Indenture or the Notes,
shall be had against any incorporator, stockholder, officer, director, employee
or controlling person, as such, of the Company or of any successor Person
thereof or of any subsidiary guarantor or of any successor person, as such,
whether by virtue of any constitution, statute, rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
<PAGE>
29
SECTION 115. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which shall be original; but such counterparts shall together constitute but one
and the same instrument.
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally.
---------------
The Initial Notes shall be known as the "9 3/4% Senior Subordinated
Notes due 2008" and the Exchange Notes shall be known as the "9 3/4% Series B
Senior Subordinated Notes due 2008," in each case, of the Company. The Notes
and the Trustee's certificate of authentication shall be in substantially the
forms set forth in Exhibit A hereto and in this Article, respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers of the Company executing
such Notes, as evidenced by their execution of the Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note. Each Note shall be dated the date of
its authentication.
The definitive Notes shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers of the Company executing such Notes, as evidenced by their
execution of such Notes.
Initial Notes offered and sold in reliance on Rule 144A under the
Securities Act shall be issued initially in the form of a single permanent
global Note in substantially the form set forth in Exhibit A and contain each of
the legends set forth in Section 203 (the "U.S. Global Note"), registered in the
name of the nominee of the Depositary, deposited with the Trustee, as custodian
for the Depositary or its nominee, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary or its nominee, as hereinafter provided.
Initial Notes offered and sold in offshore transactions in reliance on
Regulation S under the Securities Act shall be issued initially in the form of a
single temporary global Note in substantially the form set forth in Exhibit A
and contain the legends set forth in Section 203 (the "Temporary Offshore Global
Note"), registered in the name of the nominee of the Depositary,
<PAGE>
30
deposited with the Trustee, as custodian for the Depositary or its nominee, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. At any time following 41 days after the date hereof (the "Offshore
Note Exchange Date"), upon receipt by the Trustee and the Company of a
certificate substantially in the form set forth in Section 204, a single
permanent global Note substantially in the form of Exhibit A hereto (the
"Permanent Offshore Global Note"; and together with the Temporary Offshore
Global Note, the "Offshore Global Note") duly executed by the Company and
authenticated by the Trustee as hereinafter provided shall be deposited with the
Trustee, as custodian for the Depositary, and the Note Registrar shall reflect
on its books and records the date and a decrease in the principal amount of the
Temporary Offshore Global Note in an amount equal to the principal amount of the
beneficial interest in the Temporary Offshore Global Note transferred. The
aggregate principal amount of the Offshore Global Note may from time to time be
increased or decreased by adjustments made in the records of the Trustee, as
custodian for the Depositary or its nominee, as herein provided. Initial Notes
issued pursuant to Section 305 in exchange for or upon transfer of beneficial
interests in the U.S. Global Note or the Offshore Global Note shall be in the
form of permanent certificated Notes in substantially the form set forth in
Exhibit A containing the Private Placement Legend as set forth in Section 203
(the "U.S. Physical Notes"). or in the form of permanent certificated Notes
substantially in the form set forth in Exhibit A (the "Offshore Physical
Notes"), respectively, as hereinafter provided.
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Note
and the Offshore Global Note are sometimes collectively referred to as the
"Global Notes."
Exchange Notes shall be issued substantially in the form set forth in
Exhibit A.
SECTION 202. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:
This is one of the Notes referred to in the within-mentioned
Indenture.
State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee
Dated: __________ By: ____________________
Authorized Signatory
<PAGE>
31
SECTION 203. Restrictive Legends.
-------------------
Unless and until (i) an Initial Note is sold pursuant to an effective
Shelf Registration Statement or (ii) an Initial Note is exchanged for an
Exchange Note in an Exchange Offer pursuant to an effective Exchange Offer
Registration Statement, in each case pursuant to the Registration Rights
Agreement, (A) each U.S. Global Note and U.S. Physical Note shall bear the
following legend set forth below (the "Private Placement Legend") on the face
thereof and (B) the Offshore Physical Notes and the Temporary Offshore Global
Note shall bear the Private Placement Legend on the face thereof until the
Offshore Note Exchange Date and receipt by the Company and the Trustee of a
certificate substantially in the form provided in Section 204:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903
OR 904 OF REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE
WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144
UNDER THE SECURITIES ACT AND ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR AND THIS
SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE
LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A INSIDE THE UNITED STATES, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO
<PAGE>
32
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO
RULE 904 OF REGULATION S, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE
COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF
THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
Each Global Note, whether or not an Initial Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("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 IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 311 AND 312 OF THE INDENTURE.
<PAGE>
33
SECTION 204. Form of Certificate to Be Delivered After the Offshore
------------------------------------------------------
Note Exchange Date.
- - ------------------
On or after June 1, 1998
State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: ___________________
Re: OSCAR I CORPORATION (the "Company")
9 3/4% Senior Subordinated Notes due 2008 (the "Notes")
-------------------------------------------------------
Ladies and Gentlemen:
This letter relates to $_______________ principal amount of Notes
represented by the temporary offshore global note certificate (the "Temporary
Offshore Global Note"). Pursuant to Section 203 of the Indenture dated as of
April 21, 1998 (the "Indenture") relating to the Notes, we hereby certify that
(1) we are the beneficial owner of such principal amount of Notes represented by
the Temporary Offshore Global Note and (2) we are a Non-U.S. Person to whom the
Notes could be transferred in accordance with Rule 904 of Regulation S
promulgated under the Securities Act of 1933, as amended (the "Regulation S").
[Accordingly, you are hereby requested to exchange the Temporary Offshore Global
Note for an unlegended Permanent Offshore Global Note representing the
undersigned's interest in the principal amount of Notes represented by the
Temporary Offshore Global Note, all in the manner provided for in the
Indenture.] [Accordingly, you are hereby requested to issue an Offshore Physical
Note representing the undersigned's interest in the principal amount of Notes
represented by the Temporary Offshore Global Note, all in the manner provided by
the Indenture.]
<PAGE>
34
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. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By: ________________________
Authorized Signature
ARTICLE THREE
THE NOTES
SECTION 301. Amount.
------
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $225,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 303, 304, 305, 306, 311,
312, 906, 1013, 1014 or 1108 or pursuant to an Exchange Offer.
The Initial Notes shall be known and designated as the "9 3/4% Senior
Subordinated Notes due 2008" and the Exchange Notes shall be known and
designated as the "9 3/4% Series B Senior Subordinated Notes due 2008," in each
case, of the Company. The Stated Maturity of the Notes shall be April 15, 2008,
and they shall bear interest at the rate of 9 3/4% per annum from April 21,
1998, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, payable on October 15, 1998 and semi-annually
thereafter on April 15 and October 15 in each year, until the principal thereof
is paid in full and to the Person in whose name the Note (or any predecessor
Note) is registered at the close of business on the April 1 or October 1
immediately preceding such Interest Payment Date (each, a "Regular Record
Date"). Interest will be computed on the Notes as specified in Section 310
hereof.
The principal of (and premium, if any) and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the option of the
Company, interest may be paid (a) by check mailed to addresses
<PAGE>
35
of the Persons entitled thereto as such addresses shall appear on the Note
Register or (b) by wire transfer to an account located in the United States
maintained by the payee.
Holders shall have the right to require the Company to purchase their
Notes, in whole or in part, in the event of a Change in Control pursuant to
Section 1013. The Notes shall be subject to repurchase pursuant to an Offer to
Purchase as provided in Section 1014.
The Notes shall be redeemable as provided in Article Eleven and in the
Notes. The Indebtedness evidenced by the Notes shall be subordinated in right
of payment to Senior Indebtedness as provided in Article Twelve.
SECTION 302. Denominations.
-------------
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Notes shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its President, its Chief Operating
Officer, its Chief Financial Officer or a Vice President. The signature of any
of these officers on the Notes may be the manual or facsimile signatures of the
present or any future such authorized officer and may be imprinted or otherwise
reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
On Company Order, the Trustee shall authenticate for original issue
Initial Notes in an aggregate principal amount not to exceed $225,000,000. On
Company Order, the Trustee shall authenticate for original issue Exchange Notes
in an aggregate principal amount not to exceed $225,000,000; provided that such
Exchange Notes shall be issuable only upon the valid surrender for cancellation
of Initial Notes of a like aggregate principal amount in accordance with an
Exchange Offer pursuant to the Registration Rights Agreement. In each case, the
Trustee shall be entitled to receive an Officers' Certificate and an Opinion of
Counsel of the Company that it may reasonably request in connection with such
authentication of Notes. Such order shall specify the amount of Notes to be
authenticated and the date on which the original issue of Notes is to be
authenticated.
Each Note shall be dated the date of its authentication.
<PAGE>
36
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be consolidated
or merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Notes authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Notes executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Notes surrendered for such exchange
and of like principal amount; and the Trustee, upon Company Request of the
successor Person, shall authenticate and deliver Notes as specified in such
request for the purpose of such exchange. If Notes shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 303 in exchange or substitution for or upon registration of
transfer of any Notes, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Notes at the time
Outstanding for Notes authenticated and delivered in such new name.
SECTION 304. Temporary Notes.
---------------
Pending the preparation of definitive Notes, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as conclusively evidenced by their execution
of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes, upon
surrender of the temporary Notes at the office or agency of the Company in a
Place of Payment, without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Notes, the Company shall execute and, upon Company
Order, the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of
<PAGE>
37
definitive Notes of authorized denominations. Until so exchanged the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Notes.
SECTION 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register for the Notes (the register maintained in the Corporate
Trust Office of the Trustee and in any other office or agency of the Company in
a Place of Payment being herein sometimes collectively referred to as the "Note
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and of transfers of
Notes. The Note Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. At all reasonable
times, the Note Register shall be open to inspection by the Trustee. The
Trustee is hereby initially appointed as note registrar (the Trustee in such
capacity, together with any successor of the Trustee in such capacity, the "Note
Registrar") for the purpose of registering Notes and transfers of Notes as
herein provided.
Upon surrender for registration of transfer of any Note at the office
or agency in a Place of Payment, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any authorized denomination or
denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Notes may be exchanged for other Notes,
of any authorized denomination and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange (including an exchange of Initial Notes
for Exchange Notes), the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive; provided that no exchange of Initial Notes for Exchange
Notes shall occur until an Exchange Offer Registration Statement shall have been
declared effective by the Commission, the Trustee shall have received an
Officers' Certificate confirming that the Exchange Offer Registration Statement
has been declared effective by the Commission and the Initial Notes to be
exchanged for the Exchange Notes shall be canceled by the Trustee.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Note Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
<PAGE>
38
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 303, 304, 906, 1013, 1014 or 1108 not involving
any transfer.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes.
-------------------------------------------
If any mutilated Note is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding, or, in case any such mutilated Note has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon Company Order the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding, or, in case any such destroyed, lost or stolen
Note has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note, shall constitute an original
additional contractual obligation of the Company and any other obligor upon the
Notes, whether or not the mutilated, destroyed, lost or stolen Note shall be at
any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
<PAGE>
39
SECTION 307. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the Place of Payment;
provided, however, that each installment of interest on any Note may at the
Company's option be paid (i) by mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears on the Note Register or (ii) by wire
transfer to an account located in the United States maintained by the payee.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such defaulted interest and, if applicable, interest on
such defaulted interest (to the extent lawful) at the rate specified in the
Notes (such defaulted interest and, if applicable, interest thereon herein
collectively called "Defaulted Interest") may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. 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 "Special Record Date"), and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit on
or prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given in the
manner provided in Section 106, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been so given, such Defaulted
Interest shall be paid to the Persons in whose name the Registered Notes
(or their respective Predecessor Notes) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
<PAGE>
40
(2) The Company may make payment of any Defaulted Interest on the
Notes in any other lawful manner not inconsistent with the requirements of
any securities exchange on which such Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305,
each Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 308. Persons Deemed Owners.
---------------------
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of (and premium, if any, on) and
(subject to Sections 305 and 307) interest on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
------------
All Notes surrendered for payment, redemption, repayment at the option
of the Holder, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Notes so
delivered to the Trustee shall be promptly canceled by it. The Company may at
any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold, and all Notes so delivered
shall be promptly canceled by the Trustee. If the Company shall so acquire any
of the Notes, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be disposed of by the Trustee in accordance with
its customary procedures unless by Company Order the Company shall direct that
canceled Notes be returned to it.
<PAGE>
41
SECTION 310. Computation of Interest.
-----------------------
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
SECTION 311. Book-Entry Provisions for Global Notes.
--------------------------------------
(a) Each Global Note initially shall (i) be registered in the name of
the Depositary for such Global Notes or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for such Depositary and (iii) bear legends
as set forth in Section 203.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a beneficial owner of any Note. The registered holder of a Global
Note may grant proxies and otherwise authorize any person, including Agent
Members and persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the Notes.
(b) Interests of beneficial owners in a Global Note may be transferred
in accordance with the applicable rules and procedures of the Depositary and the
provisions of Section 312. Transfers of a Global Note shall be limited to
transfers of such Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees, except (i) as otherwise set forth in
Section 312 and (ii) U.S. Physical Notes or Offshore Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the U.S. Global Note or the Offshore Global Note, respectively, in the event
that the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the applicable Global Note or the Depositary ceases
to be a "Clearing Agency" registered under the Exchange Act and a successor
depositary is not appointed by the Company within 90 days or an Event of Default
has occurred and is continuing and the Note Registrar has received a request
from the Depositary. In connection with a transfer of an entire Global Note to
beneficial owners pursuant to clause (ii) of this paragraph (b), the applicable
Global Note shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the applicable Global Note, an equal aggregate principal
amount at maturity of U.S. Physical Notes (in the case of the U.S. Global Note)
or Offshore Physical Notes (in the case of the Offshore Global Note), as the
case may be, of authorized denominations.
<PAGE>
42
(c) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in the
other Global Note will, upon transfer, cease to be an interest in such Global
Note and become an interest in the other Global Note and, accordingly, will
thereafter be subject to all transfer restrictions, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(d) Any U.S. Physical Note delivered in exchange for an interest in
the U.S. Global Note pursuant to paragraph (b) of this Section shall, unless
such exchange is made on or after the Resale Restriction Termination Date and
except as otherwise provided in Section 312, bear the Private Placement Legend.
SECTION 312. Transfer Provisions.
-------------------
Unless and until (i) an Initial Note is sold pursuant to an effective
Registration Statement, or (ii) an Initial Note is exchanged for an Exchange
Note in the Exchange Offer pursuant to an effective Registration Statement, in
each case, pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) General. The provisions of this Section 312 shall apply to all
-------
transfers involving any Physical Note and any beneficial interest in any
Global Note.
(b) Certain Definitions. As used in this Section 312 only, "delivery"
-------------------
of a certificate by a transferee or transferor means the delivery to the
Note Registrar by such transferee or transferor of the applicable
certificate duly completed; "holding" includes both possession of a
Physical Note and ownership of a beneficial interest in a Global Note, as
the context requires; "transferring" a Global Note means transferring that
portion of the principal amount of the transferor's beneficial interest
therein that the transferor has notified the Note Registrar that it has
agreed to transfer; and "transferring" a Physical Note means transferring
that portion of the principal amount thereof that the transferor has
notified the Note Registrar that it has agreed to transfer.
As used in this Indenture, "Accredited Investor Certificate" means a
certificate substantially in the form set forth in Section 313; "Regulation
S Certificate" means a certificate substantially in the form set forth in
Section 314; "Rule 144A Certificate" means a certificate substantially in
the form set forth in Section 315; and "Non-Registration Opinion and
Supporting Evidence" means a written opinion of counsel reasonably
acceptable to the Company to the effect that, and such other certification
or information as the Company may reasonably require to confirm that, the
proposed transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.
<PAGE>
43
(c) [Intentionally Omitted]
(d) Deemed Delivery of a Rule 144A Certificate in Certain
-----------------------------------------------------
Circumstances. A Rule 144A Certificate, if not actually delivered, will be
-------------
deemed delivered if (A) (i) the transferor advises the Company and the
Trustee in writing that the relevant offer and sale were made in accordance
with the provisions of Rule 144A (or, in the case of a transfer of a
Physical Note, the transferor checks the box provided on the Physical Note
to that effect) and (ii) the transferee advises the Company and the Trustee
in writing that (x) it and, if applicable, each account for which it is
acting in connection with the relevant transfer, is a qualified
institutional buyer within the meaning of Rule 144A, (y) it is aware that
the transfer of Notes to it is being made in reliance on the exemption from
the provisions of Section 5 of the Securities Act provided by Rule 144A,
and (z) prior to the proposed date of transfer it has been given the
opportunity to obtain from the Company the information referred to in Rule
144A(d)(4), and has either declined such opportunity or has received such
information (or, in the case of a transfer of a Physical Note, the
transferee signs the certification provided on the Physical Note to that
effect); or (B) the transferor holds the U.S. Global Note and is
transferring to a transferee that will take delivery in the form of the
U.S. Global Note.
(e) Procedures and Requirements.
---------------------------
1. If the proposed transfer occurs prior to the Offshore Note
Exchange Date, and the proposed transferor holds:
(A) a U.S. Physical Note which is surrendered to the Note
Registrar, and the proposed transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and, if
required by the Company, a Non-Registration Opinion and Supporting
Evidence, or delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee requests
delivery in the form of a U.S. Physical Note, then the Note Registrar shall
(x) register such transfer in the name of such transferee and record the
date thereof in its books and records, (y) cancel such surrendered U.S.
Physical Note and (z) deliver a new U.S. Physical Note to such transferee
duly registered in the name of such transferee in principal amount equal to
the principal amount being transferred of such surrendered U.S. Physical
Note;
(ii) delivers (or is deemed to have delivered pursuant to
clause (d) above) a Rule 144A Certificate and the proposed transferee is or
is acting through an Agent Member and requests that the
<PAGE>
44
proposed transferee receive a beneficial interest in the U.S. Global Note,
then the Note Registrar shall (x) cancel such surrendered U.S. Physical
Note, (y) record an increase in the principal amount of the U.S. Global
Note equal to the principal amount being transferred of such surrendered
U.S. Physical Note and (z) notify the Depositary in accordance with the
procedures of the Depositary that it approves of such transfer; or
(iii) delivers a Regulation S Certificate and the
proposed transferee is or is acting through an Agent Member and requests
that the proposed transferee receive a beneficial interest in the Temporary
Offshore Global Note, then the Note Registrar shall (x) cancel such
surrendered U.S. Physical Note, (y) record an increase in the principal
amount of the Temporary Offshore Global Note equal to the principal amount
being transferred of such surrendered U.S. Physical Note and (z) notify the
Depositary in accordance with the procedures of the Depositary that it
approves of such transfer.
In any of the cases described in this Section 312(e)(1)(A), the
Note Registrar shall deliver to the transferor a new U.S. Physical Note in
principal amount equal to the principal amount not being transferred of
such surrendered U.S. Physical Note, as applicable.
(B) the U.S. Global Note, and the proposed transferee or
transferor, as applicable:
(i) delivers an Accredited Investor Certificate and, if
required by the Company, a Non-Registration Opinion and Supporting
Evidence, or delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee requests
delivery in the form of a U.S. Physical Note, then the Note Registrar shall
(w) register such transfer in the name of such transferee and record the
date thereof in its books and records, (x) record a decrease in the
principal amount of the U.S. Global Note in an amount equal to the
beneficial interest therein being transferred, (y) deliver a new U.S.
Physical Note to such transferee duly registered in the name of such
transferee in principal amount equal to the amount of such decrease and (z)
notify the Depositary in accordance with the procedures of the Depositary
that it approves of such transfer;
<PAGE>
45
(ii) delivers (or is deemed to have delivered pursuant to
clause (d) above) a Rule 144A Certificate and the proposed transferee is or
is acting through an Agent Member and requests that the proposed transferee
receive a beneficial interest in the U.S. Global Note, then the transfer
shall be effected in accordance with the procedures of the Depositary
therefor; or
(iii) delivers a Regulation S Certificate and the proposed
transferee is or is acting through an Agent Member and requests that the
proposed transferee receive a beneficial interest in the Temporary Offshore
Global Note, then the Note Registrar shall (w) register such transfer in
the name of such transferee and record the date thereof in its books and
records, (x) record a decrease in the principal amount of the U.S. Global
Note in an amount equal to the beneficial interest therein being
transferred, (y) record an increase in the principal amount of the
Temporary Offshore Global Note equal to the amount of such decrease and (z)
notify the Depositary in accordance with the procedures of the Depositary
that it approves of such transfer.
(C) the Temporary Offshore Global Note, and the proposed
transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and, if
required by the Company, a Non-Registration Opinion and Supporting
Evidence, or delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee requests
delivery in the form of a U.S. Physical Note, then the Note Registrar shall
(w) register such transfer in the name of such transferee and record the
date thereof in its books and records, (x) record a decrease in the
principal amount of the Offshore Global Note in an amount equal to the
beneficial interest therein being transferred, (y) deliver a new U.S.
Physical Note to such transferee duly registered in the name of such
transferee in principal amount equal to the amount of such decrease and (z)
notify the Depositary in accordance with the procedures of the Depositary
that it approves of such transfer;
(ii) delivers (or is deemed to have delivered pursuant to
clause (d) above) a Rule 144A Certificate and the proposed transferee is or
is acting through an Agent Member and requests that the proposed transferee
receive a beneficial interest in the U.S. Global
<PAGE>
46
Note, then the Note Registrar shall (x) record a decrease in the principal
amount of the Offshore Global Note in an amount equal to the beneficial
interest therein being transferred, (y) record an increase in the principal
amount of the U.S. Global Note equal to the amount of such decrease and (z)
notify the Depositary in accordance with the procedures of the Depositary
that it approves of such transfer; or
(iii) delivers a Regulation S Certificate and the
proposed transferee is or is acting through an Agent Member and requests
that the proposed transferee receive a beneficial interest in the Temporary
Offshore Global Note, then the transfer shall be effected in accordance
with the procedures of the Depositary therefor; provided, however, that
until the Offshore Note Exchange Date occurs, beneficial interests in the
Offshore Global Note may be held only in or through accounts maintained at
the Depositary by Euroclear or Cedel (or by Agent Members acting for the
account thereof), and no person shall be entitled to effect any transfer or
exchange that would result in any such interest being held otherwise than
in or through such an account.
2. If the proposed transfer occurs on or after the Offshore Note
Exchange Date and the proposed transferor holds:
(A) a U.S. Physical Note which is surrendered to the Note
Registrar, and the proposed transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and, if
required by the Company, a Non-Registration Opinion and Supporting
Evidence, or delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee requests
delivery in the form of a U.S. Physical Note, then the procedures set forth
in Section 312(e)(1)(A)(i) shall apply;
(ii) delivers (or is deemed to have delivered pursuant to
clause (d) above) a Rule 144A Certificate and the proposed transferee is or
is acting through an Agent Member and requests that the proposed transferee
receive a beneficial interest in the Offshore Global Note, then the
procedures set forth in Section 312(e)(1)(A)(ii) shall apply; or
<PAGE>
47
(iii) delivers a Regulation S Certificate, then the Note
Registrar shall cancel such surrendered U.S. Physical Note and at the
direction of the transferee, either:
(x) register such transfer in the name of such
transferee, record the date thereof in its books and records and
deliver a new Offshore Physical Note to such transferee in principal
amount equal to the principal amount being transferred of such
surrendered U.S. Physical Note, or
(y) if the proposed transferee is or is acting through
an Agent Member, record an increase in the principal amount of the
Offshore Global Note equal to the principal amount being transferred
of such surrendered U.S. Physical Note and notify the Depositary in
accordance with the procedures of the Depositary that it approves of
such transfer.
In any of the cases described in this Section 312(e)(2)(A)(i), (ii) or
(iii)(x), the Note Registrar shall deliver to the transferor a new U.S.
Physical Note in principal amount equal to the principal amount not being
transferred of such surrendered U.S. Physical Note, as applicable.
(B) the U.S. Global Note, and the proposed transferee or transferor, as
applicable:
(i) delivers an Accredited Investor Certificate and, if required
by the Company, a Non-Registration Opinion and Supporting Evidence, or
delivers (or is deemed to have delivered pursuant to clause (d) above) a
Rule 144A Certificate and the proposed transferee requests delivery in the
form of a U.S. Physical Note, then the procedures set forth in Section
312(e)(1)(B)(i) shall apply; or
(ii) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or is
acting through an Agent Member and requests that the proposed transferee
receive a beneficial interest in the U.S. Global Note, then the procedures
set forth in Section 312(e)(1)(B)(ii) shall apply; or
<PAGE>
48
(iii) delivers a Regulation S Certificate, then the Note
Registrar shall (x) record a decrease in the principal amount of the U.S.
Global Note in an amount equal to the beneficial interest therein being
transferred, (y) notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer and (z) at the direction
of the transferee, either:
(x) register such transfer in the name of such
transferee, record the date thereof in its books and records and deliver a
new Offshore Physical Note to such transferee in principal amount equal to
the amount of such decrease, or
(y) if the proposed transferee is or is acting through an
Agent Member, record an increase in the principal amount of the Offshore
Global Note equal to the amount of such decrease.
(C) an Offshore Physical Note which is surrendered to the Note Registrar,
and the proposed transferee or transferor, as applicable :
(i) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or is
acting through an Agent Member and requests delivery in the form of the
U.S. Global Note, then the Note Registrar shall (x) cancel such surrendered
Offshore Physical Note, (y) record an increase in the principal amount of
the U.S. Global Note equal to the principal amount being transferred of
such surrendered Offshore Physical Note and (z) notify the Depositary in
accordance with the procedures of the Depositary that it approves of such
transfer;
(ii) where the proposed transferee is or is acting through an
Agent Member, requests that the proposed transferee receive a beneficial
interest in the Offshore Global Note, then the Note Registrar shall (x)
cancel such surrendered Offshore Physical Note, (y) record an increase in
the principal amount of the Offshore Global Note equal to the principal
amount being transferred of such surrendered Offshore Physical Note and (z)
notify the Depositary in accordance with the procedures of the Depositary
that it approves of such transfer; or
<PAGE>
49
(iii) does not make a request covered by Section 312(e)(2)(C)(i)
or Section 312(e)(2)(C)(ii), then the Note Registrar shall (x) register
such transfer in the name of such transferee and record the date thereof in
its books and records, (y) cancel such surrendered Offshore Physical Note
and (z) deliver a new Offshore Physical Note to such transferee duly
registered in the name of such transferee in principal amount equal to the
principal amount being transferred of such surrendered Offshore Physical
Note.
In any of the cases described in this Section 312(e)(2)(C), the Note
Registrar shall deliver to the transferor a new Offshore Physical Note in
principal amount equal to the principal amount not being transferred of such
surrendered Offshore Physical Note, as applicable.
(D) the Offshore Global Note, and the proposed transferee or transferor,
as applicable:
(i) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or is
acting through an Agent Member and requests delivery in the form of the
U.S. Global Note, then the Note Registrar shall (x) record a decrease in
the principal amount of the Offshore Global Note in an amount equal to the
beneficial interest therein being transferred, (y) record an increase in
the principal amount of the U.S. Global Note equal to the amount of such
decrease and (z) notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer;
(ii) where the proposed transferee is or is acting through an
Agent Member, requests that the proposed transferee receive a beneficial
interest in the Offshore Global Note, then the transfer shall be effected
in accordance with the procedures of the Depositary therefor; or
(iii) does not make a request covered by Section 312(e)(2)(D)(i)
or Section 312(e)(2)(D)(ii), then the Note Registrar shall (w) register
such transfer in the name of such transferee and record the date thereof in
its books and records, (x) record a decrease in the principal amount of the
Offshore Global Note in an amount equal to the beneficial interest therein
being transferred, (y) deliver a new Offshore Physical Note to such
transferee duly registered in the
<PAGE>
50
name of such transferee in principal amount equal to the amount
of such decrease and (z) notify the Depositary in accordance with
the procedures of the Depositary that it approves of such
transfer.
(f) Execution, Authentication and Delivery of Physical Notes. In any
--------------------------------------------------------
case in which the Note Registrar is required to deliver a Physical Note to a
transferee or transferor, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, such Physical Note.
(g) Certain Additional Terms Applicable to Physical Notes. Any
-----------------------------------------------------
transferee entitled to receive a Physical Note may request that the principal
amount thereof be evidenced by one or more Physical Notes in any authorized
denomination or denominations and the Note Registrar shall comply with such
request if all other transfer restrictions are satisfied.
(h) Transfers Not Covered by Section 312(e). The Note Registrar shall
---------------------------------------
effect and record, upon receipt of a written request from the Company so to do,
a transfer not otherwise permitted by Section 312(e), such recording to be done
in accordance with the otherwise applicable provisions of Section 312(e), upon
the furnishing by the proposed transferor or transferee of a Non-Registration
Opinion and Supporting Evidence.
(i) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in the
Indenture. The Note Registrar shall not register a transfer of any Note unless
such transfer complies with the restrictions with respect thereto set forth in
this Indenture. The Note Registrar shall not be required to determine (but may
rely upon a determination made by the Company) the sufficiency or accuracy of
any such certifications, legal opinions, other information or document.
(j) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the circumstances exist contemplated by the
fourth paragraph of Section 201 (with respect to an Offshore Physical Note) or
the requested transfer is at least two years after the original issue date of
the Initial Note (with respect to any Physical Note), (ii) there is delivered to
the Note Registrar an Opinion of Counsel reasonably satisfactory to the Company
and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
<PAGE>
51
provisions of the Securities Act or (iii) such Notes are exchanged for Exchange
Notes pursuant to an Exchange Offer.
SECTION 313. Form of Accredited Investor Certificate.
---------------------------------------
Transferee Letter of Representation
-----------------------------------
State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee (the "Trustee")
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: ___________________
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate
principal amount of the 9 3/4% Senior Subordinated Notes due 2008 (the "Notes")
of Oscar I Corporation (the "Company"), we confirm that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of
1933, as amended (the "Securities Act")) purchasing for our own account or
for the account of such an institutional "accredited investor," and we are
acquiring the Notes for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act or other applicable securities law and we 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.
2. We understand and acknowledge that the Notes have not been
registered under the Securities Act, or any other applicable securities law
and may not be offered, sold or otherwise transferred except in compliance
with the registration requirements of the Securities Act or any other
applicable securities law, or pursuant to an exemption therefrom, and in
each case in compliance with the conditions for transfer set forth below.
We agree on our own behalf and on behalf of any investor account for which
we are purchasing Notes to offer, sell or otherwise transfer such Notes
prior to the date which is two years after the later of the date of
original issue and the last date on which the Company or any affiliate of
the Company was the owner of such Notes (or any predecessor thereto) (the
"Resale
<PAGE>
52
Restriction Termination Date") only (a) to the Company or any subsidiary
thereof, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) for so long as the Notes are
eligible for resale pursuant to Rule 144A under the Securities Act ("Rule
144A"), to a person we reasonably believe is a "Qualified Institutional
Buyer" within the meaning of Rule 144A (a "QIB") that purchases for its own
account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales to non-U.S. persons that occur outside the United States within the
meaning of Regulation S under the Securities Act, or (e) pursuant to any
other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed
to be made pursuant to clause (d) or (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver to the trustee
(the "Trustee") under the Indenture pursuant to which the Notes are issued
a letter from the transferee substantially in the form of this letter,
which shall provide, among other things, that the transferee is a person or
entity as defined in paragraph 1 of this letter and that it is acquiring
such Notes for investment purposes and not for distribution in violation of
the Securities Act. We acknowledge that the Company and the Trustee reserve
the right prior to any offer, sale or other transfer of the Notes pursuant
to clauses (d) and (e) above prior to the Resale Restriction Termination
Date to require the delivery of an opinion of counsel, certifications
and/or other information satisfactory to the Company and the Trustee.
3. We are acquiring the Notes purchased by us for our own account or
for one or more accounts as to each of which we exercise sole investment
discretion.
4. 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 proceeding or official
inquiry with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
(Name of Purchaser)
By: _____________________________
Date: ___________________________
<PAGE>
53
Upon transfer, the Notes would be registered in the name of the new
beneficial owner as follows:
NAME ADDRESS TAXPAYER ID NUMBER
---- ------- ------------------
Date of this Certificate: _________ __, 199_
<PAGE>
54
SECTION 314. Form of Regulation S Certificate.
--------------------------------
Regulation S Certificate
------------------------
To: State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee (the "Trustee")
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: ____________________
Re: Oscar I Corporation (the "Company")
9 3/4% Senior Subordinated Notes due 2008 (the "Notes")
-------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $____ aggregate principal
amount of Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S ("Regulation S") under the Securities Act of 1933,
as amended (the "Securities Act"), and accordingly, we hereby certify as
follows:
1. The offer of the Notes was not made to a person in the United
States (unless such person or the account held by it for which it is acting
is excluded from the definition of "U.S. person" pursuant to Rule 902(o) of
Regulation S under the circumstances described in Rule 902(i)(3) of
Regulation S) or specifically targeted at an identifiable group of U.S.
citizens abroad.
2. Either (a) at the time the buy order was originated, the buyer was
outside the United States or we and any person acting on our behalf
reasonably believed that the buyer was outside the United States or (b) the
transaction was executed in, on or through the facilities of a designated
offshore securities market, and neither we nor any person acting on our
behalf knows that the transaction was pre-arranged with a buyer in the
United States.
3. Neither we, any of our affiliates, nor any person acting on our or
their behalf has made any directed selling efforts in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable.
4. The proposed transfer of Notes is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
<PAGE>
55
5. If we are a dealer or a person receiving a selling concession or
other fee or remuneration in respect of the Notes, and the proposed
transfer takes place before the Offshore Note Exchange Date referred to in
the Indenture, dated as of April 21, 1998, among the Company and the
Trustee, or we are an officer or director of the Company or a distributor,
we certify that the proposed transfer is being made in accordance with the
provisions of Rules 903 and 904(c) of Regulation S.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[NAME OF SELLER]
By:__________________________
Name:
Title:
Address:
Date of this Certificate: __________ __, 199_
<PAGE>
56
SECTION 315. Form of Rule 144A Certificate.
-----------------------------
Rule 144A Certificate
---------------------
To: State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee (the "Trustee")
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: _______________________
Re: Oscar I Corporation (the "Company")
9 3/4% Senior Subordinated Notes due 2008 (the "Notes")
-------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of $_____ aggregate principal
amount of Notes, we confirm that such sale has been effected pursuant to and in
accordance with Rule 144A ("Rule 144A") under the Securities Act of 1933, as
amended (the "Securities Act"). We are aware that the transfer of Notes to us
is being made in reliance on the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A. Prior to the date of this Certificate
we have been given the opportunity to obtain from the Company the information
referred to in Rule 144A(d)(4), and have either declined such opportunity or
have received such information.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER]
By:__________________________
Name:
Title:
Address:
Date of this Certificate: __________ __, 199_
<PAGE>
57
SECTION 316. CUSIP Numbers.
-------------
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers, and, if so, the Trustee shall
use such "CUSIP" numbers in addition to serial numbers in notices of redemption,
repurchase or other notices to Holders as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such CUSIP numbers either as printed on the Notes or as contained
in any notice of a redemption or repurchase and that reliance may be placed only
on the serial or other identification numbers printed on the Notes, and any such
redemption or repurchase shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Trustee of any change in the
CUSIP numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall, upon Company Request, cease to be of further
effect with respect to Notes (except as to any surviving rights of registration
of transfer or exchange of Notes expressly provided for) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when
(1) either
(A) all Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306, and (ii) Notes for
whose payment money has theretofore been deposited in trust with the
Trustee or any Paying Agent or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee
for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated Maturity
within one year, or
<PAGE>
58
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest on the Notes to the date of such deposit (in the
case of Notes which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument or agreement to which the Company is a party or by which it is
bound;
(3) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(4) the Company has delivered irrevocable instructions to the Trustee
to apply the deposited money toward the payment of such Notes at maturity
or the Redemption Date, as the case may be; and
(5) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606, the obligations of
the Company to any Authenticating Agent under Section 612 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying
<PAGE>
59
Agent (including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 401 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 401; provided that if the Company has
made any payment of principal of, premium, if any, or interest on any Notes
because of 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 FIVE
REMEDIES
SECTION 501. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at Maturity, upon
acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions of Article Twelve;
(2) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30
days, whether or not such payment is prohibited by the provisions of
Article Twelve;
(3) default in the performance or breach of the provisions of Article
Eight or the failure to make or consummate an Offer to Purchase in
accordance with Section 1013 or Section 1014;
(4) default in the performance or breach of any covenant or agreement
of the Company in this Indenture or under the Notes (other than a default
specified in clause (1),
<PAGE>
60
(2) or (3) of this Section) and such default or breach continues for a
period of 60 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Outstanding
Notes;
(5) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereinafter be created, (A) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (B) the failure to make a principal payment at the
final (but not any interim) fixed maturity and such defaulted payment shall
not have been made, waived or extended within 30 days of such payment
default;
(6) any final judgment or order (to the extent not covered by
insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company or any Significant Subsidiary and shall not
be paid, discharged or vacated, and there shall be any period of 30
consecutive days following entry of the final judgment or order that causes
the aggregate principal amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed
$10 million during a stay of enforcement of such final judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
(7) a court having competent jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any Significant
Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B) appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary and, in each case, such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days;
(8) the Company or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any
general assignment for the benefit of creditors;
<PAGE>
61
(9) the Company fails to redeem all of the Company's Preferred Stock
within 60 days after the Closing Date; or
(10) UATC fails to redeem the Senior Secured Notes within 60 days
after the Closing Date.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 501 that occurs with respect to the Company) occurs
and is continuing under this Indenture, then in every such case the Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Notes, by written notice to the Company (and to the Trustee if such notice is
given by the Holders), may, and the Trustee at the written request of such
Holders shall, declare the principal of, premium, if any, and accrued interest
on all of the Outstanding Notes to be immediately due and payable. Upon a
declaration of acceleration (an "Acceleration Notice"), such principal of,
premium, if any, and accrued interest shall be immediately due and payable;
provided, however, that if there are any amounts outstanding under the Credit
Agreement, such declaration shall not become effective until the earlier of (A)
an acceleration of the Indebtedness under the Credit Agreement and (ii) five (5)
Business Days after receipt by the Company and the Agent Bank of such
Acceleration Notice. In the event of a declaration of acceleration because of
an Event of Default set forth in clause (5) of Section 501 has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to clause (5) of Section 501 be remedied or cured by the Company or the relevant
Significant Subsidiary or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If
an Event of Default specified in clause (7) or (8) of Section 501 above occurs
with respect to the Company, the principal of, premium, if any, and accrued
interest on the Outstanding Notes shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. The Holders of at least a majority in aggregate principal amount of
the Outstanding Notes by written notice to the Company and to the Trustee, may
waive all past defaults and rescind and annul a declaration of acceleration and
its consequences if (1) all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, and interest on the Notes that
have become due solely by such declaration of acceleration, have been cured or
waived and (2) the recission would not conflict with any judgment or decree of a
court of competent jurisdiction.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
- - -------
The Company covenants that if
<PAGE>
62
(1) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Note at the Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Notes, the whole amount then due and payable on
such Notes for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by such Notes, and, in addition thereto, 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.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company (in accordance with the applicable Note Guarantee) or any
other obligor upon such Notes and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company or any
other obligor upon such Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture or the Note Guarantees by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, upon the Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
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63
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes, to
take such other actions (including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such matter)
and to file such 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 of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official 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 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 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided, however, that the
Trustee may, on behalf of such Holders, vote for the election of a trustee in
bankruptcy or other similar official.
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
All rights of action and claims under this Indenture, the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
------------------------------
Subject to Article Twelve, any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (or premium, if any) or interest, upon
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64
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
-----
607;
Second: To the payment of the amounts then due and unpaid for
------
principal of (and premium, if any, on) and interest on the Notes in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal (and premium, if any)
and interest, respectively; and
Third: The balance, if any, to the Person or Persons entitled
-----
thereto, including the Company or any other obligor on the Notes, as their
interests may appear or as a court of competent jurisdiction may direct;
provided that all sums due and owing to the Holders and the Trustee have
been paid in full as required by this Indenture.
SECTION 507. Limitation on Suits.
-------------------
A Holder may not pursue any remedy with respect to the Indenture or
the Notes unless:
(1) the Holder gives the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to
the Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity, and during such 60-day
period, the Holders of a majority in aggregate principal amount of the
Outstanding Notes do not give the Trustee a direction that is inconsistent
with the request.
The limitations in clauses (1) through (4) above do not apply to the right of
any Holder of a Note to receive payment of the principal of, premium, if any, or
interest on, such Note or to being suit for the enforcement of any such payment,
on or after the due date expressed in the Notes, which right shall not be
impaired or affected without the consent of the Holder.
<PAGE>
65
SECTION 508. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest.
- - --------------------
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Eleven) and in
such Note of the principal of (and premium, if any, on) and (subject to Section
307) interest on, such Note on the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired or affected without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, any other obligor on the Notes,
the Trustee and the Holders of Notes shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Notes is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
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66
SECTION 512. Control by Holders.
------------------
The Holders of at least a majority in aggregate principal amount of
the Outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that the Trustee may refuse to
following any direction that
(1) conflicts with law or this Indenture,
(2) may involve the Trustee in personal liability, or
(3) the Trustee determines in good faith may be unduly prejudicial to
the rights of Holders of Notes not joining in the giving of such direction,
and
the Trustee may take other action it deems proper that is not inconsistent with
any direction received from Holders of Notes.
SECTION 513. Waiver of Past Defaults.
-----------------------
Subject to Sections 508, 902 and the last paragraph of Section 502,
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes) may on behalf of the Holders of all the Notes
waive any past default hereunder and its consequences under this Indenture,
except a default
(1) in respect of the payment of the principal of (or premium, if any,
on) or interest on any Note, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, any 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 and the Note Guarantees; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.
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67
SECTION 514. Waiver of Stay or Extension Laws.
--------------------------------
Each of the Company and any other obligor on the Notes covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which would prohibit or forgive the Company or any such obligor from
paying all or any portion of the principal of, premium, if any, or interest on
the Notes contemplated herein or in the Notes or which may affect the covenants
or the performance of this Indenture; and each of the Company and any other
obligor on the Notes (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of a Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith or willful misconduct on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but not to verify
the contents thereof.
(b) In case a Default has occurred and is continuing of which a
Responsible Officer of the Trustee has actual knowledge or of which written
notice of such Default shall have been given to the Trustee by the Company, any
other obligor of the Notes or by any Holder, 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 their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
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68
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
------
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in aggregate principal amount of the
Outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 602. Notice of Defaults.
------------------
Within ten days after the earlier of receipt from the Company of
notice of the occurrence of any Default or Event of Default hereunder or the
date when such Default or Event of Default becomes known to the Trustee, the
Trustee shall transmit, in the manner and to the extent provided in TIA Section
313(c), notice of such Default or Event of Default hereunder known to the
Trustee, unless such Default or Event of Default shall have been cured or
waived; provided, however, that, except in the case of a Default or Event of
Default in the payment of the principal of (or premium, if any, on) or interest
on any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interest of the Holders.
<PAGE>
69
SECTION 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of TIA Sections 315(a) through 315(d)
(determined as if the TIA were applicable to this Indenture at all times):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, request and rely upon an Officers' Certificate;
(4) before the Trustee acts or refrains from acting, the Trustee may
consult with counsel of its selection and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) 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 of Notes pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not
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70
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture;
(9) the Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder;
(10) the permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty; and
(11) except for a default under Sections 501(1) or (2) hereof, or any
other event of which the Trustee has "actual knowledge" and which event,
with the giving of notice or the passage of time or both, would constitute
an Event of Default under this Indenture, the Trustee shall not be deemed
to have notice of any default or Event of Default unless specifically
notified in writing of such event by the Company or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding; as
used herein, the term "actual knowledge" means the actual fact or statement
of knowing, without any duty to make any investigation with regard thereto.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 604. Trustee Not Responsible for Recitals or Issuance of
---------------------------------------------------
Notes.
- - -----
The recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Notes, except that
the Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Notes and perform its obligations hereunder and that
the statements made by it in its Statement of Eligibility on Form T-1 supplied
to the Company are true and accurate, subject to the qualifications set forth
therein. Neither the Trustee nor any Authenticating Agent shall be accountable
for the use or application by the Company of Notes or the proceeds thereof.
<PAGE>
71
SECTION 605. May Hold Notes.
--------------
The Trustee, any Authenticating Agent, any Paying Agent, any Note
Registrar or any other agent of the Company or of the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and, subject to
TIA Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Note Registrar or such other agent.
SECTION 606. Money Held in Trust.
-------------------
All money received by the Trustee shall, until used or applied as
herein provided, be held in trust hereunder for the purposes for which they were
received. Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as shall
be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel and costs and expenses of
collection), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee and
its agents for, and to hold it harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
<PAGE>
72
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (and premium, if any, on) or
interest on particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(8) or Section 501(9), the
expenses (including the reasonable charges and expenses of its counsel) of and
the compensation of the Trustee for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and which shall have an
office in The City of New York, and shall have or be wholly owned by an entity
having a combined capital and surplus of at least $50,000,000. If the Trustee
does not have an office in The City of New York, the Trustee may appoint an
agent in The City of New York reasonably acceptable to the Company to conduct
any activities which the Trustee may be required under this Indenture to conduct
in The City of New York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 609. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 610.
(b) The Trustee may resign at any time with respect to the Notes by
giving written notice thereof to the Company. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee by written
instrument executed by authority of the Board of Directors, a copy of which
shall be delivered to the resigning Trustee and a copy to the successor
<PAGE>
73
trustee. If the instrument of acceptance by a successor Trustee required by
Section 610 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Notes.
(c) The Trustee may be removed at any time with respect to the Notes
by Act of the Holders of not less than a majority in principal amount of the
Outstanding Notes, delivered to the Trustee and to the Company. If the
instrument of acceptance by a successor Trustee required by Section 610 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Notes.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months,
or
(2) the Trustee shall cease to be eligible under Section 608 and shall
fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months,
or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a Custodian of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Notes, or (ii) subject to TIA Section 315(e), any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to all Notes
and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Notes, the Company, by a Board Resolution, shall promptly appoint
a successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Notes shall be appointed by Act of the Holders of a majority in
aggregate principal amount of the Outstanding Notes delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee with respect to
the Notes and to that extent supersede the successor Trustee appointed by the
<PAGE>
74
Company. If no successor Trustee with respect to the Notes shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Note for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Notes.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Notes and each appointment of a successor
Trustee with respect to the Notes to the Holders of Notes in the manner provided
for in Section 106. Each notice shall include the name of the successor Trustee
with respect to the Notes and the address of its Corporate Trust Office.
SECTION 610. Acceptance of Appointment by Successor.
--------------------------------------
(a) Each successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance, such successor Trustee shall be qualified and eligible
under this Article.
SECTION 611. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
- - --------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver
<PAGE>
75
the Notes so authenticated with the same effect as if such successor Trustee had
itself authenticated such Notes. In case at that time any of the Notes shall not
have been authenticated, any successor Trustee may authenticate such Notes
either in the name of any predecessor hereunder or in the name of the successor
Trustee. In all such cases such certificates shall have the full force and
effect which this Indenture provides for, the certificate of authentication of
the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Notes in the name of any predecessor Trustee shall apply only to its successor
or successors by merger, conversion or consolidation.
SECTION 612. Appointment of Authenticating Agent.
-----------------------------------
At any time when any of the Notes remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents with respect to the Notes which shall
be authorized to act on behalf of the Trustee to authenticate Notes and the
Trustee shall give written notice of such appointment to all Holders of Notes
with respect to which such Authenticating Agent will serve, in the manner
provided for in Section 106. Notes so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, and a copy of such instrument shall be promptly furnished to the
Company. Wherever reference is made in this Indenture to the authentication and
delivery of Notes by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
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76
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice of
such appointment to all Holders of Notes, in the manner provided for in Section
106. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time such compensation for its services under this Section as shall be agreed in
writing between the Company and such Authenticating Agent.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Notes designated therein referred to in the within-
mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
OF MISSOURI, N.A.,
as Trustee
By: __________________________
as Authenticating Agent
By: __________________________
Authorized Officer
<PAGE>
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses.
----------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request, a
list of similar form and content to that in Subsection (a) hereof as of a
date not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished.
SECTION 702. Disclosure of Names and Addresses of Holders.
--------------------------------------------
Every Holder of Notes, by receiving and holding the same, agrees with
the Company and the Trustee that none of the Company or the Trustee or any agent
of either of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
TIA Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under TIA Section 312(b).
SECTION 703. Reports by Trustee.
------------------
Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Notes pursuant to this Indenture, the Trustee
shall transmit to the Holders of Notes (with a copy to the Company at the Place
of Payment), in the manner and to the extent provided in TIA Section 313(c), a
brief report dated as of such May 15 if required by TIA Section 313(a).
<PAGE>
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ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company will not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person or permit any
Person to merge with or into the Company unless: (i) the Company shall be the
continuing Person, or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or that acquired or leased
such property and assets of the Company shall be a corporation organized and
validly existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, all of the obligations of the Company on
all of the Notes and under the Indenture; (ii) immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction on a pro
forma basis the Company, or any Person becoming the successor obligor of the
Notes, as the case may be, could Incur at least $1.00 of Indebtedness under
clause (i) of the first paragraph of subsection (a) of Section 1008; and (iv)
the Company delivers to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clause (iii)) and Opinion
of Counsel, in each case stating that such consolidation, merger or transfer and
such supplemental indenture complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with; provided, however, that clause (iii) above does not apply if, in the good
faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company and any
such transaction shall not have as one of its purposes the evasion of the
foregoing limitations.
SECTION 802. Successor Substituted.
---------------------
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Company in accordance with Sections 801, the successor Person
formed by such consolidation or into which the Company is merged or the
successor Person to which such sale, assignment, conveyance, transfer, lease or
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture, with the same effect
as if such successor had been named as the Company herein. When a successor
assumes all the obligations of its predecessor hereunder or the Notes, the
predecessor shall be released from all obligations; provided that in the case of
a transfer by lease, the predecessor shall not be released from the payment of
principal and interest or other obligations on the Notes.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company or any
other obligor on the Notes, and the assumption by any such successor of the
covenants of the Company or such obligor contained herein and in the Notes
in accordance with Article Eight;
(2) to add to the covenants of the Company or any other obligor upon
the Notes for the benefit of the Holders or to surrender any right or power
conferred upon the Company or any other obligor on the Notes, as
applicable, herein, in the Notes;
(3) to cure any ambiguity, or to correct or supplement any provision
herein or in the Notes which may be defective or inconsistent with any
other provision herein or in the Notes or to make any other provisions with
respect to matters or questions arising under this Indenture or the Notes;
provided that, in each case, such provisions shall not adversely affect the
interests of the Holders;
(4) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act;
(5) to evidence and provide for the acceptance of the appointment of a
successor Trustee under this Indenture; or
(6) to mortgage, pledge, hypothecate or grant a security interest in
favor of the Trustee for the benefit of the Holders as additional security
for the payment and performance of the Company's obligations under this
Indenture, in any property, or assets, including any of which are required
to be mortgaged, pledged or hypothecated, or in which a security interest
is required to be granted to the Trustee pursuant to this Indenture or
otherwise.
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SECTION 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
Modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of each
Holder affected thereby, (i) change the Stated Maturity of the principal of, or
any installment of interest on, any Note or alter the optional redemption or
repurchase provisions of any such Note or the Indenture in a manner adverse to
the Holders, (ii) reduce the principal amount of, or premium, if any, or
interest on, any Note, (iii) change the place or currency of payment of
principal of, or premium, if any, or interest on, any Note, (iv) impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity (or, in the case of a redemption, on or after the Redemption
Date) of any Note, (v) reduce the above-stated percentage of outstanding Notes
the consent of whose Holders is necessary to modify or amend the Indenture, (vi)
waive a default in the payment of principal of, premium, if any, or interest on
the Notes, (vii) modify the subordination provisions in a manner adverse to the
Holders, (viii) amend, change or modify the obligation of the Company to make
and consummate an Offer to Purchase with respect to any Asset Sale in accordance
with Section 1014 or the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control in accordance with
Section 1013, including, in each case, amending, changing or modifying any
definition relating thereto in any manner materially adverse to the holders of
the Notes affected thereby, or (ix) reduce the percentage or aggregate principal
amount of outstanding Notes the consent of whose Holders is necessary for waiver
of compliance with certain provisions of the Indenture or for waiver of certain
defaults.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
<PAGE>
81
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Notes to Supplemental Indentures.
---------------------------------------------
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 907. Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Note affected, in
the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
SECTION 908. Effect on Senior Indebtedness.
-----------------------------
No supplemental indenture shall adversely affect the rights of the
holders of Senior Indebtedness under Article Twelve of this Indenture without
the consent of such holders affected thereby.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest.
---------------------------------------------------
The Company covenants and agrees for the benefit of the Holders of
Notes that it will duly and punctually pay the principal of (and premium, if
any, on) and interest on the Notes in accordance with the terms of the Notes and
this Indenture.
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82
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in The City of New York an office or agency
where Notes may be presented or surrendered for payment (the "Place of
Payment"), where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company hereby designates its
offices at 61 Broadway, 15/th/ Floor, Corporate Trust Window, New York, New York
10006 as the Place of Payment.
The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of the Place of Payment. 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, and the Company hereby appoints the Trustee as its agent
to receive such respective presentations, surrenders, notices and demands.
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 any such designation;
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
accordance with the requirements set forth above for Notes for such purposes.
The Company will 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.
SECTION 1003. Money for Notes Payments to Be Held in Trust.
--------------------------------------------
If the Company shall at any time act as its own Paying Agent with
respect to the Notes, it will, on or before each due date of the principal of
(and premium, if any) or interest on any of the Notes, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, prior to or on each due date of the principal of (and premium,
if any, on) or interest on any Notes, deposit with a Paying Agent a sum in same
day funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
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83
The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) and interest on the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal of
(and premium, if any) or interest on the Notes; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
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 (and 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 Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general 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 to the Company, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
<PAGE>
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SECTION 1004. Corporate Existence.
-------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each Restricted Subsidiary and the corporate rights
(charter and statutory), licenses and franchises of the Company and each
Restricted Subsidiary; provided, however, that, subject to the other provisions
of this Indenture, the Company shall not be required to preserve any such
existence (except the Company), right, license or franchise 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 as a whole
and that the loss thereof is not, and will not be, disadvantageous in any
material respect to the Holders.
SECTION 1005. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (b)
all lawful claims for labor, materials and supplies, which, if unpaid, would by
law become a material liability or lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Company) are being maintained in
accordance with GAAP.
SECTION 1006. Maintenance of Properties.
-------------------------
The Company will cause all material properties owned by the Company or
any Restricted Subsidiary or used or held for use in the conduct of its business
or the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any Restricted Subsidiary and not adverse in
any material respect to the Holders.
<PAGE>
85
SECTION 1007. Statement by Officers as to Default.
-----------------------------------
(a) The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year, an Officers' Certificate stating that a review has been
conducted of the activities of the Company and its Restricted Subsidiaries and
the Company's and its Restricted Subsidiaries' performance under the Indenture
during the preceding fiscal year under the supervision of the signing officers
with a view to determining whether the Company has kept, observed, performed and
fulfilled, and has caused each of its Restricted Subsidiaries to keep, observe,
perform and fulfill its obligations under this Indenture and further stating, as
to each such officer signing such certificate, that the Company during the
preceding fiscal year has kept, observed, performed and fulfilled, and has
caused each of its Restricted Subsidiaries to keep, observe, perform and fulfill
each and every such covenant contained in this Indenture and no Default or Event
of Default occurred during the year and at the date of such certificate there is
no Default or Event of Default which has occurred and is continuing or, if such
signers do know of such Default or Event of Default, the certificate shall
describe its status, with particularity and that, to the best of his or her
knowledge, no event has occurred and remains by reason of which payments on the
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 each is
taking or proposes to take with respect thereto. For purposes of this Section
1007(a), such compliance shall be determined without regard to any period of
grace or requirement of notice under this Indenture.
(b) When any Default or Event of Default has occurred and is
continuing under this Indenture, or if the trustee for or the holder of any
other evidence of Indebtedness of the Company or any Subsidiary gives any notice
or takes any other action with respect to a claimed default (other than with
respect to Indebtedness in the principal amount of less than $10,000,000), the
Company shall deliver to the Trustee by registered or certified mail or by
telegram, telex or facsimile transmission an Officers' Certificate specifying
such event, notice or other action within five Business Days of its occurrence.
SECTION 1008. Limitation on Indebtedness.
--------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes and Indebtedness
existing on the Closing Date, including Acquired Indebtedness at United Artists
Realty Company and United Artists Properties I Corp.); provided that the Company
may Incur Indebtedness, and any Restricted Subsidiary may Incur Acquired
Indebtedness, if, after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds therefrom, (i) the Consolidated
Leverage Ratio would be less than 6:1 and (ii) the Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately preceding the
incurrence of such Indebtedness for which internal financial statements are
available, taken as one period (and after giving pro forma effect to (A) the
incurrence of such Indebtedness and (if applicable) the application of the net
proceeds therefrom, including to refinance
<PAGE>
86
other Indebtedness, as if such Indebtedness was incurred, and the application of
such proceeds occurred, on the first day of such four-quarter period, (B) the
incurrence, repayment or retirement of any other Indebtedness by the Company and
its Restricted Subsidiaries since the first day of such four-quarter period as
if such Indebtedness was incurred, repaid or retired on the first day of such
four-quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such four-quarter period)
and (C) the acquisition (whether by purchase, merger or otherwise) or
disposition (whether by sale, merger or otherwise) of any company, entity or
business acquired or disposed of by the Company or its Restricted Subsidiaries,
as the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition occurred on the first day of such four-quarter
period), would have been at least equal to 1.75 to 1.0.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness under the Credit Agreement in an aggregate principal amount
outstanding at any time not to exceed $450 million, less any amount of such
Indebtedness permanently repaid as provided under Section 1014 and less any
Indebtedness Incurred in reliance on clause (ix) below; (ii) Indebtedness owed
(A) to the Company or (B) to any Restricted Subsidiary; provided that any event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to the
Company or another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of which are used
to refinance or refund, then outstanding Indebtedness (other than the Prop I
Mortgage Notes and Indebtedness Incurred under clause (i), (ii), (iv), (vi) or
(viii) of this paragraph) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, prepayment
penalties, accrued interest, fees and expenses); provided that Indebtedness the
proceeds of which are used to refinance or refund the Notes or Indebtedness that
is pari passu with, or subordinated in right of payment to, the Notes shall only
be permitted under this clause (iii) if (A) in case the Notes are refinanced in
part or the Indebtedness to be refinanced is pari passu with the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Notes, (B) in
case the Indebtedness to be refinanced is subordinated in right of payment to
the Notes, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced is subordinated to
the Notes and (C) such new Indebtedness, determined as of the date of Incurrence
of such new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; and provided further that in no event may
Indebtedness of the Company (other than Indebtedness in the form of a Guarantee
of Indebtedness of a Restricted Subsidiary permitted to be incurred by such
Subsidiary, which
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Guarantee is released upon a subsequent refinancing of such Subsidiary's
Indebtedness) be refinanced by means of any Indebtedness of any Restricted
Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in respect of
performance, bid, surety or appeal bonds provided in the ordinary course of
business, (B) under Currency Agreements and Interest Rate Agreements; provided
that such agreements (a) are designed solely to protect the Company or its
Restricted Subsidiaries against fluctuations in foreign currency exchange rates
or interest rates and (b) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder, and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or bid or performance bonds
securing any obligations of the Company or any of its Restricted Subsidiaries
pursuant to such agreements, in any case Incurred in connection with the
disposition of any business, assets or Restricted Subsidiary (other than
Guarantees of Indebtedness Incurred by any Person acquiring all or any portion
of such business, assets or Restricted Subsidiary for the purpose of financing
such acquisition), in a principal amount not to exceed the gross proceeds
actually received by the Company or any Restricted Subsidiary in connection with
such disposition; (v) Indebtedness of the Company, to the extent the net
proceeds thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to defease the
Notes as described below under Section 1402; (vi) Guarantees of the Notes and
Guarantees of Indebtedness of the Company by any Restricted Subsidiary provided
the Guarantee of such Indebtedness is permitted by and made in accordance with
Section 1015; (vii) Indebtedness represented by Capitalized Leases, mortgage
financings or purchase money obligations Incurred to finance all or any part of
the purchase price or cost of construction or improvement of property in an
aggregate principal amount outstanding at any time (together with any
refinancings thereof) not to exceed $25 million; (viii) Indebtedness (in
addition to Indebtedness permitted under clauses (i) through (vii) above and
clause (ix) below) (A) of the Company in an aggregate principal amount
outstanding at any time not to exceed $50 million and (B) of the Company or any
Restricted Subsidiaries in an aggregate principal amount outstanding at any time
not to exceed $15 million, and (ix) Indebtedness Incurred to extend, renew,
refinance or replace any Indebtedness in respect of the Prop I Mortgage Notes
outstanding on the Closing Date or any Indebtedness Incurred to extend, renew,
refinance or replace any such Indebtedness so Incurred (including successive
extensions, renewals, refinancings and replacements thereof).
(b) Notwithstanding any other provision of this Section 1008, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 1008 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness
under this Section 1008, (1) Indebtedness Incurred under the Credit Agreement on
or prior to the Closing Date shall be treated as Incurred pursuant to clause (i)
of the second paragraph of subsection (a) of this
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88
Section 1008, (2) Guarantees, Liens or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included and (3) any Liens granted pursuant to
the equal and ratable provisions referred to in Section 1012 shall not be
treated as Indebtedness. For purposes of determining compliance with this
Section 1008, in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described in the above clauses (other
than Indebtedness referred to in clause (1) of the preceding sentence), the
Company, in its sole discretion, shall classify (and from time to time may
reclassify) such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses.
SECTION 1009. Limitation on Restricted Payments.
---------------------------------
(a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on or with respect to its Capital Stock (other than (x)
dividends or distributions payable solely in shares of its Capital Stock (other
than Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions on
Capital Stock of Restricted Subsidiaries held by minority stockholders) held by
Persons other than the Company or any of its Restricted Subsidiaries, (ii)
purchase, redeem, retire or otherwise acquire for value any shares of Capital
Stock of (A) the Company or an Unrestricted Subsidiary (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Person (other than with respect to the Capital Stock of an Unrestricted
Subsidiary, Permitted Investments) or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by any Affiliate of the Company (other than a Wholly Owned Restricted Subsidiary
or a Restricted Subsidiary in which no Affiliate of the Company (other than the
Company or any Restricted Subsidiary) or holder of 5% or more of the aggregate
value of the Capital Stock of the Company has an interest) or any holder (or any
Affiliate (other than a Wholly Owned Restricted Subsidiary or a Restricted
Subsidiary in which no Affiliate of the Company (other than the Company or any
Restricted Subsidiary) or holder of 5% or more of the aggregate value of the
Capital Stock of the Company has an interest) of such holder) of 5% or more of
the aggregate value of the Capital Stock of the Company, (iii) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of the Company that is subordinated in right of payment to the
Notes or (iv) make any Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (i) through (iv)
above being collectively "Restricted Payments") if, at the time of, and after
giving effect to, the proposed Restricted Payment: (A) a Default or Event of
Default shall have occurred and be continuing, (B) the Company could not Incur
at least $1.00 of Indebtedness under the first paragraph of subsection (a) of
this Section 1008 or (C) the aggregate amount of all Restricted Payments (the
amount, if other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) made after the Closing Date shall exceed the sum of (1) Consolidated
EBITDA accrued on a cumulative
<PAGE>
89
basis during the period (taken as one accounting period) beginning on the first
day of the fiscal quarter immediately following the Closing Date and ending on
the last day of the last fiscal quarter preceding the Determination Date for
which reports have been filed with the Commission or provided to the Trustee
pursuant to Section 1020 less two times Consolidated Interest Expense for such
period, plus (2) the aggregate Net Cash Proceeds received by the Company after
the Closing Date as a capital contribution or from the issuance and sale of its
Capital Stock (other than Disqualified Stock) to a Person who is not a
Subsidiary of the Company, including an issuance or sale permitted by the
Indenture of Indebtedness of the Company for cash subsequent to the Closing Date
upon the conversion or exchange of such Indebtedness into Capital Stock (other
than Disqualified Stock) of the Company, or from the issuance to a Person who is
not a Subsidiary of the Company of any options, warrants or other rights to
acquire Capital Stock of the Company (in each case, exclusive of any
Disqualified Stock or any options, warrants or other rights that are redeemable
at the option of the holder, or are required to be redeemed, prior to the Stated
Maturity of the Notes) plus (3) an amount equal to the net reduction in
Investments (other than reductions in Permitted Investments) in any Person
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Company or
any Restricted Subsidiary or from the Net Cash Proceeds from the sale of any
such Investment (except, in each case, to the extent any such payment or
proceeds are included in the calculation of Consolidated EBITDA), or from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries (valued
in each case as provided in the definition of "Investments"), not to exceed, in
each case, the amount of Investments previously made by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
(b) The foregoing provision shall not be violated by reason of: (i)
the payment of any dividend or other distribution within 60 days after the date
of declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph; (ii) the redemption, repurchase, defeasance
or other acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Notes including premium, if any, and
accrued and unpaid interest, with the proceeds of, or in exchange for,
Indebtedness Incurred under clause (iii) of the second paragraph of part (a) of
Section 1008; (iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company or an Unrestricted Subsidiary (or options, warrants or
other rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital Stock
(other than Disqualified Stock) of the Company (or options, warrants or other
rights to acquire such Capital Stock); (iv) the making of any principal payment
or the repurchase, redemption, retirement, defeasance or other acquisition for
value of Indebtedness of the Company which is subordinated in right of payment
to the Notes in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock (other than Disqualified
Stock) of the Company (or options, warrants or other rights to acquire such
Capital Stock); (v) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a consolidation,
merger or transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially
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90
all of the property and assets of the Company; (vi) Investments acquired as a
capital contribution to or in exchange for Capital Stock (other than
Disqualified Stock) of the Company; (vii) the declaration or payment of
dividends on the Common Stock of the Company following a Public Equity Offering,
of up to 6% per annum of the Net Cash Proceeds received by the Company in such
Public Equity Offering; (viii) the purchase, redemption, retirement or other
acquisition for value of shares of Capital Stock of the Company, options to
purchase such shares or Indebtedness of the Company that is subordinated in
right of payment to the Notes issued in exchange for any of the foregoing or
issued in lieu of cash interest thereon (the "Junior Notes"), held by directors,
employees, or former directors or employees of the Company or any Restricted
Subsidiary (or their estates or beneficiaries under their estates), upon their
death, disability, retirement, termination of employment or pursuant to the
terms of any agreement under which such shares of Capital Stock, options or
Junior Notes were issued; provided that the aggregate consideration paid (other
than in the form of Junior Notes) for such purchase, redemption, retirement or
other acquisition for value of such shares of Capital Stock, options or Junior
Notes after the Closing Date does not exceed $2 million in any fiscal year, plus
the aggregate Net Cash Proceeds received by the Company from the reissuance of
such shares during such fiscal year or $10 million in the aggregate, plus the
aggregate Net Cash Proceeds received by the Company from the reissuance of such
shares (unless such repurchases are made with the proceeds of insurance policies
and the shares of Capital Stock are repurchased from the executors,
administrators, testamentary trustees, heirs, legatees or beneficiaries); or
(ix) the redemption or other acquisition of the Company's Preferred Stock;
provided that, except in the case of clauses (i), (iii) and (ix), no Default or
Event of Default shall have occurred and be continuing or occur as a consequence
of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) and (ix) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred
to in clauses (iii), (iv) or (viii) shall be included in calculating whether the
conditions of clause (C) of subsection (a) of this Section 1009 have been met
with respect to any subsequent Restricted Payments; provided that the payment of
any dividend or other distribution shall not be included in calculating whether
the conditions of clause (C) of subsection (a) of this Section 1009 have been
met if the declarations of such dividend or other distribution has been included
in such calculation. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of subsection (a) this
Section 1009 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
<PAGE>
91
SECTION 1010. Limitation on Issuance and Sale of Capital Stock of
---------------------------------------------------
Restricted Subsidiaries.
- - -----------------------
The Company will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell, any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) except (i) to the Company or a Wholly
Owned Restricted Subsidiary; (ii) issuances of director's qualifying shares or
sales to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law; (iii) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such issuance or sale would have been permitted
to be made under Section 1009 if made on the date of such issuance or sale; or
(iv) sales of Common Stock of a Restricted Subsidiary, provided that the Company
or such Restricted Subsidiary applies the Net Cash Proceeds, if any, from any
such sale under this clause (iv) in accordance with clause (A) or (B) of Section
1014.
SECTION 1011. Limitation on Transactions with Shareholders and
------------------------------------------------
Affiliates.
- - ----------
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of the aggregate value of the Capital
Stock of the Company or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or, if such transaction is pursuant to a written agreement, at
the time of the execution of the agreement providing therefor, in a comparable
arm's-length transaction with a Person that is not such a holder or an
Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Company or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company; (iv) any payments or other transactions pursuant to
any tax-sharing agreement between the Company and any other Person with which
the Company files a consolidated tax return or with which the Company is part of
a consolidated group for tax purposes; (v) the payment of fees to Merrill Lynch
or any of its Affiliates for consulting, investment banking or financial
advisory services rendered by such Person to the Company or any of its
Subsidiaries; (vi) loans or advances to officers and employees of the Company
and its
<PAGE>
92
Restricted Subsidiaries made in the ordinary course of business; provided that
the aggregate amount of such loans or advances outstanding at any time shall not
exceed $1 million; (vii) any Restricted Payments not prohibited by Section 1009
or (viii) transactions pursuant to agreements in effect on the Closing Date that
are referred to in the Company's filings with the Commission. Notwithstanding
the foregoing, any transaction or series of related transactions covered by the
first paragraph of Section 1011 and not covered by clauses (ii) through (viii)
of this paragraph, the aggregate amount of which exceeds $5 million in value,
must be approved or determined to be fair in the manner provided for in clause
(i)(A) or (B) above.
SECTION 1012. Limitation on Liens.
-------------------
The Company shall not Incur any Indebtedness secured by a Lien
("Secured Indebtedness") which is not Senior Indebtedness (or Indebtedness that
would constitute Senior Indebtedness except that it is without recourse to the
Company) unless contemporaneously therewith effective provision is made to
secure the Notes equally and ratably with (or, if the Secured Indebtedness is
subordinated in right of payment to the Notes, prior to) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.
SECTION 1013. Purchase of Notes upon Change in Control.
----------------------------------------
(a) If a Change in Control shall occur at any time, the Company must
commence and consummate an Offer to Purchase for all Notes then Outstanding, at
a purchase price (the "Change in Control Purchase Price") in cash in an amount
equal to 101% of the principal amount thereof, plus accrued interest, if any, to
the date of purchase (the "Change in Control Purchase Date"), pursuant to the
procedures described below and otherwise set forth in this Indenture.
(b) Within 30 days following any Change in Control, the Company shall
notify the Trustee thereof and give written notice of such Offer to Purchase to
each Holder by first-class mail, postage prepaid, at the address of such Holder
appearing in the Note Register, stating, among other things, (i) the Change in
Control Purchase Price and the Change in Control Purchase Date, which shall be a
Business Day no earlier than 30 days nor later than 75 days from the date such
notice is mailed, or such later date as is necessary to comply with requirements
under the Exchange Act or any applicable securities laws or regulations; (ii)
that any Note not tendered will continue to accrue interest; (iii) that, unless
the Company defaults in the payment of the Change in Control Purchase Price, any
Notes accepted for payment pursuant to the Offer to Purchase shall cease to
accrue interest after the Change in Control Purchase Date; (iv) that Holders
electing to have any Notes purchased pursuant to an Offer to Purchase shall 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 in Control Purchase Date; (v) that Holders
shall be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the
<PAGE>
93
second Business Day preceding the Change in Control Purchase 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 its election to have such Notes purchased; (vi) that
Holders whose Notes are being purchased only in part shall 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; (vii) the instructions that the Holders of Notes must
follow in order to tender their Notes; and (viii) the circumstances and relevant
facts regarding such Change in Control.
(c) The Company will comply with any tender offer rules under the
Exchange Act, including Rule 14e-1, in connection with any Offer to Purchase.
To the extent that the provisions of any applicable securities laws or
regulations conflict with the provisions of the Indenture, the Company will
comply with such securities laws and regulations and shall not be deemed to have
breached its obligations under the Indenture by virtue thereof.
(d) The Company will not be required to make an Offer to Purchase
pursuant to this Section 1013 if a third party makes an Offer to Purchase in
compliance with this Section 1013 and repurchases all Notes validly tendered and
not withdrawn under such Offer to Purchase.
SECTION 1014. Limitation on Sale of Assets.
----------------------------
The Company will not, and will not permit any Restricted Subsidiary
to, consummate any Asset Sale, unless (i) the consideration received by the
Company or such Restricted Subsidiary is at least equal to the fair market value
of the assets sold or disposed of and (ii) at least 75% of the consideration
received consists of cash or Temporary Cash Investments or the assumption of
Indebtedness of the Company or any Restricted Subsidiary, provided that the
Company or such Subsidiary is irrevocably released from all liability under such
Indebtedness. If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may use the Net Cash Proceeds thereof, to (i) within twelve
months after the date of such Asset Sale, (A) apply an amount equal to such
excess Net Cash Proceeds to permanently repay Senior Indebtedness of the Company
or any Restricted Subsidiary in each case owing to a Person other than the
Company or any of its Restricted Subsidiaries or (B) invest an equal amount, or
the amount not so applied pursuant to clause (A) (or enter into a definitive
agreement committing to so invest within 12 months after the date of such
agreement), in property or assets (other than current assets) of a nature or
type or that are used in a business (or in a company having property and assets
of a nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of, the Company and its
Restricted Subsidiaries existing on the date of such investment and (ii) apply
(no later than the end of the 12-month period referred to in clause (i)) such
excess Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as
provided in the following paragraph of this Section 1014. The amount of such
Net Cash Proceeds required to be applied (or to be committed to be applied)
during
<PAGE>
94
such 12-month period as set forth in clause (i) of the preceding sentence
and not applied as so required by the end of such period shall constitute
"Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 1014 totals at least $10 million, the Company must commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders of the Notes and the Floating Rate Notes (and if
required by the terms of any other Pari Passu Indebtedness from the holders of
such Pari Passu Indebtedness) on a pro rata basis an aggregate principal amount
of Notes, Floating Rate Notes and other Pari Passu Indebtedness equal to the
Excess Proceeds on such date, at a purchase price equal to 100% of the principal
amount thereof, plus, in each case, accrued interest (if any) to the Payment
Date. Upon consummation of an Offer to Purchase, any Excess Proceeds subject to
such Offer to Purchase remaining after all Notes, Floating Rate Notes and other
Pari Passu Indebtedness validly tendered and not withdrawn are purchased by the
Company shall no longer constitute "Excess Proceeds" and may be used for general
corporate purposes.
The Company will comply with any tender offer rules under the Exchange
Act, including Rule 14e-1, in connection with any Offer to Purchase subject to
the provisions of this Section 1014. To the extent that the provisions of any
applicable securities laws or regulations conflict with the provisions of the
Indenture, the Company will comply with such securities laws and regulations and
shall not be deemed to have breached its obligations under the Indenture by
virtue thereof.
SECTION 1015. Limitations on Issuances of Guarantees by Restricted
----------------------------------------------------
Subsidiaries.
- - ------------
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a Guarantee
(a "Subsidiary Guarantee") of payment of the Notes by such Restricted Subsidiary
and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Subsidiary Guarantee until such time as the Notes have been paid in
full; provided that this paragraph shall not be applicable to any Guarantee of
any Restricted Subsidiary that existed at the time such Person became a
Restricted Subsidiary and was not Incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary. If the
Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be pari passu with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated
<PAGE>
95
to the Subsidiary Guarantee at least to the extent that the Guaranteed
Indebtedness is subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the Company's
and each Restricted Subsidiary's Capital Stock in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by the Indenture) or (ii) the release or discharge of the
Guarantee which resulted in the creation of such Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 1016. Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Restricted Subsidiaries.
- - ---------------------------------
The Company will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary, (ii) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (iii) make
loans or advances to the Company or (iv) transfer any of its property or assets
to the Company.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Agreement, the
Indenture or any other agreements in effect on the Closing Date, and any
extensions, refinancings, renewals or replacements of such agreements; provided
that the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to the
Holders than those encumbrances or restrictions that are then in effect and that
are being extended, refinanced, renewed or replaced; (ii) existing under or by
reason of applicable law; (iii) existing with respect to any Person or the
property or assets of such Person acquired by the Company or any Restricted
Subsidiary, existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not applicable to
any Person or the property or assets of any Person other than such Person or the
property or assets of such Person so acquired and any extensions, refinancings,
renewals or replacements thereof; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no less favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced; (iv) in the case of clause (iv) of the first paragraph of
this Section 1016, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by virtue of
any transfer of, agreement to transfer, option or right with respect to, or Lien
on, any property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by
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96
the Indenture or (C) arising or agreed to in the ordinary course of business,
not relating to any Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company and the Restricted
Subsidiaries, taken as a whole; (v) with respect to a Restricted Subsidiary and
imposed pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary; or (vi) contained in the terms of any
Indebtedness or any agreement pursuant to which such Indebtedness was issued if
(A) the encumbrance or restriction applies only in the event of a payment
default or a default with respect to a financial covenant contained in such
Indebtedness or agreement, (B) the encumbrance or restriction is not materially
more disadvantageous to the Holders of the Notes than is customary in comparable
financings (as determined by the Company) and (C) the Company determines that
any such encumbrance or restriction will not materially affect the Company's
ability to make principal or interest payments on the Notes. Nothing contained
in this Section 1016 shall prevent the Company or any Restricted Subsidiary from
(1) creating, incurring, assuming or suffering to exist any Liens otherwise
permitted in Section 1012 or (2) restricting the sale or other disposition of
property or assets of the Company or any of its Restricted Subsidiaries that
secure Indebtedness of the Company or any of its Restricted Subsidiaries.
SECTION 1017. [Intentionally Omitted]
SECTION 1018. Limitation on Senior Subordinated Indebtedness.
----------------------------------------------
The Company shall not Incur any Indebtedness that is subordinate in
right of payment to any Senior Indebtedness unless such Indebtedness is pari
passu with, or subordinated in right of payment to, the Notes; provided that the
foregoing limitation shall not apply to distinctions between categories of
Senior Indebtedness of the Company that exist by reason of any Liens or
Guarantees arising or created in respect of some but not all such Senior
Indebtedness.
SECTION 1019. [Intentionally Omitted]
SECTION 1020. Reports.
-------
At all times from and after the earlier of (i) the date of the
commencement of an Exchange Offer or the effectiveness of the Shelf Registration
Statement (the "Registration") and (ii) the date that is six months after the
Closing Date, in either case, whether or not the Company is then required to
file reports with the Commission, the Company shall file with the Commission all
such reports and other information as it would be required to file with the
Commission by Section 13(a) or 15(d) under the Exchange Act if it were subject
thereto (unless the Commission will not accept such a filing, in which case the
Company shall provide such documents to the Trustee). The Company shall supply
the Trustee and each Holder or shall supply to the Trustee for forwarding to
each such Holder, without cost to such Holder, copies of such reports and other
information;
<PAGE>
97
provided, however, that copies of such reports may omit exhibits, which the
Company shall deliver at its cost to any Holder upon request. In addition, at
all times prior to the earlier of the date of the Registration and six months
after the Closing Date, the Company shall, at its cost, deliver to each Holder
of the Notes quarterly and annual reports substantially equivalent to those
which would be required by the Exchange Act; provided, however, that copies of
such reports may omit exhibits, which the Company shall supply at its cost to
any Holder upon request. In addition, at all times prior to the Registration,
upon the request of any Holder or any prospective purchaser of the Notes
designated by a Holder, the Company shall supply to such Holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
SECTION 1021. Waiver of Certain Covenants.
---------------------------
The Company and the Restricted Subsidiaries may omit in any
particular instance to comply with any term, provision or condition set forth in
Sections 1007 to 1012, inclusive, and Sections 1015, 1016 to 1018, if before or
after the time for such compliance the Holders of at least a majority in
aggregate principal amount of all Outstanding Notes affected by such term,
provision or covenant, by Act of such Holders, waive such compliance in such
instance with such term, provision or condition, but no such waiver shall extend
to or affect such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Company, the Restricted Subsidiaries and the duties of the Trustee, as
applicable, in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Redemption.
----------
The Notes may or shall be, as the case may be, redeemed, as a whole
or from time to time in part, subject to the conditions and the Redemption
Prices specified in the form of Note, together with accrued and unpaid interest,
if any, to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date that is on or prior to the Redemption Date to
receive interest due on an Interest Payment Date), on the Redemption Date.
SECTION 1102. Applicability of Article.
------------------------
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with the terms of such Notes and in accordance with this Article
Eleven.
<PAGE>
98
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Notes pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. Selection by Trustee of Notes to Be Redeemed.
--------------------------------------------
If less than all the Notes are to be redeemed, the particular Notes
to be redeemed shall be selected by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
such Notes are listed, or, if such Notes are not so listed by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate; provided, however, that no Note of $1000 in principal amount or
less shall be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption relating to such Note shall state the portion of the
principal amount thereof to be redeemed.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes to be redeemed. The Trustee shall give notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall deliver to the Trustee, at least 30 days prior
to the Redemption Date (or such shorter notice period as shall be satisfactory
to the Trustee), 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 following items.
<PAGE>
99
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Notes are to be redeemed, the
identification of the particular Notes to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of Notes to be outstanding after such partial redemption,
(4) in case any Note is to be redeemed in part only, the notice which
relates to such Note shall state that on and after the Redemption Date,
upon surrender of such Note, the holder will receive, without charge, a new
Note or Notes of authorized denominations for the principal amount thereof
remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Note, or the portion
thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on Notes called for redemption (or the
portion thereof) will cease to accrue on and after said date,
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price and accrued interest, if any,
(7) the name and address of the Paying Agent,
(8) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Notes, and
(10) the paragraph of the Notes pursuant to which the Notes are to be
redeemed.
SECTION 1106. Deposit of Redemption Price.
---------------------------
Prior to 10:00 A.M. on any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and
<PAGE>
100
hold in trust as provided in Section 1003) an amount of money sufficient to pay
the Redemption Price of, and accrued interest on, all the Notes which are to be
redeemed on that date.
SECTION 1107. Notes Payable on Redemption Date.
--------------------------------
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such at the close of
business on the relevant Regular Record Date or Special Record Date, as the case
may be, according to their terms and the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate of interest set forth in the
Note.
SECTION 1108. Notes Redeemed in Part.
----------------------
Any Note which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at a Place of Payment therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holders attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge, a
new Note or Notes, of any authorized denomination as requested by such Holder,
in an aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Note so surrendered, provided, that each such
new Note will be in a principal amount of $1,000 or integral multiple thereof.
<PAGE>
101
ARTICLE TWELVE
SUBORDINATION OF NOTES
SECTION 1201. Notes Subordinate to Senior Indebtedness.
----------------------------------------
The Company and the Trustee each covenants and agrees, and each
Holder, by its acceptance of a Note, likewise covenants and agrees that all
Notes shall be issued subject to the provisions of this Article Twelve; and each
Person holding any Note, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that Senior Subordinated
Obligations shall, to the extent and in the manner set forth in this Article
Twelve, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all existing and future Senior Indebtedness,
including, without limitation, the Company's obligations under the Credit
Agreement (including any interest accruing on or after, or which would accrue
but for an event specified in paragraphs (7) and (8) of Section 501 of this
Indenture, whether or not such interest is an allowed claim enforceable against
the debtor under the United States Bankruptcy Code).
SECTION 1202. Payment over of Proceeds upon Dissolution, etc.
----------------------------------------------
(a) Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities (other
than with the money, securities or proceeds held under any defeasance trust
established in accordance with this Indenture), upon any dissolution or winding
up or total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership or other
proceedings or other marshaling of assets for the benefit of creditors, all
amounts due or to become due upon all Senior Indebtedness (including any
interest accruing on or after, or which would accrue but for an event specified
in paragraphs (7) and (8) of Sections 501 of this Indenture, whether or not such
interest is an allowed claim enforceable against the debtor under the United
States Bankruptcy Code) shall first be paid in full, in cash or cash
equivalents, before the Holders or the Trustee on their behalf shall be entitled
to receive any payment by (or on behalf of) the Company on account of Senior
Subordinated Obligations, or any payment to acquire any of the Notes for cash,
property or securities (other than any payment in the form of Junior
Securities), or any distribution with respect to the Notes of any cash, property
or securities (other than any payment in the form of Junior Securities). Before
any payment may be made by, or on behalf of, the Company on any Senior
Subordinated Obligations (other than with the money, securities or proceeds held
under any defeasance trust established in accordance with this Indenture) upon
any such dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities (other than any payment in the form of
Junior Securities), to which the Holders or the Trustee on their behalf would be
entitled, but for the provisions of this
<PAGE>
102
Article Twelve, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution, or by the Holders or the Trustee if received by them or
it, directly to the holders of Senior Indebtedness (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness held by such holders)
or their representatives or to any trustee or trustees under any other indenture
pursuant to which any such Senior Indebtedness may have been issued, as their
respective interests appear, to the extent necessary to pay all such Senior
Indebtedness in full, in cash or cash equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred. To the extent the obligation to repay any Senior
Indebtedness is declared to be fraudulent, invalid, or otherwise set aside under
any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then the obligation so declared fraudulent, invalid or otherwise set aside (and
all other amounts that would come due with respect thereto had such obligation
not been so affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities (other than any payment in the form of Junior Securities), shall
be received by the Trustee or any Holder at a time when such payment or
distribution is prohibited by paragraph (a) of this Section 1202 and before all
obligations in respect of Senior Indebtedness are paid in full, in cash or cash
equivalents, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness (pro rata to such holders on the basis of such respective
amount of Senior Indebtedness held by such holders) or their representatives, or
to the trustee or trustees under any indenture pursuant to which any such Senior
Indebtedness may have been issued, as their respective interests appear, for
application to the payment of Senior Indebtedness remaining unpaid until all
such Senior Indebtedness has been paid in full, in cash or cash equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
<PAGE>
103
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the sale, conveyance, transfer, lease or other disposition
of all or substantially all of its property and assets to another corporation
upon the terms and conditions provided in Article Eight of this Indenture shall
not be deemed a dissolution, winding up, liquidation or reorganization for the
purposes of this Section 1202 if such other corporation shall, as a part of such
consolidation, merger, sale, conveyance, transfer, lease or other disposition,
comply (to the extent required) with the conditions stated in Article Eight of
this Indenture.
SECTION 1203. Suspension of Payment When Designated Senior
--------------------------------------------
Indebtedness in Default.
- - -----------------------
(a) No direct or indirect payment by (other than any payment in the
form of Junior Securities) or on behalf of the Company of Senior Subordinated
Obligations (other than with the money, securities or proceeds held under any
defeasance trust established in accordance with this Indenture), whether
pursuant to the terms of the Notes or upon acceleration or otherwise shall be
made if, at the time of such payment, there exists a default in the payment of
all or any portion of the obligations under or with respect to any Senior
Indebtedness of the Company and such default shall not have been cured or waived
or the benefits of this sentence waived by or on behalf of the holders of such
Senior Indebtedness.
(b) During the continuance of any other event of default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated, upon receipt by the Trustee of written notice from the trustee
or other representative for the holders of such Designated Senior Indebtedness
(or the holders of at least a majority in principal amount of such Designated
Senior Indebtedness then outstanding), no payment of Senior Subordinated
Obligations (other than with the money, securities or proceeds held under any
defeasance trust established in accordance with this Indenture) may be made by
or on behalf of the Company upon or in respect of the Notes for a period (a
"Payment Blockage Period") commencing on the date of receipt of such notice and
- - ------------------------
ending 179 days thereafter (unless, in each case, such Payment Blockage Period
shall be terminated by written notice to the Trustee from such trustee of, or
other representatives for, such holders or by payment in full in cash or cash
equivalents of such Designated Senior Indebtedness or such event of default has
been cured or waived). Not more than one Payment Blockage Period may be
commenced with respect to the Notes during any period of 360 consecutive days.
Notwithstanding anything in this Indenture to the contrary, there must be 180
consecutive days in any 360-day period in which no Payment Blockage Period is in
effect. No event of default that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to an event of
default pursuant to any provision under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose) on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be,
<PAGE>
104
or shall be made, the basis for the commencement of a second Payment Blockage
Period by the representative for, or the holders of, such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such event of default shall have been cured or waived for a period of not less
than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder at a time when such payment is
prohibited by Section 1203(a) or 1203(b) of this Indenture and before all
obligations in respect of Senior Indebtedness are paid in full in cash or cash
equivalents, such payment shall be received and held in trust for the benefit
of, and shall be paid over or delivered to, the holders of Senior Indebtedness
(pro rata to such holders on the basis of such respective amount of Senior
Indebtedness held by such holders) or their representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of Senior Indebtedness remaining unpaid until all
such Senior Indebtedness has been paid in full, in cash or cash equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
SECTION 1204. Payment Permitted If No Default.
-------------------------------
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Notes shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1202 or under the conditions
described in Section 1203, from making payments at any time of principal of, and
premium, if any, or interest on the Notes.
SECTION 1205. Subrogation to Rights of Holders of Senior
------------------------------------------
Indebtedness.
- - ------------
(a) Subject to the payment in full of all Senior Indebtedness, the
Holders of the Notes shall be subrogated (equally and ratably with the holders
of all Pari Passu Indebtedness of the Company) to the rights of the holders of
such Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the Holders of the Notes or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Notes or on their behalf or by the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness; it
being understood that the provisions of this Article are intended solely for the
<PAGE>
105
purpose of determining the relative rights of the Holders of Notes, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Twelve shall
have been applied, pursuant to the provisions of this Article Twelve, to the
payment of all amounts payable under Senior Indebtedness, then, and in such
case, the Holders (equally and ratably with the holders of all Pari Passu
Indebtedness of the Company) shall be entitled to receive from the holders of
such Senior Indebtedness any payments or distributions received by such holders
of Senior Indebtedness in excess of the amount required to make payment in full,
in cash or cash equivalents, of such Senior Indebtedness of such holders.
SECTION 1206. Provisions Solely to Define Relative Rights.
-------------------------------------------
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the
principal of, and premium, if any, and interest on the Notes as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders and creditors of the
Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness.
SECTION 1207. Trustee to Effectuate Subordination.
-----------------------------------
Each Holder of a Note by its acceptance thereof authorizes and directs
the Trustee on its behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his 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 504 hereof at least 30 days before the
expiration of the time to file such claim, the Agent Bank (if the Credit
Agreement is still outstanding) is hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
SECTION 1208. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this
<PAGE>
106
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with. The provisions of this Article Twelve are intended to be
for the benefit of, and shall be enforceable directly by, the Holders of Senior
Indebtedness.
(b) Without in any way limiting the generality of this Section 1208,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Twelve or the obligations hereunder of
the Holders to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against the
Company and any other Person.
SECTION 1209. Notice to Trustee.
-----------------
(a) The Company shall give prompt written notice to the Trustee of
any fact known to the Company that would prohibit the making of any payment to
or by the Trustee in respect of the Notes pursuant to the provisions of this
Article Twelve. The Trustee shall not be charged with the knowledge of the
existence of any default or event of default with respect to any Senior
Indebtedness or of any other facts that would prohibit the making of any payment
to or by the Trustee unless and until the Trustee shall have received notice in
writing at its Corporate Trust Office to that effect signed by an Officer of the
Company, or by a holder of Senior Indebtedness or trustee or agent thereof; and
prior to the receipt of any such written notice, the Trustee shall, subject to
Article Six, be entitled to assume that no such facts exist; provided that, if
the Trustee shall not have received the notice provided for in this Section 1209
at least two Business Days prior to the date upon which, by the terms of this
Indenture, any monies shall become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Note), then, notwithstanding anything herein to the contrary, the Trustee shall
have full power and authority to receive any monies from the Company and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary that may be received by it on or after
such prior date except for an acceleration of the Notes prior to such
application. Nothing contained in this Section 1209 shall limit the right of
the holders of Senior Indebtedness to recover payments as contemplated by this
Article Twelve. The foregoing shall not apply if the Paying Agent is the
Company. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of any
Senior Indebtedness (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder.
<PAGE>
107
(b) In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Twelve and, if such evidence is not
furnished to the Trustee, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 1210. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
- - -----------------
Upon any payment or distribution of assets or securities referred to
in this Article Twelve, the Trustee and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or
distribution, delivered to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness 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 Twelve.
SECTION 1211. Trustee's Relation to Senior Indebtedness.
-----------------------------------------
(a) The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Twelve with respect to any Senior Indebtedness
that may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Indebtedness and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness 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 Indebtedness (except as provided in
Sections 1202(c) and 1203(c) of this Indenture) and shall not be liable to any
such holders if the Trustee shall in good faith mistakenly pay over or
distribute to Holders of Notes or to the Company or to any other person cash,
property or securities to which any holders of Senior Indebtedness shall be
entitled by virtue of this Article Twelve or otherwise.
<PAGE>
108
SECTION 1212. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1212 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1213. No Suspension of Remedies.
-------------------------
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Article Five or to pursue any rights or remedies hereunder or
under applicable law, except as provided in Article Five.
SECTION 1214. Trust Moneys Not Subordinated.
-----------------------------
Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article Fourteen by the Trustee for the payment of principal of, premium, if
any, and interest on the Notes shall not be subordinated to the prior payment of
any Senior Indebtedness (provided that, at the time deposited, such deposit did
not violate Section 1202 or Section 1203 or any then outstanding Senior
Indebtedness), and (subject to the foregoing proviso) none of the Holders shall
be obligated to pay over any such amount to any holder of Senior Indebtedness.
SECTION 1215. Consent of Holders of Senior Indebtedness Under the
---------------------------------------------------
Credit Agreement.
- - ----------------
The provisions of this Article Twelve (including the definitions
contained in this Article and references to this Article contained in this
Indenture) shall not be amended in a manner that would adversely affect the
rights of the holders of Senior Indebtedness under the Credit Agreement, and no
such amendment shall become effective unless the holders of Senior Indebtedness
under the Credit Agreement shall have consented (in accordance with the
provisions of the Credit Agreement) to such amendment. The Trustee shall be
entitled to receive and rely on an Officer's Certificate stating that such
consent has been given.
<PAGE>
109
ARTICLE THIRTEEN
[INTENTIONALLY OMITTED]
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
-------------------------------------------------
Defeasance.
- - ----------
The Company may, at its option and at any time, effect defeasance of
the Notes under Section 1402, or covenant defeasance of the Notes under Section
1403, in accordance with the terms of the Notes and in accordance with this
Article.
SECTION 1402. Defeasance and Discharge.
------------------------
The Company will be deemed to have paid and will be discharged from
any and all obligations in respect of the Notes on the 123rd day after the date
of the deposit referred to in clause (1) of this Section 1402, and the
provisions of this Indenture will no longer be in effect with respect to the
Notes, and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same, except as to (i) rights of registration of
transfer and exchange, (ii) substitution of apparently mutilated, defaced,
destroyed, lost or stolen Notes, (iii) rights of Holders to receive payments of
principal thereof and interest thereon, (iv) the Company's obligations under
Section 1002, (v) the rights, obligations and immunities of the Trustee
hereunder and (vi) the rights of the Holders as beneficiaries of this Indenture
with respect to the property so deposited with the Trustee payable to all or any
of them; provided that the following conditions shall have been satisfied:
(1) with reference to this Section 1402, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 608 of this
Indenture) and conveyed all right, title and interest for the benefit of
the Holders, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee as trust funds in trust, specifically
pledged to the Trustee for the benefit of the Holders as security for
payment of the principal of, premium, if any, and interest, if any, on the
Notes, and dedicated solely to the benefit of the Holders, in and to (A)
money in an amount, (B) U.S. Government Obligations that, through the
payment of interest, premium, if any, and principal in respect thereof in
accordance with their terms, will provide, not later than one day before
the due date of any payment referred to in this clause (1), money in an
amount or (C) a combination thereof
<PAGE>
110
in an amount sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, without consideration of
the reinvestment of such interest and after payment of all federal, state
and local taxes or other charges and assessments in respect thereof payable
by the Trustee, the principal of, premium, if any, and accrued interest on
the outstanding Notes at the Stated Maturity of such principal or interest;
provided that the Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government Obligations to the
payment of such principal, premium, if any, and interest with respect to
the Notes;
(2) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it is bound and is permitted by Article Twelve;
(3) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day
after such date of deposit, and such deposit shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(4) the Company shall have delivered to the Trustee (A) either (i) a
ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the Company's exercise of its
option under this Section 1402 and will be subject to federal income tax on
the same amount and in the same manner and at the same times as would have
been the case if such option had not been exercised or (ii) an Opinion of
Counsel to the same effect as the ruling described in clause (i) above
accompanied by a ruling to that effect published by the Internal Revenue
Service, unless there has been a change in the applicable federal income
tax law since the date of this Indenture such that a ruling from the
Internal Revenue Service is no longer required and (B) an Opinion of
Counsel to the effect that (i) the creation of the defeasance trust does
not violate the Investment Company Act of 1940 and (ii) after the passage
of 123 days following the deposit (except, with respect to any trust funds
for the account of any Holder who may be deemed to be an "insider" for
purposes of the United States Bankruptcy Code, after one year following the
deposit), the trust funds will not be subject to the effect of Section 547
of the United States Bankruptcy Code or Section 15 of the New York Debtor
and Creditor Law in a case commenced by or against the Company under either
such statute, and either (I) the trust funds will no longer remain the
property of the Company (and therefore will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or
<PAGE>
111
similar laws affecting creditors' rights generally) or (II) if a court were
to rule under any such law in any case or proceeding that the trust funds
remained property of the Company, (a) assuming such trust funds remained in
the possession of the Trustee prior to such court ruling to the extent not
paid to the Holders, the Trustee will hold, for the benefit of the Holders,
a valid and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise except for the effect of Section
552(b) of the United States Bankruptcy Code on interest on the trust funds
accruing after the commencement of a case under such statute and (b) the
Holders will be entitled to receive adequate protection of their interests
in such trust funds if such trust funds are used in such case or
proceeding;
(5) if the Notes are then listed on a national securities exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit defeasance and discharge will not cause the
Notes to be delisted; and
(6) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 1402 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (4)(A)(ii) of this Section 1402, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section 1402,
the Company's obligations in Sections 203, 303, 305, 306, 307, 311, 312, 1001,
1002, 1003, 603, 607, 609, 1405, 1406 and Article Twelve (with respect to
payments in respect of Senior Subordinated Obligations other than with the
assets held in trust as described in this Section 1402) shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 607, 1405 and 1406 shall survive. If and when a ruling from the
Internal Revenue Service or an Opinion of Counsel referred to in clause (4)(A)
of this Section 1402 is able to be provided specifically without regard to, and
not in reliance upon, the continuance of the Company's obligations under Section
1001, then the Company's obligations under such Section 1001 shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel and compliance with
the other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 1402.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
<PAGE>
112
SECTION 1403. Covenant Defeasance.
-------------------
The Company may omit to comply with any term, provision or condition
set forth in clause (iii) of Section 801 and Sections 1003 through 1020, and
clauses (3), (4), (5) and (6) of Section 501 shall be deemed not to be Events of
Default, in each case with respect to the outstanding Notes if:
(i) with reference to this Section 1403, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 608) and conveyed
all right, title and interest to the Trustee for the benefit of the
Holders, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee as trust funds in trust, specifically
pledged to the Trustee for the benefit of the Holders as security for
payment of the principal of, premium, if any, and interest, if any, on the
Notes, and dedicated solely to, the benefit of the Holders, in and to (A)
money in an amount, (B) U.S. Government Obligations that, through the
payment of interest and principal in respect thereof in accordance with
their terms, will provide, not later than one day before the due date of
any payment referred to in this clause (i), money in an amount or (C) a
combination thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
without consideration of the reinvestment of such interest and after
payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal of,
premium, if any, and interest on the outstanding Notes on the Stated
Maturity of such principal or interest; provided that the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of such principal, premium,
if any, and interest with respect to the Notes;
(ii) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it is bound and is permitted by Article Twelve;
(iii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(iv) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that (A) the creation of the defeasance trust does not
violate the Investment Company Act of 1940, (B) the Holders have a valid
first priority security interest in the trust funds, (C) the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and defeasance of certain obligations and will be
<PAGE>
113
subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and
defeasance had not occurred and (D) after the passage of 123 days following
the deposit (except, with respect to any trust funds for the account of any
Holder who may be deemed to be an "insider" for purposes of the United
States Bankruptcy Code, after one year following the deposit), the trust
funds will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a
case commenced by or against the Company under either such statute, and
either (1) the trust funds will no longer remain the property of the
Company (and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally) or (2) if a court were to rule under any such law in any
case or proceeding that the trust funds remained property of the Company,
(x) assuming such trust funds remained in the possession of the Trustee
prior to such court ruling to the extent not paid to the Holders, the
Trustee will hold, for the benefit of the Holders, a valid and perfected
security interest in such trust funds that is not avoidable in bankruptcy
or otherwise (except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute), (y) the Holders will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used in such case or proceeding and (z) no
property, rights in property or other interests granted to the Trustee or
the Holders in exchange for, or with respect to, such trust funds will be
subject to any prior rights of holders of other Indebtedness of the Company
or any of its Subsidiaries;
(v) if the Notes are then listed on a national securities exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit defeasance and discharge will not cause the
Notes to be delisted; and
(vi) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 1403 have been complied with.
SECTION 1404. [Intentionally Omitted]
SECTION 1405. Deposited Money and Government Obligations to Be Held
-----------------------------------------------------
in Trust; Other Miscellaneous Provisions.
- - ----------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1405, the "Trustee") pursuant to Sections 1404 and 1406 in respect of
such 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
<PAGE>
114
or through any Paying Agent (including the Company acting as its own 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 (and premium, if any) and
interest, but such money need not be segregated from other funds except to the
extent required by law. Money and U.S. Government Obligations so held in trust
are not subject to Article Twelve.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1404 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 such Outstanding Notes.
Anything in this Article Fourteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations (or other property and any
proceeds therefrom) held by it as provided in Section 1404 which, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent defeasance or covenant defeasance, as applicable, in accordance with
this Article.
SECTION 1406. Reinstatement.
-------------
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1405 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 such Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1402 or 1403, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1405; provided, however, that if the Company makes any payment of principal of
(or premium, if any) or interest on any such 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
OSCAR I CORPORATION
By:_________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Trustee
By:_________________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
[FACE OF NOTE]
OSCAR I CORPORATION
9 3/4% [Series B]/1/ Senior Subordinated Note due 2008
No.________ CUSIP No. __________
$ __________
OSCAR I CORPORATION, a Delaware corporation (the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, promises to pay to ___________, or its registered assigns, the
principal sum of __________________________________ Dollars ($___________), on
April 15, 2008.
[Initial]/2/ Interest Rate: 9 3/4% per annum.
Interest Payment Dates: April 15 and October 15 of each year
commencing October 15, 1998.
Regular Record Dates: April 1 and October 1 of each year.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
- - ----------------------
/1/ Include only for Exchange Note.
/2/ Include only for Initial Note.
<PAGE>
A-2
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Date:_________ OSCAR I CORPORATION
By:________________________________
Name:
Title:
<PAGE>
A-3
(Form of Trustee's Certificate of Authentication)
This is one of the 9 3/4% [Series B]/1/ Senior Subordinated Notes due
2008 referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Trustee
Dated: __________ By: ________________________________
Authorized Signatory
- - -----------------------
/1/ Include only for Exchange Note.
<PAGE>
A-4
[REVERSE SIDE OF NOTE]
OSCAR I CORPORATION
9 3/4% [Series B]/1/ Senior Subordinated Note due 2008
1. Principal and Interest; Subordination.
-------------------------------------
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate of 9 3/4%
per annum [(subject to adjustment as provided below)]/2/ [except that interest
accrued on this Note pursuant to the fourth paragraph of this Section 1 for
periods prior to the applicable Exchange Date (as such term is defined in the
Registration Rights Agreement referred to below) will accrue at the rate or
rates borne by the Notes from time to time during such periods]./1/
Interest will be payable semi-annually (to the Holders of record of
the Notes (or any Predecessor Notes) at the close of business on the April 1 or
October 1 immediately preceding the Interest Payment Date) on each Interest
Payment Date, commencing October 15, 1998.
[The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated April 21, 1998, among the Company and the
Initial Purchasers named therein (the "Registration Rights Agreement"). In the
event that either (a) the Exchange Offer Registration Statement (as such term is
defined in the Registration Rights Agreement) is not filed with the Securities
and Exchange Commission on or prior to the 60th calendar day following the date
of original issue of the Notes, (b) the Exchange Offer Registration Statement
(as such term is defined in the Registration Rights Agreement) has not been
declared effective on or prior to the 120th calendar day following the date of
original issue of the Notes or (c) the Exchange Offer is not consummated or a
Shelf Registration Statement (as such terms are defined in the Registration
Rights Agreement) is not declared effective on or prior to the 150th calendar
day following the date of original issue of the Notes, the interest rate borne
by this Note shall be increased by one-quarter of one percent per annum
following such 60-day period in the case of (a) above, following such 120-day
period in the case of (b) above or following such 150-day period in the case of
(c) above, which
- - -------------------
/1/ Include only for Exchange Note.
/2/ Include only for Initial Note.
<PAGE>
A-5
rate will be increased by an additional one-quarter of one percent per annum for
each 90-day period that any additional interest continues to accrue; provided
that the aggregate increase in such annual interest rate shall in no event
exceed one percent. Upon (x) the filing of the Exchange Offer Registration
Statement after the 60-day period described in clause (a) above, (y) the
effectiveness of the Exchange Offer Registration Statement after the 120-day
period described in clause (b) above or (z) the consummation of the Exchange
Offer or the effectiveness of a Shelf Registration Statement, as the case may
be, after the 150-day period described in clause (c) above, the interest rate
borne by this Note from the date of such filing, effectiveness or consummation,
as the case may be, will be reduced to the interest rate set forth above;
provided, however, that, if after any such reduction in interest rate, a
different event specified in clause (a), (b) or (c) above occurs, the interest
rate may again be increased pursuant to the foregoing provisions.]/1/
Interest on this Note will accrue from the most recent date to which
interest has been paid [on this Note or the Note surrendered in exchange
herefor]/2/ or, if no interest has been paid, from April 21, 1998; provided
that, if there is no existing default in the payment of interest and if this
Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum equal to the rate of interest applicable to the Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness, and this Note is issued
subject to such provisions. Each Holder of this Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Trustee on its behalf to take such action as may be necessary or appropriate
to effectuate the subordination as provided in the Indenture and (c) appoints
the Trustee its attorney-in-fact for such purpose.
2. Method of Payment.
-----------------
The Company will pay interest (except defaulted interest) on the
principal amount of the Notes on each April 15 and October 15 to the Persons who
are Holders (as reflected in the Note Register at the close of business on the
April 1 and October 1 immediately preceding the
- - -----------------------
/1/ Include only for Initial Note.
/2/ Include only for Exchange Note.
<PAGE>
A-6
Interest Payment Date), in each case, even if the Note is canceled on
registration of transfer or registration of exchange after such Regular Record
Date; provided that, with respect to the payment of principal, the Company will
make payment to the Holder that surrenders this Note to any Paying Agent on or
after April 15, 2008.
The Company will pay principal (premium, if any) and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal (premium, if
any) and interest by its check payable in such money. The Company may pay
interest on the Notes either (a) by mailing a check for such interest to a
Holder's registered address (as reflected in the Note Register) or (b) by wire
transfer to an account located in the United States maintained by the payee. If
a payment date is a date other than a Business Day at a Place of Payment,
payment may be made at that place on the next succeeding day that is a Business
Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as Paying Agent and Note Registrar.
The Company may change any Paying Agent or Note Registrar upon written notice
thereto. The Company, any Subsidiary or any Affiliate of any of them may act as
Paying Agent, Note Registrar or co-registrar.
4. Indenture; Limitations.
----------------------
The Company issued the Notes under an Indenture dated as of April 21,
1998 (the "Indenture"), among the Company and State Street Bank and Trust
Company of Missouri, N.A., as trustee (the "Trustee"). Capitalized terms herein
are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all
such terms, and Holders are referred to the Indenture and the Trust Indenture
Act for a statement of all such terms. To the extent permitted by applicable
law, in the event of any inconsistency between the terms of this Note and the
terms of the Indenture, the terms of the Indenture shall control.
The Notes are unsecured senior subordinated obligations of the
Company. The Indenture limits the aggregate principal amount of the Notes to
$225,000,000.
5. Redemption.
----------
Optional Redemption. The Notes may be redeemed at the option of the
-------------------
Company, in whole or in part, at any time and from time to time on or after
April 15, 2003, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is on or prior to the Redemption Date to receive interest due on an
Interest Payment
<PAGE>
A-7
Date), if redeemed during the 12-month period commencing April 15 of each of the
years set forth below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003...................................... 104.875%
2004...................................... 103.250%
2005...................................... 101.625%
2006 and thereafter....................... 100.000%
</TABLE>
In addition to the optional redemption of the Notes in accordance with
the provisions of the preceding paragraph, at any time prior to April 15, 2001,
the Company may redeem up to 35% of the principal amount of the Notes, with the
proceeds received by the Company of one or more Public Equity Offerings with the
net proceeds of such offerings, at 109.75% of the principal amount thereof,
together with accrued and unpaid interest, if any, to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is on or prior to the Redemption Date to receive interest due on an
Interest Payment Date); provided, however, that at least $146,250,000 of the
original aggregate principal amount of the Notes remains outstanding thereafter.
Notice of any such redemption must be given not later than 90 days after the
consummation of the Public Equity Offering.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which such Notes are
listed, or, if such Notes are not so listed by lot or by such other method as
the Trustee it its sole discretion shall deem to be fair and appropriate;
provided, however, that no Note of $1000 in principal amount or less shall be
redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal amount
thereof to be redeemed.
Notice of a redemption will be mailed, first-class postage prepaid, at
least 30 days but not more than 60 days before the Redemption Date to each
Holder to be redeemed at such Holder's last address as it appears in the Note
Register. Notes in original denominations larger than $1,000 may be redeemed in
part in integral multiples of $1,000. On and after the Redemption Date,
interest ceases to accrue on Notes or portions of Notes called for redemption,
unless the Company defaults in the payment of the Redemption Price.
6. Repurchase upon a Change in Control and Asset Sales.
---------------------------------------------------
Upon the occurrence of (a) a Change in Control, the Company must
commence and consummate an Offer to Purchase for Notes then outstanding, at a
purchase price of 101% of the
<PAGE>
A-8
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase and (b) Asset Sales, the Company may be obligated to make offers to
purchase Notes with a portion of the Net Cash Proceeds of such Asset Sales at a
redemption price of 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase.
7. Denominations; Transfer; Exchange.
---------------------------------
The Notes are in registered form without coupons, in denominations of
$1,000 and multiples of $1,000 in excess thereof. A Holder may register the
transfer or exchange of Notes in accordance with the Indenture. The Note
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Note Registrar need not register the
transfer or exchange of any Notes selected for redemption (except the unredeemed
portion of any Note being redeemed in part).
8. Persons Deemed Owners.
---------------------
A Holder may be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal (premium, if any) or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
-----------------------------------------
If the Company irrevocably deposits, or causes to be deposited, with
the Trustee money or U.S. Government Obligations sufficient to pay the then
outstanding principal of (premium, if any) and accrued interest on the Notes (a)
to redemption or maturity, the Company will be discharged from the Indenture and
the Notes, except in certain circumstances for certain sections thereof, and (b)
to the Stated Maturity, the Company will be discharged from certain covenants
set forth in the Indenture.
11. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be
<PAGE>
A-9
waived with the consent of the Holders of a majority in aggregate principal
amount of the Notes then outstanding. Without notice to or the consent of any
Holder, the parties thereto may amend the Indenture or the Notes to the extent
set forth in the Indenture.
12. Restrictive Covenants.
---------------------
The Indenture contains certain covenants, including, without
limitation, covenants with respect to the following matters: (i) Indebtedness;
(ii) Restricted Payments; (iii) issuances and sales of Capital Stock of
Restricted Subsidiaries; (iv) transactions with Shareholders and Affiliates; (v)
Liens; (vi) purchase of Notes upon a Change in Control; (vii) sale of Assets;
(viii) issuances of Guarantees by Restricted Subsidiaries; (ix) dividend and
other payment restrictions affecting Restricted Subsidiaries; (x) other Senior
Subordinated Indebtedness; (xi) merger and certain transfers of assets; and
(xii) limitation on Unrestricted Subsidiaries. Within 120 days after the end of
each fiscal year, the Company must report to the Trustee on compliance with such
limitations.
13. Successor Persons.
-----------------
When a successor person or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor person will
be released from those obligations.
14. Remedies for Events of Default.
------------------------------
If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 501 of the Indenture that occurs with respect to
the Company) occurs and is continuing under this Indenture, then in every such
case the Trustee or the Holders of at least 25% in aggregate principal amount of
the Outstanding Notes, by written notice to the Company (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the written
request of such Holders shall, declare the principal of, premium, if any, and
accrued interest on all of the Outstanding Notes to be immediately due and
payable. Upon an Acceleration Notice, such principal of, premium, if any, and
accrued interest shall be immediately due and payable; provided, however, that
if there are any amounts outstanding under the Credit Agreement, such
declaration shall not become effective until the earlier of (A) an acceleration
of the Indebtedness under the Credit Agreement and (ii) five (5) Business Days
after receipt by the Company and the Agent Bank of such Acceleration Notice. In
the event of a declaration of acceleration because an Event of Default set forth
in clause (5) of Section 501 has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to clause (5) of Section 501
shall be remedied or cured by the Company or the relevant Significant Subsidiary
or waived by the holders of the relevant Indebtedness within 60 days after the
declaration of acceleration with respect thereto. If an Event of Default
specified in clause (7) or (8) of Section 501 of the Indenture occurs with
respect to the Company, the principal of, premium, if any, and accrued interest
on the Outstanding Notes shall ipso facto become and be immediately due and
payable
<PAGE>
A-10
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of at least a majority in aggregate principal amount of the
Outstanding Notes by written notice to the Company and to the Trustee, may waive
all past defaults and rescind and annul a declaration of acceleration and its
consequences if (1) all existing Events of Default, other than the nonpayment of
the principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
(2) the recission would not conflict with any judgment or decree of a court of
competent jurisdiction.
Holders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it before
it enforces the Indenture or the Notes. The Holders of at least a majority in
aggregate principal amount of the Notes then outstanding may direct the Trustee
in the exercise of any trust or power in accordance with the terms of the
Indenture.
15. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Notes and may make loans to, accept
deposits from, perform services for, and otherwise deal with, the Company and
its Affiliates as if it were not the Trustee.
16. Authentication.
--------------
This Note shall not be valid until the Trustee signs the certificate
of authentication on the other side of this Note.
17. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Oscar I
Corporation, 9110 E. Nichols Avenue, Suite 200, Englewood, Colorado 80112-3405,
Attention: Chief Financial Officer.
<PAGE>
A-11
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- - ----------------------------------
- - --------------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)
- - --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- - --------------------------------------------------------------------------------
attorney to transfer such Note on the books of the Company with full power of
substitution in the premises.
<PAGE>
A-12
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE PHYSICAL
CERTIFICATES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
April 21, 2000, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
Check One
---------
(a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
--
(b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Note Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Sections 311 and 312 of the Indenture shall
have been satisfied.
Date:____________________
_____________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written upon
the face of the within-mentioned instrument
in every particular, without alteration or
any change whatsoever.
Signature Guarantee:_______________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
<PAGE>
A-13
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:____________________ ___________________________________
NOTICE: To be executed by an
executive officer
<PAGE>
A-14
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 1013 or Section 1014 of the Indenture, check the Box: [_].
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 1013 or Section 1014 of the Indenture, state the amount (in
original principal amount) below:
$_____________________.
Date:____________
Your Signature:__________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:_____________________________
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT 4.2
===============================================================================
OSCAR I CORPORATION
Company
and
STATE STREET
BANK AND TRUST COMPANY
OF MISSOURI, N.A.
Trustee
-------------------------
INDENTURE
Dated as of April 21, 1998
-------------------------
$50,000,000
Floating Rate Senior Subordinated Notes due 2007
Floating Rate Series B Senior Subordinated Notes due 2007
===============================================================================
<PAGE>
OSCAR I CORPORATION
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of April 21, 1998
-------------------------------------------------
Trust Indenture Indenture
Act Section Section
---------------- ----------
<TABLE>
<CAPTION>
<S> <C>
(S) 310(a)(1)............................................. 607
(a)(2)............................................. 607
(b)................................................ 608
(S) 312(c)................................................ 701
(S) 314(a)................................................ 703
(a)(4)............................................. 1004
(c)(1)............................................. 102
(c)(2)............................................. 102
(e)................................................ 102
(S) 315(b)................................................ 601
(S) 316(a)(last sentence)................................. 101 ("Outstanding")
(a)(1)(A).......................................... 502, 512
(a)(1)(B).......................................... 513
(b)................................................ 508
(c)................................................ 104(d)
(S) 317(a)(1)............................................. 503
(a)(2)............................................. 504
(b)................................................ 1003
(S) 318(a)................................................ 111
</TABLE>
- - -------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES..................................................................... 1
RECITALS OF THE COMPANY..................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
<S> <C>
SECTION 101. Definitions................................................... 1
-----------
Acquired Indebtedness......................................... 2
Act........................................................... 2
Affiliate..................................................... 2
Agent Bank.................................................... 2
Agent Members................................................. 2
Applicable LIBOR Rate......................................... 2
Asset Acquisition............................................. 3
Asset Disposition............................................. 3
Asset Sale.................................................... 3
Authenticating Agent.......................................... 4
Average Life.................................................. 4
Bankruptcy Law................................................ 4
Board of Directors............................................ 4
Board Resolution.............................................. 4
Business Day.................................................. 5
Capital Stock................................................. 5
Capitalized Lease............................................. 5
Capitalized Lease Obligations................................. 5
cash equivalents.............................................. 5
Change of Control............................................. 6
Commission.................................................... 6
Common Stock.................................................. 6
Company....................................................... 7
Company's Preferred Stock".................................... 7
Company Request or Company Order.............................. 7
Consolidated EBITDA........................................... 7
Consolidated Fixed Charge Coverage Ratio ..................... 8
Consolidated Interest Expense................................. 8
Consolidated Leverage Ratio................................... 8
Corporate Trust Office........................................ 9
corporation................................................... 9
Credit Agreement.............................................. 9
</TABLE>
<PAGE>
ii
<TABLE>
<S> <C>
Currency Agreement........................................... 9
Custodian.................................................... 9
Default...................................................... 9
Defaulted Interest........................................... 9
Depositary................................................... 10
Designated Senior Indebtedness............................... 10
Determination Date........................................... 10
Disinterested Director....................................... 10
Disqualified Stock........................................... 10
Dollar or $.................................................. 10
Event of Default............................................. 10
Exchange Act................................................. 10
Exchange Notes............................................... 11
Exchange Offer............................................... 11
Exchange Offer Registration Statem........................... 11
fair market value............................................ 11
Fixed Rate Notes............................................. 11
GAAP......................................................... 11
Global Notes................................................. 11
Guarantee.................................................... 11
Holder....................................................... 12
Incur........................................................ 12
Indebtedness................................................. 12
Indenture.................................................... 13
Interest Payment Date........................................ 13
Initial Notes................................................ 13
Initial Quarterly Period..................................... 13
Institutional Accredited Investor............................ 13
Interest Rate Agreement...................................... 13
Interest Rate Determination Date............................. 13
Investment................................................... 13
Issuance Date................................................ 14
Junior Securities............................................ 14
Lien......................................................... 14
Majority Owned Subsidiary.................................... 14
Maturity..................................................... 14
ML Funds..................................................... 15
Moody's...................................................... 15
Net Cash Proceeds............................................ 15
Non-U.S. Person.............................................. 15
Note Register and Note Registrar............................. 15
Notes........................................................ 15
Offer to Purchase............................................ 16
</TABLE>
<PAGE>
iii
<TABLE>
<S> <C>
Officers' Certificate.................................. 16
Offshore Global Note................................... 16
Offshore Note Exchange Date............................ 16
Offshore Physical Note................................. 17
Opinion of Counsel..................................... 17
Outstanding............................................ 17
Pari Passu Indebtedness................................ 18
Paying Agent........................................... 18
Payment Blockage Period................................ 18
Payment Default........................................ 18
Permitted Holders...................................... 18
Permitted Investment................................... 18
Person................................................. 19
Place of Payment....................................... 19
Predecessor Note....................................... 19
Preferred Stock........................................ 19
Private Placement Legend............................... 19
Public Equity Offering................................. 19
purchase money obligations............................. 19
QIB.................................................... 19
Quarterly Period....................................... 19
Redemption Date........................................ 20
Redemption Price....................................... 20
Reference Banks........................................ 20
Registration Rights Agreement.......................... 20
Registration Statement................................. 20
Regular Record Date.................................... 20
Regulation S........................................... 20
Representative......................................... 20
Responsible Officer.................................... 20
Restricted Subsidiary.................................. 20
Reuters Screen LIBO Page............................... 21
Rule 144A.............................................. 21
S&P.................................................... 21
Securities Act......................................... 21
Senior Indebtedness.................................... 21
Senior Subordinated Obligations........................ 21
Shelf Registration Statement........................... 21
Significant Subsidiary................................. 22
Special Record Date.................................... 22
Stated Maturity........................................ 22
Subordinated Indebtedness.............................. 22
Subsidiary............................................. 22
</TABLE>
<PAGE>
iv
<TABLE>
<S> <C>
Temporary Cash Investment.............................. 22
Trade Payables......................................... 23
Trust Indenture Act or TIA............................. 23
Trustee................................................ 23
UATC................................................... 23
United States.......................................... 23
Unrestricted Subsidiary................................ 23
U.S. Global Note....................................... 24
U.S. Government Obligations............................ 24
U.S. Physical Note..................................... 24
Vice President......................................... 24
Voting Stock........................................... 24
Wholly Owned........................................... 24
Working Day............................................ 24
SECTION 102. Compliance Certificates and Opinions................... 25
SECTION 103. Form of Documents Delivered to Trustee................. 25
SECTION 104. Acts of Holders........................................ 26
SECTION 105. Notices, Etc., to Trustee, Company and Agent Bank...... 27
SECTION 106. Notice to Holders; Waiver.............................. 28
SECTION 107. Effect of Headings and Table of Contents............... 28
SECTION 108. Successors and Assigns................................. 28
SECTION 109. Separability Clause.................................... 29
SECTION 110. Benefits of Indenture.................................. 29
SECTION 111. Governing Law.......................................... 29
SECTION 112. Legal Holidays......................................... 29
SECTION 113. Trust Indenture Act Controls........................... 29
SECTION 114. No Recourse Against Others............................. 30
SECTION 115. Counterparts........................................... 30
ARTICLE TWO
NOTE FORMS
<S> <C>
SECTION 201. Forms Generally........................................ 30
SECTION 202. Form of Trustee's Certificate of Authentication........ 32
SECTION 203. Restrictive Legends.................................... 32
SECTION 204. Form of Certificate to Be Delivered After the Offshore
Note Exchange Date............................ 34
</TABLE>
ARTICLE THREE
THE NOTES
<PAGE>
v
<TABLE>
<S> <C>
SECTION 301. Amount............................................................. 35
SECTION 302. Denominations...................................................... 36
SECTION 303. Execution, Authentication, Delivery and Dating..................... 36
SECTION 304. Temporary Notes.................................................... 37
SECTION 305. Registration, Registration of Transfer and Exchange................ 38
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes........................ 39
SECTION 307. Payment of Interest; Interest Rights Preserved..................... 40
SECTION 308. Persons Deemed Owners.............................................. 41
SECTION 309. Cancellation....................................................... 41
SECTION 310. Computation of Interest............................................ 42
SECTION 311. Book-Entry Provisions for Global Notes............................. 42
SECTION 312. Transfer Provisions................................................ 43
SECTION 313. Form of Accredited Investor Certificate............................ 52
SECTION 314. Form of Regulation S Certificate................................... 55
SECTION 315. Form of Rule 144A Certificate...................................... 57
SECTION 316. CUSIP Numbers...................................................... 58
<CAPTION>
ARTICLE FOUR
SATISFACTION AND DISCHARGE
<S> <C>
SECTION 401. Satisfaction and Discharge of Indenture............................ 58
SECTION 402. Application of Trust Money......................................... 59
<CAPTION>
ARTICLE FIVE
REMEDIES
<S> <C>
SECTION 501. Events of Default.................................................. 60
SECTION 502. Acceleration of Maturity; Rescission and Annulment................. 62
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.... 62
SECTION 504. Trustee May File Proofs of Claim................................... 63
SECTION 505. Trustee May Enforce Claims Without Possession of Notes............. 64
SECTION 506. Application of Money Collected..................................... 64
SECTION 507. Limitation on Suits................................................ 65
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest................................................... 66
SECTION 509. Restoration of Rights and Remedies................................. 66
SECTION 510. Rights and Remedies Cumulative..................................... 66
SECTION 511. Delay or Omission Not Waiver....................................... 66
SECTION 512. Control by Holders................................................. 67
SECTION 513. Waiver of Past Defaults............................................ 67
SECTION 514. Waiver of Stay or Extension Laws................................... 68
</TABLE>
<PAGE>
vi
ARTICLE SIX
THE TRUSTEE
<TABLE>
<CAPTION>
<S> <C>
SECTION 601. Certain Duties and Responsibilities............................. 68
SECTION 602. Notice of Defaults.............................................. 69
SECTION 603. Certain Rights of Trustee....................................... 70
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes....... 71
SECTION 605. May Hold Notes.................................................. 72
SECTION 606. Money Held in Trust............................................. 72
SECTION 607. Compensation and Reimbursement.................................. 72
SECTION 608. Corporate Trustee Required; Eligibility......................... 73
SECTION 609. Resignation and Removal; Appointment of Successor............... 73
SECTION 610. Acceptance of Appointment by Successor.......................... 75
SECTION 611. Merger, Conversion, Consolidation or Succession to Business..... 75
SECTION 612. Appointment of Authenticating Agent............................. 76
<CAPTION>
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
<S> <C>
SECTION 701. Company to Furnish Trustee Names and Addresses.................. 78
SECTION 702. Disclosure of Names and Addresses of Holders.................... 78
SECTION 703. Reports by Trustee.............................................. 78
<CAPTION>
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
<S> <C>
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms............ 79
SECTION 802. Successor Substituted........................................... 79
<CAPTION>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
<S> <C>
SECTION 901. Supplemental Indentures Without Consent of Holders.............. 80
SECTION 902. Supplemental Indentures with Consent of Holders................. 81
SECTION 903. Execution of Supplemental Indentures............................ 81
SECTION 904. Effect of Supplemental Indentures............................... 81
SECTION 905. Conformity with Trust Indenture Act............................. 82
SECTION 906. Reference in Notes to Supplemental Indentures................... 82
</TABLE>
<PAGE>
vii
<TABLE>
<S> <C>
SECTION 907. Notice of Supplemental Indentures..................................... 82
SECTION 908. Effect on Senior Indebtedness......................................... 82
<CAPTION>
ARTICLE TEN
COVENANTS
<S> <C>
SECTION 1001. Payment of Principal, Premium, If Any, and Interest.................. 82
SECTION 1002. Maintenance of Office or Agency...................................... 83
SECTION 1003. Money for Notes Payments to Be Held in Trust......................... 83
SECTION 1004. Corporate Existence.................................................. 85
SECTION 1005. Payment of Taxes and Other Claims.................................... 85
SECTION 1006. Maintenance of Properties............................................ 85
SECTION 1007. Statement by Officers as to Default.................................. 86
SECTION 1008. Limitation on Indebtedness........................................... 86
SECTION 1009. Limitation on Restricted Payments.................................... 89
SECTION 1010. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries............................................ 92
SECTION 1011. Limitation on Transactions with Shareholders and Affiliates.......... 92
SECTION 1012. Limitation on Liens.................................................. 93
SECTION 1013. Purchase of Notes upon Change in Control............................. 93
SECTION 1014. Limitation on Sale of Assets......................................... 94
SECTION 1015. Limitations on Issuances of Guarantees by Restricted Subsidiaries.... 95
SECTION 1016. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries............................................ 96
SECTION 1017. [Intentionally Omitted].............................................. 97
SECTION 1018. Limitation on Senior Subordinated Indebtedness....................... 97
SECTION 1019. [Intentionally Omitted].............................................. 97
SECTION 1020. Reports.............................................................. 97
SECTION 1021. Waiver of Certain Covenants.......................................... 98
<CAPTION>
ARTICLE ELEVEN
REDEMPTION OF NOTES
<S> <C>
SECTION 1101. Redemption........................................................... 98
SECTION 1102. Applicability of Article............................................. 98
SECTION 1103. Election to Redeem; Notice to Trustee................................ 99
SECTION 1104. Selection by Trustee of Notes to Be Redeemed......................... 99
SECTION 1105. Notice of Redemption................................................. 99
SECTION 1106. Deposit of Redemption Price.......................................... 100
SECTION 1107. Notes Payable on Redemption Date..................................... 101
SECTION 1108. Notes Redeemed in Part............................................... 101
</TABLE>
<PAGE>
viii
ARTICLE TWELVE
SUBORDINATION OF NOTES
<TABLE>
<S> <C>
SECTION 1201. Notes Subordinate to Senior Indebtedness........................... 101
SECTION 1202. Payment over of Proceeds upon Dissolution, etc..................... 102
SECTION 1203. Suspension of Payment When Designated Senior
Indebtedness in Default........................................ 104
SECTION 1204. Payment Permitted If No Default.................................... 105
SECTION 1205. Subrogation to Rights of Holders of Senior Indebtedness............ 105
SECTION 1206. Provisions Solely to Define Relative Rights........................ 106
SECTION 1207. Trustee to Effectuate Subordination................................ 106
SECTION 1208. No Waiver of Subordination Provisions.............................. 106
SECTION 1209. Notice to Trustee.................................................. 107
SECTION 1210. Reliance on Judicial Order or Certificate of Liquidating Agent..... 108
SECTION 1211. Trustee's Relation to Senior Indebtedness.......................... 108
SECTION 1212. Article Applicable to Paying Agents................................ 108
SECTION 1213. No Suspension of Remedies.......................................... 109
SECTION 1214. Trust Moneys Not Subordinated...................................... 109
SECTION 1215. Consent of Holders of Senior Indebtedness Under the
Credit Agreement................................................ 109
<CAPTION>
ARTICLE THIRTEEN
[INTENTIONALLY OMITTED]
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
<S> <C>
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance..................................................... 110
SECTION 1402. Defeasance and Discharge........................................... 110
SECTION 1403. Covenant Defeasance................................................ 112
SECTION 1404. [Intentionally Omitted]............................................ 114
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.................. 114
SECTION 1406. Reinstatement...................................................... 115
</TABLE>
EXHIBIT A - Form of Note
<PAGE>
INDENTURE, dated as of April 21, 1998, among OSCAR I CORPORATION
(which is expected to be renamed United Artists Theatre Company), a corporation
duly organized and existing under the laws of the State of Delaware (herein
called the "Company"), having its principal office at 9110 E. Nichols Avenue,
Suite 200, Englewood, Colorado 80112-3405, and STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A., a National Banking Association, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issuance of its
Floating Rate Senior Subordinated Notes due 2007 (the "Initial Notes"), and its
Floating Rate Series B Senior Subordinated Notes due 2007 (the "Exchange Notes"
and, together with the Initial Notes, the "Notes"), of substantially the tenor
and amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
Upon the issuance of the Exchange Notes, if any, or the effectiveness
of the Shelf Registration Statement (as defined herein), this Indenture will be
subject to, and shall be governed by the provisions of the Trust Indenture Act
of 1939, as amended, that are required to be part of or deemed to be part of and
to govern the indentures qualified thereunder.
All things necessary have been done to make the Notes, when duly
executed and duly issued by the Company and authenticated and delivered
hereunder by the Trustee or the Authenticating Agent, the valid obligations of
the Company and to make this Indenture a valid agreement of the Company, in
accordance with their and its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE>
2
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and "self-
liquidating paper", as used in TIA Section 311, shall have the meanings
assigned to them in the rules of the Commission adopted under the Trust
Indenture Act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by a Restricted Subsidiary and not Incurred in connection
with, or in anticipation of, such Person becoming a Restricted Subsidiary or
such Asset Acquisition; provided that Indebtedness of such Person which is
redeemed, defeased, retired or otherwise repaid at the time of or immediately
upon consummation of the transactions by which such Person becomes a Restricted
Subsidiary or such Asset Acquisition shall not be Acquired Indebtedness.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent Bank" means Bank of America National Trust and Savings Association
in its capacity as administrative agent under the Credit Agreement and any
future or successor or replacement administrative agent under the Credit
Agreement.
"Agent Members" has the meaning specified in Section 311.
"Applicable LIBOR Rate" means for the Initial Quarterly Period and for each
Quarterly Period during which any Note is outstanding, 437.5 basis points over
the "LIBOR Rate", which shall
<PAGE>
3
be the rate determined by the Company (notice of such rate to be sent to the
Trustee by the Company on the date of determination thereof) equal to the
average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the
offered rates for deposits in U.S. dollars for a period of three months, as set
forth on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the
applicable Interest Rate Determination Date; provided, however, that if only one
such offered rate appears on the Reuters Screen LIBO Page, the LIBOR Rate will
mean such offered rate. If such rate is not available at 11:00 a.m., London
time, on the applicable Interest Rate Determination Date, then the LIBOR Rate
will mean the arithmetic mean (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the interest rates per annum at which deposits in amounts equal
to $1 million in U.S. dollars are offered by the Reference Banks to leading
banks in the London Interbank Market for a period of three months as of 11:00
a.m., London time, on the applicable Interest Rate Determination Date. If on any
Interest Rate Determination Date, at least two of the Reference Banks provide
such offered quotations, then the LIBOR Rate will be determined in accordance
with the preceding sentence on the basis of the offered quotations of those
Reference Banks providing such quotations; provided, however, that if fewer than
two of the Reference Banks are so quoting such interest rates as mentioned
above, (i) the Applicable LIBOR Rate shall be deemed to be the Applicable LIBOR
Rate for the next preceding Quarterly Period, (ii) if relevant, in the case of
the Quarterly Period next succeeding the Initial Quarterly Period, the
Applicable LIBOR Rate shall be the Applicable LIBOR Rate for the Initial
Quarterly Period and (iii) if relevant in the case of the Initial Quarterly
Period, the Applicable LIBOR Rate shall be 10.0625%.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such investment or (ii)
an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person; provided that the property and assets acquired are
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of
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4
its Restricted Subsidiaries of (i) all or any of the Capital Stock of any
Restricted Subsidiary, (ii) all or substantially all of the property and assets
of an operating unit or business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the Company or any
of its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed by
the provisions of the Indenture applicable to mergers, consolidations and sales
of assets of the Company; provided that "Asset Sale" shall not include (a) sales
or other dispositions of inventory, receivables and other current assets, (b)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Section 1009, (c) sales, transfers or other
dispositions of assets with a fair market value not in excess of $500,000 in any
transaction or series of related transactions, (d) sales, transfers or other
dispositions of theatres which are determined in good faith by the Board of
Directors to be nonstrategic and underperforming ("Underperforming Theatres")
for consideration at least equal to the fair market value of the Underperforming
Theatre disposed of, (e) sales, transfers or other dispositions of Temporary
Cash Investments in the ordinary course of business for consideration at least
equal to the fair market value of the Temporary Cash Investments disposed of or
(f) sales or other dispositions of assets for consideration at least equal to
the fair market value of the assets sold or disposed of, to the extent that the
consideration received would satisfy clause (B) of the Section 1014.
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Notes.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Board of Directors" means, with respect to any Person, the board of
directors of such Person or any duly authorized committee of such board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
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5
"Business Day," when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Notes, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment or other location are authorized
or obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"cash equivalents" means any of the following: (i) direct obligations of
the United States of America or any agency thereof or obligations fully and
unconditionally guaranteed by the United States of America or any agency
thereof, (ii) time-deposit accounts, certificates of deposit and money-market
deposits maturing within 360 days of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $250 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank or trust company meeting the qualifications described in clause
(ii) above, (iv) commercial paper, maturing not more than 270 days after the
date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment therein
is made of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P, (v) securities with maturities of six months or less from the
date of acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
Moody's and (vi) overnight and demand deposits in a bank or trust company
meeting the qualifications described in clause (ii) above.
<PAGE>
6
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) other than the
Permitted Holders becomes the ultimate "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), of more than a majority of the total voting power of the Voting Stock
of the Company on a fully diluted basis; (ii) the Company consolidates with, or
merges with or into, another Person or conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding Voting Stock of the Company
is converted into or exchanged for cash, securities or other property, other
than any such transaction (a) where the outstanding Voting Stock of the Company
is not converted or exchanged at all (except to the extent necessary to reflect
a change in the jurisdiction of incorporation of the Company) or is converted
into or exchanged for (x) Voting Stock (other than Disqualified Stock) of the
surviving or transferee corporation or (y) Voting Stock (other than Disqualified
Stock) of the surviving or transferee corporation and cash, securities and other
property (other than Capital Stock of the surviving or transferee corporation)
in an amount that could be paid by the Company as a Restricted Payment as
described under Section 1009 and (b) immediately after such transaction, no
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than Permitted Holders, is the ultimate "beneficial owner"
directly or indirectly, of more than a majority of the total outstanding Voting
Stock of the surviving or transferee corporation; or (iii) individuals who on
the Closing Date constitute the Board of Directors (together with any new
directors whose election by the Board of Directors or whose nomination by the
Board of Directors for election by the Company's stockholders was approved (x)
by a vote of at least a majority of the members of the Board of Directors then
in office who either were members of the Board of Directors on the Closing Date
or whose election or nomination for election was previously so approved or (y)
in writing by the Permitted Holders) cease for any reason to constitute a
majority of the members of the Board of Directors then in office.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated, whether voting or
non-voting) of such Person's common stock, whether outstanding on the Issuance
Date or issued after the Issuance Date, and includes, without limitation, all
series and classes of such common stock.
<PAGE>
7
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company's Preferred Stock" shall mean the Preferred Stock of the Company
outstanding on the date hereof and accrued dividends thereon.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Operating Officer, its Chief
Financial Officer, any Vice President, its Treasurer or an Assistant Treasurer,
and delivered to the Trustee.
"Consolidated EBITDA" means, for any period, the operating income of the
Company and its Restricted Subsidiaries for such period plus, to the extent such
amount was deducted in calculating such operating income (i) Consolidated
Interest Expense, (ii) income taxes (other than income taxes (either positive or
negative) attributable to extraordinary and non-recurring gains or losses or
sales of assets), (iii) depreciation expense, (iv) amortization expense and (v)
all other non-cash items reducing such operating income, less all non-cash items
increasing such operating income, all as determined on a consolidated basis for
the Company and its Restricted Subsidiaries in conformity with GAAP; provided
that (a) Consolidated EBITDA shall not include (x) the operating income (or
operating loss) of any Person that is not a Restricted Subsidiary, except (I)
with respect to operating income, to the extent the amount of dividends or other
distributions actually paid to the Company or any of its Restricted Subsidiaries
by such Person during such period and (II) with respect to operating losses, to
the extent of the amount of Investments made by the Company or any Restricted
Subsidiary in such Person during such period; (y) solely for the purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 1009 (and in such case, except to
the extent includable pursuant to clause (x) above), the operating income (or
operating loss) of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with the Company or any of its
Restricted Subsidiaries or all or substantially all of the property and assets
of such Person are acquired by the Company or any of its Restricted
Subsidiaries; and (z) the operating income of any Restricted Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
such Restricted Subsidiary of such operating income is not at the time permitted
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary; and (b) Consolidated EBITDA shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) (I) except for purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 1009, by any amount paid (but only
to the extent not accrued in a prior period) or accrued as dividends on
preferred stock of the Company (other than dividends payable in Capital Stock
(other than Disqualified Stock) and other than dividends accruing on the
Company's Preferred Stock) or any Restricted Subsidiary owned by Persons other
than the Company and any of its
<PAGE>
8
Restricted Subsidiaries and (II) if any Restricted Subsidiary is not a Wholly
Owned Restricted Subsidiary, by an amount equal to (A) the amount of the
operating income attributable to such Restricted Subsidiary multiplied by (B)
the percentage ownership interest in the income of such Restricted Subsidiary
not owned on the last day of such period by the Company or any of its Restricted
Subsidiaries.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (i) the sum of Consolidated EBITDA for such period to (ii)
the Consolidated Interest Expense for such period.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and the
aggregate amount of interest in respect of Indebtedness that is Guaranteed or
secured by the Company or any of its Restricted Subsidiaries) and all but the
principal component of rentals in respect of Capitalized Lease Obligations paid,
accrued or scheduled to be paid or to be accrued by the Company and its
Restricted Subsidiaries during such period (other than Capitalized Lease
Obligations paid during such period if such obligations were accrued in a prior
period); excluding, however, (i) any amount of such interest of any Restricted
Subsidiary if the operating income of such Restricted Subsidiary is excluded in
the calculation of Consolidated EBITDA pursuant to clause (z) of the definition
thereof (but only in the same proportion as the operating income of such
Restricted Subsidiary is excluded from the calculation of Consolidated EBITDA
pursuant to clause (z) of the definition thereof) and (ii) any premiums, fees
and expenses (and any amortization thereof) payable in connection with the
Transactions, all as determined on a consolidated basis (without taking into
account Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Determination Date, the ratio
of (i) the aggregate amount of Indebtedness of the Company and its Restricted
Subsidiaries on a consolidated basis outstanding on such Determination Date to
(ii) the aggregate amount of Consolidated EBITDA for the then most recent fiscal
quarter for which financial statements of the Company have been filed with the
Commission pursuant to Section 1020 (such fiscal quarter being the "Quarter"),
multiplied by four; provided that, in making the foregoing calculation, (A) pro
forma effect shall be given to any Indebtedness to be Incurred or repaid on the
Determination Date; (B) pro forma effect shall be given to Asset Dispositions
and Asset Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition) that occur from the beginning of the Quarter
through the Determination Date (the "Reference Period"), as if they had occurred
and such proceeds had been applied on the first day of such Reference Period;
and (C) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of
<PAGE>
9
proceeds of any asset disposition) that have been made by any Person that has
become a Restricted Subsidiary or has been merged with or into the Company or
any Restricted Subsidiary during such Reference Period and that would have
constituted Asset Dispositions or Asset Acquisitions had such transactions
occurred when such Person was a Restricted Subsidiary as if such asset
dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions
that occurred on the first day of such Reference Period; provided that to the
extent that clause (B) or (C) of this sentence requires that pro forma effect be
given to an Asset Acquisition or Asset Disposition, such pro forma calculation
shall be based upon the full fiscal quarter immediately preceding the
Determination Date of the Person, or division or line of business of the Person,
that is acquired or disposed of for which financial information is available.
"Corporate Trust Office" means a corporate trust office of the Trustee
which office on the date of execution of this Indenture is located at 61
Broadway, 15/th/ Floor, Corporate Trust Window, New York, New York 10006.
"corporation" includes corporations, associations, companies and business
trusts.
"Credit Agreement" means the credit agreement dated as of April 21, 1998,
among the Company, the several lenders parties thereto, Banc of America National
Trust and Savings Association, as Administrative Agent, BankBoston, NA, as
Documentation Agent, NationsBank of Texas, N.A., as syndication agent and
Merrill Lynch Capital Corporation and Morgan Stanley Senior Funding, Inc., as
co-syndication agents, together with any agreements, instruments and documents
executed or delivered pursuant to or in connection with such credit agreement,
in each case as such credit agreement or such agreements, instruments or
documents may be amended, supplemented, extended, renewed, refinanced, replaced
or otherwise modified from time to time; provided that, for purposes of the
provisions of Article Twelve, with respect to any agreement providing for the
refinancing or replacement of Indebtedness under the Credit Agreement, such
agreement shall be the Credit Agreement under the Indenture only if a notice to
that effect is delivered by the Company to the Trustee and there shall be at any
time only one instrument that is (together with the aforementioned related
agreements, instruments and documents) the Credit Agreement under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
<PAGE>
10
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Indebtedness" means the Indebtedness specified in clause
(i) of the definition of Senior Indebtedness and any other Indebtedness
constituting Senior Indebtedness that, at the date of determination, has an
aggregate principal amount outstanding of at least $25 million and that is
specifically designated by the Issuer, in the instrument creating or evidencing
such Senior Indebtedness as "Designated Senior Indebtedness."
"Determination Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under this Indenture, a member of
the Board of Directors who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of
transactions.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Section 1013 and Section 1014 and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to Section
1013 and Section 1014.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
<PAGE>
11
"Exchange Notes" has the meaning stated in the first recital of this
Indenture and refers to any Exchange Notes containing terms substantially
identical to the Initial Notes (except that (i) such Exchange Notes shall not
contain terms with respect to transfer restrictions and shall be registered
under the Securities Act, and (ii) certain provisions relating to an increase in
the stated rate of interest thereon shall be eliminated) that are issued and
exchanged for the Initial Notes in accordance with the Exchange Offer, as
provided for in the Registration Rights Agreement and this Indenture.
"Exchange Offer" means the offer by the Company to the Holders of the
Initial Notes to exchange all of the Initial Notes for Exchange Notes, as
provided for in the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in the Registration Rights Agreement.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy.
"Fixed Rate Notes" means the $225,000,000 aggregate principal amount of 9
3/4% Senior Subordinated Notes due 2008 of the Company to be issued on the Issue
Date.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
this Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to (i) the amortization of any fees, expenses or
goodwill incurred in connection with the Transactions, (ii) losses incurred for
the early extinguishment of debt in connection with the Transactions and (iii)
except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"Global Notes" has the meaning set forth in Section 201.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
<PAGE>
12
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Holder" means the Person in whose name a Note is registered in the Note
Register.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion in value of non-interest bearing or other
discount Indebtedness shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except Trade Payables, (v) all Capitalized
Lease Obligations, (vi) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed
by such Person to the extent such Indebtedness is Guaranteed by such Person and
(viii) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding principal
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, provided (A) that
the amount outstanding at any time of any non-interest bearing or other discount
Indebtedness is the principal amount of such Indebtedness at such time that
would be shown on the balance sheet of such Person prepared in conformity with
<PAGE>
13
GAAP, (B) that money borrowed and set aside at the time of the Incurrence of any
Indebtedness in order to prefund the payment of the interest on such
Indebtedness shall not be deemed to be "Indebtedness" so long as such money is
held to secure the payment of such interest and (C) that Indebtedness shall not
include any liability for federal, state, local or other taxes.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" shall have the meaning specified in Section 301 of
this Indenture.
"Initial Notes" has the meaning specified in the recitals to this
Indenture.
"Initial Quarterly Period" means the period from and including April 21,
1998 through and including July 14, 1998.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Interest Rate Determination Date" means, with respect to the Initial
Quarterly Period, April 17, 1998, and with respect to each Quarterly Period, the
second Working Day prior to the first day of such Quarterly Period.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers, suppliers or lessors
in the ordinary course of business that are, in conformity with GAAP, recorded
as accounts receivable, prepaid expenses or deposits on the balance sheet of the
Company or its Restricted Subsidiaries and negotiable instruments held for
collection) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, bonds,
notes, debentures or other similar instruments issued by, such Person and shall
include (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock (or any other
Investment), held by the Company or any of its Restricted Subsidiaries, of (or
in) any Person that has ceased to be a Restricted Subsidiary, including, without
limitation, by reason of any transaction permitted by clause (iii) of Section
1010; provided that the fair market value of the Investment remaining in any
Person that has ceased to be a Restricted
<PAGE>
14
Subsidiary shall not exceed the aggregate amount of Investments previously made
in such Person valued at the time such Investments were made less the net
reduction of such Investments. For purposes of the definition of "Unrestricted
Subsidiary" and Section 1009, (i) "Investment" shall include the fair market
value of the assets (net of liabilities (other than liabilities to the Company
or any of its Restricted Subsidiaries)) of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary, (ii)
the fair market value of the assets (net of liabilities (other than liabilities
to the Company or any of its Restricted Subsidiaries)) of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary, and the fair market value of the outstanding Investments
in any Person other than an Unrestricted Subsidiary that thereafter becomes a
Restricted Subsidiary at the time such Person becomes a Restricted Subsidiary,
shall be considered a reduction in outstanding Investments and (iii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer.
"Issuance Date" or "Closing Date" means the date of the Indenture, which
will be the date on which the Notes are originally issued under the Indenture.
"Junior Securities" means (i) Capital Stock of the Company (other than any
Capital Stock which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part), (ii) securities of the Company or any other corporation
authorized by an order or decree giving effect, and stating in such order or
decree that effect is given, to the subordination of the Notes to the Senior
Indebtedness, and made by a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy, insolvency or other similar law, or
(iii) any securities of the Company provided for by a plan of reorganization or
readjustment that are subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding to substantially the same
extent as, or to a greater extent than, the Notes are so subordinated.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Majority Owned Subsidiary" means any corporation, association or other
business entity that is not a Subsidiary of the Company but of which 50% of the
voting power of the outstanding Voting Stock is owned, directly or indirectly,
by the Company or one or more of its Restricted Subsidiaries as of the Issue
Date.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity with respect to such principal or by declaration
of acceleration, call for redemption or purchase or otherwise.
<PAGE>
15
"ML Funds" means Merrill Lynch Capital Appreciation Partnership No. B-XIX,
L.P., Merrill Lynch Capital Appreciation Partnership No. B-XX, L.P., Roman
Nineteen Offshore Fund Holdings N.V., MLCP Associates L.P. No. II, ML IBK
Positions, Inc., and Merrill Lynch KECALP L.P. 1991 and any Affiliates of the
foregoing and any of their respective successors.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (i) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equiv alents, net of (a) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (b) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (c) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (I) is
secured by a Lien on the property or assets sold or (II) is required to be paid
as a result of such sale and (d) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and (ii) with respect
to any issuance or sale of Capital Stock, the proceeds of such issuance or sale
in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal, but
not interest, component thereof) when received in the form of cash or cash
equivalents (except to the extent such obligations are financed or sold with
recourse to the Company or any Restricted Subsidiary) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Non-U.S. Person" means a person who is not a U.S. person as defined in
Regulation S.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 305.
"Notes" has the meaning stated in the first recital of this Indenture and
more particularly means any Notes authenticated and delivered under this
Indenture.
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16
"Offer to Purchase" means an offer to purchase Notes by the Company from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not validly tendered will continue to
accrue interest pursuant to its terms; (iv) that, unless the Company defaults in
the payment of the purchase price, any Note accepted for payment pursuant to
the Offer to Purchase shall cease to accrue interest on and after the Payment
Date; (v) that Holders electing to have a Note purchased pursuant to the Offer
to Purchase will be required to surrender the Note, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side of the
Note completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) 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; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof. On the Payment Date, the Company shall
(i) accept for payment on a pro rata basis Notes or portions thereof validly
tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Offshore Global Note" has the meaning set forth in Section 201.
"Offshore Note Exchange Date" has the meaning set forth in Section 201.
<PAGE>
17
"Offshore Physical Note" has the meaning set forth in Section 201.
"Opinion of Counsel" means a written opinion of legal counsel, which and
who may be counsel for the Company, including an employee of the Company, and
who shall be reasonably acceptable to the Trustee.
"Outstanding," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption or
repayment at the option of the Holder money in the necessary amount has
been theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of such
Notes; provided that, if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Notes, except to the extent provided in Sections 1402 and 1403,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Fourteen; and
(iv) Notes which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in respect
of which there shall have been presented to the Trustee proof satisfactory
to it that such Notes are held by a bona fide purchaser in whose hands such
Notes are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding
(provided that in connection with any offer by the Company or any obligor to
purchase the Notes, Notes tendered for purchase will be deemed to be Outstanding
and held by the tendering Holder until the date of purchase), except that, in
determining whether the Trustee shall be protected in making such calculation or
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded. Notes so owned which
have been pledged in good faith may be regarded as
<PAGE>
18
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right to act with respect to such Notes and that the pledgee is not
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor.
"Pari Passu Indebtedness" means (a) the Fixed Rate Notes and (b) any other
Indebtedness that ranks pari passu in right of payment to the Notes.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (or premium, if any,
on) or interest on any Notes on behalf of the Company.
"Payment Blockage Period" has the meaning specified in Section 1203.
"Payment Default" means any default in the payment (whether at stated
maturity, upon scheduled installment, by acceleration or otherwise) of principal
of, or premium, if any, or interest on Designated Senior Indebtedness.
"Permitted Holders" means any of the ML Funds or any of their respective
Affiliates.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Majority Owned Subsidiary or a Person which will,
upon the making of such Investment, become a Restricted Subsidiary or be merged
or consolidated with or into or transfer or convey all or substantially all its
assets to, the Company or a Restricted Subsidiary; provided that such person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such Investment; (ii)
Temporary Cash Investments; (iii) payroll, travel and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses in accordance with GAAP; (iv) loans or advances to officers and
employees of the Company and its Restricted Subsidiaries made in the ordinary
course of business; provided that the aggregate amount of such loans or advances
outstanding at any time shall not exceed $1 million; (v) Investments in Interest
Rate Agreements and Currency Agreements designed solely to protect the Company
or its Restricted Subsidiaries against fluctuations in foreign currency exchange
rates or interest rates; (vi) Investments in any Person the primary business of
which is related, ancillary or complementary to the business of the Company and
its Restricted Subsidiaries on the date of such Investments; provided that the
aggregate amount of Investments made pursuant to this clause (vi) does not
exceed $25 million; (vii) Investments received in consideration for sales of
Underperforming Theatres; (viii) stock, obligations or securities received in
satisfaction of judgments or in settlement of debts owing to the Company or any
Restricted Subsidiary that arose in the ordinary course of business, received
pursuant to any plan of reorganization or similar arrangement in satisfaction of
liabilities owing to the Company or a Restricted Subsidiary that arose in the
ordinary course of business or received upon the foreclosure or enforcement of a
Lien in favor
<PAGE>
19
of the Company or any Restricted Subsidiary that arose in the ordinary course of
business and (ix) non-cash proceeds of Asset Sales conducted in accordance with
the provisions of Section 1014.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment" means the office or agency maintained by the Company
where the principal of (and premium, if any, on) and interest on the Notes are
payable as specified in Section 1002.
"Predecessor Note" of any particular Note, means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding, or issued after
the Issuance Date, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Private Placement Legend" has the meaning set forth in Section 203.
"Public Equity Offering" means an underwritten primary public offering of
Capital Stock (other than Disqualified Stock) of the Company, pursuant to an
effective registration statement under the Securities Act.
"purchase money obligations" means, with respect to any Person,
obligations, other than Capitalized Lease Obligations, incurred or assumed in
the ordinary course of business in connection with the purchase of property to
be used in the business of such Person within 90 days of such purchase, provided
that the amount of any purchase money obligation shall not exceed the purchase
price of the property purchased.
"QIB" means a "Qualified Institutional Buyer" within the meaning of Rule
144A under the Securities Act.
"Quarterly Period" means the period from and including a scheduled Interest
Payment Date through the day next preceding the following scheduled Interest
Payment Date.
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20
"Redemption Date," when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Reference Banks" means each of Bank of America--The Sequor Group, The
Morgan Guaranty Trust Company of New York and Citibank N.A., and any such
replacement bank thereof as listed on the Reuters Screen LIBO Page and their
respective successors, and if any of such banks are not at the applicable time
providing interest rates as contemplated within the definition of the
"Applicable LIBOR Rate," Reference Banks shall mean the remaining bank or banks
so providing such rates. In the event that fewer than two of such banks are
providing such rates, the Company shall use reasonable efforts to appoint
additional Reference Banks so that there are at least two such banks providing
such rates; provided, however, that such banks appointed by the Company shall be
London offices of leading banks engaged in the Eurodollar market (the market in
which U.S. currency, which is deposited by corporations and national governments
in banks outside the United States, is used for settling international
transactions).
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of April 21, 1998, among the Company and the Holders of Initial Notes.
"Registration Statement" means the Registration Statement as defined in the
Registration Rights Agreement.
"Regular Record Date" has the meaning specified in Section 301.
"Regulation S" means Regulation S under the Securities Act.
"Representative" means (i) with respect to the Credit Agreement, the Agent
Bank and (ii) with respect to any other Senior Indebtedness, the indenture
trustee or other trustee, agent or representative for the holders of such Senior
Indebtedness.
"Responsible Officer," when used with respect to the Trustee, means any
vice president, any assistant secretary, any assistant treasurer, any trust
officer or assistant trust officer, 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
or her knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
<PAGE>
21
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London Interbank Offered
Rates of leading banks).
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Services and its successors.
"Securities Act" means Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Senior Indebtedness" means the following obligations of the Company,
whether outstanding on the Closing Date or thereafter Incurred: (i) all
Indebtedness and all other monetary obligations (including expenses, fees and
other monetary obligations) of the Company under the Credit Agreement and (ii)
all other Indebtedness and all other monetary obligations of the Company (other
than the Notes), including principal and interest on such Indebtedness, unless
such Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, is pari passu with, or
subordinated in right of payment to, the Notes; provided that the term "Senior
Indebtedness" shall not include (a) any Indebtedness of the Company that, when
Incurred, was without recourse to the Company, (b) any Indebtedness of the
Company to a Subsidiary of the Company, or to a joint venture in which the
Company has an interest, (c) any Indebtedness of the Company, to the extent not
permitted by Section 1008 or Section 1018 (but as to any such Indebtedness under
the Credit Agreement, no such violation shall be deemed to exist for purposes of
this clause (c) if the Bank Agent shall have received a representation from an
Officer of the Company to the effect that the issuance of such Indebtedness does
not violate Section 1008 or Section 1018), (d) any Indebtedness to any employee
of the Company or any of its respective Subsidiaries, (e) any liability for
taxes owed or owing by the Company or (f) any Trade Payables. Senior
Indebtedness will also include interest accruing on or after, or which would
accrue but for, events of bankruptcy of the Company and its respective
Subsidiaries at the rate provided for in the document governing such Senior
Indebtedness, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under bankruptcy law.
"Senior Subordinated Obligations" means any principal of, premium, if any,
or interest on the Notes or the Fixed Rate Notes payable pursuant to the terms
of the Notes or the Fixed Rate Notes or upon acceleration, including any amounts
received upon the exercise of rights of rescission or other rights of action
(including claims for damages) or otherwise, to the extent relating to the
purchase price of the Notes or the Fixed Rate Notes or amounts corresponding to
such principal, premium, if any, or interest on the Notes or the Fixed Rate
Notes.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
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22
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Special Record Date" for the payment of any Defaulted Interest on the
Notes means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company that is
expressly subordinated in right of payment to the Notes.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time-deposit accounts, certificates of deposit and money-
market deposits maturing within 360 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $250 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank or trust company meeting the qualifications
described in clause (ii) above, (iv) commercial paper, maturing not more than
270 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's or "A-1"
(or higher) according to S&P, (v) securities with maturities
<PAGE>
23
of six months or less from the date of acquisition issued or fully and
unconditionally guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or Moody's and (vi) overnight and demand deposits
in a bank or trust company meeting the qualifications described in clause (ii)
above.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors (including film
payables) created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was executed, except as provided in
Section 905.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder.
"UATC" means United Artists Theatre Circuit, Inc., a wholly owned
subsidiary of the Company.
"United States" means the United States of America (including the states
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below; and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 1009 and (C), if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 1008 and Section
1009. The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that (i) no Default or Event of Default shall
have occurred and be continuing at the time of or after giving effect to such
designation and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation would, if Incurred at such time,
have been permitted
<PAGE>
24
to be Incurred (and shall be deemed to have been Incurred) for all purposes of
the Indenture. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Global Note" has the meaning set forth in Section 201.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"U.S. Physical Note" has the meaning set forth in Section 201.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
"Working Day" means any day which is not a Saturday, Sunday or a day on
which banking institutions in New York, New York or London, England are
authorized or obligated by law or executive order to close.
<PAGE>
25
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company and any other
obligor on the Notes (if applicable) shall, at the request of the Trustee,
furnish to the Trustee an Officers' Certificate in form and substance reasonably
acceptable to the Trustee stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and, at the request of the Trustee, an Opinion of Counsel to the
effect that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that in the case of any such application or
request as to which the furnishing of any such documents is specifically
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Each certificate or opinion with respect to compliance with a covenant
or condition provided for in this Indenture (other than pursuant to Section
1007) shall include:
(1) a statement that each individual or firm signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual or such
firm, he or it has made such examination or investigation as is necessary
to enable him or it to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
individual or such firm, such covenant or condition has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
<PAGE>
26
Any certificate or opinion of an officer of the Company or any other
obligor on the Notes may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his or her
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company or any other obligor on the Notes stating that the information with
respect to such factual matters is in the possession of the Company or any other
obligor on the Notes.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. Except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Note Register.
(d) If the Company shall solicit from the Holders of Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or
<PAGE>
27
pursuant to Board Resolution, fix in advance a record date for the determination
of Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no obligation
to do so. Notwithstanding TIA Section 316(c), such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation of
Holders generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding Notes
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
Outstanding Notes shall be computed as of such record date; provided that no
such authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than eleven months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
SECTION 105. Notices, Etc., to Trustee, Company and Agent Bank.
-------------------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or any other obligor
on the Notes shall be sufficient for every purpose hereunder if made,
given, furnished or delivered in writing and mailed, first-class postage
prepaid, or delivered by recognized overnight courier, to or with the
Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or delivered in writing, or mailed, first-class
postage prepaid, or delivered by recognized overnight courier, to the
Company addressed to it at the address of its principal office, for the
attention of the Chief Financial Officer, specified in the first paragraph
of this Indenture or at any other address previously furnished in writing
to the Trustee by the Company, or
<PAGE>
28
(3) the Agent Bank by the Company, the Trustee or any Holder shall be
sufficient for any purpose hereunder if made, given, furnished or delivered
in writing to or with the Agent Bank addressed to it as set forth in the
Credit Agreement, or at any other address previously furnished in writing
to the Company and the Trustee by the Agent Bank.
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice of any event to Holders of
Notes by the Company or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-
class postage prepaid, to each such Holder affected by such event, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Any notice mailed to a Holder in the manner herein prescribed shall be
conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.
In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be sufficient giving of
such notice for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
<PAGE>
29
SECTION 109. Separability Clause.
-------------------
In case any provision in this Indenture or in any Note 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 110. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, any Authenticating Agent, any
Paying Agent, any Notes Registrar and their successors hereunder and the Holders
and, with respect to any provisions hereof relating to the subordination of the
Notes or the rights of holders of Senior Indebtedness, the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 111. Governing Law.
-------------
This Indenture and the Notes shall be governed by and construed in
accordance with the law of the State of New York. Upon the effectiveness of the
Shelf Registration Statement or the consummation of the Exchange Offer, this
Indenture will be subject to the provisions of the Trust Indenture Act that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 112. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity or Maturity of any Note shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture or of
any Note) payment of principal (and premium, if any) or interest need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date or at the Stated
Maturity or Maturity; provided that no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date, Stated Maturity or
Maturity, as the case may be.
SECTION 113. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by Section 318(c) of the TIA, the imposed duties shall
control.
<PAGE>
30
SECTION 114. No Recourse Against Others.
--------------------------
No recourse for the payment of the principal of, premium, if any, or
interest on any of the Notes or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or in any of the Notes or because of
the creation of any Indebtedness represented by this Indenture or the Notes,
shall be had against any incorporator, stockholder, officer, director, employee
or controlling person, as such, of the Company or of any successor Person
thereof or of any subsidiary guarantor or of any successor person, as such,
whether by virtue of any constitution, statute, rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
SECTION 115. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which shall be original; but such counterparts shall together constitute but one
and the same instrument.
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally.
---------------
The Initial Notes shall be known as the "Floating Rate Senior
Subordinated Notes due 2007" and the Exchange Notes shall be known as the
"Floating Rate Series B Senior Subordinated Notes due 2007," in each case, of
the Company. The Notes and the Trustee's certificate of authentication shall be
in substantially the forms set forth in Exhibit A hereto and in this Article,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers of the Company executing such Notes, as evidenced by their execution of
the Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note. Each
Note shall be dated the date of its authentication.
The definitive Notes shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers of the Company executing such Notes, as evidenced by their
execution of such Notes.
<PAGE>
31
Initial Notes offered and sold in reliance on Rule 144A under the
Securities Act shall be issued initially in the form of a single permanent
global Note in substantially the form set forth in Exhibit A and contain each of
the legends set forth in Section 203 (the "U.S. Global Note"), registered in the
name of the nominee of the Depositary, deposited with the Trustee, as custodian
for the Depositary or its nominee, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary or its nominee, as hereinafter provided.
Initial Notes offered and sold in offshore transactions in reliance on
Regulation S under the Securities Act shall be issued initially in the form of a
single temporary global Note in substantially the form set forth in Exhibit A
and contain the legends set forth in Section 203 (the "Temporary Offshore Global
Note"), registered in the name of the nominee of the Depositary, deposited with
the Trustee, as custodian for the Depositary or its nominee, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. At any
time following 41 days after the date hereof (the "Offshore Note Exchange
Date"), upon receipt by the Trustee and the Company of a certificate
substantially in the form set forth in Section 204, a single permanent global
Note substantially in the form of Exhibit A hereto (the "Permanent Offshore
Global Note"; and together with the Temporary Offshore Global Note, the
"Offshore Global Note") duly executed by the Company and authenticated by the
Trustee as hereinafter provided shall be deposited with the Trustee, as
custodian for the Depositary, and the Note Registrar shall reflect on its books
and records the date and a decrease in the principal amount of the Temporary
Offshore Global Note in an amount equal to the principal amount of the
beneficial interest in the Temporary Offshore Global Note transferred. The
aggregate principal amount of the Offshore Global Note may from time to time be
increased or decreased by adjustments made in the records of the Trustee, as
custodian for the Depositary or its nominee, as herein provided. Initial Notes
issued pursuant to Section 305 in exchange for or upon transfer of beneficial
interests in the U.S. Global Note or the Offshore Global Note shall be in the
form of permanent certificated Notes in substantially the form set forth in
Exhibit A containing the Private Placement Legend as set forth in Section 203
(the "U.S. Physical Notes"), or in the form of permanent certificated Notes
substantially in the form set forth in Exhibit A (the "Offshore Physical
Notes"), respectively, as hereinafter provided.
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Note
and the Offshore Global Note are sometimes collectively referred to as the
"Global Notes."
Exchange Notes shall be issued substantially in the form set forth in
Exhibit A.
<PAGE>
32
SECTION 202. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:
This is one of the Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Trustee
Dated: __________ By: _____________________
Authorized Signatory
SECTION 203. Restrictive Legends.
-------------------
Unless and until (i) an Initial Note is sold pursuant to an effective
Shelf Registration Statement or (ii) an Initial Note is exchanged for an
Exchange Note in an Exchange Offer pursuant to an effective Exchange Offer
Registration Statement, in each case pursuant to the Registration Rights
Agreement, (A) each U.S. Global Note and U.S. Physical Note shall bear the
following legend set forth below (the "Private Placement Legend") on the face
thereof and (B) the Offshore Physical Notes and the Temporary Offshore Global
Note shall bear the Private Placement Legend on the face thereof until the
Offshore Note Exchange Date and receipt by the Company and the Trustee of a
certificate substantially in the form provided in Section 204:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903
OR 904 OF REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE
WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144
UNDER THE SECURITIES ACT AND ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR
<PAGE>
33
OF ANY PREDECESSOR AND THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"),
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A INSIDE THE
UNITED STATES, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
PURSUANT TO RULE 904 OF REGULATION S, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED
THAT THE COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO
CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND
(II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OF
TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Each Global Note, whether or not an Initial Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS
<PAGE>
34
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 311 AND 312 OF THE INDENTURE.
SECTION 204. Form of Certificate to Be Delivered After the Offshore
------------------------------------------------------
Note Exchange Date.
- - ------------------
On or after June 1, 1998
State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee (the "Trustee")
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: ___________________
Re: OSCAR I CORPORATION (the "Company")
Floating Rate Senior Subordinated Notes due 2007 (the "Notes")
--------------------------------------------------------------
Ladies and Gentlemen:
This letter relates to $_______________ principal amount of Notes
represented by the temporary offshore global note certificate (the "Temporary
Offshore Global Note"). Pursuant to Section 203 of the Indenture dated as of
April 21, 1998 (the "Indenture") relating to the Notes, we hereby certify that
(1) we are the beneficial owner of such principal amount of Notes represented by
the Temporary Offshore Global Note and (2) we are a Non-U.S. Person to whom the
Notes could be transferred in accordance with Rule 904 of Regulation S
promulgated under the Securities Act of 1933, as amended (the "Regulation S").
[Accordingly, you are hereby requested to exchange the Temporary Offshore Global
Note for an unlegended Permanent Offshore Global Note representing
<PAGE>
35
the undersigned's interest in the principal amount of Notes represented by the
Temporary Offshore Global Note, all in the manner provided for in the
Indenture.] [Accordingly, you are hereby requested to issue an Offshore Physical
Note representing the undersigned's interest in the principal amount of Notes
represented by the Temporary Offshore Global Note, all in the manner provided by
the Indenture.]
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. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By: ______________________________________
Authorized Signature
ARTICLE THREE
THE NOTES
SECTION 301. Amount.
------
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $50,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 303, 304, 305, 306, 311,
312, 906, 1013, 1014 or 1108 or pursuant to an Exchange Offer.
The Initial Notes shall be known and designated as the "Floating Rate
Senior Subordinated Notes due 2007" and the Exchange Notes shall be known and
designated as the "Floating Rate Series B Senior Subordinated Notes due 2007,"
in each case, of the Company. The Stated Maturity of the Notes shall be October
15, 2007, and they shall bear interest from April 21, 1998 or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for.
Interest on the Notes will accrue at a rate equal to the Applicable
LIBOR Rate for the Quarterly Period immediately preceding the applicable
Interest Payment Date and will be payable quarterly in arrears on April 15, July
15, October 15 and January 15 of each year, or if any such day
<PAGE>
36
is not a Business Day, on the next succeeding Business Day, commencing on July
15, 1998 (each an "Interest Payment Date"), until the principal thereof is paid
in full and to the Person in whose name the Note (or any predecessor Note) is
registered at the close of business on the immediately preceding April 1, July
1, October 1 and January 1 of each year (each, a "Regular Record Date").
Interest will be computed on the Notes as specified in Section 310 hereof.
The principal of (and premium, if any) and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the option of the
Company, interest may be paid (a) by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Note Register or (b) by
wire transfer to an account located in the United States maintained by the
payee.
Holders shall have the right to require the Company to purchase their
Notes, in whole or in part, in the event of a Change in Control pursuant to
Section 1013. The Notes shall be subject to repurchase pursuant to an Offer to
Purchase as provided in Section 1014.
The Notes shall be redeemable as provided in Article Eleven and in the
Notes. The Indebtedness evidenced by the Notes shall be subordinated in right
of payment to Senior Indebtedness as provided in Article Twelve.
SECTION 302. Denominations.
-------------
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Notes shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its President, its Chief Operating
Officer, its Chief Financial Officer or a Vice President. The signature of any
of these officers on the Notes may be the manual or facsimile signatures of the
present or any future such authorized officer and may be imprinted or otherwise
reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
On Company Order, the Trustee shall authenticate for original issue
Initial Notes in an aggregate principal amount not to exceed $50,000,000. On
Company Order, the Trustee shall
<PAGE>
37
authenticate for original issue Exchange Notes in an aggregate principal amount
not to exceed $50,000,000; provided that such Exchange Notes shall be issuable
only upon the valid surrender for cancellation of Initial Notes of a like
aggregate principal amount in accordance with an Exchange Offer pursuant to the
Registration Rights Agreement. In each case, the Trustee shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel of the Company that
it may reasonably request in connection with such authentication of Notes. Such
order shall specify the amount of Notes to be authenticated and the date on
which the original issue of Notes is to be authenticated.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be consolidated
or merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Notes authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Notes executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Notes surrendered for such exchange
and of like principal amount; and the Trustee, upon Company Request of the
successor Person, shall authenticate and deliver Notes as specified in such
request for the purpose of such exchange. If Notes shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 303 in exchange or substitution for or upon registration of
transfer of any Notes, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Notes at the time
Outstanding for Notes authenticated and delivered in such new name.
SECTION 304. Temporary Notes.
---------------
Pending the preparation of definitive Notes, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such
<PAGE>
38
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as conclusively evidenced by their
execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes, upon
surrender of the temporary Notes at the office or agency of the Company in a
Place of Payment, without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Notes, the Company shall execute and, upon Company
Order, the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
SECTION 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register for the Notes (the register maintained in the Corporate
Trust Office of the Trustee and in any other office or agency of the Company in
a Place of Payment being herein sometimes collectively referred to as the "Note
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and of transfers of
Notes. The Note Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. At all reasonable
times, the Note Register shall be open to inspection by the Trustee. The
Trustee is hereby initially appointed as note registrar (the Trustee in such
capacity, together with any successor of the Trustee in such capacity, the "Note
Registrar") for the purpose of registering Notes and transfers of Notes as
herein provided.
Upon surrender for registration of transfer of any Note at the office
or agency in a Place of Payment, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any authorized denomination or
denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Notes may be exchanged for other Notes,
of any authorized denomination and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange (including an exchange of Initial Notes
for Exchange Notes), the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive; provided that no exchange of Initial Notes for Exchange
Notes shall occur until an Exchange Offer Registration Statement shall have been
declared effective by the Commission, the Trustee shall have received an
Officers' Certificate confirming that the Exchange Offer Registration Statement
has been declared effective by the Commission and the Initial Notes to be
exchanged for the Exchange Notes shall be canceled by the Trustee.
<PAGE>
39
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Note Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 303, 304, 906, 1013, 1014 or 1108 not involving
any transfer.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes.
-------------------------------------------
If any mutilated Note is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding, or, in case any such mutilated Note has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon Company Order the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding, or, in case any such destroyed, lost or stolen
Note has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note, shall constitute an original
additional contractual obligation of the Company and any other obligor upon the
Notes, whether or not the mutilated, destroyed, lost or stolen Note shall
<PAGE>
40
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 307. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the Place of Payment;
provided, however, that each installment of interest on any Note may at the
Company's option be paid (i) by mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears on the Note Register or (ii) by wire
transfer to an account located in the United States maintained by the payee.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such defaulted interest and, if applicable, interest on
such defaulted interest (to the extent lawful) at the rate specified in the
Notes (such defaulted interest and, if applicable, interest thereon herein
collectively called "Defaulted Interest") may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. 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 "Special Record Date"), and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit on
or prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company,
<PAGE>
41
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given in the manner provided in
Section 106, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so given, such Defaulted Interest shall be
paid to the Persons in whose name the Registered Notes (or their respective
Predecessor Notes) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause
(2).
(2) The Company may make payment of any Defaulted Interest on the
Notes in any other lawful manner not inconsistent with the requirements of
any securities exchange on which such Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305,
each Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 308. Persons Deemed Owners.
---------------------
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of (and premium, if any, on) and
(subject to Sections 305 and 307) interest on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
------------
All Notes surrendered for payment, redemption, repayment at the option
of the Holder, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Notes so
delivered to the Trustee shall be promptly canceled by it. The Company may at
any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold, and all Notes so delivered
shall be promptly canceled by the Trustee. If the Company shall so acquire any
of the Notes, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation. No Notes shall be
authenticated in lieu of or in exchange for any Notes
<PAGE>
42
canceled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Notes held by the Trustee shall be disposed of by the
Trustee in accordance with its customary procedures unless by Company Order the
Company shall direct that canceled Notes be returned to it.
SECTION 310. Computation of Interest.
-----------------------
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months. The amount of interest for each day that the Notes are
outstanding (the "Daily Interest Amount") will be calculated by dividing the
Applicable LIBOR Rate for the Quarterly Period with respect to which such
interest is to be calculated by 360 and multiplying the result by the principal
amount of the Notes outstanding on such date. The amount of interest to be paid
on the Notes for the Initial Quarterly Period and each Quarterly Period will be
calculated by adding the Daily Interest Amounts for each day in the Quarterly
Period.
SECTION 311. Book-Entry Provisions for Global Notes.
--------------------------------------
(a) Each Global Note initially shall (i) be registered in the name of
the Depositary for such Global Notes or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for such Depositary and (iii) bear legends
as set forth in Section 203.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a beneficial owner of any Note. The registered holder of a Global
Note may grant proxies and otherwise authorize any person, including Agent
Members and persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the Notes.
(b) Interests of beneficial owners in a Global Note may be transferred
in accordance with the applicable rules and procedures of the Depositary and the
provisions of Section 312. Transfers of a Global Note shall be limited to
transfers of such Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees, except (i) as otherwise set forth in
Section 312 and (ii) U.S. Physical Notes or Offshore Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the U.S. Global Note or the Offshore Global Note, respectively, in the event
that the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the applicable Global Note or the Depositary
<PAGE>
43
ceases to be a "Clearing Agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company within 90 days or an Event
of Default has occurred and is continuing and the Note Registrar has received a
request from the Depositary. In connection with a transfer of an entire Global
Note to beneficial owners pursuant to clause (ii) of this paragraph (b), the
applicable Global Note shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the applicable Global Note, an equal aggregate
principal amount at maturity of U.S. Physical Notes (in the case of the U.S.
Global Note) or Offshore Physical Notes (in the case of the Offshore Global
Note), as the case may be, of authorized denominations.
(c) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in the
other Global Note will, upon transfer, cease to be an interest in such Global
Note and become an interest in the other Global Note and, accordingly, will
thereafter be subject to all transfer restrictions, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(d) Any U.S. Physical Note delivered in exchange for an interest in
the U.S. Global Note pursuant to paragraph (b) of this Section shall, unless
such exchange is made on or after the Resale Restriction Termination Date and
except as otherwise provided in Section 312, bear the Private Placement Legend.
SECTION 312. Transfer Provisions.
-------------------
Unless and until (i) an Initial Note is sold pursuant to an effective
Registration Statement, or (ii) an Initial Note is exchanged for an Exchange
Note in the Exchange Offer pursuant to an effective Registration Statement, in
each case, pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) General. The provisions of this Section 312 shall apply to all
-------
transfers involving any Physical Note and any beneficial interest in any
Global Note.
(b) Certain Definitions. As used in this Section 312 only, "delivery"
-------------------
of a certificate by a transferee or transferor means the delivery to the
Note Registrar by such transferee or transferor of the applicable
certificate duly completed; "holding" includes both possession of a
Physical Note and ownership of a beneficial interest in a Global Note, as
the context requires; "transferring" a Global Note means transferring that
portion of the principal amount of the transferor's beneficial interest
therein that the transferor has notified the Note Registrar that it has
agreed to transfer; and "transferring" a Physical Note means transferring
that portion of the principal amount thereof that the transferor has
notified the Note Registrar that it has agreed to transfer.
<PAGE>
44
As used in this Indenture, "Accredited Investor Certificate" means a
certificate substantially in the form set forth in Section 313; "Regulation
S Certificate" means a certificate substantially in the form set forth in
Section 314; "Rule 144A Certificate" means a certificate substantially in
the form set forth in Section 315; and "Non-Registration Opinion and
Supporting Evidence" means a written opinion of counsel reasonably
acceptable to the Company to the effect that, and such other certification
or information as the Company may reasonably require to confirm that, the
proposed transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.
(c) [Intentionally Omitted]
(d) Deemed Delivery of a Rule 144A Certificate in Certain
-----------------------------------------------------
Circumstances. A Rule 144A Certificate, if not actually delivered, will be
-------------
deemed delivered if (A) (i) the transferor advises the Company and the
Trustee in writing that the relevant offer and sale were made in accordance
with the provisions of Rule 144A (or, in the case of a transfer of a
Physical Note, the transferor checks the box provided on the Physical Note
to that effect) and (ii) the transferee advises the Company and the Trustee
in writing that (x) it and, if applicable, each account for which it is
acting in connection with the relevant transfer, is a qualified
institutional buyer within the meaning of Rule 144A, (y) it is aware that
the transfer of Notes to it is being made in reliance on the exemption from
the provisions of Section 5 of the Securities Act provided by Rule 144A,
and (z) prior to the proposed date of transfer it has been given the
opportunity to obtain from the Company the information referred to in Rule
144A(d)(4), and has either declined such opportunity or has received such
information (or, in the case of a transfer of a Physical Note, the
transferee signs the certification provided on the Physical Note to that
effect); or (B) the transferor holds the U.S. Global Note and is
transferring to a transferee that will take delivery in the form of the
U.S. Global Note.
(e) Procedures and Requirements.
---------------------------
1. If the proposed transfer occurs prior to the Offshore Note
Exchange Date, and the proposed transferor holds:
(A) a U.S. Physical Note which is surrendered to the Note
Registrar, and the proposed transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and, if
required by the Company, a Non-Registration Opinion and
Supporting Evidence, or delivers (or is deemed to have
delivered pursuant to clause (d) above) a Rule 144A
Certificate and the proposed transferee requests delivery in
the form of a U.S. Physical
<PAGE>
45
Note, then the Note Registrar shall (x) register such transfer in the
name of such transferee and record the date thereof in its books and
records, (y) cancel such surrendered U.S. Physical Note and (z)
deliver a new U.S. Physical Note to such transferee duly registered in
the name of such transferee in principal amount equal to the principal
amount being transferred of such surrendered U.S. Physical Note;
(ii) delivers (or is deemed to have delivered pursuant to
clause (d) above) a Rule 144A Certificate and the proposed transferee
is or is acting through an Agent Member and requests that the proposed
transferee receive a beneficial interest in the U.S. Global Note, then
the Note Registrar shall (x) cancel such surrendered U.S. Physical
Note, (y) record an increase in the principal amount of the U.S.
Global Note equal to the principal amount being transferred of such
surrendered U.S. Physical Note and (z) notify the Depositary in
accordance with the procedures of the Depositary that it approves of
such transfer; or
(iii) delivers a Regulation S Certificate and the proposed
transferee is or is acting through an Agent Member and requests that
the proposed transferee receive a beneficial interest in the Temporary
Offshore Global Note, then the Note Registrar shall (x) cancel such
surrendered U.S. Physical Note, (y) record an increase in the
principal amount of the Temporary Offshore Global Note equal to the
principal amount being transferred of such surrendered U.S. Physical
Note and (z) notify the Depositary in accordance with the procedures
of the Depositary that it approves of such transfer.
In any of the cases described in this Section 312(e)(1)(A), the Note Registrar
shall deliver to the transferor a new U.S. Physical Note in principal amount
equal to the principal amount not being transferred of such surrendered U.S.
Physical Note, as applicable.
(B) the U.S. Global Note, and the proposed transferee or transferor,
as applicable:
(i) delivers an Accredited Investor Certificate and, if required
by the Company, a Non-Registration Opinion and Supporting Evidence, or
delivers (or is deemed to have delivered pursuant to clause (d) above)
a Rule 144A Certificate and the proposed transferee requests delivery
in the form of a U.S. Physical
<PAGE>
46
Note, then the Note Registrar shall (w) register such transfer in the
name of such transferee and record the date thereof in its books and
records, (x) record a decrease in the principal amount of the U.S.
Global Note in an amount equal to the beneficial interest therein
being transferred, (y) deliver a new U.S. Physical Note to such
transferee duly registered in the name of such transferee in principal
amount equal to the amount of such decrease and (z) notify the
Depositary in accordance with the procedures of the Depositary that it
approves of such transfer;
(ii) delivers (or is deemed to have delivered pursuant to
clause (d) above) a Rule 144A Certificate and the proposed transferee
is or is acting through an Agent Member and requests that the proposed
transferee receive a beneficial interest in the U.S. Global Note, then
the transfer shall be effected in accordance with the procedures of
the Depositary therefor; or
(iii) delivers a Regulation S Certificate and the proposed
transferee is or is acting through an Agent Member and requests that
the proposed transferee receive a beneficial interest in the Temporary
Offshore Global Note, then the Note Registrar shall (w) register such
transfer in the name of such transferee and record the date thereof in
its books and records, (x) record a decrease in the principal amount
of the U.S. Global Note in an amount equal to the beneficial interest
therein being transferred, (y) record an increase in the principal
amount of the Temporary Offshore Global Note equal to the amount of
such decrease and (z) notify the Depositary in accordance with the
procedures of the Depositary that it approves of such transfer.
(C) the Temporary Offshore Global Note, and the proposed transferee or
transferor, as applicable:
(i) delivers an Accredited Investor Certificate and, if required
by the Company, a Non-Registration Opinion and Supporting Evidence, or
delivers (or is deemed to have delivered pursuant to clause (d) above)
a Rule 144A Certificate and the proposed transferee requests delivery
in the form of a U.S. Physical Note, then the Note Registrar shall (w)
register such transfer in the name of such transferee and record the
date thereof in its books and records, (x) record a decrease in the
principal amount of the Offshore Global Note in an amount equal to the
beneficial interest therein
<PAGE>
47
being transferred, (y) deliver a new U.S. Physical Note to such
transferee duly registered in the name of such transferee in principal
amount equal to the amount of such decrease and (z) notify the
Depositary in accordance with the procedures of the Depositary that it
approves of such transfer;
(ii) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or
is acting through an Agent Member and requests that the proposed
transferee receive a beneficial interest in the U.S. Global Note, then
the Note Registrar shall (x) record a decrease in the principal amount
of the Offshore Global Note in an amount equal to the beneficial
interest therein being transferred, (y) record an increase in the
principal amount of the U.S. Global Note equal to the amount of such
decrease and (z) notify the Depositary in accordance with the
procedures of the Depositary that it approves of such transfer; or
(iii) delivers a Regulation S Certificate and the proposed
transferee is or is acting through an Agent Member and requests that
the proposed transferee receive a beneficial interest in the Temporary
Offshore Global Note, then the transfer shall be effected in
accordance with the procedures of the Depositary therefor; provided,
however, that until the Offshore Note Exchange Date occurs, beneficial
interests in the Offshore Global Note may be held only in or through
accounts maintained at the Depositary by Euroclear or Cedel (or by
Agent Members acting for the account thereof), and no person shall be
entitled to effect any transfer or exchange that would result in any
such interest being held otherwise than in or through such an account.
2. If the proposed transfer occurs on or after the Offshore Note Exchange
Date and the proposed transferor holds:
(A) a U.S. Physical Note which is surrendered to the Note Registrar,
and the proposed transferee or transferor, as applicable:
(i) delivers an Accredited Investor Certificate and, if required
by the Company, a Non-Registration Opinion and Supporting Evidence, or
delivers (or is deemed to have delivered pursuant to clause (d) above)
a Rule 144A Certificate and the proposed transferee requests delivery
in the form of a U.S. Physical
<PAGE>
48
Note, then the procedures set forth in Section 312(e)(1)(A)(i) shall apply;
(ii) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or is
acting through an Agent Member and requests that the proposed transferee
receive a beneficial interest in the Offshore Global Note, then the
procedures set forth in Section 312(e)(1)(A)(ii) shall apply; or
(iii) delivers a Regulation S Certificate, then the Note
Registrar shall cancel such surrendered U.S. Physical Note and at the
direction of the transferee, either:
(x) register such transfer in the name of such transferee,
record the date thereof in its books and records and deliver a new
Offshore Physical Note to such transferee in principal amount
equal to the principal amount being transferred of such
surrendered U.S. Physical Note, or
(y) if the proposed transferee is or is acting through an
Agent Member, record an increase in the principal amount of the
Offshore Global Note equal to the principal amount being
transferred of such surrendered U.S. Physical Note and notify the
Depositary in accordance with the procedures of the Depositary
that it approves of such transfer.
In any of the cases described in this Section 312(e)(2)(A)(i), (ii) or
(iii)(x), the Note Registrar shall deliver to the transferor a new U.S.
Physical Note in principal amount equal to the principal amount not being
transferred of such surrendered U.S. Physical Note, as applicable.
(B) the U.S. Global Note, and the proposed transferee or transferor, as
applicable:
(i) delivers an Accredited Investor Certificate and, if required
by the Company, a Non-Registration Opinion and Supporting Evidence, or
delivers (or is deemed to have delivered pursuant to clause (d) above) a
Rule 144A Certificate and the proposed transferee requests delivery in the
form of a U.S. Physical
<PAGE>
49
Note, then the procedures set forth in Section 312(e)(1)(B)(i) shall apply;
or
(ii) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or is
acting through an Agent Member and requests that the proposed transferee
receive a beneficial interest in the U.S. Global Note, then the procedures
set forth in Section 312(e)(1)(B)(ii) shall apply; or
(iii) delivers a Regulation S Certificate, then the Note
Registrar shall (x) record a decrease in the principal amount of the U.S.
Global Note in an amount equal to the beneficial interest therein being
transferred, (y) notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer and (z) at the direction
of the transferee, either:
(x) register such transfer in the name of such transferee,
record the date thereof in its books and records and deliver a
new Offshore Physical Note to such transferee in principal amount
equal to the amount of such decrease, or
(y) if the proposed transferee is or is acting through an
Agent Member, record an increase in the principal amount of the
Offshore Global Note equal to the amount of such decrease.
(C) an Offshore Physical Note which is surrendered to the Note Registrar,
and the proposed transferee or transferor, as applicable:
(i) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or is
acting through an Agent Member and requests delivery in the form of the
U.S. Global Note, then the Note Registrar shall (x) cancel such surrendered
Offshore Physical Note, (y) record an increase in the principal amount of
the U.S. Global Note equal to the principal amount being transferred of
such surrendered Offshore Physical Note and (z) notify the Depositary in
accordance with the procedures of the Depositary that it approves of such
transfer;
<PAGE>
50
(ii) where the proposed transferee is or is acting through an
Agent Member, requests that the proposed transferee receive a beneficial
interest in the Offshore Global Note, then the Note Registrar shall (x)
cancel such surrendered Offshore Physical Note, (y) record an increase in
the principal amount of the Offshore Global Note equal to the principal
amount being transferred of such surrendered Offshore Physical Note and (z)
notify the Depositary in accordance with the procedures of the Depositary
that it approves of such transfer; or
(iii) does not make a request covered by Section 312(e)(2)(C)(i)
or Section 312(e)(2)(C)(ii), then the Note Registrar shall (x) register
such transfer in the name of such transferee and record the date thereof in
its books and records, (y) cancel such surrendered Offshore Physical Note
and (z) deliver a new Offshore Physical Note to such transferee duly
registered in the name of such transferee in principal amount equal to the
principal amount being transferred of such surrendered Offshore Physical
Note.
In any of the cases described in this Section 312(e)(2)(C), the Note
Registrar shall deliver to the transferor a new Offshore Physical Note in
principal amount equal to the principal amount not being transferred of such
surrendered Offshore Physical Note, as applicable.
(D) the Offshore Global Note, and the proposed transferee or transferor,
as applicable:
(i) delivers (or is deemed to have delivered pursuant to clause
(d) above) a Rule 144A Certificate and the proposed transferee is or is
acting through an Agent Member and requests delivery in the form of the
U.S. Global Note, then the Note Registrar shall (x) record a decrease in
the principal amount of the Offshore Global Note in an amount equal to the
beneficial interest therein being transferred, (y) record an increase in
the principal amount of the U.S. Global Note equal to the amount of such
decrease and (z) notify the Depositary in accordance with the procedures of
the Depositary that it approves of such transfer;
(ii) where the proposed transferee is or is acting through an
Agent Member, requests that the proposed transferee receive a beneficial
interest in the Offshore Global Note, then the transfer shall
<PAGE>
51
be effected in accordance with the procedures of the Depositary
therefor; or
(iii) does not make a request covered by Section 312(e)(2)(D)(i)
or Section 312(e)(2)(D)(ii), then the Note Registrar shall (w)
register such transfer in the name of such transferee and record the
date thereof in its books and records, (x) record a decrease in the
principal amount of the Offshore Global Note in an amount equal to the
beneficial interest therein being transferred, (y) deliver a new
Offshore Physical Note to such transferee duly registered in the name
of such transferee in principal amount equal to the amount of such
decrease and (z) notify the Depositary in accordance with the
procedures of the Depositary that it approves of such transfer.
(f) Execution, Authentication and Delivery of Physical Notes. In any case
--------------------------------------------------------
in which the Note Registrar is required to deliver a Physical Note to a
transferee or transferor, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, such Physical Note.
(g) Certain Additional Terms Applicable to Physical Notes. Any transferee
-----------------------------------------------------
entitled to receive a Physical Note may request that the principal amount
thereof be evidenced by one or more Physical Notes in any authorized
denomination or denominations and the Note Registrar shall comply with such
request if all other transfer restrictions are satisfied.
(h) Transfers Not Covered by Section 312(e). The Note Registrar shall
---------------------------------------
effect and record, upon receipt of a written request from the Company so to do,
a transfer not otherwise permitted by Section 312(e), such recording to be done
in accordance with the otherwise applicable provisions of Section 312(e), upon
the furnishing by the proposed transferor or transferee of a Non-Registration
Opinion and Supporting Evidence.
(i) General. By its acceptance of any Note bearing the Private Placement
-------
Legend, each Holder of such Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in the Indenture. The
Note Registrar shall not register a transfer of any Note unless such transfer
complies with the restrictions with respect thereto set forth in this Indenture.
The Note Registrar shall not be required to determine (but may rely upon a
determination made by the Company) the sufficiency or accuracy of any such
certifications, legal opinions, other information or document.
<PAGE>
52
(j) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Note Registrar shall deliver only Notes that
bear the Private Placement Legend unless (i) the circumstances exist
contemplated by the fourth paragraph of Section 201 (with respect to an
Offshore Physical Note) or the requested transfer is at least two years
after the original issue date of the Initial Note (with respect to any
Physical Note), (ii) there is delivered to the Note Registrar an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer
are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Notes are exchanged for Exchange Notes
pursuant to an Exchange Offer.
SECTION 313. Form of Accredited Investor Certificate.
---------------------------------------
Transferee Letter of Representation
-----------------------------------
State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee (the "Trustee")
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: ___________________
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Floating Rate Senior Subordinated Notes due 2007 (the
"Notes") of Oscar I Corporation (the "Company"), we confirm that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of
1933, as amended (the "Securities Act")) purchasing for our own account or
for the account of such an institutional "accredited investor," and we are
acquiring the Notes for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act or other applicable securities law and we 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.
<PAGE>
53
2. We understand and acknowledge that the Notes have not been
registered under the Securities Act, or any other applicable securities law
and may not be offered, sold or otherwise transferred except in compliance
with the registration requirements of the Securities Act or any other
applicable securities law, or pursuant to an exemption therefrom, and in
each case in compliance with the conditions for transfer set forth below.
We agree on our own behalf and on behalf of any investor account for which
we are purchasing Notes to offer, sell or otherwise transfer such Notes
prior to the date which is two years after the later of the date of
original issue and the last date on which the Company or any affiliate of
the Company was the owner of such Notes (or any predecessor thereto) (the
"Resale Restriction Termination Date") only (a) to the Company or any
subsidiary thereof, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) for so long as the Notes
are eligible for resale pursuant to Rule 144A under the Securities Act
("Rule 144A"), to a person we reasonably believe is a "Qualified
Institutional Buyer" within the meaning of Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales to non-U.S. persons that occur outside the
United States within the meaning of Regulation S under the Securities Act,
or (e) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases
to any requirement of law that the disposition of our property or the
property of such investor account or accounts be at all times within our or
their control and to compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the
Resale Restriction Termination Date. If any resale or other transfer of the
Notes is proposed to be made pursuant to clause (d) or (e) above prior to
the Resale Restriction Termination Date, the transferor shall deliver to
the trustee (the "Trustee") under the Indenture pursuant to which the Notes
are issued a letter from the transferee substantially in the form of this
letter, which shall provide, among other things, that the transferee is a
person or entity as defined in paragraph 1 of this letter and that it is
acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. We acknowledge that the Company and the
Trustee reserve the right prior to any offer, sale or other transfer of the
Notes pursuant to clauses (d) and (e) above prior to the Resale Restriction
Termination Date to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and the
Trustee.
3. We are acquiring the Notes purchased by us for our own account or
for one or more accounts as to each of which we exercise sole investment
discretion.
4. 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 proceeding or official
inquiry with respect to the matters covered hereby.
<PAGE>
54
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
(Name of Purchaser)
By:_______________________________________
Date:_____________________________________
Upon transfer, the Notes would be registered in the name of the new
beneficial owner as follows:
<TABLE>
<CAPTION>
NAME ADDRESS TAXPAYER ID NUMBER
- - ------- ------- ------------------
<S> <C> <C>
</TABLE>
Date of this Certificate: _________ __, 199_
<PAGE>
55
SECTION 314. Form of Regulation S Certificate.
--------------------------------
Regulation S Certificate
------------------------
To: State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee (the "Trustee")
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: ____________________
Re: Oscar I Corporation (the "Company")
Floating Rate Senior Subordinated Notes due 2007 (the "Notes")
--------------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $____ aggregate principal
amount of Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S ("Regulation S") under the Securities Act of 1933,
as amended (the "Securities Act"), and accordingly, we hereby certify as
follows:
1. The offer of the Notes was not made to a person in the United
States (unless such person or the account held by it for which it is acting
is excluded from the definition of "U.S. person" pursuant to Rule 902(o) of
Regulation S under the circumstances described in Rule 902(i)(3) of
Regulation S) or specifically targeted at an identifiable group of U.S.
citizens abroad.
2. Either (a) at the time the buy order was originated, the buyer was
outside the United States or we and any person acting on our behalf
reasonably believed that the buyer was outside the United States or (b) the
transaction was executed in, on or through the facilities of a designated
offshore securities market, and neither we nor any person acting on our
behalf knows that the transaction was pre-arranged with a buyer in the
United States.
3. Neither we, any of our affiliates, nor any person acting on our or
their behalf has made any directed selling efforts in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable.
4. The proposed transfer of Notes is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
<PAGE>
56
5. If we are a dealer or a person receiving a selling concession or
other fee or remuneration in respect of the Notes, and the proposed
transfer takes place before the Offshore Note Exchange Date referred to in
the Indenture, dated as of April 21, 1998, among the Company and the
Trustee, or we are an officer or director of the Company or a distributor,
we certify that the proposed transfer is being made in accordance with the
provisions of Rules 903 and 904(c) of Regulation S.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[NAME OF SELLER]
By:__________________________
Name:
Title:
Address:
Date of this Certificate: __________ __, 199_
<PAGE>
57
SECTION 315. Form of Rule 144A Certificate.
-----------------------------
Rule 144A Certificate
---------------------
To: State Street Bank and Trust Company
of Missouri, N.A.,
as Trustee (the "Trustee")
Corporate Trust Department
Two International Place -- 4/th/ Floor
Boston, Massachusetts 02110
Attention: _______________________
Re: Oscar I Corporation (the "Company")
Floating Rate Senior Subordinated Notes due 2007 (the "Notes")
--------------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of $____ aggregate principal
amount of Notes, we confirm that such sale has been effected pursuant to and in
accordance with Rule 144A ("Rule 144A") under the Securities Act of 1933, as
amended (the "Securities Act"). We are aware that the transfer of Notes to us
is being made in reliance on the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A. Prior to the date of this Certificate
we have been given the opportunity to obtain from the Company the information
referred to in Rule 144A(d)(4), and have either declined such opportunity or
have received such information.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER]
By:__________________________
Name:
Title:
Address:
Date of this Certificate: __________ __, 199_
<PAGE>
58
SECTION 316. CUSIP Numbers.
-------------
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers, and, if so, the Trustee shall
use such "CUSIP" numbers in addition to serial numbers in notices of redemption,
repurchase or other notices to Holders as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such CUSIP numbers either as printed on the Notes or as contained
in any notice of a redemption or repurchase and that reliance may be placed only
on the serial or other identification numbers printed on the Notes, and any such
redemption or repurchase shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Trustee of any change in the
CUSIP numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall, upon Company Request, cease to be of further
effect with respect to Notes (except as to any surviving rights of registration
of transfer or exchange of Notes expressly provided for) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when
(1) either
(A) all Notes theretofore authenticated and delivered (other
than (i) Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306, and (ii) Notes
for whose payment money has theretofore been deposited in trust with
the Trustee or any Paying Agent or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee
for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated Maturity
within one year, or
<PAGE>
59
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest on the Notes to the date of such deposit (in the
case of Notes which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument or agreement to which the Company is a party or by which it is
bound;
(3) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(4) the Company has delivered irrevocable instructions to the Trustee
to apply the deposited money toward the payment of such Notes at maturity
or the Redemption Date, as the case may be; and
(5) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606, the obligations of
the Company to any Authenticating Agent under Section 612 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying
<PAGE>
60
Agent (including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 401 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 401; provided that if the Company has
made any payment of principal of, premium, if any, or interest on any Notes
because of 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 FIVE
REMEDIES
SECTION 501. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at Maturity, upon
acceleration, redemption or otherwise, whether or not such payment is
prohibited by the provisions of Article Twelve;
(2) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30
days, whether or not such payment is prohibited by the provisions of
Article Twelve;
(3) default in the performance or breach of the provisions of Article
Eight or the failure to make or consummate an Offer to Purchase in
accordance with Section 1013 or Section 1014;
(4) default in the performance or breach of any covenant or agreement
of the Company in this Indenture or under the Notes (other than a default
specified in clause (1),
<PAGE>
61
(2) or (3) of this Section) and such default or breach continues for a
period of 60 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Outstanding
Notes;
(5) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereinafter be created, (A) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (B) the failure to make a principal payment at the
final (but not any interim) fixed maturity and such defaulted payment shall
not have been made, waived or extended within 30 days of such payment
default;
(6) any final judgment or order (to the extent not covered by
insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company or any Significant Subsidiary and shall not
be paid, discharged or vacated, and there shall be any period of 30
consecutive days following entry of the final judgment or order that causes
the aggregate principal amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed
$10 million during a stay of enforcement of such final judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
(7) a court having competent jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any Significant
Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B) appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary and, in each case, such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days;
(8) the Company or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any
general assignment for the benefit of creditors;
<PAGE>
62
(9) the Company fails to redeem all of the Company's Preferred Stock
within 60 days after the Closing Date; or
(10) UATC fails to redeem the Senior Secured Notes within 60 days
after the Closing Date.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 501 that occurs with respect to the Company) occurs
and is continuing under this Indenture, then in every such case the Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Notes, by written notice to the Company (and to the Trustee if such notice is
given by the Holders), may, and the Trustee at the written request of such
Holders shall, declare the principal of, premium, if any, and accrued interest
on all of the Outstanding Notes to be immediately due and payable. Upon a
declaration of acceleration (an "Acceleration Notice"), such principal of,
premium, if any, and accrued interest shall be immediately due and payable;
provided, however, that if there are any amounts outstanding under the Credit
Agreement, such declaration shall not become effective until the earlier of (A)
an acceleration of the Indebtedness under the Credit Agreement and (ii) five (5)
Business Days after receipt by the Company and the Agent Bank of such
Acceleration Notice. In the event of a declaration of acceleration because of
an Event of Default set forth in clause (5) of Section 501 has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to clause (5) of Section 501 be remedied or cured by the Company or the relevant
Significant Subsidiary or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If
an Event of Default specified in clause (7) or (8) of Section 501 above occurs
with respect to the Company, the principal of, premium, if any, and accrued
interest on the Outstanding Notes shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder. The Holders of at least a majority in aggregate principal amount of
the Outstanding Notes by written notice to the Company and to the Trustee, may
waive all past defaults and rescind and annul a declaration of acceleration and
its consequences if (1) all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, and interest on the Notes that
have become due solely by such declaration of acceleration, have been cured or
waived and (2) the recission would not conflict with any judgment or decree of a
court of competent jurisdiction.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
- - -------
The Company covenants that if
<PAGE>
63
(1) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Note at the Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Notes, the whole amount then due and payable on
such Notes for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by such Notes, and, in addition thereto, 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.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company (in accordance with the applicable Note Guarantee) or any
other obligor upon such Notes and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company or any
other obligor upon such Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture or the Note Guarantees by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, upon the Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
<PAGE>
64
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes, to
take such other actions (including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such matter)
and to file such 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 of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official 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 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 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided, however, that the
Trustee may, on behalf of such Holders, vote for the election of a trustee in
bankruptcy or other similar official.
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
All rights of action and claims under this Indenture, the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
------------------------------
Subject to Article Twelve, any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (or premium, if any) or interest, upon
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65
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
-----
607;
Second: To the payment of the amounts then due and unpaid for
------
principal of (and premium, if any, on) and interest on the Notes in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal (and premium, if any)
and interest, respectively; and
Third: The balance, if any, to the Person or Persons entitled
-----
thereto, including the Company or any other obligor on the Notes, as their
interests may appear or as a court of competent jurisdiction may direct;
provided that all sums due and owing to the Holders and the Trustee have
been paid in full as required by this Indenture.
SECTION 507. Limitation on Suits.
-------------------
A Holder may not pursue any remedy with respect to the Indenture or
the Notes unless:
(1) the Holder gives the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to
the Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity, and during such 60-day
period, the Holders of a majority in aggregate principal amount of the
Outstanding Notes do not give the Trustee a direction that is inconsistent
with the request.
The limitations in clauses (1) through (4) above do not apply to the right of
any Holder of a Note to receive payment of the principal of, premium, if any, or
interest on, such Note or to being suit for the enforcement of any such payment,
on or after the due date expressed in the Notes, which right shall not be
impaired or affected without the consent of the Holder.
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66
SECTION 508. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest.
- - --------------------
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Eleven) and in
such Note of the principal of (and premium, if any, on) and (subject to Section
307) interest on, such Note on the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired or affected without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, any other obligor on the Notes,
the Trustee and the Holders of Notes shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Notes is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
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67
SECTION 512. Control by Holders.
------------------
The Holders of at least a majority in aggregate principal amount of
the Outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that the Trustee may refuse to
following any direction that
(1) conflicts with law or this Indenture,
(2) may involve the Trustee in personal liability, or
(3) the Trustee determines in good faith may be unduly prejudicial to
the rights of Holders of Notes not joining in the giving of such direction,
and
the Trustee may take other action it deems proper that is not inconsistent with
any direction received from Holders of Notes.
SECTION 513. Waiver of Past Defaults.
-----------------------
Subject to Sections 508, 902 and the last paragraph of Section 502,
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes) may on behalf of the Holders of all the Notes
waive any past default hereunder and its consequences under this Indenture,
except a default
(1) in respect of the payment of the principal of (or premium, if any,
on) or interest on any Note, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, any 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 and the Note Guarantees; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.
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68
SECTION 514. Waiver of Stay or Extension Laws.
--------------------------------
Each of the Company and any other obligor on the Notes covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which would prohibit or forgive the Company or any such obligor from
paying all or any portion of the principal of, premium, if any, or interest on
the Notes contemplated herein or in the Notes or which may affect the covenants
or the performance of this Indenture; and each of the Company and any other
obligor on the Notes (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of a Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith or willful misconduct on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but not to verify
the contents thereof.
(b) In case a Default has occurred and is continuing of which a
Responsible Officer of the Trustee has actual knowledge or of which written
notice of such Default shall have been given to the Trustee by the Company, any
other obligor of the Notes or by any Holder, 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 their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
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69
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
------
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in aggregate principal amount of the
Outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 602. Notice of Defaults.
------------------
Within ten days after the earlier of receipt from the Company of
notice of the occurrence of any Default or Event of Default hereunder or the
date when such Default or Event of Default becomes known to the Trustee, the
Trustee shall transmit, in the manner and to the extent provided in TIA Section
313(c), notice of such Default or Event of Default hereunder known to the
Trustee, unless such Default or Event of Default shall have been cured or
waived; provided, however, that, except in the case of a Default or Event of
Default in the payment of the principal of (or premium, if any, on) or interest
on any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interest of the Holders.
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70
SECTION 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of TIA Sections 315(a) through 315(d)
(determined as if the TIA were applicable to this Indenture at all times):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, request and rely upon an Officers' Certificate;
(4) before the Trustee acts or refrains from acting, the Trustee may
consult with counsel of its selection and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) 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 of Notes pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not
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71
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture;
(9) the Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder;
(10) the permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty; and
(11) except for a default under Sections 501(1) or (2) hereof, or any
other event of which the Trustee has "actual knowledge" and which event,
with the giving of notice or the passage of time or both, would constitute
an Event of Default under this Indenture, the Trustee shall not be deemed
to have notice of any default or Event of Default unless specifically
notified in writing of such event by the Company or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding; as
used herein, the term "actual knowledge" means the actual fact or statement
of knowing, without any duty to make any investigation with regard thereto.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 604. Trustee Not Responsible for Recitals or Issuance of
---------------------------------------------------
Notes.
- - -----
The recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Notes, except that
the Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Notes and perform its obligations hereunder and that
the statements made by it in its Statement of Eligibility on Form T-1 supplied
to the Company are true and accurate, subject to the qualifications set forth
therein. Neither the Trustee nor any Authenticating Agent shall be accountable
for the use or application by the Company of Notes or the proceeds thereof.
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72
SECTION 605. May Hold Notes.
--------------
The Trustee, any Authenticating Agent, any Paying Agent, any Note
Registrar or any other agent of the Company or of the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and, subject to
TIA Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Note Registrar or such other agent.
SECTION 606. Money Held in Trust.
-------------------
All money received by the Trustee shall, until used or applied as
herein provided, be held in trust hereunder for the purposes for which they were
received. Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as shall
be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel and costs and expenses of
collection), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee and
its agents for, and to hold it harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
<PAGE>
73
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (and premium, if any, on) or
interest on particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(8) or Section 501(9), the
expenses (including the reasonable charges and expenses of its counsel) of and
the compensation of the Trustee for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and which shall have an
office in The City of New York, and shall have or be wholly owned by an entity
having a combined capital and surplus of at least $50,000,000. If the Trustee
does not have an office in The City of New York, the Trustee may appoint an
agent in The City of New York reasonably acceptable to the Company to conduct
any activities which the Trustee may be required under this Indenture to conduct
in The City of New York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 609. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 610.
(b) The Trustee may resign at any time with respect to the Notes by
giving written notice thereof to the Company. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee by written
instrument executed by authority of the Board of Directors, a copy of which
shall be delivered to the resigning Trustee and a copy to the successor
<PAGE>
74
trustee. If the instrument of acceptance by a successor Trustee required by
Section 610 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Notes.
(c) The Trustee may be removed at any time with respect to the Notes
by Act of the Holders of not less than a majority in principal amount of the
Outstanding Notes, delivered to the Trustee and to the Company. If the
instrument of acceptance by a successor Trustee required by Section 610 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Notes.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months,
or
(2) the Trustee shall cease to be eligible under Section 608 and shall
fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months,
or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a Custodian of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Notes, or (ii) subject to TIA Section 315(e), any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to all Notes
and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Notes, the Company, by a Board Resolution, shall promptly appoint
a successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Notes shall be appointed by Act of the Holders of a majority in
aggregate principal amount of the Outstanding Notes delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee with respect to
the Notes and to that extent supersede the successor Trustee appointed by the
<PAGE>
75
Company. If no successor Trustee with respect to the Notes shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Note for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Notes.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Notes and each appointment of a successor
Trustee with respect to the Notes to the Holders of Notes in the manner provided
for in Section 106. Each notice shall include the name of the successor Trustee
with respect to the Notes and the address of its Corporate Trust Office.
SECTION 610. Acceptance of Appointment by Successor.
--------------------------------------
(a) Each successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance, such successor Trustee shall be qualified and eligible
under this Article.
SECTION 611. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
- - --------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver
<PAGE>
76
the Notes so authenticated with the same effect as if such successor Trustee had
itself authenticated such Notes. In case at that time any of the Notes shall not
have been authenticated, any successor Trustee may authenticate such Notes
either in the name of any predecessor hereunder or in the name of the successor
Trustee. In all such cases such certificates shall have the full force and
effect which this Indenture provides for, the certificate of authentication of
the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Notes in the name of any predecessor Trustee shall apply only to its successor
or successors by merger, conversion or consolidation.
SECTION 612. Appointment of Authenticating Agent.
-----------------------------------
At any time when any of the Notes remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents with respect to the Notes which shall
be authorized to act on behalf of the Trustee to authenticate Notes and the
Trustee shall give written notice of such appointment to all Holders of Notes
with respect to which such Authenticating Agent will serve, in the manner
provided for in Section 106. Notes so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, and a copy of such instrument shall be promptly furnished to the
Company. Wherever reference is made in this Indenture to the authentication and
delivery of Notes by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
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77
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice of
such appointment to all Holders of Notes, in the manner provided for in Section
106. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time such compensation for its services under this Section as shall be agreed in
writing between the Company and such Authenticating Agent.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Notes designated therein referred to in the within-
mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Trustee
By: __________________________
as Authenticating Agent
By: __________________________
Authorized Officer
<PAGE>
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses.
----------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request, a
list of similar form and content to that in Subsection (a) hereof as of a
date not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished.
SECTION 702. Disclosure of Names and Addresses of Holders.
--------------------------------------------
Every Holder of Notes, by receiving and holding the same, agrees with
the Company and the Trustee that none of the Company or the Trustee or any agent
of either of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
TIA Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under TIA Section 312(b).
SECTION 703. Reports by Trustee.
------------------
Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Notes pursuant to this Indenture, the Trustee
shall transmit to the Holders of Notes (with a copy to the Company at the Place
of Payment), in the manner and to the extent provided in TIA Section 313(c), a
brief report dated as of such May 15 if required by TIA Section 313(a).
<PAGE>
79
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company will not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person or permit any
Person to merge with or into the Company unless: (i) the Company shall be the
continuing Person, or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or that acquired or leased
such property and assets of the Company shall be a corporation organized and
validly existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, all of the obligations of the Company on
all of the Notes and under the Indenture; (ii) immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction on a pro
forma basis the Company, or any Person becoming the successor obligor of the
Notes, as the case may be, could Incur at least $1.00 of Indebtedness under
clause (i) of the first paragraph of subsection (a) of Section 1008; and (iv)
the Company delivers to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clause (iii)) and Opinion
of Counsel, in each case stating that such consolidation, merger or transfer and
such supplemental indenture complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with; provided, however, that clause (iii) above does not apply if, in the good
faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company and any
such transaction shall not have as one of its purposes the evasion of the
foregoing limitations.
SECTION 802. Successor Substituted.
---------------------
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of the Company in accordance with Sections 801, the successor Person
formed by such consolidation or into which the Company is merged or the
successor Person to which such sale, assignment, conveyance, transfer, lease or
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture, with the same effect
as if such successor had been named as the Company herein. When a successor
assumes all the obligations of its predecessor hereunder or the Notes, the
predecessor shall be released from all obligations; provided that in the case of
a transfer by lease, the predecessor shall not be released from the payment of
principal and interest or other obligations on the Notes.
<PAGE>
80
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company or any
other obligor on the Notes, and the assumption by any such successor of the
covenants of the Company or such obligor contained herein and in the Notes
in accordance with Article Eight;
(2) to add to the covenants of the Company or any other obligor upon
the Notes for the benefit of the Holders or to surrender any right or power
conferred upon the Company or any other obligor on the Notes, as
applicable, herein, in the Notes;
(3) to cure any ambiguity, or to correct or supplement any provision
herein or in the Notes which may be defective or inconsistent with any
other provision herein or in the Notes or to make any other provisions with
respect to matters or questions arising under this Indenture or the Notes;
provided that, in each case, such provisions shall not adversely affect the
interests of the Holders;
(4) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act;
(5) to evidence and provide for the acceptance of the appointment of a
successor Trustee under this Indenture; or
(6) to mortgage, pledge, hypothecate or grant a security interest in
favor of the Trustee for the benefit of the Holders as additional security
for the payment and performance of the Company's obligations under this
Indenture, in any property, or assets, including any of which are required
to be mortgaged, pledged or hypothecated, or in which a security interest
is required to be granted to the Trustee pursuant to this Indenture or
otherwise.
<PAGE>
81
SECTION 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
Modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of each
Holder affected thereby, (i) change the Stated Maturity of the principal of, or
any installment of interest on, any Note or alter the optional redemption or
repurchase provisions of any such Note or the Indenture in a manner adverse to
the Holders, (ii) reduce the principal amount of, or premium, if any, or
interest on, any Note, (iii) change the place or currency of payment of
principal of, or premium, if any, or interest on, any Note, (iv) impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity (or, in the case of a redemption, on or after the Redemption
Date) of any Note, (v) reduce the above-stated percentage of outstanding Notes
the consent of whose Holders is necessary to modify or amend the Indenture, (vi)
waive a default in the payment of principal of, premium, if any, or interest on
the Notes, (vii) modify the subordination provisions in a manner adverse to the
Holders, (viii) amend, change or modify the obligation of the Company to make
and consummate an Offer to Purchase with respect to any Asset Sale in accordance
with Section 1014 or the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control in accordance with
Section 1013, including, in each case, amending, changing or modifying any
definition relating thereto in any manner materially adverse to the holders of
the Notes affected thereby, or (ix) reduce the percentage or aggregate principal
amount of outstanding Notes the consent of whose Holders is necessary for waiver
of compliance with certain provisions of the Indenture or for waiver of certain
defaults.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
<PAGE>
82
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Notes to Supplemental Indentures.
---------------------------------------------
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 907. Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Note affected, in
the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
SECTION 908. Effect on Senior Indebtedness.
-----------------------------
No supplemental indenture shall adversely affect the rights of the
holders of Senior Indebtedness under Article Twelve of this Indenture without
the consent of such holders affected thereby.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest.
---------------------------------------------------
The Company covenants and agrees for the benefit of the Holders of
Notes that it will duly and punctually pay the principal of (and premium, if
any, on) and interest on the Notes in accordance with the terms of the Notes and
this Indenture.
<PAGE>
83
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in The City of New York an office or agency
where Notes may be presented or surrendered for payment (the "Place of
Payment"), where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company hereby designates its
offices at 61 Broadway, 15/th/ Floor, Corporate Trust Window, New York, New York
10006 as the Place of Payment.
The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of the Place of Payment. 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, and the Company hereby appoints the Trustee as its agent
to receive such respective presentations, surrenders, notices and demands.
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 any such designation;
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
accordance with the requirements set forth above for Notes for such purposes.
The Company will 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.
SECTION 1003. Money for Notes Payments to Be Held in Trust.
--------------------------------------------
If the Company shall at any time act as its own Paying Agent with
respect to the Notes, it will, on or before each due date of the principal of
(and premium, if any) or interest on any of the Notes, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, prior to or on each due date of the principal of (and premium,
if any, on) or interest on any Notes, deposit with a Paying Agent a sum in same
day funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
<PAGE>
84
The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) and interest on the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal of
(and premium, if any) or interest on the Notes; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
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 (and 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 Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general 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 to the Company, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
<PAGE>
85
SECTION 1004. Corporate Existence.
-------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each Restricted Subsidiary and the corporate rights
(charter and statutory), licenses and franchises of the Company and each
Restricted Subsidiary; provided, however, that, subject to the other provisions
of this Indenture, the Company shall not be required to preserve any such
existence (except the Company), right, license or franchise 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 as a whole
and that the loss thereof is not, and will not be, disadvantageous in any
material respect to the Holders.
SECTION 1005. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (b)
all lawful claims for labor, materials and supplies, which, if unpaid, would by
law become a material liability or lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Company) are being maintained in
accordance with GAAP.
SECTION 1006. Maintenance of Properties.
-------------------------
The Company will cause all material properties owned by the Company or
any Restricted Subsidiary or used or held for use in the conduct of its business
or the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any Restricted Subsidiary and not adverse in
any material respect to the Holders.
<PAGE>
86
SECTION 1007. Statement by Officers as to Default.
-----------------------------------
(a) The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year, an Officers' Certificate stating that a review has been
conducted of the activities of the Company and its Restricted Subsidiaries and
the Company's and its Restricted Subsidiaries' performance under the Indenture
during the preceding fiscal year under the supervision of the signing officers
with a view to determining whether the Company has kept, observed, performed and
fulfilled, and has caused each of its Restricted Subsidiaries to keep, observe,
perform and fulfill its obligations under this Indenture and further stating, as
to each such officer signing such certificate, that the Company during the
preceding fiscal year has kept, observed, performed and fulfilled, and has
caused each of its Restricted Subsidiaries to keep, observe, perform and fulfill
each and every such covenant contained in this Indenture and no Default or Event
of Default occurred during the year and at the date of such certificate there is
no Default or Event of Default which has occurred and is continuing or, if such
signers do know of such Default or Event of Default, the certificate shall
describe its status, with particularity and that, to the best of his or her
knowledge, no event has occurred and remains by reason of which payments on the
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 each is
taking or proposes to take with respect thereto. For purposes of this Section
1007(a), such compliance shall be determined without regard to any period of
grace or requirement of notice under this Indenture.
(b) When any Default or Event of Default has occurred and is
continuing under this Indenture, or if the trustee for or the holder of any
other evidence of Indebtedness of the Company or any Subsidiary gives any notice
or takes any other action with respect to a claimed default (other than with
respect to Indebtedness in the principal amount of less than $10,000,000), the
Company shall deliver to the Trustee by registered or certified mail or by
telegram, telex or facsimile transmission an Officers' Certificate specifying
such event, notice or other action within five Business Days of its occurrence.
SECTION 1008. Limitation on Indebtedness.
--------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes and Indebtedness
existing on the Closing Date, including Acquired Indebtedness at United Artists
Realty Company and United Artists Properties I Corp.); provided that the Company
may Incur Indebtedness, and any Restricted Subsidiary may Incur Acquired
Indebtedness, if, after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds therefrom, (i) the Consolidated
Leverage Ratio would be less than 6:1 and (ii) the Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately preceding the
incurrence of such Indebtedness for which internal financial statements are
available, taken as one period (and after giving pro forma effect to (A) the
incurrence of such Indebtedness and (if applicable) the application of the net
proceeds therefrom, including to refinance
<PAGE>
87
other Indebtedness, as if such Indebtedness was incurred, and the application of
such proceeds occurred, on the first day of such four-quarter period, (B) the
incurrence, repayment or retirement of any other Indebtedness by the Company and
its Restricted Subsidiaries since the first day of such four-quarter period as
if such Indebtedness was incurred, repaid or retired on the first day of such
four-quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such four-quarter period)
and (C) the acquisition (whether by purchase, merger or otherwise) or
disposition (whether by sale, merger or otherwise) of any company, entity or
business acquired or disposed of by the Company or its Restricted Subsidiaries,
as the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition occurred on the first day of such four-quarter
period), would have been at least equal to 1.75 to 1.0.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness under the Credit Agreement in an aggregate principal amount
outstanding at any time not to exceed $450 million, less any amount of such
Indebtedness permanently repaid as provided under Section 1014 and less any
Indebtedness Incurred in reliance on clause (ix) below; (ii) Indebtedness owed
(A) to the Company or (B) to any Restricted Subsidiary; provided that any event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to the
Company or another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of which are used
to refinance or refund, then outstanding Indebtedness (other than the Prop I
Mortgage Notes and Indebtedness Incurred under clause (i), (ii), (iv), (vi) or
(viii) of this paragraph) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, prepayment
penalties, accrued interest, fees and expenses); provided that Indebtedness the
proceeds of which are used to refinance or refund the Notes or Indebtedness that
is pari passu with, or subordinated in right of payment to, the Notes shall only
be permitted under this clause (iii) if (A) in case the Notes are refinanced in
part or the Indebtedness to be refinanced is pari passu with the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Notes, (B) in
case the Indebtedness to be refinanced is subordinated in right of payment to
the Notes, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced is subordinated to
the Notes and (C) such new Indebtedness, determined as of the date of Incurrence
of such new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; and provided further that in no event may
Indebtedness of the Company (other than Indebtedness in the form of a Guarantee
of Indebtedness of a Restricted Subsidiary permitted to be incurred by such
Subsidiary, which
<PAGE>
88
Guarantee is released upon a subsequent refinancing of such Subsidiary's
Indebtedness) be refinanced by means of any Indebtedness of any Restricted
Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in respect of
performance, bid, surety or appeal bonds provided in the ordinary course of
business, (B) under Currency Agreements and Interest Rate Agreements; provided
that such agreements (a) are designed solely to protect the Company or its
Restricted Subsidiaries against fluctuations in foreign currency exchange rates
or interest rates and (b) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder, and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or bid or performance bonds
securing any obligations of the Company or any of its Restricted Subsidiaries
pursuant to such agreements, in any case Incurred in connection with the
disposition of any business, assets or Restricted Subsidiary (other than
Guarantees of Indebtedness Incurred by any Person acquiring all or any portion
of such business, assets or Restricted Subsidiary for the purpose of financing
such acquisition), in a principal amount not to exceed the gross proceeds
actually received by the Company or any Restricted Subsidiary in connection with
such disposition; (v) Indebtedness of the Company, to the extent the net
proceeds thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to defease the
Notes as described below under Section 1402; (vi) Guarantees of the Notes and
Guarantees of Indebtedness of the Company by any Restricted Subsidiary provided
the Guarantee of such Indebtedness is permitted by and made in accordance with
Section 1015; (vii) Indebtedness represented by Capitalized Leases, mortgage
financings or purchase money obligations Incurred to finance all or any part of
the purchase price or cost of construction or improvement of property in an
aggregate principal amount outstanding at any time (together with any
refinancings thereof) not to exceed $25 million; (viii) Indebtedness (in
addition to Indebtedness permitted under clauses (i) through (vii) above and
clause (ix) below) (A) of the Company in an aggregate principal amount
outstanding at any time not to exceed $50 million and (B) of the Company or any
Restricted Subsidiaries in an aggregate principal amount outstanding at any time
not to exceed $15 million, and (ix) Indebtedness Incurred to extend, renew,
refinance or replace any Indebtedness in respect of the Prop I Mortgage Notes
outstanding on the Closing Date or any Indebtedness Incurred to extend, renew,
refinance or replace any such Indebtedness so Incurred (including successive
extensions, renewals, refinancings and replacements thereof).
(b) Notwithstanding any other provision of this Section 1008, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 1008 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness
under this Section 1008, (1) Indebtedness Incurred under the Credit Agreement on
or prior to the Closing Date shall be treated as Incurred pursuant to clause (i)
of the second paragraph of subsection (a) of this
<PAGE>
89
Section 1008, (2) Guarantees, Liens or obligations with respect to letters of
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included and (3) any Liens granted pursuant to
the equal and ratable provisions referred to in Section 1012 shall not be
treated as Indebtedness. For purposes of determining compliance with this
Section 1008, in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described in the above clauses (other
than Indebtedness referred to in clause (1) of the preceding sentence), the
Company, in its sole discretion, shall classify (and from time to time may
reclassify) such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses.
SECTION 1009. Limitation on Restricted Payments.
---------------------------------
(a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on or with respect to its Capital Stock (other than (x)
dividends or distributions payable solely in shares of its Capital Stock (other
than Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions on
Capital Stock of Restricted Subsidiaries held by minority stockholders) held by
Persons other than the Company or any of its Restricted Subsidiaries, (ii)
purchase, redeem, retire or otherwise acquire for value any shares of Capital
Stock of (A) the Company or an Unrestricted Subsidiary (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Person (other than with respect to the Capital Stock of an Unrestricted
Subsidiary, Permitted Investments) or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by any Affiliate of the Company (other than a Wholly Owned Restricted Subsidiary
or a Restricted Subsidiary in which no Affiliate of the Company (other than the
Company or any Restricted Subsidiary) or holder of 5% or more of the aggregate
value of the Capital Stock of the Company has an interest) or any holder (or any
Affiliate (other than a Wholly Owned Restricted Subsidiary or a Restricted
Subsidiary in which no Affiliate of the Company (other than the Company or any
Restricted Subsidiary) or holder of 5% or more of the aggregate value of the
Capital Stock of the Company has an interest) of such holder) of 5% or more of
the aggregate value of the Capital Stock of the Company, (iii) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of the Company that is subordinated in right of payment to the
Notes or (iv) make any Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (i) through (iv)
above being collectively "Restricted Payments") if, at the time of, and after
giving effect to, the proposed Restricted Payment: (A) a Default or Event of
Default shall have occurred and be continuing, (B) the Company could not Incur
at least $1.00 of Indebtedness under the first paragraph of subsection (a) of
this Section 1008 or (C) the aggregate amount of all Restricted Payments (the
amount, if other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) made after the Closing Date shall exceed the sum of (1) Consolidated
EBITDA accrued on a cumulative
<PAGE>
90
basis during the period (taken as one accounting period) beginning on the first
day of the fiscal quarter immediately following the Closing Date and ending on
the last day of the last fiscal quarter preceding the Determination Date for
which reports have been filed with the Commission or provided to the Trustee
pursuant to Section 1020 less two times Consolidated Interest Expense for such
period, plus (2) the aggregate Net Cash Proceeds received by the Company after
the Closing Date as a capital contribution or from the issuance and sale of its
Capital Stock (other than Disqualified Stock) to a Person who is not a
Subsidiary of the Company, including an issuance or sale permitted by the
Indenture of Indebtedness of the Company for cash subsequent to the Closing Date
upon the conversion or exchange of such Indebtedness into Capital Stock (other
than Disqualified Stock) of the Company, or from the issuance to a Person who is
not a Subsidiary of the Company of any options, warrants or other rights to
acquire Capital Stock of the Company (in each case, exclusive of any
Disqualified Stock or any options, warrants or other rights that are redeemable
at the option of the holder, or are required to be redeemed, prior to the Stated
Maturity of the Notes) plus (3) an amount equal to the net reduction in
Investments (other than reductions in Permitted Investments) in any Person
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Company or
any Restricted Subsidiary or from the Net Cash Proceeds from the sale of any
such Investment (except, in each case, to the extent any such payment or
proceeds are included in the calculation of Consolidated EBITDA), or from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries (valued
in each case as provided in the definition of "Investments"), not to exceed, in
each case, the amount of Investments previously made by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
(b) The foregoing provision shall not be violated by reason of: (i)
the payment of any dividend or other distribution within 60 days after the date
of declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph; (ii) the redemption, repurchase, defeasance
or other acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Notes including premium, if any, and
accrued and unpaid interest, with the proceeds of, or in exchange for,
Indebtedness Incurred under clause (iii) of the second paragraph of part (a) of
Section 1008; (iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company or an Unrestricted Subsidiary (or options, warrants or
other rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital Stock
(other than Disqualified Stock) of the Company (or options, warrants or other
rights to acquire such Capital Stock); (iv) the making of any principal payment
or the repurchase, redemption, retirement, defeasance or other acquisition for
value of Indebtedness of the Company which is subordinated in right of payment
to the Notes in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock (other than Disqualified
Stock) of the Company (or options, warrants or other rights to acquire such
Capital Stock); (v) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a consolidation,
merger or transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially
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91
all of the property and assets of the Company; (vi) Investments acquired as a
capital contribution to or in exchange for Capital Stock (other than
Disqualified Stock) of the Company; (vii) the declaration or payment of
dividends on the Common Stock of the Company following a Public Equity Offering,
of up to 6% per annum of the Net Cash Proceeds received by the Company in such
Public Equity Offering; (viii) the purchase, redemption, retirement or other
acquisition for value of shares of Capital Stock of the Company, options to
purchase such shares or Indebtedness of the Company that is subordinated in
right of payment to the Notes issued in exchange for any of the foregoing or
issued in lieu of cash interest thereon (the "Junior Notes"), held by directors,
employees, or former directors or employees of the Company or any Restricted
Subsidiary (or their estates or beneficiaries under their estates), upon their
death, disability, retirement, termination of employment or pursuant to the
terms of any agreement under which such shares of Capital Stock, options or
Junior Notes were issued; provided that the aggregate consideration paid (other
than in the form of Junior Notes) for such purchase, redemption, retirement or
other acquisition for value of such shares of Capital Stock, options or Junior
Notes after the Closing Date does not exceed $2 million in any fiscal year, plus
the aggregate Net Cash Proceeds received by the Company from the reissuance of
such shares during such fiscal year or $10 million in the aggregate, plus the
aggregate Net Cash Proceeds received by the Company from the reissuance of such
shares (unless such repurchases are made with the proceeds of insurance policies
and the shares of Capital Stock are repurchased from the executors,
administrators, testamentary trustees, heirs, legatees or beneficiaries); or
(ix) the redemption or other acquisition of the Company's Preferred Stock;
provided that, except in the case of clauses (i), (iii) and (ix), no Default or
Event of Default shall have occurred and be continuing or occur as a consequence
of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) and (ix) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred
to in clauses (iii), (iv) or (viii) shall be included in calculating whether the
conditions of clause (C) of subsection (a) of this Section 1009 have been met
with respect to any subsequent Restricted Payments; provided that the payment of
any dividend or other distribution shall not be included in calculating whether
the conditions of clause (C) of subsection (a) of this Section 1009 have been
met if the declarations of such dividend or other distribution has been included
in such calculation. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of subsection (a) this
Section 1009 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
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92
SECTION 1010. Limitation on Issuance and Sale of Capital Stock of
---------------------------------------------------
Restricted Subsidiaries.
- - -----------------------
The Company will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell, any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) except (i) to the Company or a Wholly
Owned Restricted Subsidiary; (ii) issuances of director's qualifying shares or
sales to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law; (iii) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such issuance or sale would have been permitted
to be made under Section 1009 if made on the date of such issuance or sale; or
(iv) sales of Common Stock of a Restricted Subsidiary, provided that the Company
or such Restricted Subsidiary applies the Net Cash Proceeds, if any, from any
such sale under this clause (iv) in accordance with clause (A) or (B) of Section
1014.
SECTION 1011. Limitation on Transactions with Shareholders and
------------------------------------------------
Affiliates.
- - ----------
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of the aggregate value of the Capital
Stock of the Company or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or, if such transaction is pursuant to a written agreement, at
the time of the execution of the agreement providing therefor, in a comparable
arm's-length transaction with a Person that is not such a holder or an
Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Company or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company; (iv) any payments or other transactions pursuant to
any tax-sharing agreement between the Company and any other Person with which
the Company files a consolidated tax return or with which the Company is part of
a consolidated group for tax purposes; (v) the payment of fees to Merrill Lynch
or any of its Affiliates for consulting, investment banking or financial
advisory services rendered by such Person to the Company or any of its
Subsidiaries; (vi) loans or advances to officers and employees of the Company
and its
<PAGE>
93
Restricted Subsidiaries made in the ordinary course of business; provided that
the aggregate amount of such loans or advances outstanding at any time shall not
exceed $1 million; (vii) any Restricted Payments not prohibited by Section 1009
or (viii) transactions pursuant to agreements in effect on the Closing Date that
are referred to in the Company's filings with the Commission. Notwithstanding
the foregoing, any transaction or series of related transactions covered by the
first paragraph of Section 1011 and not covered by clauses (ii) through (viii)
of this paragraph, the aggregate amount of which exceeds $5 million in value,
must be approved or determined to be fair in the manner provided for in clause
(i)(A) or (B) above.
SECTION 1012. Limitation on Liens.
-------------------
The Company shall not Incur any Indebtedness secured by a Lien
("Secured Indebtedness") which is not Senior Indebtedness (or Indebtedness that
would constitute Senior Indebtedness except that it is without recourse to the
Company) unless contemporaneously therewith effective provision is made to
secure the Notes equally and ratably with (or, if the Secured Indebtedness is
subordinated in right of payment to the Notes, prior to) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.
SECTION 1013. Purchase of Notes upon Change in Control.
----------------------------------------
(a) If a Change in Control shall occur at any time, the Company must
commence and consummate an Offer to Purchase for all Notes then Outstanding, at
a purchase price (the "Change in Control Purchase Price") in cash in an amount
equal to 101% of the principal amount thereof, plus accrued interest, if any, to
the date of purchase (the "Change in Control Purchase Date"), pursuant to the
procedures described below and otherwise set forth in this Indenture.
(b) Within 30 days following any Change in Control, the Company shall
notify the Trustee thereof and give written notice of such Offer to Purchase to
each Holder by first-class mail, postage prepaid, at the address of such Holder
appearing in the Note Register, stating, among other things, (i) the Change in
Control Purchase Price and the Change in Control Purchase Date, which shall be a
Business Day no earlier than 30 days nor later than 75 days from the date such
notice is mailed, or such later date as is necessary to comply with requirements
under the Exchange Act or any applicable securities laws or regulations; (ii)
that any Note not tendered will continue to accrue interest; (iii) that, unless
the Company defaults in the payment of the Change in Control Purchase Price, any
Notes accepted for payment pursuant to the Offer to Purchase shall cease to
accrue interest after the Change in Control Purchase Date; (iv) that Holders
electing to have any Notes purchased pursuant to an Offer to Purchase shall 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 in Control Purchase Date; (v) that Holders
shall be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the
<PAGE>
94
second Business Day preceding the Change in Control Purchase 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 its election to have such Notes purchased; (vi) that
Holders whose Notes are being purchased only in part shall 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; (vii) the instructions that the Holders of Notes must
follow in order to tender their Notes; and (viii) the circumstances and relevant
facts regarding such Change in Control.
(c) The Company will comply with any tender offer rules under the
Exchange Act, including Rule 14e-1, in connection with any Offer to Purchase.
To the extent that the provisions of any applicable securities laws or
regulations conflict with the provisions of the Indenture, the Company will
comply with such securities laws and regulations and shall not be deemed to have
breached its obligations under the Indenture by virtue thereof.
(d) The Company will not be required to make an Offer to Purchase
pursuant to this Section 1013 if a third party makes an Offer to Purchase in
compliance with this Section 1013 and repurchases all Notes validly tendered and
not withdrawn under such Offer to Purchase.
SECTION 1014. Limitation on Sale of Assets.
----------------------------
The Company will not, and will not permit any Restricted Subsidiary
to, consummate any Asset Sale, unless (i) the consideration received by the
Company or such Restricted Subsidiary is at least equal to the fair market value
of the assets sold or disposed of and (ii) at least 75% of the consideration
received consists of cash or Temporary Cash Investments or the assumption of
Indebtedness of the Company or any Restricted Subsidiary, provided that the
Company or such Subsidiary is irrevocably released from all liability under such
Indebtedness. If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may use the Net Cash Proceeds thereof, to (i) within twelve
months after the date of such Asset Sale, (A) apply an amount equal to such
excess Net Cash Proceeds to permanently repay Senior Indebtedness of the Company
or any Restricted Subsidiary in each case owing to a Person other than the
Company or any of its Restricted Subsidiaries or (B) invest an equal amount, or
the amount not so applied pursuant to clause (A) (or enter into a definitive
agreement committing to so invest within 12 months after the date of such
agreement), in property or assets (other than current assets) of a nature or
type or that are used in a business (or in a company having property and assets
of a nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of, the Company and its
Restricted Subsidiaries existing on the date of such investment and (ii) apply
(no later than the end of the 12-month period referred to in clause (i)) such
excess Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as
provided in the following paragraph of this Section 1014. The amount of such
Net Cash Proceeds required to be applied (or to be committed to be applied)
during
<PAGE>
95
such 12-month period as set forth in clause (i) of the preceding sentence and
not applied as so required by the end of such period shall constitute "Excess
Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 1014 totals at least $10 million, the Company must commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders of the Notes and the Fixed Rate Notes (and if required
by the terms of any other Pari Passu Indebtedness from the holders of such Pari
Passu Indebtedness) on a pro rata basis an aggregate principal amount of Notes,
Fixed Rate Notes and other Pari Passu Indebtedness equal to the Excess Proceeds
on such date, at a purchase price equal to 100% of the principal amount thereof,
plus, in each case, accrued interest (if any) to the Payment Date. Upon
consummation of an Offer to Purchase, any Excess Proceeds subject to such Offer
to Purchase remaining after all Notes, Fixed Rate Notes and other Pari Passu
Indebtedness validly tendered and not withdrawn are purchased by the Company
shall no longer constitute "Excess Proceeds" and may be used for general
corporate purposes.
The Company will comply with any tender offer rules under the Exchange
Act, including Rule 14e-1, in connection with any Offer to Purchase subject to
the provisions of this Section 1014. To the extent that the provisions of any
applicable securities laws or regulations conflict with the provisions of the
Indenture, the Company will comply with such securities laws and regulations and
shall not be deemed to have breached its obligations under the Indenture by
virtue thereof.
SECTION 1015. Limitations on Issuances of Guarantees by Restricted
----------------------------------------------------
Subsidiaries.
- - ------------
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a Guarantee
(a "Subsidiary Guarantee") of payment of the Notes by such Restricted Subsidiary
and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Subsidiary Guarantee until such time as the Notes have been paid in
full; provided that this paragraph shall not be applicable to any Guarantee of
any Restricted Subsidiary that existed at the time such Person became a
Restricted Subsidiary and was not Incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary. If the
Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be pari passu with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated
<PAGE>
96
to the Subsidiary Guarantee at least to the extent that the Guaranteed
Indebtedness is subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the Company's
and each Restricted Subsidiary's Capital Stock in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by the Indenture) or (ii) the release or discharge of the
Guarantee which resulted in the creation of such Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 1016. Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Restricted Subsidiaries.
- - ---------------------------------
The Company will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary, (ii) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (iii) make
loans or advances to the Company or (iv) transfer any of its property or assets
to the Company.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Agreement, the
Indenture or any other agreements in effect on the Closing Date, and any
extensions, refinancings, renewals or replacements of such agreements; provided
that the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to the
Holders than those encumbrances or restrictions that are then in effect and that
are being extended, refinanced, renewed or replaced; (ii) existing under or by
reason of applicable law; (iii) existing with respect to any Person or the
property or assets of such Person acquired by the Company or any Restricted
Subsidiary, existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not applicable to
any Person or the property or assets of any Person other than such Person or the
property or assets of such Person so acquired and any extensions, refinancings,
renewals or replacements thereof; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no less favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced; (iv) in the case of clause (iv) of the first paragraph of
this Section 1016, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by virtue of
any transfer of, agreement to transfer, option or right with respect to, or Lien
on, any property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by
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97
the Indenture or (C) arising or agreed to in the ordinary course of business,
not relating to any Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company and the Restricted
Subsidiaries, taken as a whole; (v) with respect to a Restricted Subsidiary and
imposed pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary; or (vi) contained in the terms of any
Indebtedness or any agreement pursuant to which such Indebtedness was issued if
(A) the encumbrance or restriction applies only in the event of a payment
default or a default with respect to a financial covenant contained in such
Indebtedness or agreement, (B) the encumbrance or restriction is not materially
more disadvantageous to the Holders of the Notes than is customary in comparable
financings (as determined by the Company) and (C) the Company determines that
any such encumbrance or restriction will not materially affect the Company's
ability to make principal or interest payments on the Notes. Nothing contained
in this Section 1016 shall prevent the Company or any Restricted Subsidiary from
(1) creating, incurring, assuming or suffering to exist any Liens otherwise
permitted in Section 1012 or (2) restricting the sale or other disposition of
property or assets of the Company or any of its Restricted Subsidiaries that
secure Indebtedness of the Company or any of its Restricted Subsidiaries.
SECTION 1017. [Intentionally Omitted]
SECTION 1018. Limitation on Senior Subordinated Indebtedness.
----------------------------------------------
The Company shall not Incur any Indebtedness that is subordinate in
right of payment to any Senior Indebtedness unless such Indebtedness is pari
passu with, or subordinated in right of payment to, the Notes; provided that the
foregoing limitation shall not apply to distinctions between categories of
Senior Indebtedness of the Company that exist by reason of any Liens or
Guarantees arising or created in respect of some but not all such Senior
Indebtedness.
SECTION 1019. [Intentionally Omitted]
SECTION 1020. Reports.
-------
At all times from and after the earlier of (i) the date of the
commencement of an Exchange Offer or the effectiveness of the Shelf Registration
Statement (the "Registration") and (ii) the date that is six months after the
Closing Date, in either case, whether or not the Company is then required to
file reports with the Commission, the Company shall file with the Commission all
such reports and other information as it would be required to file with the
Commission by Section 13(a) or 15(d) under the Exchange Act if it were subject
thereto (unless the Commission will not accept such a filing, in which case the
Company shall provide such documents to the Trustee). The Company shall supply
the Trustee and each Holder or shall supply to the Trustee for forwarding to
each such Holder, without cost to such Holder, copies of such reports and other
information;
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98
provided, however, that copies of such reports may omit exhibits, which the
Company shall deliver at its cost to any Holder upon request. In addition, at
all times prior to the earlier of the date of the Registration and six months
after the Closing Date, the Company shall, at its cost, deliver to each Holder
of the Notes quarterly and annual reports substantially equivalent to those
which would be required by the Exchange Act; provided, however, that copies of
such reports may omit exhibits, which the Company shall supply at its cost to
any Holder upon request. In addition, at all times prior to the Registration,
upon the request of any Holder or any prospective purchaser of the Notes
designated by a Holder, the Company shall supply to such Holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
SECTION 1021. Waiver of Certain Covenants.
---------------------------
The Company and the Restricted Subsidiaries may omit in any particular
instance to comply with any term, provision or condition set forth in Sections
1007 to 1012, inclusive, and Sections 1015, 1016 to 1018, if before or after the
time for such compliance the Holders of at least a majority in aggregate
principal amount of all Outstanding Notes affected by such term, provision or
covenant, by Act of such Holders, waive such compliance in such instance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company, the
Restricted Subsidiaries and the duties of the Trustee, as applicable, in respect
of any such term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Redemption.
----------
The Notes may or shall be, as the case may be, redeemed, as a whole or
from time to time in part, subject to the conditions and the Redemption Prices
specified in the form of Note, together with accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date that is on or prior to the Redemption Date to
receive interest due on an Interest Payment Date), on the Redemption Date.
SECTION 1102. Applicability of Article.
------------------------
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with the terms of such Notes and in accordance with this Article
Eleven.
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99
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Notes pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. Selection by Trustee of Notes to Be Redeemed.
--------------------------------------------
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which such Notes are
listed, or, if such Notes are not so listed by lot or by such other method as
the Trustee in its sole discretion shall deem to be fair and appropriate;
provided, however, that no Note of $1000 in principal amount or less shall be
redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal amount
thereof to be redeemed.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes to be redeemed. The Trustee shall give notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall deliver to the Trustee, at least 30 days prior
to the Redemption Date (or such shorter notice period as shall be satisfactory
to the Trustee), 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 following items.
<PAGE>
100
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Notes are to be redeemed, the
identification of the particular Notes to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of Notes to be outstanding after such partial redemption,
(4) in case any Note is to be redeemed in part only, the notice which
relates to such Note shall state that on and after the Redemption Date,
upon surrender of such Note, the holder will receive, without charge, a new
Note or Notes of authorized denominations for the principal amount thereof
remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Note, or the portion
thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on Notes called for redemption (or the
portion thereof) will cease to accrue on and after said date,
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price and accrued interest, if any,
(7) the name and address of the Paying Agent,
(8) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Notes, and
(10) the paragraph of the Notes pursuant to which the Notes are to be
redeemed.
SECTION 1106. Deposit of Redemption Price.
---------------------------
Prior to 10:00 A.M. on any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and
<PAGE>
101
hold in trust as provided in Section 1003) an amount of money sufficient to pay
the Redemption Price of, and accrued interest on, all the Notes which are to be
redeemed on that date.
SECTION 1107. Notes Payable on Redemption Date.
--------------------------------
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such at the close of
business on the relevant Regular Record Date or Special Record Date, as the case
may be, according to their terms and the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate of interest set forth in the
Note.
SECTION 1108. Notes Redeemed in Part.
----------------------
Any Note which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at a Place of Payment therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holders attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge, a
new Note or Notes, of any authorized denomination as requested by such Holder,
in an aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Note so surrendered, provided, that each such
new Note will be in a principal amount of $1,000 or integral multiple thereof.
ARTICLE TWELVE
SUBORDINATION OF NOTES
SECTION 1201. Notes Subordinate to Senior Indebtedness.
----------------------------------------
The Company and the Trustee each covenants and agrees, and each
Holder, by its acceptance of a Note, likewise covenants and agrees that all
Notes shall be issued subject to the
<PAGE>
102
provisions of this Article Twelve; and each Person holding any Note, whether
upon original issue or upon transfer, assignment or exchange thereof, accepts
and agrees that Senior Subordinated Obligations shall, to the extent and in the
manner set forth in this Article Twelve, be subordinated in right of payment to
the prior payment in full, in cash or cash equivalents, of all existing and
future Senior Indebtedness, including, without limitation, the Company's
obligations under the Credit Agreement (including any interest accruing on or
after, or which would accrue but for an event specified in paragraphs (7) and
(8) of Section 501 of this Indenture, whether or not such interest is an allowed
claim enforceable against the debtor under the United States Bankruptcy Code).
SECTION 1202. Payment over of Proceeds upon Dissolution, etc.
----------------------------------------------
(a) Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities (other
than with the money, securities or proceeds held under any defeasance trust
established in accordance with this Indenture), upon any dissolution or winding
up or total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership or other
proceedings or other marshaling of assets for the benefit of creditors, all
amounts due or to become due upon all Senior Indebtedness (including any
interest accruing on or after, or which would accrue but for an event specified
in paragraphs (7) and (8) of Sections 501 of this Indenture, whether or not such
interest is an allowed claim enforceable against the debtor under the United
States Bankruptcy Code) shall first be paid in full, in cash or cash
equivalents, before the Holders or the Trustee on their behalf shall be entitled
to receive any payment by (or on behalf of) the Company on account of Senior
Subordinated Obligations, or any payment to acquire any of the Notes for cash,
property or securities (other than any payment in the form of Junior
Securities), or any distribution with respect to the Notes of any cash, property
or securities (other than any payment in the form of Junior Securities). Before
any payment may be made by, or on behalf of, the Company on any Senior
Subordinated Obligations (other than with the money, securities or proceeds held
under any defeasance trust established in accordance with this Indenture) upon
any such dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities (other than any payment in the form of
Junior Securities), to which the Holders or the Trustee on their behalf would be
entitled, but for the provisions of this Article Twelve, shall be made by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person making such payment or distribution, or by the Holders or
the Trustee if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their representatives or to any
trustee or trustees under any other indenture pursuant to which any such Senior
Indebtedness may have been issued, as their respective interests appear, to the
extent necessary to pay all such Senior Indebtedness in full, in cash or cash
<PAGE>
103
equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred. To the extent the obligation to repay any Senior
Indebtedness is declared to be fraudulent, invalid, or otherwise set aside under
any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then the obligation so declared fraudulent, invalid or otherwise set aside (and
all other amounts that would come due with respect thereto had such obligation
not been so affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities (other than any payment in the form of Junior Securities), shall
be received by the Trustee or any Holder at a time when such payment or
distribution is prohibited by paragraph (a) of this Section 1202 and before all
obligations in respect of Senior Indebtedness are paid in full, in cash or cash
equivalents, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness (pro rata to such holders on the basis of such respective
amount of Senior Indebtedness held by such holders) or their representatives, or
to the trustee or trustees under any indenture pursuant to which any such Senior
Indebtedness may have been issued, as their respective interests appear, for
application to the payment of Senior Indebtedness remaining unpaid until all
such Senior Indebtedness has been paid in full, in cash or cash equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the sale, conveyance, transfer, lease or other disposition
of all or substantially all of its property and assets to another corporation
upon the terms and conditions provided in Article Eight of this Indenture shall
not be deemed a dissolution, winding up, liquidation or reorganization for the
purposes of this Section 1202 if such other corporation shall, as a part of such
consolidation, merger, sale, conveyance, transfer, lease or other disposition,
comply (to the extent required) with the conditions stated in Article Eight of
this Indenture.
<PAGE>
104
SECTION 1203. Suspension of Payment When Designated Senior
--------------------------------------------
Indebtedness in Default.
- - -----------------------
(a) No direct or indirect payment by (other than any payment in the
form of Junior Securities) or on behalf of the Company of Senior Subordinated
Obligations (other than with the money, securities or proceeds held under any
defeasance trust established in accordance with this Indenture), whether
pursuant to the terms of the Notes or upon acceleration or otherwise shall be
made if, at the time of such payment, there exists a default in the payment of
all or any portion of the obligations under or with respect to any Senior
Indebtedness of the Company and such default shall not have been cured or waived
or the benefits of this sentence waived by or on behalf of the holders of such
Senior Indebtedness.
(b) During the continuance of any other event of default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated, upon receipt by the Trustee of written notice from the trustee
or other representative for the holders of such Designated Senior Indebtedness
(or the holders of at least a majority in principal amount of such Designated
Senior Indebtedness then outstanding), no payment of Senior Subordinated
Obligations (other than with the money, securities or proceeds held under any
defeasance trust established in accordance with this Indenture) may be made by
or on behalf of the Company upon or in respect of the Notes for a period (a
"Payment Blockage Period") commencing on the date of receipt of such notice and
-----------------------
ending 179 days thereafter (unless, in each case, such Payment Blockage Period
shall be terminated by written notice to the Trustee from such trustee of, or
other representatives for, such holders or by payment in full in cash or cash
equivalents of such Designated Senior Indebtedness or such event of default has
been cured or waived). Not more than one Payment Blockage Period may be
commenced with respect to the Notes during any period of 360 consecutive days.
Notwithstanding anything in this Indenture to the contrary, there must be 180
consecutive days in any 360-day period in which no Payment Blockage Period is in
effect. No event of default that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to an event of
default pursuant to any provision under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose) on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or shall be made, the basis for the commencement of a second
Payment Blockage Period by the representative for, or the holders of, such
Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder at a time when such payment is
prohibited by Section 1203(a) or 1203(b) of this Indenture and before all
obligations in respect of Senior Indebtedness
<PAGE>
105
are paid in full in cash or cash equivalents, such payment shall be received and
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness (pro rata to such holders on the basis of such
respective amount of Senior Indebtedness held by such holders) or their
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full, in
cash or cash equivalents, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
SECTION 1204. Payment Permitted If No Default.
-------------------------------
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Notes shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1202 or under the conditions
described in Section 1203, from making payments at any time of principal of, and
premium, if any, or interest on the Notes.
SECTION 1205. Subrogation to Rights of Holders of Senior
------------------------------------------
Indebtedness.
------------
(a) Subject to the payment in full of all Senior Indebtedness, the
Holders of the Notes shall be subrogated (equally and ratably with the holders
of all Pari Passu Indebtedness of the Company) to the rights of the holders of
such Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the Holders of the Notes or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Notes or on their behalf or by the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness; it
being understood that the provisions of this Article are intended solely for the
purpose of determining the relative rights of the Holders of Notes, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Twelve shall
have been applied, pursuant to the provisions of this Article Twelve, to the
payment of all amounts payable under Senior Indebtedness, then, and in such
case, the Holders (equally and ratably with the holders of all Pari Passu
Indebtedness of the Company) shall be entitled to receive from the holders of
such Senior Indebtedness any payments or distributions received by such holders
of Senior Indebtedness in
<PAGE>
106
excess of the amount required to make payment in full, in cash or cash
equivalents, of such Senior Indebtedness of such holders.
SECTION 1206. Provisions Solely to Define Relative Rights.
-------------------------------------------
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the
principal of, and premium, if any, and interest on the Notes as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders and creditors of the
Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness.
SECTION 1207. Trustee to Effectuate Subordination.
-----------------------------------
Each Holder of a Note by its acceptance thereof authorizes and directs
the Trustee on its behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his 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 504 hereof at least 30 days before the
expiration of the time to file such claim, the Agent Bank (if the Credit
Agreement is still outstanding) is hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
SECTION 1208. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with. The provisions of this Article Twelve are
intended to be for the benefit of, and shall be enforceable directly by, the
Holders of Senior Indebtedness.
(b) Without in any way limiting the generality of this Section 1208,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Twelve or the obligations hereunder of
the Holders to the holders of Senior Indebtedness, do any one or more of the
<PAGE>
107
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against the
Company and any other Person.
SECTION 1209. Notice to Trustee.
-----------------
(a) The Company shall give prompt written notice to the Trustee of
any fact known to the Company that would prohibit the making of any payment to
or by the Trustee in respect of the Notes pursuant to the provisions of this
Article Twelve. The Trustee shall not be charged with the knowledge of the
existence of any default or event of default with respect to any Senior
Indebtedness or of any other facts that would prohibit the making of any payment
to or by the Trustee unless and until the Trustee shall have received notice in
writing at its Corporate Trust Office to that effect signed by an Officer of the
Company, or by a holder of Senior Indebtedness or trustee or agent thereof; and
prior to the receipt of any such written notice, the Trustee shall, subject to
Article Six, be entitled to assume that no such facts exist; provided that, if
the Trustee shall not have received the notice provided for in this Section 1209
at least two Business Days prior to the date upon which, by the terms of this
Indenture, any monies shall become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Note), then, notwithstanding anything herein to the contrary, the Trustee shall
have full power and authority to receive any monies from the Company and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary that may be received by it on or after
such prior date except for an acceleration of the Notes prior to such
application. Nothing contained in this Section 1209 shall limit the right of
the holders of Senior Indebtedness to recover payments as contemplated by this
Article Twelve. The foregoing shall not apply if the Paying Agent is the
Company. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of any
Senior Indebtedness (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder.
(b) In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Twelve and, if such evidence is not
furnished to the Trustee, the Trustee may defer any payment
<PAGE>
108
to such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 1210. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
-----------------
Upon any payment or distribution of assets or securities referred to
in this Article Twelve, the Trustee and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or
distribution, delivered to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness 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 Twelve.
SECTION 1211. Trustee's Relation to Senior Indebtedness.
-----------------------------------------
(a) The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Twelve with respect to any Senior Indebtedness
that may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Indebtedness and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness 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 Indebtedness (except as provided in
Sections 1202(c) and 1203(c) of this Indenture) and shall not be liable to any
such holders if the Trustee shall in good faith mistakenly pay over or
distribute to Holders of Notes or to the Company or to any other person cash,
property or securities to which any holders of Senior Indebtedness shall be
entitled by virtue of this Article Twelve or otherwise.
SECTION 1212. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1212 shall
<PAGE>
109
not apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as Paying Agent.
SECTION 1213. No Suspension of Remedies.
-------------------------
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Article Five or to pursue any rights or remedies hereunder or
under applicable law, except as provided in Article Five.
SECTION 1214. Trust Moneys Not Subordinated.
-----------------------------
Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article Fourteen by the Trustee for the payment of principal of, premium, if
any, and interest on the Notes shall not be subordinated to the prior payment of
any Senior Indebtedness (provided that, at the time deposited, such deposit did
not violate Section 1202 or Section 1203 or any then outstanding Senior
Indebtedness), and (subject to the foregoing proviso) none of the Holders shall
be obligated to pay over any such amount to any holder of Senior Indebtedness.
SECTION 1215. Consent of Holders of Senior Indebtedness Under the
---------------------------------------------------
Credit Agreement.
----------------
The provisions of this Article Twelve (including the definitions
contained in this Article and references to this Article contained in this
Indenture) shall not be amended in a manner that would adversely affect the
rights of the holders of Senior Indebtedness under the Credit Agreement, and no
such amendment shall become effective unless the holders of Senior Indebtedness
under the Credit Agreement shall have consented (in accordance with the
provisions of the Credit Agreement) to such amendment. The Trustee shall be
entitled to receive and rely on an Officer's Certificate stating that such
consent has been given.
ARTICLE THIRTEEN
[INTENTIONALLY OMITTED]
<PAGE>
110
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
-------------------------------------------------
Defeasance.
- - ----------
The Company may, at its option and at any time, effect defeasance of
the Notes under Section 1402, or covenant defeasance of the Notes under Section
1403, in accordance with the terms of the Notes and in accordance with this
Article.
SECTION 1402. Defeasance and Discharge.
------------------------
The Company will be deemed to have paid and will be discharged from
any and all obligations in respect of the Notes on the 123rd day after the date
of the deposit referred to in clause (1) of this Section 1402, and the
provisions of this Indenture will no longer be in effect with respect to the
Notes, and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same, except as to (i) rights of registration of
transfer and exchange, (ii) substitution of apparently mutilated, defaced,
destroyed, lost or stolen Notes, (iii) rights of Holders to receive payments of
principal thereof and interest thereon, (iv) the Company's obligations under
Section 1002, (v) the rights, obligations and immunities of the Trustee
hereunder and (vi) the rights of the Holders as beneficiaries of this Indenture
with respect to the property so deposited with the Trustee payable to all or any
of them; provided that the following conditions shall have been satisfied:
(1) with reference to this Section 1402, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 608 of this
Indenture) and conveyed all right, title and interest for the benefit of
the Holders, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee as trust funds in trust, specifically
pledged to the Trustee for the benefit of the Holders as security for
payment of the principal of, premium, if any, and interest, if any, on the
Notes, and dedicated solely to the benefit of the Holders, in and to (A)
money in an amount, (B) U.S. Government Obligations that, through the
payment of interest, premium, if any, and principal in respect thereof in
accordance with their terms, will provide, not later than one day before
the due date of any payment referred to in this clause (1), money in an
amount or (C) a combination thereof in an amount sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest and
after payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal of,
premium, if any, and accrued interest on the outstanding Notes at the
Stated Maturity of such principal or interest; provided that the
<PAGE>
111
Trustee shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of such
principal, premium, if any, and interest with respect to the Notes;
(2) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it is bound and is permitted by Article Twelve;
(3) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day
after such date of deposit, and such deposit shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(4) the Company shall have delivered to the Trustee (A) either (i) a
ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the Company's exercise of its
option under this Section 1402 and will be subject to federal income tax on
the same amount and in the same manner and at the same times as would have
been the case if such option had not been exercised or (ii) an Opinion of
Counsel to the same effect as the ruling described in clause (i) above
accompanied by a ruling to that effect published by the Internal Revenue
Service, unless there has been a change in the applicable federal income
tax law since the date of this Indenture such that a ruling from the
Internal Revenue Service is no longer required and (B) an Opinion of
Counsel to the effect that (i) the creation of the defeasance trust does
not violate the Investment Company Act of 1940 and (ii) after the passage
of 123 days following the deposit (except, with respect to any trust funds
for the account of any Holder who may be deemed to be an "insider" for
purposes of the United States Bankruptcy Code, after one year following the
deposit), the trust funds will not be subject to the effect of Section 547
of the United States Bankruptcy Code or Section 15 of the New York Debtor
and Creditor Law in a case commenced by or against the Company under either
such statute, and either (I) the trust funds will no longer remain the
property of the Company (and therefore will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (II) if a court were to rule
under any such law in any case or proceeding that the trust funds remained
property of the Company, (a) assuming such trust funds remained in the
possession of the Trustee prior to such court ruling to the extent not paid
to the Holders, the Trustee will hold, for the benefit of the Holders, a
valid and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise except for the effect of Section
552(b) of the United States
<PAGE>
112
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute and (b) the Holders will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used in such case or proceeding;
(5) if the Notes are then listed on a national securities exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit defeasance and discharge will not cause the
Notes to be delisted; and
(6) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 1402 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (4)(A)(ii) of this Section 1402, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section 1402,
the Company's obligations in Sections 203, 303, 305, 306, 307, 311, 312, 1001,
1002, 1003, 603, 607, 609, 1405, 1406 and Article Twelve (with respect to
payments in respect of Senior Subordinated Obligations other than with the
assets held in trust as described in this Section 1402) shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 607, 1405 and 1406 shall survive. If and when a ruling from the
Internal Revenue Service or an Opinion of Counsel referred to in clause (4)(A)
of this Section 1402 is able to be provided specifically without regard to, and
not in reliance upon, the continuance of the Company's obligations under Section
1001, then the Company's obligations under such Section 1001 shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel and compliance with
the other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 1402.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 1403. Covenant Defeasance.
-------------------
The Company may omit to comply with any term, provision or condition
set forth in clause (iii) of Section 801 and Sections 1003 through 1020, and
clauses (3), (4), (5) and (6) of Section 501 shall be deemed not to be Events of
Default, in each case with respect to the outstanding Notes if:
(i) with reference to this Section 1403, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 608) and conveyed
all right, title and interest to the Trustee for
<PAGE>
113
the benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust funds
in trust, specifically pledged to the Trustee for the benefit of the
Holders as security for payment of the principal of, premium, if any, and
interest, if any, on the Notes, and dedicated solely to, the benefit of the
Holders, in and to (A) money in an amount, (B) U.S. Government Obligations
that, through the payment of interest and principal in respect thereof in
accordance with their terms, will provide, not later than one day before
the due date of any payment referred to in this clause (i), money in an
amount or (C) a combination thereof in an amount sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest and
after payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal of,
premium, if any, and interest on the outstanding Notes on the Stated
Maturity of such principal or interest; provided that the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of such principal, premium,
if any, and interest with respect to the Notes;
(ii) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it is bound and is permitted by Article Twelve;
(iii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(iv) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (A) the creation of the defeasance trust does not violate
the Investment Company Act of 1940, (B) the Holders have a valid first
priority security interest in the trust funds, (C) the Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such deposit and defeasance of certain obligations and will be subject
to federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred and (D) after the passage of 123 days following the deposit
(except, with respect to any trust funds for the account of any Holder who
may be deemed to be an "insider" for purposes of the United States
Bankruptcy Code, after one year following the deposit), the trust funds
will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a
case commenced by or against the Company under either such statute, and
either (1) the trust funds will no longer remain the property of the
Company (and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
<PAGE>
114
rights generally) or (2) if a court were to rule under any such law in any
case or proceeding that the trust funds remained property of the Company,
(x) assuming such trust funds remained in the possession of the Trustee
prior to such court ruling to the extent not paid to the Holders, the
Trustee will hold, for the benefit of the Holders, a valid and perfected
security interest in such trust funds that is not avoidable in bankruptcy
or otherwise (except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute), (y) the Holders will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used in such case or proceeding and (z) no
property, rights in property or other interests granted to the Trustee or
the Holders in exchange for, or with respect to, such trust funds will be
subject to any prior rights of holders of other Indebtedness of the Company
or any of its Subsidiaries;
(v) if the Notes are then listed on a national securities exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit defeasance and discharge will not cause the
Notes to be delisted; and
(vi) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 1403 have been complied with.
SECTION 1404. [Intentionally Omitted]
SECTION 1405. Deposited Money and Government Obligations to Be Held
-----------------------------------------------------
in Trust; Other Miscellaneous Provisions.
- - ----------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1405, the "Trustee") pursuant to Sections 1404 and 1406 in respect of
such 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 its
own 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 (and premium, if
any) and interest, but such money need not be segregated from other funds except
to the extent required by law. Money and U.S. Government Obligations so held in
trust are not subject to Article Twelve.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1404 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 such Outstanding Notes.
<PAGE>
115
Anything in this Article Fourteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations (or other property and any
proceeds therefrom) held by it as provided in Section 1404 which, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent defeasance or covenant defeasance, as applicable, in accordance with
this Article.
SECTION 1406. Reinstatement.
-------------
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1405 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 such Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1402 or 1403, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1405; provided, however, that if the Company makes any payment of principal of
(or premium, if any) or interest on any such 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
OSCAR I CORPORATION
By:
------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Trustee
By:
------------------------------
Name:
Title:
<PAGE>
Exhibit A
---------
[FACE OF NOTE]
OSCAR I CORPORATION
Floating Rate [Series B]/1/ Senior Subordinated Note due 2007
No._______ CUSIP No. __________
$ __________
OSCAR I CORPORATION, a Delaware corporation (the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, promises to pay to ___________, or its registered assigns, the
principal sum of ____________________________________ Dollars ($___________), on
October 15, 2007.
[Initial]/2/ Interest Rate: A rate equal to the Applicable
LIBOR Rate, payable quarterly.
Interest Payment Dates: April 15, July 15, October 15
and January 15 of each year
commencing July 15, 1998.
Regular Record Dates: April 1, July 1, October 1 and
January 1 of each year.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
- - -----------------
/1/ Include only for Exchange Note.
/2/ Include only for Initial Note.
<PAGE>
A-2
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Date:____________ OSCAR I CORPORATION
By: _________________________
Name:
Title:
<PAGE>
A-3
(Form of Trustee's Certificate of Authentication)
This is one of the Floating Rate [Series B]/1/ Senior Subordinated
Notes due 2007 referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.,
as Trustee
Dated: __________ By: ________________________________
Authorized Signatory
/1/ Include only for Exchange Note.
<PAGE>
A-4
[REVERSE SIDE OF NOTE]
OSCAR I CORPORATION
Floating Rate [Series B]/1/ Senior Subordinated Note due 2007
1. Principal and Interest; Subordination.
-------------------------------------
The Company will pay the principal of this Note on October 15, 2007.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date at the Applicable LIBOR Rate for each
Quarterly Period immediately preceding the applicable Interest Payment Date
[(subject to adjustment as provided below)]/2/ [except that interest accrued on
this Note pursuant to the fourth paragraph of this Section 1 for periods prior
to the applicable Exchange Date (as such term is defined in the Registration
Rights Agreement referred to below) will accrue at the rate or rates borne by
the Notes from time to time during such periods]./1/
Interest will be payable on a quarterly basis (to the Holders of
record of the Notes (or any Predecessor Notes) at the close of business on the
April 1, July 1, October 1 and January 1 immediately preceding the Interest
Payment Date) on each Interest Payment Date, commencing July 15, 1998.
[The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated April 21, 1998, among the Company and the
Initial Purchasers named therein (the "Registration Rights Agreement"). In the
event that either (a) the Exchange Offer Registration Statement (as such term is
defined in the Registration Rights Agreement) is not filed with the Securities
and Exchange Commission on or prior to the 60th calendar day following the date
of original issue of the Notes, (b) the Exchange Offer Registration Statement
(as such term is defined in the Registration Rights Agreement) has not been
declared effective on or prior to the 120th calendar day following the date of
original issue of the Notes or (c) the Exchange Offer is not consummated or a
Shelf Registration Statement (as such terms are defined in the Registration
Rights Agreement) is not declared effective on or prior to the 150th calendar
day following the date of original issue of the Notes, the interest rate borne
by this Note shall be increased by one-quarter of one percent per annum
following such 60-day period in the case of (a) above, following such 120-
- - --------------------------
/1/ Include only for Exchange Note.
/2/ Include only for Initial Note.
<PAGE>
A-5
day period in the case of (b) above or following such 150-day period in the case
of (c) above, which rate will be increased by an additional one-quarter of one
percent per annum for each 90-day period that any additional interest continues
to accrue; provided that the aggregate increase in such annual interest rate
shall in no event exceed one percent. Upon (x) the filing of the Exchange Offer
Registration Statement after the 60-day period described in clause (a) above,
(y) the effectiveness of the Exchange Offer Registration Statement after the
120-day period described in clause (b) above or (z) the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the 150-day period described in clause (c) above, the
interest rate borne by this Note from the date of such filing, effectiveness or
consummation, as the case may be, will be reduced to the interest rate set forth
above; provided, however, that, if after any such reduction in interest rate, a
different event specified in clause (a), (b) or (c) above occurs, the interest
rate may again be increased pursuant to the foregoing provisions.]/1/
Interest on this Note will accrue from the most recent date to which
interest has been paid [on this Note or the Note surrendered in exchange
herefor]/2/ or, if no interest has been paid, from April 21, 1998; provided
that, if there is no existing default in the payment of interest and if this
Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The amount of interest for each day that the
Notes are outstanding (the "Daily Interest Amount") will be calculated by
dividing the Applicable LIBOR Rate for the Quarterly Period with respect to
which such interest is to be calculated by 360 and multiplying the result by the
principal amount of the Notes outstanding on such date. The amount of interest
to be paid on the Notes for the Initial Quarterly Period and each Quarterly
Period will be calculated by adding the Daily Interest Amounts for each day in
the Quarterly Period.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum equal to the rate of interest applicable to the Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness, and this Note is issued
subject to such provisions. Each Holder of this Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Trustee on its behalf to take such action as may be necessary or appropriate
to effectuate the
- - -------------------------
/1/ Include only for Initial Note.
/2/ Include only for Exchange Note.
<PAGE>
A-6
subordination as provided in the Indenture and (c) appoints the Trustee its
attorney-in-fact for such purpose.
2. Method of Payment.
-----------------
The Company will pay interest (except defaulted interest) on the
principal amount of the Notes on each April 15, July 15, October 15 and January
15 to the Persons who are Holders (as reflected in the Note Register at the
close of business on the April 1, July 1, October 1 and January 1 immediately
preceding the Interest Payment Date), in each case, even if the Note is canceled
on registration of transfer or registration of exchange after such Regular
Record Date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to any Paying
Agent on or after October 15, 2007.
The Company will pay principal (premium, if any) and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal (premium, if
any) and interest by its check payable in such money. The Company may pay
interest on the Notes either (a) by mailing a check for such interest to a
Holder's registered address (as reflected in the Note Register) or (b) by wire
transfer to an account located in the United States maintained by the payee. If
a payment date is a date other than a Business Day at a Place of Payment,
payment may be made at that place on the next succeeding day that is a Business
Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as Paying Agent and Note Registrar.
The Company may change any Paying Agent or Note Registrar upon written notice
thereto. The Company, any Subsidiary or any Affiliate of any of them may act as
Paying Agent, Note Registrar or co-registrar.
4. Indenture; Limitations.
----------------------
The Company issued the Notes under an Indenture dated as of April 21,
1998 (the "Indenture"), among the Company and State Street Bank and Trust
Company of Missouri, N.A., as trustee (the "Trustee"). Capitalized terms herein
are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all
such terms, and Holders are referred to the Indenture and the Trust Indenture
Act for a statement of all such terms. To the extent permitted by applicable
law, in the event of any inconsistency between the terms of this Note and the
terms of the Indenture, the terms of the Indenture shall control.
The Notes are unsecured senior subordinated obligations of the
Company. The Indenture limits the aggregate principal amount of the Notes to
$50,000,000.
<PAGE>
A-7
5. Redemption.
----------
Optional Redemption. The Notes may be redeemed at the option of the
-------------------
Company, in whole or in part, at any time and from time to time on or after
April 15, 1999, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is on or prior to the Redemption Date to receive interest due on an
Interest Payment Date), if redeemed during the 12-month period commencing April
15 of each of the years set forth below:
Redemption
Year Price
---- --------------
1999 103.000%
2000 102.000%
2001 101.000%
2002 and thereafter 100.000%
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which such Notes are
listed, or, if such Notes are not so listed by lot or by such other method as
the Trustee it its sole discretion shall deem to be fair and appropriate;
provided, however, that no Note of $1000 in principal amount or less shall be
redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal amount
thereof to be redeemed.
Notice of a redemption will be mailed, first-class postage prepaid, at
least 30 days but not more than 60 days before the Redemption Date to each
Holder to be redeemed at such Holder's last address as it appears in the Note
Register. Notes in original denominations larger than $1,000 may be redeemed in
part in integral multiples of $1,000. On and after the Redemption Date,
interest ceases to accrue on Notes or portions of Notes called for redemption,
unless the Company defaults in the payment of the Redemption Price.
6. Repurchase upon a Change in Control and Asset Sales.
---------------------------------------------------
Upon the occurrence of (a) a Change in Control the Company must
commence and consummate an Offer to Purchase for Notes then outstanding, at a
purchase price of 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase and (b) Asset Sales, the Company may
be obligated to make offers to purchase Notes with a portion of the Net Cash
Proceeds of such Asset Sales at a redemption price of 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase.
<PAGE>
A-8
7. Denominations; Transfer; Exchange.
---------------------------------
The Notes are in registered form without coupons, in denominations of
$1,000 and multiples of $1,000 in excess thereof. A Holder may register the
transfer or exchange of Notes in accordance with the Indenture. The Note
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Note Registrar need not register the
transfer or exchange of any Notes selected for redemption (except the unredeemed
portion of any Note being redeemed in part).
8. Persons Deemed Owners.
---------------------
A Holder may be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal (premium, if any) or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
-----------------------------------------
If the Company irrevocably deposits, or causes to be deposited, with
the Trustee money or U.S. Government Obligations sufficient to pay the then
outstanding principal of (premium, if any) and accrued interest on the Notes (a)
to redemption or maturity, the Company will be discharged from the Indenture and
the Notes, except in certain circumstances for certain sections thereof, and (b)
to the Stated Maturity, the Company will be discharged from certain covenants
set forth in the Indenture.
11. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to the extent set
forth in the Indenture.
<PAGE>
A-9
12. Restrictive Covenants.
---------------------
The Indenture contains certain covenants, including, without
limitation, covenants with respect to the following matters: (i) Indebtedness;
(ii) Restricted Payments; (iii) issuances and sales of Capital Stock of
Restricted Subsidiaries; (iv) transactions with Shareholders and Affiliates; (v)
Liens; (vi) purchase of Notes upon a Change in Control; (vii) sale of Assets,
(viii) issuances of Guarantees by Restricted Subsidiaries; (ix) dividend and
other payment restrictions affecting Restricted Subsidiaries; (x) other Senior
Subordinated Indebtedness, (xi) merger and certain transfers of assets; and
(xii) limitation on Unrestricted Subsidiaries. Within 120 days after the end of
each fiscal year, the Company must report to the Trustee on compliance with such
limitations.
13. Successor Persons.
-----------------
When a successor person or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor person will
be released from those obligations.
14. Remedies for Events of Default.
------------------------------
If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 501 of the Indenture that occurs with respect to
the Company) occurs and is continuing under this Indenture, then in every such
case the Trustee or the Holders of at least 25% in aggregate principal amount of
the Outstanding Notes, by written notice to the Company (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the written
request of such Holders shall, declare the principal of, premium, if any, and
accrued interest on all of the Outstanding Notes to be immediately due and
payable. Upon an Acceleration Notice, such principal of, premium, if any, and
accrued interest shall be immediately due and payable; provided, however, that
if there are any amounts outstanding under the Credit Agreement, such
declaration shall not become effective until the earlier of (A) an acceleration
of the Indebtedness under the Credit Agreement and (ii) five (5) Business Days
after receipt by the Company and the Agent Bank of such Acceleration Notice. In
the event of a declaration of acceleration because an Event of Default set forth
in clause (5) of Section 501 has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to clause (5) of Section 501
shall be remedied or cured by the Company or the relevant Significant Subsidiary
or waived by the holders of the relevant Indebtedness within 60 days after the
declaration of acceleration with respect thereto. If an Event of Default
specified in clause (7) or (8) of Section 501 of the Indenture occurs with
respect to the Company, the principal of, premium, if any, and accrued interest
on the Outstanding Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. The Holders of at least a majority in aggregate principal amount of the
Outstanding Notes by written notice to the Company and to the Trustee, may waive
all past defaults and rescind and annul a declaration of acceleration and its
consequences if (1) all existing Events of Default, other than the nonpayment of
the principal
<PAGE>
A-10
of, premium, if any, and interest on the Notes that have become due solely by
such declaration of acceleration, have been cured or waived and (2) the
recission would not conflict with any judgment or decree of a court of competent
jurisdiction.
Holders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it before
it enforces the Indenture or the Notes. The Holders of at least a majority in
aggregate principal amount of the Notes then outstanding may direct the Trustee
in the exercise of any trust or power in accordance with the terms of the
Indenture.
15. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Notes and may make loans to, accept
deposits from, perform services for, and otherwise deal with, the Company and
its Affiliates as if it were not the Trustee.
16. Authentication.
--------------
This Note shall not be valid until the Trustee signs the certificate
of authentication on the other side of this Note.
17. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Oscar I
Corporation, 9110 E. Nichols Avenue, Suite 200, Englewood, Colorado 80112-3405,
Attention: Chief Financial Officer.
<PAGE>
A-11
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- - ----------------------------------
- - --------------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)
- - --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- - --------------------------------------------------------------------------------
attorney to transfer such Note on the books of the Company with full power of
substitution in the premises.
<PAGE>
A-12
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE PHYSICAL
CERTIFICATES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
April 21, 2000, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
Check One
---------
(a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by Rule
144A thereunder.
or
--
(b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Note
Registrar shall not be obligated to register this Note in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Sections 311 and 312 of the
Indenture shall have been satisfied.
Date:
-----------------------
---------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
Signature Guarantee:
---------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
<PAGE>
A-13
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
-------------------------------- ------------------------------
NOTICE: To be executed by an
executive officer
<PAGE>
A-14
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 1013 or Section 1014 of the Indenture, check the Box: [ ].
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 1013 or Section 1014 of the Indenture, state the amount (in
original principal amount) below:
$_____________________.
Date:
---------------------
Your Signature:
-----------------------
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:
---------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT 10.1
================================================================================
REGISTRATION RIGHTS AGREEMENT
-----------------------------
among
Oscar I Corporation,
Issuer,
and
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BancAmerica Robertson Stephens
Morgan Stanley & Co. Incorporated
BancBoston Securities Inc.
NationsBanc Montgomery Securities LLC,
Initial Purchasers
Dated as of April 21, 1998
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of April 21, 1998, by and among Oscar I Corporation, a Delaware
corporation (the "Company"), and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), BancAmerica Robertson Stephens,
Morgan Stanley & Co. Incorporated, BancBoston Securities Inc. and NationsBanc
Montgomery Securities LLC (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated April
15, 1998 between the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of $225,000,000 aggregate principal amount of the Company's 9 3/4%
Senior Subordinated Notes due 2008 (the "Notes"). In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Company has agreed
to provide to the Initial Purchasers and their direct and indirect transferees
and assigns the registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing under the Purchase
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
-----------
capitalized defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time, and the rules and regulations of the SEC promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
--------
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"Closing Date" shall mean the Closing Date as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble of this
-------
Agreement and also includes the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company, provided, however, that any such
depositary must have an address in the Borough of Manhattan, in the City of
New York.
<PAGE>
2
"Exchange Notes" shall mean notes containing terms substantially
--------------
identical in all material respects to the Notes (except that (i) interest
thereon shall accrue from the last date on which interest was paid on the
Notes or, if no such interest has been paid, from April 21, 1998, (ii) such
Notes shall have been registered pursuant to an effective Registration
Statement under the 1933 Act and (iii) certain provisions relating to an
increase in the stated rate of interest thereon shall be eliminated) to be
offered to Holders of Notes in exchange for Notes pursuant to the Exchange
Offer, which are entitled to the benefits of the Indenture or an indenture
that is substantially identical to the Indenture and which has been
qualified under the Trust Indenture Act of 1939, as amended (the "TIA").
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
---------------------------
Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Holders" shall mean the Initial Purchasers, for so long as they own
-------
any Registrable Notes, and each of their successors, assigns and direct and
indirect transferees who become registered owners of Registrable Notes
under the Indenture.
"Indenture" shall mean the Indenture relating to the Notes dated as of
---------
April 21, 1998, among the Company and The Bank of New York, as trustee, as
the same may be amended or supplemented from time to time in accordance
with the terms thereof, except that, if the Exchange Notes are issued
pursuant to an indenture substantially identical to the Indenture, then
"Indenture" also shall refer to such Indenture.
"Initial Purchasers" shall have the meaning set forth in the preamble
------------------
of this Agreement.
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Registrable Notes; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the
Company or any of its affiliates (as such term is defined in Rule 405 under
the 1933 Act) shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage or amount.
<PAGE>
3
"Person" shall mean an individual, partnership, limited liability
------
company, corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Notes covered by a Shelf Registration Statement,
and by all other amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all material
incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
------------------
of this Agreement.
"Registrable Notes" shall mean the Notes; provided, however, that the
-----------------
Notes shall cease to be Registrable Notes when (i) a Registration Statement
with respect to such Notes shall have been declared effective under the
1933 Act and such Notes shall have been disposed of pursuant to such
Registration Statement, (ii) such Notes shall have been sold to the public
pursuant to Rule 144 (or any similar provision or exemption then in force,
but not Rule 144A) under the 1933 Act, (iii) such Notes shall have ceased
to be outstanding or (iv) such Notes have been exchanged for Exchange Notes
upon consummation of the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. ("NASD") registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state or
other securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of one counsel for any
underwriters and Holders in connection with state or other securities or
blue sky qualification of any of the Exchange Notes or Registrable Notes),
(iii) all expenses of any Persons in preparing, printing and distributing
any Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements,
certificates representing the Exchange Notes and other documents relating
to the performance of and compliance with this Agreement, (iv) all rating
agency fees, (v) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Notes on any securities exchange
or exchanges, (vi) all fees and disbursements relating to the qualification
of the Indenture under applicable securities laws, (vii) the reasonable
fees and disbursements of counsel for the Company and of the independent
public accountants of the Company, including the expenses of any
<PAGE>
4
special audits or "cold comfort" letters required by or incident to such
performance and compliance, (viii) in the case of a Shelf Registration
Statement, the reasonable fees and disbursements of one counsel for the
Holders of Registrable Notes (which counsel shall be selected by the
Majority Holders) and (ix) the fees and expenses of a "qualified
independent underwriter" as defined by Conduct Rule 2720 of the NASD, if
required by the NASD rules, in connection with the offering of the
Registrable Notes, (x) the reasonable fees and expenses of the trustee,
including its counsel, and any escrow agent or custodian, and (xi) any fees
and disbursements of the underwriters customarily required to be paid by
issuers or sellers of securities and the reasonable fees and expenses of
any special experts retained by the Company in connection with any
Registration Statement, but excluding underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition
of Registrable Notes by a Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Exchange Notes or Registrable Notes
pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Notes on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be adopted
by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Notes under the
-------
Indenture.
2. Registration Under the 1933 Act. (a) Exchange Offer
------------------------------- --------------
Registration. To the extent not prohibited by any applicable law or applicable
- - ------------
interpretation of the staff of the SEC, the Company shall (A) file within 60
calendar days after the Closing Date an Exchange Offer Registration Statement
covering the offer by the Company to the Holders to exchange Exchange Notes for
all of the Registrable Notes, (B) use its best efforts to cause such Exchange
Offer Registration Statement to be declared effective by the SEC within 120
calendar days after the Closing Date, (C) use its best efforts to cause such
Registration Statement to remain effective
<PAGE>
5
until the closing of the Exchange Offer and (D) use its best efforts to
consummate the Exchange Offer within 150 calendar days following the Closing
Date. The Exchange Notes will be issued under the Indenture. Upon the
effectiveness of the Exchange Offer Registration Statement, the Company shall
promptly commence the Exchange Offer, it being the objective of such Exchange
Offer to enable each Holder (other than Participating Broker-Dealers (as defined
in Section 3(f))) eligible and electing to exchange Registrable Notes for
Exchange Notes (assuming that such Holder is not an "affiliate" of the Company
within the meaning of Rule 405 under the 1933 Act, acquires the Exchange Notes
in the ordinary course of such Holder's business and has no arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the Exchange Notes) to trade such Exchange Notes from
and after their receipt without any limitations or restrictions under the 1933
Act and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 20 business days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) use the services of the Depositary for the Exchange Offer with
respect to Notes evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable Notes at any time
prior to the close of business, New York City time, on the last business
day on which the Exchange Offer shall remain open, by sending to the
institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Notes delivered for exchange, and a statement that
such Holder is withdrawing its election to have such Notes exchanged; and
(v) otherwise comply with all applicable laws relating to the Exchange
Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange Registrable Notes duly tendered and not
validly withdrawn pursuant to the Exchange Offer subject to the conditions
of the Exchange Offer and in accordance with the terms of the Exchange
Offer Registration Statement and the letter of transmittal which is an
exhibit thereto;
<PAGE>
6
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes so accepted for exchange by the Company;
and
(iii) cause the Trustee promptly to authenticate and deliver Exchange
Notes to each Holder of Registrable Notes equal in amount to the
Registrable Notes of such Holder so accepted for exchange.
Interest on each Exchange Note will accrue from the last date on which
interest was paid on the Registrable Notes surrendered in exchange therefor or,
if no interest has been paid on the Registrable Notes, from the Closing Date.
The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer, or the making of any exchange by a Holder, does not violate
applicable law or any applicable interpretation of the staff of the SEC and that
the Company shall not be required to consummate the Exchange Offer if (a) there
shall be in effect any law, statute, rule, regulation or interpretation of the
SEC or any other governmental authority, or any order, decree or judgment,
which, in the reasonable opinion of counsel to the Company satisfactory to the
Initial Purchasers, 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 (b) any governmental approval has not
been obtained, which approval of the Company shall, in its reasonable judgment,
deem necessary for the consummation of the Exchange Offer. Each Holder of
Registrable Notes (other than Participating Broker-Dealers) who wishes to
exchange such Registrable Notes for Exchange Notes in the Exchange Offer shall
have represented that (i) it is not an "affiliate" (as defined in Rule 405 under
the 1933 Act) of the Company or, if it is such an "affiliate", it will comply
with the registration and prospectus delivery requirements of the 1933 Act to
the extent applicable, (ii) any Exchange Notes to be received by it will be
acquired in the ordinary course of business, (iii) at the time of the
commencement of the Exchange Offer it has no arrangement or understanding with
any person to participate in the distribution (within the meaning of the 1933
Act) of the Exchange Notes and (iv) it is not acting on behalf of any person who
could not make the representations in clauses (i) through (iii). The Company
shall inform the Initial Purchasers of the names and addresses of the Holders to
whom the Exchange Offer is made, and the Initial Purchasers shall have the right
to contact such Holders and otherwise facilitate the tender of Registrable Notes
in the Exchange Offer.
(b) Shelf Registration. (i) If, because of any change in law or
------------------
applicable interpretations thereof by the staff of the SEC, the Company is not
permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof,
or (ii) if for any other reason the Exchange Offer is not consummated within 150
days following the Closing Date, or (iii) if any Holder (other than an Initial
Purchaser) is not eligible to participate in the Exchange Offer or (iv) upon the
written request of any Initial Purchaser (with respect to any Registrable Notes
which it acquired directly from the Company) following the consummation of the
Exchange Offer if any such Initial Purchaser shall hold Registrable Notes which
it acquired directly from the Company
<PAGE>
7
and if such Initial Purchaser is not permitted, in the opinion of counsel to
such Initial Purchaser, pursuant to applicable law or applicable interpretation
of the staff of the SEC to participate in the Exchange Offer, the Company shall,
at its cost:
(A) as promptly as practicable, file with the SEC a Shelf Registration
Statement relating to the offer and sale of the Registrable Notes by the
Holders from time to time in accordance with the methods of distribution
elected by the Majority Holders of such Registrable Notes and set forth in
such Shelf Registration Statement, and use its best efforts to cause such
Shelf Registration Statement to be declared effective by the SEC by the
150th day after the Closing Date (or promptly following the consummation of
the Exchange Offer in the event of a request by any Initial Purchaser
pursuant to clause (iv) above). In the event that the Company are required
to file a Shelf Registration Statement upon the request of any Holder
(other than an Initial Purchaser) not eligible to participate in the
Exchange Offer pursuant to clause (iii) above or upon the request of any
Initial Purchaser pursuant to clause (iv) above, the Company shall file and
use its best efforts to have declared effective by the SEC both an Exchange
Offer Registration Statement pursuant to Section 2(a) with respect to all
Registrable Notes and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Notes held by
such Holder or such Initial Purchaser, as applicable, after completion of
the Exchange Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the Closing
Date (or one year from the effective date of the Shelf Registration
Statement if such Shelf Registration Statement is filed upon the request of
any Initial Purchaser pursuant to clause (iv) above) or such shorter period
which will terminate when all of the Registrable Notes covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or all of the Registrable Notes become eligible for resale
pursuant to Rule 144 under the 1933 Act without volume restrictions; and
(C) notwithstanding any other provisions hereof, use its best efforts
to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any supplement thereto
complies in all material respects with the 1933 Act and the rules and
regulations thereunder, (ii) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration
Statement, and any supplement to such Prospectus (as amended or
supplemented from time to time), does not include an untrue statement of a
<PAGE>
8
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement if reasonably requested by the Majority Holders
with respect to information relating to the Holders and otherwise as required by
Section 3(b) below, to use all reasonable efforts to cause any such amendment to
become effective and such Shelf Registration to become usable as soon as
practicable thereafter and to furnish to the Holders of Registrable Notes copies
of any such supplement or amendment promptly after its being used or filed with
the SEC; provided, however, that no Holder shall be entitled to have its
Registrable Notes covered by the Shelf Registration Statement unless such Holder
agrees in writing to be bound by the terms and provisions of this Agreement.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with the registration pursuant to Section 2(a) and 2(b). Each Holder
shall pay all expenses of its counsel other than as set forth in the preceding
sentence, underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Notes pursuant
to the Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company will be deemed
--------------------------------
not to have used its best efforts to cause a Registration Statement to become,
or to remain, effective during the requisite periods set forth herein if the
Company voluntarily takes any action that could reasonably be expected to result
in any such Registration Statement not being declared effective or in the
Holders of Registrable Notes covered thereby not being able to exchange or offer
and sell such Registrable Notes during that period unless (A) such action is
required by applicable law or (B) such action is taken by the Company in good
faith and for valid business reasons (but not including avoidance of the
Company's obligations hereunder), including a material corporate transaction, so
long as the Company promptly complies with the requirements of Section 3(k)
hereof, if applicable.
(ii) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Notes pursuant to a Registration Statement is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court, such Registration Statement will be
deemed not to have been effective during the period of such interference, until
the offering of Registrable Notes pursuant to such Registration Statement may
legally resume.
(e) Increase in Interest Rate. In the event that (i) the Exchange
-------------------------
Offer Registration Statement is not filed with the SEC on or prior to the 60th
calendar day following
<PAGE>
9
the Closing Date, (ii) the Exchange Offer Registration Statement is not declared
effective on or prior to the 120th calendar day following the Closing Date or
(iii) the Exchange Offer is not consummated or a Shelf Registration Statement is
not declared effective on or prior to the 150th calendar day following the
Closing Date, the interest rate borne by the Notes shall be increased by one-
quarter of one percent per annum following such 60-day period in the case of
clause (i) above, following such 120-day period in the case of clause (ii) above
or following such 150-day period in the case of clause (iii) above, which rate
will be increased by an additional one-quarter of one percent per annum for each
90-day period that any such additional interest continues to accrue, provided
that the aggregate increase in such annual interest rate will in no event exceed
one percent per annum. Upon (x) the filing of the Exchange Offer Registration
Statement after the 60-day period described in clause (i) above, (y) the
effectiveness of the Exchange Offer Registration Statement after the 120-day
period described in clause (ii) above, or (z) the date of consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the 150-day period described in clause (iii) above, the
interest rate borne by the Notes from the date of such filing, effectiveness or
the day before the date of consummation, as the case may be, will be reduced to
the original interest rate if the Company is otherwise in compliance with this
paragraph; provided, however, that, if after any such reduction in interest
rate, a different event specified in clauses (i), (ii) or (iii) above occurs,
the interest rate will again be increased and thereafter reduced pursuant to the
foregoing provisions. If the Company issues a notice that the Shelf Registration
Statement is unusable pending the announcement of a material corporate
transaction or otherwise pursuant to Section 3(k) hereof, or such a notice is
required under applicable securities laws to be issued by the Company, and the
aggregate number of days in any consecutive 12-month period for which all such
notices are issued or required to be issued exceeds 30 days per occurrence or
more than 60 days in the aggregate in a calendar year, then the interest rate
borne by the Notes will be increased by one-quarter of one percent per annum
following the date that such Shelf Registration Statement ceases to be usable
for a period of time in excess of that permitted above, which rate shall be
increased by an additional one-quarter of one percent per annum for each
subsequent 90-day period that such additional interest continues to accrue;
provided that the aggregate increase in such annual interest rate may in no
event exceed one percent per annum. Upon the Company declaring that the Shelf
Registration Statement is usable after the period of time described in the
preceding sentence, the interest rate borne by the Notes will be reduced to the
original interest rate if the Company is otherwise in compliance with this
paragraph; provided, however, that if after any such reduction in interest rate
a different event of the kind described in the preceding sentence occurs, the
interest rate will again be increased and thereafter reduced pursuant to the
foregoing provisions.
(f) Specific Enforcement. Without limiting the remedies available to
--------------------
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Sections 2(a) and
2(b) hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy
<PAGE>
10
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 obligations under Sections 2(a) and 2(b); provided, however, with
respect to any failure by the Company to comply with Section 2(a) or Section
2(b) hereof, such relief shall not be available to any Holder who fails to make
the required representations in Section 2(a) or Section 3(f), as applicable.
3. Registration Procedures. In connection with the obligations of
-----------------------
the Company with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement, within the
time period specified in Section 2, on the appropriate form under the 1933
Act, which form (i) shall be selected by the Company, (ii) shall, in the
case of a Shelf Registration, be available for the sale of the Registrable
Notes by the selling Holders thereof and (iii) shall comply as to form in
all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by
the SEC to be filed therewith;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under
applicable law to keep such Registration Statement effective for the
applicable period; cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the 1933 Act; and comply with the provisions of the 1933 Act with
respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the selling Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Notes, at least seven days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Notes is being filed
and advising such Holders that the distribution of Registrable Notes will
be made in accordance with the method elected by the Majority Holders; and
(ii) furnish to each Holder of Registrable Notes, to counsel for the
Initial Purchasers, to counsel for the Holders and to each underwriter of
an underwritten offering of Registrable Notes, if any, without charge, as
many copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such Holder
or underwriter may reasonably request, including financial statements and
schedules and, if the Holder so requests, all exhibits (including those
incorporated by reference) in order to facilitate the public sale or other
disposition of the Registrable Notes; and (iii) subject to the last
paragraph of Section 3, hereby consent to the use of the Prospectus,
including each preliminary Prospectus, or any
<PAGE>
11
amendment or supplement thereto by each of the selling Holders of
Registrable Notes in connection with the offering and sale of the
Registrable Notes covered by the Prospectus or any amendment or supplement
thereto;
(d) use its best efforts to register or qualify the Registrable Notes
under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Notes covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Notes shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with
the Holders in connection with any filings required to be made with the
NASD and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition
in each such jurisdiction of such Registrable Notes owned by such Holder;
provided, however, that the Company shall not be required to (i) register
or qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d) or (ii) take any action which would subject it to general
service of process or taxation in any such jurisdiction if it is not then
so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes and counsel for such Holders promptly and, if requested
by such Holder or counsel, confirm such advice in writing promptly (i) when
a Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of
the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation
of any proceedings for that purpose, (iv) if, during the period a
Registration Statement is effective, the representations and warranties of
the Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to such offering
cease to be true and correct in all material respects, (v) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Registrable Notes for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (vi) of the
happening of any event or the discovery of any facts during the period a
Shelf Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements
therein not misleading and (vii) of any determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate;
<PAGE>
12
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by broker-dealers who have exchanged their
Registrable Notes for Exchange Notes for the resale of such Exchange Notes,
(ii) furnish to each broker-dealer who desires to participate in the
Exchange Offer, without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such broker-dealer
may reasonably request, (iii) include in the Exchange Offer Registration
Statement a statement that any broker-dealer who holds Registrable Notes
acquired for its own account as a result of market-making activities or
other trading activities (a "Participating Broker-Dealer"), and who
receives Exchange Notes for Registrable Notes pursuant to the Exchange
Offer, may be a statutory underwriter and must deliver a prospectus meeting
the requirements of the 1933 Act in connection with any resale of such
Exchange Notes, (iv) subject to the last paragraph of Section 3, hereby
consent to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of the Exchange Notes
covered by the Prospectus or any amendment or supplement thereto, and (v)
include in the transmittal letter or similar documentation to be executed
by an exchange offeree in order to participate in the Exchange Offer the
following provision:
"If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for
Registrable Notes, it represents that the Registrable Notes to be
exchanged for Exchange Notes were acquired by it as a result of
market-making activities or other trading activities and acknowledges
that it will deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of such Exchange Notes pursuant to
the Exchange Offer; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the 1933 Act;"
(B) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to cause to be
delivered at the request of an entity representing the Participating
Broker-Dealers (which entity shall be one of the Initial Purchasers, unless
it elects not to act as such representative) only one, if any, "cold
comfort" letter with respect to the Prospectus in the form existing on the
last date for which exchanges are accepted pursuant to the Exchange Offer
and with respect to each subsequent amendment or supplement, if any,
effected during the period specified in clause (C) below; and
<PAGE>
13
(C) to the extent any Participating Broker-Dealer participates in the
Exchange Offer, the Company shall use its best efforts to maintain the
effectiveness of the Exchange Offer Registration Statement or other
registration statement for a period of 180 days following the closing of
the Exchange Offer; and
(D) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement as would
otherwise be contemplated by Section 3(b), or take any other action as a
result of this Section 3(f), for a period exceeding 180 days after the last
date for which exchanges are accepted pursuant to the Exchange Offer (as
such period may be extended by the Company) and Participating Broker-
Dealers shall not be authorized by the Company to, and shall not, deliver
such Prospectus after such period in connection with resales contemplated
by this Section 3.
(g) (A) in the case of an Exchange Offer, furnish counsel for the
Initial Purchasers and (B) in the case of a Shelf Registration, furnish
counsel for the Holders of Registrable Notes copies of any request by the
SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement as soon as
practicable and provide notice as soon as practicable to each Holder of the
withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested in writing);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Notes to facilitate the timely preparation and
delivery of certificates to the Trustee representing Registrable Notes to
be sold and not bearing any restrictive legends; and cause such Registrable
Notes to be in such denominations (consistent with the provisions of the
Indenture) in a form eligible for deposit with the Depositary and
registered in such names as the selling Holders or the underwriters, if
any, may reasonably request in writing at least one business day prior to
the closing of any sale of Registrable Notes;
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Section
3(e)(vi) hereof, use its best efforts to prepare a supplement or post-
effective amendment to a Registration Statement
<PAGE>
14
or the related Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes, such Prospectus will not contain at
the time of such delivery any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
Company agrees to notify each Holder to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and each
Holder hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission. At such time as such public disclosure is otherwise made or the
Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted
material fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such numbers of copies of the
Prospectus, as amended or supplemented, as such Holder may reasonably
request;
(l) obtain CUSIP number for all Exchange Notes, or Registrable Notes,
as the case may be, not later than the effective date of a Registration
Statement, and provide the Trustee with printed certificates for the
Exchange Notes in a form eligible for deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the TIA, in
connection with the registration of the Exchange Notes, or Registrable
Notes, as the case may be, (ii) cooperate with the Trustee and the Holders
to effect such changes to the Indenture as may be required for the
Indenture to be so qualified in accordance with the terms of the TIA and
(iii) execute, and use its best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and
appropriate actions (including those reasonably requested by the Majority
Holders) in order to expedite or facilitate the disposition of such
Registrable Notes and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Notes and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in similar underwritten offerings as may be reasonably requested by
them;
<PAGE>
15
(ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority in principal amount of the Registrable Notes
being sold) addressed to each selling Holder and the underwriters, if
any, covering the matters customarily covered in opinions requested in
sales of securities or underwritten offerings and such other matters
as may be reasonably requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
underwriters, if any, and will use best efforts to have such letters
addressed to the selling Holders of Registrable Notes, such letters to
be in customary form and covering matters of the type customarily
covered in "cold comfort" letters to underwriters in connection with
similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders and
an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Notes, which agreement shall be in
form, substance and scope customary for similar offerings; and
(v) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings.
The above shall be done at (i) the effectiveness of such Shelf Registration
Statement (and, if appropriate, each post-effective amendment thereto) and
(ii) each closing under any underwriting or similar agreement as and to the
extent required thereunder. In the case of any underwritten offering, the
Company shall provide written notice to the Holders of all Registrable
Notes of such underwritten offering at least 30 days prior to the filing of
a prospectus supplement for such underwritten offering. Such notice shall
(x) offer each such Holder the right to participate in such underwritten
offering, (y) specify a date, which shall be no earlier than 10 days
following the date of such notice, by which such Holder must inform the
Company of its intent to participate in such underwritten offering and (z)
include the instructions such Holder must follow in order to participate in
such underwritten offering;
(o) in the case of a Shelf Registration, make reasonably available at
the Company's principal place of business for inspection by representatives
of the Holders of the Registrable Notes and any underwriters participating
in any disposition pursuant to a Shelf Registration Statement and any
counsel or accountant retained by such Holders or underwriters, upon
reasonable notice, at reasonable times and in a reasonable manner, all
<PAGE>
16
relevant financial and other records, pertinent corporate documents and
properties of the Company reasonably requested by any such persons, and
cause the respective officers, directors, employees, and any other agents
of the Company to supply all relevant information necessary in the
reasonable judgment of counsel to such Holders to conduct a reasonable
investigation; provided, however, that such Persons shall first agree in
writing with the Company that any information that is reasonably and in
good faith designated by the Company in writing as confidential at the time
of delivery of such information shall be kept confidential by such Persons,
unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities having jurisdiction over the matter (subject to the
requirements of such order or inquiry, and only after such person shall
have given the Company prompt prior written notice of such requirement or
necessity, (ii) disclosure of such information is required by law
(including any disclosure requirements pursuant to Federal securities laws
in connection with the filing of such Shelf Registration Statement or
Prospectus included therein in order that such Shelf Registration Statement
or Prospectus does not contain an untrue statement of a material fact or
omit to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard such information by such
Person or (iv) such information becomes available to such Person from a
source other than the Company and its subsidiaries and such source is not
bound by a confidentiality agreement; provided, further, that the foregoing
investigation shall be coordinated on behalf of the Holders by one
representative designated by and on behalf of such Holders and any such
confidential information shall be available from such representative to
such Holders so long as any Holder agrees to be bound by such
confidentiality agreement;
(p) (i) in the case of an Exchange Offer, a reasonable time prior to
the filing of any Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to an Exchange Offer Registration
Statement or amendment or supplement to a Prospectus, provide copies of
such document to the Initial Purchasers, upon request; (ii) in the case of
a Shelf Registration, a reasonable time prior to filing any Shelf
Registration Statement, any Prospectus forming a part thereof, any
amendment to such Shelf Registration Statement or amendment or supplement
to such Prospectus, provide copies of such document to the Holders of
Registrable Notes, to the Initial Purchasers, to counsel on behalf of the
Holders and to the underwriter or underwriters of an underwritten offering
of Registrable Notes, if any, upon request; and (iii) cause the
representatives of the Company to be available for discussion of such
document as shall be reasonably requested by the Holders of Registrable
Notes, the Initial Purchasers on behalf of such Holders or any underwriter
and shall not at any time make any filing of any such document of which
such Holders, the Initial Purchasers on behalf of such Holders, their
counsel or any underwriter shall not have previously been advised and
<PAGE>
17
furnished a copy or to which such Holders, the Initial Purchasers on behalf
of such Holders, their counsel or any underwriter shall reasonably object
on or prior to five business days after receipt thereof, each of which
actions in this clause (iii) by the Holders shall be coordinated by one
representative for all the Holders at reasonable times and in a reasonable
manner; the Holders shall be deemed to have reasonably objected to such
filing only if such Registration Statement, amendment, Prospectus or
supplement to the Prospectus, as applicable, as proposed to be filed,
contains a material misstatement or omission;
(q) in the case of a Shelf Registration, use its best efforts to cause
all Registrable Securities to be listed on any securities exchange on which
similar debt securities issued by the Company are then listed if requested
by the Majority Holders or by the underwriter or underwriters of an
underwritten offering of Registrable Notes, if any;
(r) in the case of a Shelf Registration, use its best efforts to cause
the Registrable Notes to be rated with the appropriate rating agencies, if
so requested by the Majority Holders or by the underwriter or underwriters
of an underwritten offering of Registrable Notes, if any, unless the
Registrable Notes are already so rated;
(s) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the 1933 Act
and Rule 158 thereunder; and
(t) cooperate and assist in any filings required to be made with the
NASD.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Notes to furnish to the Company such information regarding
such Holder and the proposed distribution by such Holder of such Registrable
Notes as the Company may from time to time reasonably request in writing. The
Company may exclude from such registration the Registrable Notes of any Holder
who unreasonably fails to furnish such information or make such representations
within a reasonable time after receiving such request. Each Holder as to which
any Shelf Registration Statement is being affected agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Section 3(e)(ii)-
(vii) hereof, such Holder will forthwith
<PAGE>
18
discontinue disposition of Registrable Notes pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Notes current at the
time of receipt of such notice. If the Company shall give any such notice to
suspend the disposition of Registrable Notes pursuant to a Shelf Registration
Statement as a result of the happening of any event or the discovery of any
facts, each of the kind described in Section 3(e)(vi) hereof, the Company shall
be deemed to have used its best efforts to keep the Shelf Registration Statement
effective during such period of suspension provided that the Company shall use
its best efforts to file and have declared effective (if an amendment) as soon
as practicable an amendment or supplement to the Shelf Registration Statement
and shall extend the period during which the Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions.
4. Underwritten Registrations. If any of the Registrable Notes
--------------------------
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Majority Holders of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
5. Indemnification and Contribution. (a) The Company shall
--------------------------------
indemnify and hold harmless each Initial Purchaser, each Holder, including
Participating Broker-Dealers, each underwriter who participates in an offering
of Registrable Notes, their respective affiliates, and their respective
directors, officers, employees, agents and each Person, if any, who controls any
of such parties within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
pursuant to which Exchange Notes or Registrable Notes were registered under
the 1933 Act, including all documents
<PAGE>
19
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that any amounts paid in settlement of
any litigation or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever shall
not be indemnified under this subparagraph (i) of this Section 5(a);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever, in each case, based upon any such untrue statement or omission,
or any such alleged untrue statement or omission; provided that (subject to
Section 5(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred (including
reasonable fees and disbursements of counsel chosen by any indemnified
party), and reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any court or
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section 5(a);
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchasers, any Holder, including Participating Broker-Dealers or any
underwriter expressly for use in the Registration Statement or the Prospectus.
The foregoing indemnity with respect to any untrue statement contained in or any
omission from a Prospectus shall not inure to the benefit of any Initial
Purchaser, Holder (in its capacity as Holder), including Participating Broker-
Dealers (or any person who controls any such party within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act) from whom the person asserting
any such loss, liability, claim, damage or expense purchased any of the Notes
that are the subject thereof, was not sent or given a copy of such Prospectus
(as amended or supplemented) by such Initial Purchaser or such selling Holder
(in its capacity as Holder) to the extent such Initial Purchaser or such Holder
(in its capacity as Holder) was required by law to deliver such Prospectus as
amended or supplemented, at or prior to the written confirmation of
<PAGE>
20
the sale of such Notes and the untrue statement contained in or the omission
from such Prospectus was corrected in such amended or supplemented Prospectus,
unless such failure resulted from noncompliance by the Company with its
obligations hereunder to furnish such Initial Purchaser or such Holder (in its
capacity as Holder), as the case may be, with copies of such Prospectus as
amended or supplemented.
(b) In the case of a Shelf Registration, each Holder agrees, severally
and not jointly, to indemnify and hold harmless the Company, each Initial
Purchaser, each underwriter who participates in an offering of Registrable Notes
and the other selling Holders and each of their respective directors and
officers (including each officer of the Company who signed the Registration
Statement) and each Person, if any, who controls the Company, any Initial
Purchaser, any underwriter or any other selling Holder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 5(a) hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement or the Prospectus in reliance upon and in conformity with
written information furnished to the Company by such Holder, as the case may be,
expressly for use in the Registration Statement (or any amendment thereto), or
the Prospectus (or any amendment or supplement thereto); provided, however, that
no such Holder shall be liable for any claims hereunder in excess of the amount
of net proceeds received by such Holder from the sale of Registrable Notes
pursuant to such Shelf Registration Statement.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to either paragraph (a) or (b)
above, such person (the "indemnified party") shall give notice as promptly as
reasonably practicable to each person against whom such indemnity may be sought
(the "indemnifying party"), but failure to so notify an indemnifying party shall
not relieve such indemnifying party from any liability hereunder to the extent
it is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, such indemnifying party shall be entitled to participate therein and,
to the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, such indemnifying party shall not be liable to such indemnified party
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. Notwithstanding the
foregoing, any indemnified party shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the indemnified party unless
the indemnified party shall have been advised by counsel that representation of
the
<PAGE>
21
indemnified party by counsel provided by the indemnifying party would be
inappropriate due to actual or potential conflicting interests between the
indemnifying party and the indemnified party, including situations in which
there are one or more legal defenses available to the indemnified party that are
different from or additional to those available to the indemnifying party;
provided, however, that the indemnifying party shall not, in connection with any
one such action or proceeding or separate but substantially similar actions or
proceedings arising out of the same general allegations, be liable for the fees
and expenses of more than one separate firm of attorneys at any time for all
indemnified parties, except to the extent that local counsel, in addition to its
regular counsel, is required in order to effectively defend against such action
or proceeding. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 5 hereof (whether or not the indemnified parties are actual
or potential parties thereof), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested in
writing an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for
any settlement of the nature contemplated by Section 5(a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in any of the indemnity
provisions set forth in this Section 5 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, in such proportion as is appropriate to reflect the relative fault of
such indemnifying party or parties on the one hand, and such indemnified party
or parties on the other hand, in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party or parties on the one hand, and such indemnified party or
parties on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to
<PAGE>
22
information supplied by such indemnifying party or parties or such indemnified
party or parties and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Initial Purchasers and the Holders of the Registrable Notes
agree that it would not be just and equitable if contribution pursuant to this
Section 5 were determined by pro rata allocation (even if the Initial Purchasers
were treated as one entity, and the Holders were treated as one entity, for such
purpose) or by another method of allocation which does not take account of the
equitable considerations referred to above in Section 5. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 5 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by an governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1993 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 5, each person, if any, who
controls an Initial Purchaser or Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Initial Purchaser or Holder, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as the
------------- ----------------------
Company is subject to the reporting requirements of Section 13 or 15 of the 1934
Act, the Company covenants that it will file the reports required to be filed by
it under Section 13(a) or 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder, that if it ceases to be so required to file such
reports, it will upon the request of any Holder of Registrable Notes (i) make
publicly available such information as is necessary to permit sales pursuant to
Rule 144 under the 1933 Act and (ii) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933
Act and it will take such further action as any Holder of Registrable Notes may
reasonably request in writing. Upon the written request of any Holder of
Registrable Notes, the Company will deliver to such Holder a written statement
as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Company has not entered into and
--------------------------
on or after the date of this Agreement will not enter into any agreement which
is inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with the provisions hereof. 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 other
issued and outstanding securities under any such agreements.
<PAGE>
23
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Notes affected by such amendment, modification, supplement, waiver
or departure; provided, however, that no amendment, modification, supplement or
waiver or consent to any departure from the provisions of Section 5 hereof shall
be effective as against any Holder of Registrable Notes unless consented to in
writing by such Holder.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telecopier, or any courier guaranteeing overnight delivery (i) if to
a Holder (other than an Initial Purchaser), at the most current address set
forth on the records of the Registrar under the Indenture, (ii) if to an Initial
Purchaser, at the most current address given by such Initial Purchaser to the
Company by means of a notice given in accordance with the provisions of this
Section 6(d), which address initially is the address set forth in the Purchase
Agreement; and (iii) if to the Company, initially at the address set forth in
the Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 6(d).
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
is 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.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees 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 Registrable Notes in
violation of the terms hereof or of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Registrable Notes, in any manner,
whether by operation of law or otherwise, such Registrable Notes shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Registrable Notes, 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.
<PAGE>
24
(f) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company 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 it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(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.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
OSCAR I CORPORATION
By
------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BANCAMERICA ROBERTSON STEPHENS
MORGAN STANLEY & CO. INCORPORATED
BANCBOSTON SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
By: MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:
-----------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.2
================================================================================
CREDIT AGREEMENT
Dated as of April 21, 1998
among
Oscar I Corporation
(to be renamed United Artists Theatre Company),
the Financial Institutions Party Hereto,
Bank of America National Trust
and Savings Association,
as Administrative Agent
BankBoston, N.A.,
as Documentation Agent,
NationsBank of Texas, N.A.,
as Syndication Agent,
and
Merrill Lynch Capital Corporation
and
Morgan Stanley Senior Funding, Inc.,
as Co-Syndication Agents
Arranged By
[LOGO] BancAmerica ROBERTSON STEPHENS
BancBoston Securities Inc.
NationsBanc Montgomery Securities LLC
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
ARTICLE IDEFINITIONS.............................................................1
1.01 Defined Terms..........................................................1
1.02 Other Definitional Provisions.........................................26
ARTICLE IITHE CREDITS...........................................................27
2.01 Amounts and Availability of Commitments...............................27
(a) The Revolving Commitments.............................................27
(b) The Tranche A Term Loan Commitments...................................27
(c) The Tranche B Term Loan Commitments...................................27
(d) The Tranche C Term Loan Commitments...................................28
2.02 Loan Accounts.........................................................28
2.03 Procedure for Borrowing...............................................29
2.04 Conversion and Continuation Elections................................30
2.05 Letters of Credit.....................................................31
2.06 Termination or Reduction of Commitments...............................34
2.07 Optional Prepayments..................................................35
2.08 Mandatory Prepayments of Loans........................................35
2.09 Repayment.............................................................37
2.10 Interest..............................................................38
2.11 Fees..................................................................38
2.12 Computation of Fees and Interest......................................39
2.13 Payments by the Company...............................................40
2.14 Payments by the Lenders to the Administrative Agent...................41
2.15 Sharing of Payments, Etc..............................................42
2.16 Collateral Documents and Subsidiary Guaranty..........................42
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.............................42
3.01 Taxes.................................................................42
3.02 Illegality............................................................45
3.03 Increased Costs and Reduction of Return...............................46
3.04 Funding Losses........................................................47
3.05 Inability to Determine Rates..........................................47
3.06 Reserves on Eurodollar Rate Loans.....................................47
3.07 Certificates of Lenders...............................................48
ARTICLE IVCONDITIONS PRECEDENT..................................................48
4.01 Conditions of Initial Extension of Credit.............................48
4.02 Conditions to all Borrowings..........................................50
4.03 Pledge and Delivery of Collateral; Subsidiary Guarantors..............51
ARTICLE VREPRESENTATIONS AND WARRANTIES.........................................52
5.01 Corporate Existence and Power.........................................52
5.02 Corporate Authorization; No Contravention.............................52
5.03 Governmental Authorization............................................53
5.04 Binding Effect........................................................53
5.05 Litigation............................................................53
5.06 No Default............................................................53
5.07 ERISA Compliance......................................................53
5.08 Use of Proceeds; Margin Regulations...................................55
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.09 Title to Properties; Leases...........................................55
5.10 Taxes.................................................................55
5.11 Financial Condition;..................................................56
5.12 Environmental Matters.................................................56
5.13 Collateral Documents..................................................57
5.14 Regulated Entities....................................................57
5.15 Labor Relations.......................................................57
5.16 Copyrights, Patents, Trademarks and Licenses, etc.....................57
5.17 Subsidiaries of the Company...........................................58
5.18 Insurance.............................................................58
5.19 Full Disclosure.......................................................58
ARTICLE VIAFFIRMATIVE COVENANTS.................................................58
6.01 Financial Statements..................................................58
6.02 Certificates; Other Information.......................................59
6.03 Notices...............................................................60
6.04 Preservation of Corporate Existence, Etc..............................63
6.05 Maintenance of Property...............................................63
6.06 Insurance.............................................................64
6.07 Payment of Obligations................................................64
6.08 Compliance with Laws..................................................64
6.09 Inspection of Property and Books and Records..........................64
6.10 Environmental Laws....................................................65
6.11 Use of Proceeds.......................................................65
6.12 ERISA.................................................................65
6.13 Interest Rate Protection..............................................65
6.14 Pledged Subsidiaries..................................................65
6.15 Subsidiary Guarantors.................................................66
6.16 Repayment of UATC Senior Secured Note.................................66
6.17 Redemption of Company Preferred Stock.................................66
6.18 Further Assurances....................................................66
ARTICLE VII NEGATIVE COVENANTS.............................................67
7.01 Limitation on Indebtedness............................................67
7.02 Limitation on Liens...................................................68
7.03 Disposition of Assets.................................................69
7.04 Consolidations and Mergers............................................69
7.05 Loans and Investments.................................................69
7.06 Transactions with Affiliates..........................................71
7.07 Change in Business....................................................71
7.08 Compliance with ERISA.................................................71
7.09 Lease Obligations.....................................................72
7.10 Capital Stock and Equity Interests of Subsidiaries....................72
7.11 Restricted Payments...................................................72
7.12 Financial Ratios......................................................73
7.13 Priority of Loan Payments.............................................73
7.14 Investments in Margin Stock...........................................74
7.15 Amendments to Certain Agreements......................................74
7.16 Accounting Changes....................................................75
ARTICLE VIII EVENTS OF DEFAULT..............................................75
8.01 Event of Default......................................................75
8.02 Remedies..............................................................78
8.03 Rights Not Exclusive..................................................79
ARTICLE IXADMINISTRATIVE AGENT..................................................79
</TABLE>
<PAGE>
<TABLE>
<S> <C>
9.01 Appointment and Authorization.........................................79
9.02 Delegation of Duties..................................................79
9.03 Liability of Agent-Related Persons....................................79
9.04 Reliance by Administrative Agent......................................80
9.05 Notice of Default.....................................................80
9.06 Credit Decision.......................................................81
9.07 Indemnification.......................................................81
9.08 Agents in Individual Capacity.........................................82
9.09 Successor Administrative Agent........................................82
9.10 Collateral Matters....................................................82
9.11 Documentation Agent, Syndication Agent, Co-Syndication Agents.........83
ARTICLE X MISCELLANEOUS.........................................................83
10.01 Amendments and Waivers................................................83
10.02 Notices...............................................................84
10.03 No Waiver; Cumulative Remedies........................................84
10.04 Costs and Expenses....................................................85
10.05 Indemnity.............................................................85
10.06 Successors and Assigns................................................86
10.07 Assignments, Participations Etc.......................................86
10.08 Set-off..............................................................88
10.09 Notification of Addresses, Lending Offices, Etc.......................89
10.10 Counterparts..........................................................89
10.11 Severability..........................................................89
10.12 Removal of a Lender...................................................89
10.13 Governing Law and Jurisdiction........................................90
10.14 WAIVER OF JURY TRIAL..................................................90
10.15 Entire Agreement......................................................90
</TABLE>
Signatures S-1
<PAGE>
SCHEDULES
1.01(a) Applicable Amounts
1.01(b) Annualizaton Factors
1.01(c) Existing Letters of Credit
2.01 Commitments, Availability, Reduction Amounts, Use Of Proceeds:
2.01(a) Revolving Commitments,
2.01(b) Tranche A Term Commitments
2.01(c) Tranche B Term Commitments
2.01(d) Tranche C Term Commitments
5.05 Litigation
5.07 ERISA Compliance
5.12 Environmental Matters
5.16 Intellectual Property Claims
5.17 Subsidiaries of the Company
7.01 Existing Indebtedness
7.02 Liens
7.05 Existing Loans, Equity Interests and Investments
7.06 Existing Affiliate Agreements
10.02 Lending Offices and Addresses for Notices
EXHIBITS
Form of
A-1 Revolving Loan Promissory Note
A-2 Tranche A Term Loan Promissory Note
A-3 Tranche B Term Loan Promissory Note
A-4 Tranche C Term Loan Promissory Note
B Notice of Borrowing
C Notice of Continuation/Conversion
D-1 Prop I Expense Value Letter of Credit
D-2 Prop I Property Value Letter of Credit
E Subsidiary Guaranty
F-1 Company Pledge Agreement
F-2 Subsidiary Pledge Agreement
F-3 Intercompany Note
G Assignment and Acceptance Agreement
-i-
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 21, 1998, is entered into
by and among Oscar I Corporation (intended to be renamed United Artists Theatre
Company), a Delaware corporation (the "Company"), the several financial
institutions from time to time party hereto (individually, a "Lender" and
collectively, the "Lenders"), Bank of America National Trust and Savings
Association, as administrative agent (in such capacity, the "Administrative
Agent"), BankBoston, N.A., as documentation agent (in such capacity, the
"Documentation Agent"), NationsBank of Texas, N.A., as syndication agent (in
such capacity, the "Syndication Agent") and Merrill Lynch Capital Corporation
and Morgan Stanley Senior Funding, Inc., as co-syndication agents (in such
capacity, the "Co-Syndication Agents").
RECITAL
The parties hereto desire to provide credit facilities to the
Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Administrative Agent" means Bank of America National Trust and
Savings Association in its capacity as Administrative Agent hereunder, and any
successor thereto in such capacity.
"Administrative Agent's Payment Account" means Bank of America
National Trust and Savings Association, 121000358, Attention: Agency
Administrative Services #5596, Account No.12330-16202, Reference: Oscar I
Corporation, or such other account or accounts of the Administrative Agent as it
may from time to time specify to the Company and the Lenders.
"Affiliate" means, as to any specified Person, (a) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or (b) any other Person that owns
directly or indirectly, 10% or more of such Person's capital stock or any
officer or director of any such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
other Person, whether through the ownership of voting securities, by contract,
or otherwise.
"Agents" means the Administrative Agent, the Documentation Agent,
the Syndication Agent and the Co-Syndication Agents (individually, an "Agent").
"Agent-Related Persons" has the meaning specified in Section 9.03.
-1-
<PAGE>
"Agreement" means this Credit Agreement, as amended, supplemented or
modified from time to time.
"Applicable Amount" means, as of any date of determination, the
amounts set forth on Schedule 1.01(a) hereto. The Applicable Amount shall be
----------------
based upon the most recent compliance certificate delivered from time to time
pursuant to Section 6.02(b)(iii). Any change in the Applicable Amount shall be
effective from and after such Determination Date until the following
Determination Date. If the Company fails to timely deliver such compliance
certificate, the Applicable Amount shall be the highest amount indicated on
Schedule 1.01(a) until the Administrative Agent receives such compliance
- - ----------------
certificate. The Administrative Agent will with reasonable promptness notify the
Company and the Lenders of the effective date and the amount of each such
change; provided, however, that any failure to do so shall not relieve the
-------- -------
Company of any liability hereunder. "Determination Date" means each date that
the Administrative Agent receives the compliance certificate pursuant to Section
6.02(b)(iii).
"Arrangers" means BancAmerica ROBERTSON STEPHENS, BancBoston
Securities Inc. and NationsBanc Montgomery Securities LLC.
"Assignee" has the meaning specified in Section 10.07(a).
"Assignment and Acceptance" has the meaning specified in Section
10.07(b).
"Available Tranche A Term Loan Commitments" means, as of any date of
determination, the portion of the combined Tranche A Term Loan Commitments set
forth under the heading "Available Tranche A Term Loan Commitments" on Schedule
--------
2.01(b) hereto.
- - -------
"Available Tranche C Term Loan Commitments" means, as of any date of
determination, the portion of the combined Tranche C Term Loan Commitments set
forth under the heading "Available Tranche C Term Loan Commitments" on Schedule
--------
2.01(d) hereto.
- - -------
"Base Rate" means, for any day, a rate per annum (rounded upwards to
the next 1/100 of 1%) equal to the higher of (a) the Reference Rate in effect on
such day and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"BofA" means Bank of America National Trust and Savings Association.
"Borrowing" means an extension of credit consisting of (a) the
making of Loans under any Tranche on the same day by the Lenders ratably in
accordance with their Pro Rata Shares of such Tranche, or (b) the issuance,
amendment which increases the amount of, or extension of, any Letter of Credit
under the Revolving Commitment and the participation therein by the Lenders
having a Revolving Commitment.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial Lenders in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Eurodollar Rate Loan, a day on which dealings are carried on in the London
interbank market.
-2-
<PAGE>
"Capital Expenditures" means for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which are placed in service and which should be capitalized under
GAAP on a consolidated balance sheet of such Person and its Subsidiaries. For
the purpose of this definition, the purchase price of equipment which is
purchased simultaneously with the trade-in of existing equipment owned by such
Person or any of its Subsidiaries or with insurance proceeds shall be included
in Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment for such equipment
being traded in at such time, or the amount of such insurance proceeds, as the
case may be. Except where otherwise specified in this Agreement, Capital Lease
Obligations for leases of theatres (including any related real property
interests) shall be excluded from the definition of "Capital Expenditures".
"Capital Lease Obligations" means all monetary obligations of the
Company or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease.
"Cash Collateral Account" means an interest-bearing cash collateral
account established with the Administrative Agent or other institution
satisfactory to the Administrative Agent in a location satisfactory to the
Administrative Agent in which the Company hereby grants a security interest to
the Administrative Agent for the benefit of the Secured Parties.
"Cash Collateralize" means to deposit in a Cash Collateral Account
cash in amount equal to the affected Letter of Credit Usage.
"Cash Equivalents" means:
(a) any security, maturing not more than six months after the
date of acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to principal,
premium, if any, and interest by the United States of America;
(b) any certificate of deposit, time deposit, Eurodollar time
deposit, or bankers' acceptance maturing not more than six months after
the date of acquisition, issued by any member of the Lender Group or a
commercial banking institution that is a member of the Federal Reserve
System and that has combined capital and surplus and undivided profits
of not less than $100,000,000, whose debt has a rating, at the time of
which any investment therein is made or on the date of such acquisition
by any Person, as the case may be, of "P-1" (or higher) by Moody's or
any successor rating agency, or "A-1" (or higher) by S&P or any
successor rating agency;
(c) commercial paper, maturing not more than three months after
the date of acquisition, issued by any Lender in the Lender Group or a
corporation (other than an Affiliate or Subsidiary of the Company)
organized and existing under the law of the United States of America
with a rating, at the time as of which any investment therein is made,
or on the date of such acquisition by any Person, as the case may be, of
"P-1" (or
-3-
<PAGE>
higher) by Moody's or any successor rating agency, or "A-1" (or higher)
by S&P or any successor rating agency; and
(d) any security, on the date of acquisition by any Person, that is
listed for trading on any national securities exchange, trades of which
are reported on the National Association of Securities Dealers Automated
Quotations System or that has a stated maturity on or before the first
anniversary of the date of such acquisition.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws".
"Change in Control Event" means (a) the Company not directly owning,
beneficially and of record, 100% of the issued and outstanding voting stock of
UATC (other than in connection with the merger of UATC into and with the Company
in which the Company is the surviving corporation) or (b) the Merrill Lynch
Entities not owning, directly or indirectly, over 50% of the issued and
outstanding voting stock of the Company.
"Closing Date" means the first date all conditions set forth in Section
4.01 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and interests in property and proceeds
covered by the Collateral Documents.
"Collateral Documents" means, collectively, the Company Pledge
Agreement, the Subsidiary Pledge Agreement and all other security agreements,
mortgages, deeds of trust, patent and trademark assignments, lease assignments,
guarantees, financing statements, and other similar agreements from time to time
relating to the Collateral, and any amendments, supplements, modifications,
renewals, replacements, consolidations, substitutions and extensions of any of
the foregoing, and "Collateral Document" means any of the Collateral Documents.
"Commitments" means the Revolving Commitments, the Tranche A Term
Loan Commitments, the Tranche B Term Loan Commitments and/or the Tranche C Term
Loan Commitments.
"Company Pledge Agreement" means the Company Pledge Agreement,
substantially in the form of Exhibit F-1 hereto, as the same may be amended,
-----------
supplemented or otherwise modified from time to time.
"Company Preferred Stock" means the Series A Cumulative Redeemable
Exchangeable Preferred Stock issued by the Company.
"Consolidated" means, as applied to any financial or accounting term
with reference to any Person, such term determined on a consolidated basis for
such Person in accordance with GAAP, including principles of consolidation,
consistently applied.
"Consolidated Interest Expense" means, as of any date of determination,
with respect to the Company and its Subsidiaries on a Consolidated basis, all
cash payments of commitment,
-4-
<PAGE>
facility and other fees due on all commitments to lend and all cash payments of
interest on outstanding Indebtedness during the period of four consecutive
fiscal quarters ending on such date of determination.
"Consolidated Lease Expense" means, as of any date of determination,
with respect to the Company and its Subsidiaries on a Consolidated basis, all
cash operating rental expense (which is the sum of actual base rent, additional
rent and percentage rent) paid during the period of four consecutive fiscal
quarters ending on such date of determination.
"Co-Syndication Agents" means Merrill Lynch Capital Corporation and
Morgan Stanley Senior Funding, Inc.
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, or
dividend or the guaranty of any payment obligation (the "primary obligations")
of another Person (the "primary obligor"), including, without limitation, any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance or provide
funds (i) for the payment or discharge of any such primary obligation, or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company or any of its Subsidiaries pursuant to Section 414(b), (c), (m) or (o)
of the Code.
"Conversion Date" means any date on which the Company elects to
convert a Base Rate Loan into a Eurodollar Rate Loan or a Eurodollar Rate Loan
into a Base Rate Loan.
"Covered Transaction" means, with respect to any Disposition, (a)
the acquisition or development of theatre properties or other activities
incidental thereto within 360 days of such Disposition, (b) the entering into of
definitive agreements to acquire or develop theatre properties or other
activities incidental thereto within 360 days of such Disposition, provided that
such acquisition or development is completed within 360 days of the date of the
applicable definitive agreement, or (c) Sale-and-Leaseback Transactions of
theatre properties and equipment entered
-5-
<PAGE>
into within 360 days of when such properties were opened or such equipment was
acquired by the Company or any Subsidiary of the Company.
"Credit Exposure" means, as of any date of determination, as the
context requires, (a) the aggregate Revolving Commitment Exposure of all
Lenders, the aggregate Tranche A Term Loan Exposure of all Lenders, the
aggregate Tranche B Term Loan Exposure of all Lenders or the aggregate Tranche C
Term Loan Exposure of all Lenders or (b) the sum of the foregoing.
"Default" means any event which, with the giving of notice, the
lapse of time, or both, would constitute an Event of Default.
"Designated Lease" means an agreement for the use or possession of
property entered into in connection with a Sale-and-Leaseback Transaction that
does not create Capital Lease Obligations and that has a Weighted Average Life
to Expiration that is less than either the Weighted Average Life to Maturity of
the Obligations or the number of years remaining at such time until April 21,
2007. Notwithstanding anything to the contrary contained herein, no Contractual
Obligations existing on the date hereof (including any extensions or renewals
thereof) will constitute a Designated Lease under this Credit Agreement.
"Disposition" means any sale, issuance, conveyance, transfer, lease
or other disposition (including, without limitation, by way of merger or
consolidation) (collectively, a "transfer"), directly or indirectly, in one or a
series of related transactions, of or through (a) any capital stock of any
Subsidiary of the Company, (b) any other properties, assets, lines, businesses
or divisions, other than in the ordinary course of business, (c) any
Sale-and-Leaseback Transaction, (d) any Event of Loss or (e) sales of accounts
and notes receivable, with or without recourse.
"Documentation Agent" means BankBoston, N.A.
"documents" includes any and all instruments, documents, agreements,
certificates and other writings, however evidenced.
"dollars" and "$" means lawful money of the United States.
"Domestic Lending Office" means, with respect to each Lender, the
office of that Lender designated as such on Schedule 10.02 or such other office
--------------
of the Lender as it may from time to time specify to the Company and the
Administrative Agent.
"Eligible Assignee" means (a) a commercial lender organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial lender organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$100,000,000; provided that such lender is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (c) any other entity which is an "accredited investor" (as
defined in Regulation D under the Securities Act) which extends credit or buys
loans as one of its businesses, including but not limited to, insurance
companies, mutual funds and lease financing companies, or (d) other lenders or
-6-
<PAGE>
institutional investors approved in writing in advance by the Administrative
Agent and the Company which approval is not to be unreasonably withheld or
delayed.
"Environmental Claim" means all claims, however asserted, by any
Governmental Authority or other Person, of potential liability or responsibility
for violation of any Environmental Law or for release or injury to the
environment or threat to public health, personal injury (including sickness,
disease or death), property damage, natural resources damage, or otherwise
alleging liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or criminal
penalties, injunctive relief, or other type of relief, resulting from or based
upon (a) the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in or from property,
whether or not owned by the Company, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic Substances Control
Act, the Emergency Planning and Community Right-to-Know Act, each as amended.
"Environmental Permits" has the meaning specified in Section
5.12(b).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any regulation promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary of the
Company within the meaning of Section 414(b), 414(c) or 414(m) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a
Qualified Plan or a Multiemployer Plan; (b) a withdrawal by any member of the
Controlled Group from a Qualified Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA); (c) a complete or partial withdrawal by any member of the
Controlled Group from a Multiemployer Plan; (d) the filing of a notice of intent
to terminate, the treatment of a plan amendment as a termination under Section
4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure by any member of the Controlled Group to make required
contributions to a Qualified Plan or Multiemployer Plan; (f) an event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Qualified Plan or Multiemployer Plan; (g) the imposition of any
liability under Title IV of ERISA, other than
-7-
<PAGE>
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
member of the Controlled Group; (h) an application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code with
respect to any Qualified Plan; (i) a non-exempt prohibited transaction
involving, or resulting in liability to, the Company or any of its Subsidiaries;
or (j) a violation of the applicable requirements of Section 404 or 405 of ERISA
or the exclusive benefit rule under Section 401(a) of the Code by any fiduciary
with respect to any Qualified Plan for which the Company or any of its
Subsidiaries may be directly or indirectly liable.
"Eurodollar Lending Office" means with respect to each Lender, the
office of such Lender designated as such on Schedule 10.02 or such other office
--------------
of such Lender as such Lender may from time to time specify to the Company and
the Administrative Agent.
"Eurodollar Rate" means, for each Interest Period for Eurodollar
Rate Loans comprising the same Borrowing, the rate per annum equal to the
average (rounded upward to the nearest whole multiple of 1/16 of one percent) of
the rates of interest per annum notified to the Administrative Agent by each
Reference Lender as the rate at which Dollar deposits for such Interest Period
and in an amount comparable to the amount of the Eurodollar Rate Loan that such
Reference Lender will make (or, if not a Lender under the applicable Tranche,
would make if it were such a Lender) during such Interest Period would be
offered by its Eurodollar Lending Office to major Lenders in the London
eurodollar market at or about 11:00 a.m. (London time) on the second Business
Day before the commencement of such Interest Period. If no such rates are
notified to the Administrative Agent, the "Eurodollar Rate" shall be the rate
set forth on the Reuters Telerate screen for eurodollar deposits with major
Lenders in London as of the date and time of such determination.
"Eurodollar Rate Loan" means a Loan that bears interest based on the
Eurodollar Rate.
"Event of Default" means any of the events specified in Section
8.01.
"Event of Loss" means, with respect to any property or asset
(tangible or intangible, real or personal) any of the following: (a) any loss,
destruction or damage of such property or asset; or (b) any actual condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation of such property or asset or the
requisition of the use of such property or asset.
"Excess Cash" means, for the most recently completed four fiscal
quarters for the Company and its Subsidiaries on a Consolidated basis, (a)
Operating Cash Flow for such period less (b) the sum of (i) regularly scheduled
----
payments and required prepayments of principal of Indebtedness for borrowed
money of the Company and its Subsidiaries to the extent not prohibited under
this Agreement and actually paid during such period, plus (ii) Consolidated
----
Interest Expense actually paid by the Company and its Subsidiaries in respect of
Indebtedness for borrowed money during such period, plus (iii) Capital
----
Expenditures actually made during such period, plus (iv) tax payments actually
----
paid or to be paid in respect of such period.
"Excluded Disposition" means:
-8-
<PAGE>
(a) Dispositions of inventory, or used, worn-out or surplus
property and other property or assets, all in the ordinary course of
business;
(b) Dispositions of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar
replacement equipment or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
and
(c) transactions permitted under Sections 7.04 and 7.09.
"Existing Credit Agreement" means the Restated Credit Agreement
dated as of May 1, 1995, as amended, among United Artists Theatre Circuit, Inc.,
certain banks and co-agents and Bank of America National Trust and Savings
Association as managing agent.
"Existing Letters of Credit" means the "facility letters of credit"
issued under the Existing Credit Agreement and the Prop I Letters of Credit, in
each case that are outstanding on the Closing Date and described on Schedule
--------
1.01(c) hereto.
- - -------
"Federal Funds Rate" means, 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, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Lender of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. For purposes of this Agreement,
any change in the Base Rate due to a change in the Federal Funds Rate shall be
effective as of the opening of business on the effective date of such change. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Rate for any reason, including, without limitation,
the inability or failure of the Administrative Agent to obtain sufficient bids
or publications in accordance with the terms hereof, the Base Rate shall be the
Reference Rate until the circumstances giving rise to such inability no longer
exist.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letters" means the fee letters referred to in Section 2.11.
"Former Collateral Agent" means Bankers Trust Company in its
capacity as collateral agent under the Former Collateral Documents.
"Former Collateral Documents" means all "Collateral Documents" and
the "Intercreditor Agreement" defined in the Existing Credit Agreement.
"Funded Indebtedness" means, without duplication, all Indebtedness
for borrowed money and all Contingent Obligations relating thereto, Designated
Leases, Capital Lease Obligations
-9-
<PAGE>
and any net obligations of such Person under Rate Contracts on or after
termination of the applicable Rate Contract.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination. In computing
compliance with the covenants set forth in Section 7.12 the Company shall use
GAAP as in effect on the Closing Date unless the Company and Majority Lenders
have agreed to use GAAP as in effect on the date of determination of compliance
with such covenant; and the computations supporting the compliance certificates
provided pursuant to Section 6.02(b) shall reflect such use of GAAP.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central Lender (or similar monetary
or regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a pollutant,
contaminant, waste, solid waste, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or petroleum
or petroleum derived substance or waste.
"Indebtedness" of any Person means without duplication, (a) all
obligations for borrowed money, or with respect to deposits or advances of any
kind (including repurchase obligations); (b) all obligations evidenced by notes,
bonds, debentures or similar instruments; (c) all obligations on which interest
charges are customarily paid; (d) all obligations under conditional sale or
other title retention agreements relating to property purchased by such Person;
(e) all Capital Lease Obligations; (f) all net obligations with respect to Rate
Contracts on or after termination of the applicable Rate Contract; (g) all
reimbursement obligations under surety bonds, letters of credit, bankers'
acceptances and similar instruments (in each case whether or not matured); (h)
all Contingent Obligations; provided that obligations constituting contingent
liabilities of such Person as a general partner in respect of operating
liabilities of the partnership in which it is such a general partner shall
constitute Indebtedness only when and to the extent that such contingent
liabilities become due and payable obligations of such general partner; (i) all
obligations issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers incurred and paid in the
ordinary course of business); (j) all Designated Leases and (k) all Indebtedness
referred to in clauses (a) through (j) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, but only to the extent of the
lesser of (x) the principal amount of such Indebtedness and (y) the fair market
value of the property taken as security.
-10-
<PAGE>
"Indemnified Person" has the meaning specified in Section 10.05.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or any other similar
arrangement; in each case (a) and (b) under U.S. Federal, State or foreign law.
"Intercompany Note" means a promissory note substantially in the
form of Exhibit F-3 hereto executed and delivered by UATC in favor of the
-----------
Company.
"Interest Payment Date" means (a) with respect to Base Rate Loans,
the last day of each fiscal quarter of the Company and (b) with respect to any
Eurodollar Loan, the last day of each Interest Period applicable to such Loan;
provided, however, that if any Interest Period for a Eurodollar Rate Loan
- - -------- -------
exceeds three months, interest shall also be paid on the date which falls three
months after the beginning of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Rate Loan,
the period commencing on the Business Day the Loan is disbursed or continued or
on the Conversion Date on which the Loan is converted to the Eurodollar Rate
Loan and ending on the date one, two, three or six months thereafter, as
selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
--------
(a) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding Business
Day;
(b) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(c) no Interest Period for any Term Loan shall extend beyond the
Maturity Date applicable for such Term Loan; and
(d) no Interest Period applicable to any Loan under any Tranche
or portion thereof shall extend beyond the next Reduction Date or
Principal Payment Date, as applicable to such Tranche, unless, on that
Reduction Date or Principal Payment Date, either (i) the Outstanding
Obligations under such Tranche will not exceed the combined Commitments
under such Tranche (after giving effect to any reduction required to be
made on such Reduction Date or payment required to be made on such
Principal Payment Date) or (ii) the sum of (A) the aggregate principal
------
amount of Base Rate Loans plus (B) the aggregate principal amount of all
----
Eurodollar Rate Loans with an Interest Period ending on or prior to such
Reduction Date or Principal Payment Date is at least equal to
-11-
<PAGE>
the Reduction Amount for such Tranche for such Reduction Date or the
Principal Payment Amount for such Tranche on such Principal Payment
Date.
"Involuntary Closing" means a closing or loss of use of a property
which is not in the best interests of the Company in the reasonable business
judgement of the Company.
"Issuing Lender" means any Lender, in its sole discretion, issuing a
Letter of Credit under the combined Revolving Commitments.
"Lender" means each lender from time to time party to this Agreement
(collectively, the "Lenders").
"Lender Group" means the Lenders party to this Agreement.
"Lending Office" means, with respect to any Lender, the office or
offices of the Lender specified as its "Lending Office" or "Domestic Lending
Office" or "Eurodollar Lending Office", as the case may be, opposite its name on
Schedule 10.02 hereto, or such other office or offices of such Lender as it may
- - --------------
from time to time specify to the Company and the Administrative Agent.
"Letter of Credit" means a Letter of Credit issued and outstanding
under the combined Revolving Commitments, including without limitation the Prop
I Letters of Credit (collectively, the "Letters of Credit").
"Letter of Credit Action" means the issuance, supplement, amendment,
renewal, extension, modification or other action relating to a Letter of Credit
hereunder.
"Letter of Credit Application" means an application for issuances
of, or amendments to, letters of credit as shall at any time be in use at the
Issuing Lender.
"Letter of Credit Usage" means, as at any date of determination, the
undrawn face amount of outstanding Letters of Credit plus Unreimbursed Drawings.
----
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
otherwise) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the UCC or any
comparable law) and any contingent or other agreement to provide any of the
foregoing.
"Loan" means an extension of credit by a Lender to the Company
pursuant to Article II other than an Unreimbursed Drawing, and may be a Base
Rate Loan or a Eurodollar Rate Loan.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Collateral Documents, the Subsidiary Guaranty, the Fee Letters and
all documents delivered to the Administrative Agent in connection herewith (each
individually a "Loan Document").
-12-
<PAGE>
"Loan Parties" means the Company and each Subsidiary which is a
party from time to time to any Loan Document (each individually a "Loan Party").
"Majority Lenders" means, at any time of determination, Lenders
having or holding more than 51% of the sum of the aggregate Credit Exposure of
all Lenders under all Tranches. As to any Tranche, Majority Lenders means
Lenders having or holding more than 51% of the sum of the aggregate Credit
Exposure of all Lenders under such Tranche.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business, properties,
or condition (financial or otherwise) of the Company and its Subsidiaries taken
as a whole; (b) the ability of any Loan Party to perform under any Loan
Document; (c) the legality, validity, binding effect or enforceability of any
Loan Document; or (d) the perfection or priority of any Lien granted to the
Lenders or to the Administrative Agent for the benefit of the Lenders under any
of the Collateral Documents. For purposes of this Agreement and the Loan
Documents, consummation of the transactions contemplated or permitted by this
Agreement shall not be deemed to be a Material Adverse Effect.
"Material Subsidiary" means, at any particular time, any Subsidiary
of the Company that, together with the Subsidiaries of such Subsidiary, (a)
accounted for more than five percent of Operating Cash Flow for the most
recently completed four fiscal quarters of the Company and its Subsidiaries on a
Consolidated basis or (b) was the owner of more than five percent of the
Consolidated assets of the Company and its Subsidiaries as at the end of the
most recent fiscal quarter of the Company. Notwithstanding the foregoing, each
Subsidiary Guarantor shall be a Material Subsidiary.
"Maturity Date" means, as applicable, the Revolving Commitment
Maturity Date, the Tranche A Term Loan Maturity Date, the Tranche B Term Loan
Maturity Date or Tranche C Term Loan Maturity Date.
"Merrill Lynch Entity" means Merrill Lynch and Co., its wholly-owned
Subsidiaries, general or limited partnerships of which Merrill Lynch and Co. or
its wholly-owned Subsidiaries are the sole general partners, or any other
"Permitted Holder" as defined in the indenture governing the Senior Subordinated
Notes.
"Moody's" means Moody's Investors Service, a corporation organized
and existing under the laws of the State of Delaware, and its successors.
"Multiemployer Plan" means a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA) and to which any member of the
Controlled Group makes, is making, or is obligated to make contributions or has
within the immediately preceding period including five full Plan years made, or
been obligated to make, contributions.
"Negative Pledge" means a Contractual Obligation that contains a
covenant binding on the Company or any of its Subsidiaries that prohibits Liens
on any of its or their property in favor
-13-
<PAGE>
of the Secured Parties, other than any such covenant contained in a Contractual
Obligation which affects only the property that is the subject of such
Contractual Obligation.
"Net Cash Proceeds" means, with respect to any Disposition or any
offering of Indebtedness or equity securities of the Company or its
Subsidiaries, the gross cash sales proceeds received by the Company and its
Subsidiaries from such Disposition or offering (including cash or Cash
Equivalents, including payments in respect of, deferred payment obligations,
when received in the form of, or stock or other assets when such obligations are
disposed of for, cash or Cash Equivalents (except to the extent that such
obligations are financed or sold with recourse to such Person or any Subsidiary
thereof) net of (a) the reasonable direct costs relating to such Disposition or
------
offering, (b) sale, use or other transaction taxes but not actual or estimated
income taxes payable on any gain from the Disposition or offering paid or
payable as a result thereof (provided, that a reasonable estimate of income
--------
taxes on the gain from Disposition as the Company actually expects to pay in the
year in which such Disposition occurs or such Net Cash Proceeds are received may
be netted), and (c) amounts required to be applied to repay principal, interest
and prepayment premiums and penalties on Indebtedness secured by a Lien on the
asset which is the subject of such Disposition. "Net Cash Proceeds" shall also
include proceeds received by any Person in the form of cash or Cash Equivalents
including payments in respect of deferred payment obligations when received in
the form of cash or Cash Equivalents in respect of any Event of Loss net of (i)
all money actually applied (or committed to be applied within six months of the
Disposition) to repair or reconstruct the damaged property or property affected
by the condemnation or taking, (ii) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or other
payments and (iii) any amounts retained by or paid to parties having superior
rights to such proceeds, awards or other payments. "Net Cash Proceeds
Percentage" means, with respect to prepayments required pursuant to Section
2.08, an amount equal to the percentage set forth below, based upon the Total
Leverage Ratio as shown on the most recent compliance certificate delivered
pursuant to Section 6.02(b) (adjusted, in the case of Dispositions, for such
Disposition on a pro forma basis) for (a) in the case of Levels 2 and 3, the
fiscal quarter preceding the date of receipt by the Company or its Subsidiary of
such Net Cash Proceeds and (b) in the case of Level 4, the two most recent
fiscal quarters preceding the date of receipt by the Company or its Subsidiary
of such Net Cash Proceeds:
-14-
<PAGE>
<TABLE>
<CAPTION>
LEVEL TOTAL LEVERAGE RATIO NET CASH PROCEEDS PERCENTAGE
- - --------------------------------------------------------------------------------------------
EXCESS CASH FLOW EQUITY PROCEEDS
SECTION 2.08(b) SECTION 2.08(d)
<S> <C> <C> <C>
- - --------------------------------------------------------------------------------------------
1 Default or Event of Default exists, 100% 100%
regardless of Total Leverage Ratio
- - --------------------------------------------------------------------------------------------
2 >5.00:1 75% 100%
-
- - --------------------------------------------------------------------------------------------
3 = 4.00:1 but 5.00:1 50% 50%
- - --------------------------------------------------------------------------------------------
4 4.00:1 for two consecutive Fiscal 0% 0%
Quarters
- - --------------------------------------------------------------------------------------------
</TABLE>
"Note" means a promissory note substantially in the form of Exhibit
-------
A-1, Exhibit A-2, Exhibit A-3 or Exhibit A-4 hereto, as from time to time
- - --- ----------- ----------- -----------
amended, modified or supplemented (collectively, the "Notes").
"Notice of Borrowing" means a notice substantially in the form of
Exhibit B hereto.
- - ---------
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit C hereto.
---------
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or Governmental Authority for the purpose of evidencing,
creating, perfecting or preserving the priority of a Lien securing obligations
owing to a Governmental Authority.
"Obligations" means all Loans, Letter of Credit Usage and other
Indebtedness, advances, debts, liabilities, obligations, covenants and duties
owing by any Loan Party to any Lender, Swap Party, any Agent, or any other
Person required to be indemnified under any Loan Document, of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under any Loan Document, or, in respect of any Rate
Contract with any Swap Party, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification or
in any other manner, whether direct or indirect (including those acquired by
assignment), voluntary or involuntary, absolute or contingent, whether or not
jointly owed with others, direct or indirect, due or to become due, liquidated
or unliquidated, now existing or hereafter arising and however acquired.
"Operating Cash Flow" means, with respect to any Person for any
period, (a) the gross operating revenues of such Person for such period derived
in the ordinary course of its business from operations (including, in the case
of the Company, revenues received as management fees under agreements entered
into by Subsidiaries of the Company), minus (b) all operating expenses from
-----
operations of such Person for such period, including without limitation,
technical, film, actual operating lease rent (including actual operating lease
rent payable to an Affiliate of such
-15-
<PAGE>
Person), selling, advertising, general and administrative expenses and corporate
overhead of such Person during such period, minus (c) income taxes paid by such
-----
Person during such period, plus (d) depreciation, amortization, deferred taxes
----
and other non-cash charges in each case including, without limitation, any
increase or decrease, resulting from any adjustments for appreciation or
depreciation in the value of any option to acquire the common stock of the
Company to the extent deducted in calculating operating income from continuing
operations of such Person for such period, but only to the extent not paid in
cash.
In the calculation of Operating Cash Flow there shall be
excluded interest expense, interest income, extraordinary items and
gains or losses on (and proceeds from) sales or dispositions of assets
outside the ordinary course of business. With respect to the
Consolidated Operating Cash Flow of any Person, the effect of revenues
and expenses associated with any minority interest in Subsidiaries of
such Person, and intercompany transactions, including the payment of
dividends by Subsidiaries of such Person shall be excluded. All
dividends of unconsolidated (owned 50% or less) subsidiaries or other
Persons shall be included to the extent they are paid in cash.
In the case of the sale, transfer or other disposition, or an
acquisition of an operating theatre by any such Person during any
period, Operating Cash Flow shall be adjusted as it would have been if
such acquisition, sale, transfer or other disposition had been
consummated on the first day of the most recently completed four fiscal
quarter period of such Person.
In the case of newly constructed theatres or screens which have
not had 12 complete months of operations during a measurement period,
the Operating Cash Flow for such theatres or screens shall be PPOCF plus
----
PFOCF. PFOCF shall be calculated by annualizing the Operating Cash Flow
for those complete months during which such new theatre or screen has
been in operation based on the monthly annualization factors for such
month(s) set forth in Schedule 1.01(B) hereto in accordance with the
---------------
following formula:
PFOCF = OCFM - PPOCF
----
AF
Where
PFOCF = Pro Forma Operating Cash Flow.
OCFM = Sum of actual Operating Cash Flow for each
Included Month. "Included Month" is each
full month that such theatre or screen was
in operation covered by the most recent
compliance certificate (the "Prior Period
Operating Cash Flow") plus each full month
that such theatre or screen was in
operation from the end of the period
covered by the compliance certificate to
the date of calculation.
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<PAGE>
AF = Sum of annualization factors set forth in
Schedule 1.01(b) for the Included Months.
----------------
PPOCF = Prior Period Operating Cash
Flow, which is the actual
aggregate cash flow for the
theatres or screens included in
the measurement period.
"Other Taxes" has the meaning specified in Section 3.01(b).
"Outstanding Obligations" means, as of any date of determination, as
to any or all Lenders under any or all Tranches, as the case may be, and giving
effect to making any Loans or Letters of Credit requested on such date and all
payments, repayments and prepayments made on such date under such Tranches, the
sum of (a) the aggregate outstanding principal of all Loans of such Lenders
under such Tranches, and (b) all Letter of Credit Usage, if any, in which such
Lender(s) are participating.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Participant" has the meaning specified in Section 10.07(g).
"Permitted Investments" means (a) commercial paper of any of the
Lenders, or of any other Person if rated P-1 or better by Moody's or A-1 or
better by S&P or similarly rated by any successor to either of such rating
services, (b) certificates of deposit, money market deposit accounts, time
deposits and banker's acceptances issued by any Person in the Lender Group, (c)
certificates of deposit, money market deposit accounts, time deposits and
banker's acceptances issued by any commercial Lender registered to do business
in any state of the United States having combined capital and surplus and
undivided profits in excess of $500,000,000 and whose short term debt is rated A
or better by S&P or by Moody's, or similarly rated by any successor to either of
such rating services, and (d) obligations of the United States government or any
agency thereof which are backed by the full faith and credit of the United
States; provided, however, that, in the case of clauses (a), (b) and (c) above,
-------- -------
such obligations shall mature not more than one year from the date of
acquisition thereof.
"Permitted Liens" means:
(a) Assignments or other encumbrances on theatre leases and
subleases, and extensions thereof, and other encumbrances on
property of the Company or its Subsidiaries existing on the Closing
Date and set forth in Schedule 7.02 hereto;
-------------
(b) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with worker's compensation,
unemployment insurance, old-age pensions and other social security
benefits;
(c) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of Indebtedness), statutory
obligations, surety, customs and appeal bonds and other obligations
of like nature, incurred as an incident to and in the ordinary
course of business;
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<PAGE>
(d) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's, landlords', laborers' suppliers' and
vendors' liens, incurred in good faith in the ordinary course of
business and securing obligations which are not yet due or which are
being contested in good faith by appropriate proceedings as to which
the Company or such Subsidiary, shall, to the extent required by
GAAP consistently applied, have set aside on its books adequate
reserves;
(e) Liens securing the payment of taxes, assessments and
governmental charges or levies, either (i) not delinquent or (ii)
being contested in good faith by appropriate legal or administrative
proceedings and as to which the Company or such Subsidiary, as the
case may be, shall, to the extent required by GAAP applied on a
consistent basis, have set aside on its books adequate reserves; and
(f) Zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use
of property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
property, with or without consent of the lessee), none of which
materially impairs the use of any parcel of property material to the
operation of the business of the Company or such Subsidiary or the
value of such property for the purpose of such business;
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, limited liability
company, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or member of the Controlled Group makes or is
obligated to make contributions, and includes any Multiemployer Plan or a
Qualified Plan.
"Pledged Subsidiaries" means Subsidiaries of the Company, all the
issuing and outstanding capital stock or other ownership interest of which are
pledged pursuant to the Collateral Documents (individually, a "Pledged
Subsidiary").
"Principal Payment Date" means each of the dates set forth on
Schedule 2.01 hereto as being a Principal Payment Date.
- - -------------
"Principal Payment Amount" means, as to any Tranche of Term Loans,
the principal amount of such Term Loans set forth on Schedule 2.01 hereto
-------------
opposite that Principal Payment Date under the heading Principal Payment Amount.
"Pro Forma Debt Service" means, as of any date of determination, for
the Company and its Subsidiaries on a Consolidated basis, the sum of (a) all
cash payments of principal of Indebtedness scheduled by the terms of such
Indebtedness to be paid during the four fiscal quarters immediately following
the date of determination thereof (excluding, until the fiscal quarter ending
December 31, 1998, the principal of the Prop I Mortgage Debt due on the Prop I
Mortgage Debt Repayment Date) plus (b) all Pro-Forma Interest Expense for such
----
period;
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<PAGE>
provided, however, that in calculating the amount of principal payments that
- - -------- -------
will be required under the combined Revolving Commitments by reason of the
commitment reductions set forth in Section 2.06, the amount, if any, by which
the aggregate Revolving Loans and Letter of Credit Usage outstanding on such
date of determination exceeds the combined Revolving Commitments, as so reduced,
shall be included. For purposes of section 7.12(b), Pro Forma Debt Service shall
include Pro Forma Lease Expense.
"Pro Forma Interest Expense" means, as of any date of determination,
for the Company and its Subsidiaries on a Consolidated basis, for the period of
the next four fiscal quarters immediately following such date of determination,
all cash payments of commitment, facility and other fees due on all commitments
to lend and interest on the outstanding Indebtedness on such date of
determination, in each case after giving effect to all scheduled amortization
payments of Indebtedness scheduled by the terms of such Indebtedness to be paid
during such period. For purposes of this calculation, interest on any
Indebtedness that is based on a floating rate or a rate that is not fixed for
such period (after giving effect to all Rate Contracts and interest rate cap
transactions) will be assumed to be fixed at the equivalent of a three-month
Eurodollar Rate plus the Applicable Amount as of the first day of the period
referred to in the preceding sentence.
"Pro Forma Lease Expense" means, as of any date of determination,
for the Company and its Subsidiaries on a Consolidated basis, operating cash
rental expense (which is the sum of actual base rent, additional rent and
percentage rent) for the immediately preceding fiscal quarter of the Company
multiplied by 4. In the case of the sale, transfer or other disposition, or an
acquisition of an operating theatre or screen by the Company or any of its
Subsidiaries during any period, Pro Forma Lease Expense shall be adjusted as it
would have been if such acquisition, sale, transfer or other disposition had
been consummated on the first day of the most recently completed fiscal quarter
of such Person. In the case of a newly opened or constructed theatre or screen,
Pro Forma Lease Expense shall be determined by using actual lease expense for
the first full month that such theatre or screen was in operation and
multiplying the actual lease expense for that month by twelve.
"Pro Rata Share" means as to any Lender (a) under a particular
Tranche, the percentage, as adjusted from time to time as set forth herein, set
forth opposite such Lender's name under Pro Rata Share in the table for such
Tranche on Schedule 2.01(a), 2.01(b), 2.01(c) or 2.01(d) hereto, as applicable,
---------------- ------- ------- -------
and (b) under all Tranches taken as a whole, such Lender's Credit Exposure under
all Tranches as a percentage of the aggregate Credit Exposure of all Lenders
under all Tranches.
"Prop I" means United Artists Properties I Corporation, a Colorado
corporation.
"Prop I Agreement" means those UAR Financing Agreements described in
clauses (a) through (d) of the definition of UAR Financing Agreements, as
amended, supplemented or otherwise modified from time to time.
"Prop I Letters of Credit" means (a) the standby letter of credit in
the initial face amount of $12,000,000 as described in the Prop I Agreement
substantially in the form of Exhibit D-1 hereto and (b) the standby letter of
-----------
credit in the initial face amount of $500,000 issued pursuant to the Prop I
Agreement and substantially in the form of Exhibit D-2 hereto.
-----------
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<PAGE>
"Prop I Mortgage Debt" means the Secured Principal Notes due
November 1, 1998 issued pursuant to and in connection with the Prop I Agreement
not exceeding $60,000,000 in principal amount.
"Prop I Mortgage Debt Repayment Date" means the date which is the
earlier of (a) the date the Prop I Mortgage Debt is paid and (b) November 30,
1998.
"Purchase Money Mortgages" means secured Indebtedness of the Company
or any Subsidiary (a) issued to finance or refinance the purchase or
construction of any assets of the Company or any Subsidiary or (b) secured by a
Lien on any assets of the Company or any Subsidiary where the lender's sole
recourse is to the assets so encumbered, in either case (i) to the extent the
purchase or construction prices for such assets are or should be included in
"addition to property, plant or equipment" in accordance with GAAP, (ii) if the
purchase or construction of such assets is not part of any acquisition of a
Person or business unit, and (iii) if the Lien securing such Indebtedness is
created within 90 days of such purchase or construction.
"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes or
is obligated to make contributions, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding period including five full Plan years, but
excluding any Multiemployer Plan.
"Rate Contracts" means interest rate and currency swap agreements,
floor and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements (other than caps) designed to
provide protection against fluctuations in interest or currency exchange rates.
"Reduction Amount" means the principal amount of Revolving Loans
necessary to reduce the combined Revolving Commitments to the level set forth on
Schedule 2.01 hereto opposite that Reduction Date.
- - -------------
"Reduction Date" means each of the dates set forth under "Reduction
Date" on Schedule 2.01(a) hereto.
----------------
"Reference Lender" means each of BofA, BankBoston, N.A. and
NationsBank of Texas, N.A. or any successor(s) thereto in such capacity
(collectively, the "Reference Lenders" in such capacity); provided, that a
Reference Lender shall be included in the determination of the interest rate for
any particular Borrowing only if such Reference Lender is participating in any
Borrowing.
"Reference Rate" means the rate per annum determined by BofA from
time to time as its Reference Rate of interest and publicly announced as such
from time to time by BofA. The Reference Rate is set by BofA based upon various
factors including its costs and desired return, general economic conditions and
other factors, and such rate is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in the reference rate announced shall take effect at the opening of business on
the day BofA publicly announces such rate.
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<PAGE>
"Register" has the meaning set forth in Section 2.02(a)(i).
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder excluding those events for which
the 30-day notice requirement is waived, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Required Class Lenders" means, at any time of determination, (a)
Lenders having or holding more than 51% of the sum of the aggregate Revolving
Commitment Exposure of all Lenders plus the aggregate Tranche A Term Loan
----
Exposure of all Lenders and (b) Lenders having or holding more than 51% of the
sum of the aggregate Tranche B Term Loan Exposure of all Lenders plus the
----
aggregate Tranche C Term Loan Exposure of all Lenders.
"Requisite Notice" means, unless otherwise provided herein, (a)
irrevocable written notice to the intended recipient or (b) except with respect
to Letter of Credit Actions (which must be in writing), irrevocable telephonic
notice to the intended recipient, promptly confirmed by a written notice to such
recipient. Such notices shall be (i) delivered or made to such recipient at the
address, telephone number or facsimile number set forth on Schedule 10.02 or as
--------------
otherwise designated by such recipient by Requisite Notice to the Administrative
Agent and (ii) if made by the Company, given or made by a Responsible Officer.
Any written notice shall be in the form, if any, prescribed in the applicable
section herein and may be given by facsimile provided such facsimile is promptly
--------
confirmed by a telephone call to such recipient.
"Responsible Officer" means the Chief Executive Officer or the
President of the Company, any Executive Vice President of the Company or the
Chief Financial Officer or the Treasurer, or the Assistant Treasurer, of the
Company.
"Revolving Commitment" means, as to any Lender, the amount set forth
opposite such Lender's name on Schedule 2.01(a) hereto under the heading
----------------
Revolving Commitments, as such amount may be reduced from time to time pursuant
to Section 2.06 or as a result of one or more assignments pursuant to Section
10.07.
"Revolving Commitment Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Revolving
Commitments, that Lender's Revolving Commitment and (b) after the termination of
the Revolving Commitments, the sum of (i) the aggregate outstanding principal
amount of the Revolving Loans of that Lender plus (ii) the amounts of such
----
Lender's Pro Rata Share of Letter of Credit Usage.
"Revolving Commitment Maturity Date" means the earlier to occur of
(a) April 21, 2005 and (b) the date on which the combined Revolving Commitments
shall terminate in accordance with the provisions of this Agreement.
"Revolving Loan" has the meaning specified in Section 2.01(a).
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<PAGE>
"Sale-and-Leaseback Transaction" means any transaction or series of
related transactions pursuant to which the Company or any of its Subsidiaries
sells or transfers any real or tangible property or asset in connection with the
leasing, or the resale against installment payments, or as part of an
arrangement involving the leasing or the resale against installment payments, of
such property or asset to the seller or transferor.
"Secured Parties" means the Agents, the Lenders, the Issuing Lenders
and any Lender in its capacity as a counterparty under a Rate Contract (each
individually a "Secured Party").
"Senior Leverage Ratio" means, for the most recently completed four
fiscal quarters for the Company and its Subsidiaries on a Consolidated basis,
the ratio of (a) without duplication, all Funded Indebtedness at the end of such
period less the Senior Subordinated Notes and any other Subordinated
----
Indebtedness outstanding at the end of such period plus an amount equal to all
----
issued and outstanding letters of credit to (b) Operating Cash Flow plus
----
Consolidated Lease Expense related to Designated Leases during that period.
"Senior Subordinated Notes" means (a) the Floating Rate Senior
Subordinated Notes due 2007 in an aggregate principal amount of $50,000,000 and
(b) the 9-3/4% Senior Subordinated Notes due 2008 in an aggregate principal
amount of $225,000,000, in each case containing terms and conditions disclosed
to the Administrative Agent and Lenders prior to the Closing Date.
"S&P" means Standard & Poor's Ratings Services, a division of
McGraw-Hill Companies., a corporation organized and existing under the laws of
the State of New York, and its successors.
"Subordinated Indebtedness" means subordinated Indebtedness the
terms of which (a) do not impose a Negative Pledge on any assets of the Company
or any Subsidiary thereof, (b) are not materially more restrictive on the
Company and its Subsidiaries than the terms of the Senior Subordinated Notes,
and (c) do not contain subordination provisions more favorable to the lenders
thereof than the terms of the Senior Subordinated Notes.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.
"Subsidiary Guarantor" means each of UATC, UAR and Prop I and any
other Subsidiary of the Company becoming a guarantor, from and after the time
each becomes a party to the Subsidiary Guaranty (collectively, the "Subsidiary
Guarantors").
"Subsidiary Guaranty" means the Subsidiary Guaranty, substantially
in the form of Exhibit E as the same may be amended, supplemented or otherwise
---------
modified from time to time.
"Subsidiary Pledge Agreement" means the Subsidiary Pledge Agreement
substantially in the form of Exhibit F-2 hereto, as the same may be amended,
-----------
supplemented or otherwise modified from time to time.
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<PAGE>
"Super Majority Lenders" means, at any time of determination,
Lenders having or holding more than 75% of the sum of the aggregate Credit
Exposure of all Lenders under all Tranches.
"Swap Party" means any Lender or any of its Affiliates in its
capacity as an individual counterparty under any Rate Contract entered into as
contemplated by Section 6.13.
"Syndication Agent" means NationsBank of Texas, N.A.
"Taxes" has the meaning specified in Section 3.01(a).
"Term Loans" means, as the context indicates, the Tranche A Term
Loans, the Tranche B Term Loans and/or the Tranche C Term Loans.
"Total Leverage Ratio" means, for the most recently completed four
fiscal quarters for the Company and its Subsidiaries on a Consolidated basis,
the ratio of (a) without duplication, all Funded Indebtedness at the end of such
period plus an amount equal to all issued and outstanding letters of credit to
----
(b) Operating Cash Flow plus Consolidated Lease Expense related to Designated
----
Leases during such period; provided, however, that for purposes of determining
-------- -------
the Applicable Amount, outstanding letters of credit shall be excluded from the
numerator when calculating the Total Leverage Ratio.
"Tranche" means, as the context indicates, the Revolving Commitments
or the Revolving Loans, the Tranche A Term Loan Commitments or the Tranche A
Term Loans, the Tranche B Term Loan Commitments or the Tranche B Term Loans, the
Tranche C Term Loan Commitments or the Tranche C Term Loans.
"Tranche A Term Loan" has the meaning specified in Section 2.01(b).
"Tranche A Term Loan Availability Termination Date" means the
earlier to occur of (a) December 31, 1998 and (b) the date on which the combined
Tranche A Term Loan Commitments shall terminate in accordance with the
provisions of this Agreement.
"Tranche A Term Loan Commitment" means, as to any Lender, the amount
set forth opposite such Lender's name on Schedule 2.01(b) hereto under the
----------------
heading Tranche A Term Loan Commitments, as such amount may be changed from time
to time pursuant to Section 2.06 or as a result of one or more assignments
pursuant to Section 10.07.
"Tranche A Term Loan Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Tranche A Term
Loan Commitments, that Lender's Tranche A Term Loan Commitment and (b) after the
termination of the Tranche A Term Loan Commitments, the aggregate outstanding
principal amount of the Tranche A Term Loans of that Lender.
"Tranche A Term Loan Maturity Date" means the earlier to occur of
(a) April 21, 2005 and (b) the date on which the combined Tranche A Term Loan
Commitments shall terminate in accordance with the provisions of this Agreement.
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<PAGE>
"Tranche B Term Loan" has the meaning specified in Section 2.01(c).
"Tranche B Term Loan Commitment" means, as to any Lender, the amount
set forth opposite such Lender's name on Schedule 2.01(c) hereto under the
----------------
heading Tranche B Term Loan Commitments, as such amount may be changed from time
to time pursuant to Section 2.06 or as a result of one or more assignments
pursuant to Section 10.07.
"Tranche B Term Loan Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Tranche B Term
Loan Commitments, that Lender's Tranche B Term Loan Commitment and (b) after the
termination of the Tranche B Term Loan Commitments, the aggregate outstanding
principal amount of the Tranche B Term Loans of that Lender.
"Tranche B Term Loan Maturity Date" means the earlier to occur of
(a) April 21, 2006 and (b) the date on which the combined Tranche B Term Loan
Commitments shall terminate in accordance with the provisions of this Agreement.
"Tranche C Term Loan" has the meaning specified in Section 2.01(d).
"Tranche C Term Loan Availability Termination Date" means the
earlier to occur of (a) the UATC Senior Secured Note Repayment Date and (b) the
date on which the combined Tranche C Term Loan Commitments shall terminate in
accordance with the provisions of this Agreement.
Tranche C Term Loan Commitment" means, as to any Lender, the amount
set forth opposite such Lender's name on Schedule 2.01(d) hereto under the
----------------
heading Tranche C Term Loan Commitments, as such amount may be changed from time
to time pursuant to Section 2.06 or as a result of one or more assignments
pursuant to Section 10.07.
"Tranche C Term Loan Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Tranche C Term
Loan Commitments, that Lender's Tranche C Term Loan Commitment and (b) after the
termination of the Tranche C Term Loan Commitments, the aggregate outstanding
principal amount of the Tranche C Term Loans of that Lender.
"Tranche C Term Loan Maturity Date" means the earlier to occur of
(a) April 21, 2007 and (b) the date on which the Tranche A Term Loan Commitments
shall terminate in accordance with the provisions of this Agreement.
"Transferee" has the meaning specified in Section 10.07(g).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"UAR" means United Artists Realty Company, a Delaware corporation.
"UAR Financing Agreements" means (a) the Indenture of Mortgage and
Deed of Trust, dated as of November 1, 1988, from Prop. I to the Connecticut
Lender and Trust Company, N.A. and its successors and assigns, ("Connecticut
Lender") and Lese Amato; (b) the Guaranty, dated
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<PAGE>
as of November 1, 1988, from United Artists Communications, Inc. ("UAC") to
Connecticut Lender and Lese Amato, (c) the Note Purchase Agreements, each dated
November 1, 1988, between Prop. I and the noteholders listed therein, (d) the
Assignment of Lease Agreement, dated as of November 1, 1988, from Prop. I to
Connecticut Lender and Lese Amato; and (e) two Promissory Notes, each dated
October 4, 1988, from UAR to Commonwealth Theatres, Inc., including, in each
case, any amendments, renewals, extensions, substitutions, refinancings,
replacements, restructurings, supplements or other modifications thereof
otherwise permitted hereby.
"UAR Leases" means (a) the Lease Agreement, dated as of November 1,
1988, between Prop I and the Company, as amended or otherwise modified by (i)
the First Amendment thereto, dated as of May 1, 1990, (ii) the Second Amendment
thereto, dated as of September 1, 1990, and (iii) the Assignment of Lease
Agreement, dated as of November 1, 1988, from Prop. I to The Connecticut Lender,
and (b) the Master Lease Agreement and Master Sublease Agreement, each dated as
of the date of the Indenture, between UAR and the Company, in each case, as such
agreements are amended, supplemented or otherwise modified as permitted
hereunder.
"UATC" means United Artists Theatre Circuit, Inc., a Maryland
company, a wholly-owned Subsidiary of the Company.
"UATC Pass-Through Certificates" means the Pass Through
Certificates, Series 1995-A in an aggregate principal amount not exceeding
$116,753,000 issued by the United Artists Theatre Circuit, Inc. 1995-A Pass
Through Trust pursuant to the Pass Through Trust Agreement dated as of December
13, 1995 between UATC and Shawmut Bank Connecticut, National Association, as
trustee.
"UATC Preferred Stock" means the Series A Cumulative Redeemable
Exchangeable Preferred Stock issued by UATC to the Company.
"UATC Senior Secured Notes" means UATC's 11-1/2% Senior Secured
Notes due 2002, Series B issued pursuant to the UATC Senior Secured Notes
Indenture.
"UATC Senior Secured Notes Indenture" means the Trust Indenture,
dated as of May 12, 1992, among UATC, the Company, as guarantor, and The Bank of
New York, as Trustee as the same may be amended, supplemented or otherwise
modified from time to time as permitted hereunder.
"UATC Senior Secured Note Repayment Date" means the date which is
the earlier of (a) the date the UATC Senior Secured Notes are paid and (b) 45
days after the Closing Date.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"Unfunded Pension Liabilities" means the excess of the present value
of a Plan's accrued benefits, as defined in Section 3(23) of ERISA, as of the
most recent valuation date for such Plan utilizing the actuarial assumptions set
forth in such valuation, over the current value of that Plan's assets, as
defined in Section 3(26) of ERISA, as of such date.
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"Unreimbursed Drawings" means the aggregate amount of all drawings
under a Letter of Credit honored by the relevant Issuing Lender, and not
reimbursed by the Company whether from the proceeds of a Loan or from any other
source.
"United States" and "U.S." each means the United States of America.
"Weighted Average Life to Expiration" means, when applied to any
agreement for the use or possession of Property entered into in connection with
a Sale-and-Leaseback Transaction at any date, the number of years obtained by
dividing (a) the sum of the products obtained by multiplying (i) the amount of
each of the then remaining installments or other required payments of base rent
under such agreement, including the final payment thereof by (ii) the number of
years (calculated to the nearest one-twelfth) that will elapse between the date
of determination and the making of such payment, by (b) the then aggregate
unpaid amount of such base rent payments payable thereunder.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each of the then
remaining required payments of principal, including payment at final maturity,
in respect hereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between the date of determination and the making
of such payment, by (b) the then outstanding principal amount of such
Indebtedness.
"Wholly-Owned First-Tier Subsidiary" means any domestic first tier
Subsidiary of UATC which is wholly-owned, in the aggregate, by the Company and
UATC.
"Withdrawal Liability" means the aggregate amount of a liability
incurred pursuant to Section 4201 of ERISA with respect to a Multiemployer Plan
and any increase in contributions pursuant to Section 4243 of ERISA.
1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified herein or therein, all terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto.
(b) All accounting terms not expressly defined herein shall be
construed, except where the context otherwise requires, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "including" is not
limiting and means "including without limitation".
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(d) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but excluding," and the word "through" means "to and
including."
(e) References to agreements and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document.
(f) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(g) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the construction of this Agreement.
ARTICLE II THE CREDITS
2.01 AMOUNTS AND AVAILABILITY OF COMMITMENTS.
(a) THE REVOLVING COMMITMENTS. Until the Revolving Maturity
Termination Date, each Lender having a Revolving Commitment severally agrees, on
the terms and conditions hereinafter set forth, to (a) make Loans to the Company
(each such loan, a "Revolving Loan") and (b) purchase risk participations in
outstanding Letter of Credit Usage; provided, however, that (a) each Lender's
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Outstanding Obligations consisting of Revolving Loans and Letter of Credit Usage
shall not exceed its Revolving Commitment, and all Lenders' Outstanding
Obligations consisting of Revolving Loans and Letter of Credit Usage shall not
exceed the combined Revolving Commitments. Within the limits of each Lender's
Revolving Commitment and subject to the other terms and conditions hereof, the
Company may borrow under this Section 2.01(a), prepay pursuant to Section 2.07
and reborrow pursuant to this Section 2.01(a).
(b) THE TRANCHE A TERM LOAN COMMITMENTS. Until the Tranche A Term
Loan Availability Termination Date, each Lender having a Tranche A Term Loan
Commitment severally agrees, on the terms and conditions hereinafter set forth,
to make term loans to the Company (each such loan, a "Tranche A Term Loan") in
one or more disbursements; provided, however, that each Lender's Outstanding
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Obligations under its Tranche A Term Loan Commitment shall not exceed its Pro
Rata Share of the Available Tranche A Term Loan Commitments, and all Lenders'
Outstanding Obligations under the Tranche A Term Loan Commitments shall not
exceed the Available Tranche A Term Loan Commitments. Amounts borrowed under the
Tranche A Term Loan Commitments which are repaid or prepaid may not be
reborrowed
(c) THE TRANCHE B TERM LOAN COMMITMENTS. Each Lender having a
Tranche B Term Loan Commitment severally agrees, on the terms and conditions
hereinafter set forth, to make a term loan to the Company (each such loan, a
"Tranche B Term Loan") in one disbursement on the Closing Date; provided,
--------
however, that each Lender's Outstanding Obligations under its Tranche B Term
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Loan Commitment shall not exceed its Tranche B Term Loan Commitment, and all
Lenders' Outstanding Obligations under the Tranche B Term Loan Commitments shall
not exceed the combined Tranche B Term Loan Commitments. Amounts borrowed under
the Tranche B Term Loan Commitments which are repaid or prepaid may not be
reborrowed.
(d) THE TRANCHE C TERM LOAN COMMITMENTS. Until the Tranche C Term
Loan Availability Termination Date, each Lender having a Tranche C Term Loan
Commitment severally agrees, on the terms and conditions hereinafter set forth,
to make term loans to the Company (each such loan, a "Tranche C Term Loan") in
one or more disbursements; provided, however, that each Lender's Outstanding
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Obligations under its Tranche C Term Loan Commitment shall not exceed its Pro
Rata Share of the Available Tranche C Term Loan Commitments and all Lenders'
Outstanding Obligations under the Tranche C Term Loan Commitments shall not
exceed the Available Tranche C Term Loan Commitments. Amounts borrowed under the
Tranche C Term Loan Commitments which are repaid or prepaid may not be
reborrowed.
2.02 LOAN ACCOUNTS.
(a) THE REGISTER.
(i) The Administrative Agent shall maintain, at its address referred
to in Section 10.02, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"), The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) The Administrative Agent shall record in the Register the
Commitments, Loans and Letter of Credit Usage from time to time of each
Lender, and each repayment or prepayment in respect of the principal
amount of the Loans of each Lender. Any recordation shall be conclusive
and binding on the Company and each Lender, absent manifest error;
provided, however, that that failure to make any such recordation, or
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any error in such recordation, shall not affect any Lender's Commitments
or the Company's obligations in respect of any applicable Loans or
Letter of Credit Usage.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of the
Loan made by it and each payment in respect thereof. Any recordation
shall be conclusive and binding on the Company, absent manifest error;
PROVIDED, HOWEVER, that that failure to make any such recordation, or
any error in such recordation, shall not affect any Lender's Commitments
or the Company's obligations in respect of Loans and Letter of Credit
Usage; provided, further, that in the event of any inconsistency between
--------
the Register and any Lender's records, the recordations in the Register
shall govern.
(iv) The Company, Administrative Agent and the Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments, Loans and Letter of Credit
Usage listed therein for all purposes hereof, and no assignment or
transfer of any such Commitment, Loans or Letter
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of Credit Usage shall be effective, in each case, unless and until an
Assignment and Acceptance effecting the assignment or transfer thereof
shall have been accepted by the Administrative Agent and recorded in
the Register as provided in Section 10.07(c). Prior to such
recordation, all amounts owed with respect to the applicable
Commitment, Loan or Letter of Credit Usage shall be owed to the Lender
listed in the Register as the owner thereof, and any request,
authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register
as Lender shall be conclusive and binding on any subsequent holder,
assignee or transferee of the corresponding Commitments, Loans or
Letter of Credit Usage.
(b) THE NOTES. The Loans shall be evidenced by Notes executed and
delivered by the Company in favor of each Lender. The Administrative Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until an Assignment and Acceptance effecting the assignment or
transfer thereof shall have been accepted by the Administrative Agent and
recorded in the Register as provided in Section 10.07(c). Any request, authority
or consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, assignee or transferee of that Note or of any Note or
Notes issued in exchange therefor.
2.03 PROCEDURE FOR BORROWING.
(a) Except as otherwise provided in this Agreement, each Borrowing
of Loans shall be made upon Requisite Notice by the Company to the
Administrative Agent in the form of a Notice of Borrowing, which must be
received by the Administrative Agent not later than 9:00 a.m. (San Francisco
time) at least (i) three Business Days prior to the requested borrowing date in
the case of Eurodollar Rate Loans; and (ii) one Business Day prior to the
requested borrowing date in the case of Base Rate Loans, specifying: (A) the
amount of the Borrowing, which shall be in an aggregate minimum principal amount
of $5,000,000 or any integral multiple of $1,000,000 in excess thereof in the
case of Base Rate Loans and Eurodollar Rate Loans; (B) the requested borrowing
date, which shall be a Business Day; (C) whether the Borrowing is to be
comprised of Eurodollar Rate Loans or Base Rate Loans; (D) the Tranche under
which such Borrowing is requested; and (E) the duration of the Interest Period
applicable to Eurodollar Rate Loans included in such notice. If the Notice of
Borrowing shall fail to specify the duration of the Interest Period for any
Borrowing comprised of Eurodollar Rate Loans, such Interest Period shall be one
month.
(b) Upon receipt of the Notice of Borrowing, the Administrative Agent
will promptly notify each Lender under the applicable Tranche of the amount of
such Lender's Pro Rata Share of the Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of the
Borrowing available to the Administrative Agent for the account of the Company
at the Administrative Agent's Payment Account for payment by 11:00 a.m. (San
Francisco time) on the borrowing date requested by the Company in funds
immediately available to the Administrative Agent. Unless any applicable
condition specified in Article IV has not been satisfied, the proceeds of all
such Loans will then be made available to the Company by the Administrative
Agent at the office at which Administrative Agent's Payment Account is located
by crediting the account of the
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Company on the books of BofA with the aggregate of the amounts made available to
the Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
(d) Notwithstanding any other provision contained in this Agreement,
after giving effect to any Borrowing, conversion or continuation of any Loans,
there shall not be more than an aggregate of 15 Interest Periods for all
Eurodollar Rate Loans outstanding at the time any such determination is made in
effect at any one time.
(e) At the election of the Majority Lenders, no Loans may be
borrowed as, converted into or continued as, Eurodollar Rate Loans after the
occurrence and during the continuance of any Default or Event of Default exists.
2.04 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Company may upon Requisite Notice to the Administrative
Agent: (i) elect to convert on any Business Day, any Base Rate Loans (or any
part thereof in an amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof) into Eurodollar Rate Loans; (ii) elect to convert
on any Interest Payment Date, any Eurodollar Rate Loans maturing on such
Interest Payment Date (or any part thereof in an amount not less than $5,000,000
or an integral multiple of $1,000,000 in excess thereof), into Base Rate Loans;
or (iii) elect to renew, on any Interest Payment Date therefor, any Eurodollar
Rate Loans (or any part thereof in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof); provided, that if the
aggregate amount of Eurodollar Rate Loans shall have been reduced, by payment,
prepayment, or conversion of part thereof to be less than $5,000,000, the
Eurodollar Rate Loans shall automatically convert into Base Rate Loans, and on
and after such date the right of the Company to continue such Loans as
Eurodollar Rate Loans shall terminate.
(b) The Company shall deliver by Requisite Notice a Notice of
Conversion/Continuation to be received by the Administrative Agent not later
than 9:00 a.m. (San Francisco time) at least (i) three Business Days in advance
of the conversion date or continuation date, if the Loans are to be converted
into or continued as Eurodollar Rate Loans; and (ii) one Business Day in advance
of the conversion date, if the Loans are to be converted into Base Rate Loans,
specifying: (A) the proposed conversion date or continuation date; (B) the
aggregate amount of Loans to be converted or renewed; (C) the nature of the
proposed conversion or continuation; and (D) the duration of the requested
Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans, (i) the Company has failed to select a new Interest
Period to be applicable to such Eurodollar Rate Loans, as the case may be, or
(ii) if any Event of Default shall then exist, the Company shall be deemed to
have elected to convert such Eurodollar Rate Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period (reduced to
the extent necessary to reflect any reductions of the Commitments on or prior to
such day).
(d) Upon receipt of a Notice of Conversion/ Continuation, the
Administrative Agent will promptly notify each Lender under the applicable
Tranche, or, if Requisite Notice is not timely provided, the Administrative
Agent will promptly notify each Lender of the details of any
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automatic conversion. All conversions and continuations of Loans in any
Tranche shall be made ratably among the Lenders under such Tranche in accordance
with their Pro Rata Shares.
2.05 LETTERS OF CREDIT.
(a) ISSUANCE OF LETTERS OF CREDIT UNDER REVOLVING COMMITMENTS. From
time to time prior to the Revolving Commitment Maturity Date and on the terms
and subject to the conditions hereinafter set forth, with the prior consent of
the Administrative Agent, any Lender may, in the sole exercise of its
discretion, but shall not be required to, agree to issue one or more Letters of
Credit under the Revolving Commitments; provided, however, that outstanding
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Letter of Credit Usage shall not at any time exceed (i) from the Closing Date
until the Prop I Mortgage Debt Repayment Date, $25,000,000, and (ii) $15,000,000
at any time thereafter, and Outstanding Obligations consisting of Revolving
Loans and Letter of Credit Usage shall not exceed the combined Revolving
Commitments. Each Letter of Credit Action shall be in a form reasonably
acceptable to the Issuing Lender and shall not violate any policies of the
Issuing Lender. No Letter of Credit shall have an expiration date (including all
rights of renewal) later than 15 days prior to the Revolving Commitment Maturity
Date. The parties hereto confirm that all Existing Letters of Credit are deemed
Letters of Credit outstanding hereunder. The Company agrees to assume all
obligations of UATC under the Existing Letters of Credit and the applications
and agreements relating thereto, and agrees to execute, acknowledge, deliver and
record all certificates, agreements, assurances and other instruments as the
Administrative Agent or such Issuing Lenders may reasonably require from time to
time in order to assure and confirm such assumption.
(b) REQUESTING LETTER OF CREDIT ACTIONS. The Company may irrevocably
request a Letter of Credit Action by delivering a Letter of Credit Application
therefor to an Issuing Lender and the Administrative Agent (who shall notify the
Lenders), by Requisite Notice not later than 9:00 a.m. (San Francisco time)
three Business Days (or such shorter time as the Administrative Agent and the
Issuing Lender may agree) prior to the proposed date of issuance. The Issuing
Lender shall notify the Administrative Agent of such request. Unless the
Administrative Agent notifies such Issuing Lender that such Letter of Credit
Action is not permitted hereunder or such Issuing Lender determines that such
Letter of Credit Action is contrary to any Requirement of Law or policies of
such Issuing Lender or does not otherwise conform to the requirements of this
Agreement, such Issuing Lender shall effect such Letter of Credit Action. This
Agreement shall control in the event of any conflict with any Letter of Credit
Application.
(c) LENDERS' PARTICIPATION IN LETTERS OF CREDIT. Upon the issuance
of each Letter of Credit, each Lender having a Revolving Commitment shall be
deemed to have purchased an undivided risk participation therein from the
Issuing Lender issuing such Letter of Credit in an amount equal to that Lender's
Pro Rata Share thereof. Each such Lender confirms that it has purchased an
undivided risk participation in each "facility" Letter of Credit originally
issued under the Existing Credit Agreement remaining outstanding hereunder and
each Prop I Letter of Credit from the Issuing Lender issuing such Letter of
Credit in an amount equal to that Lender's Pro Rata Share thereof.
(d) REIMBURSEMENT OF PAYMENTS UNDER LETTERS OF CREDIT. The Company
shall directly reimburse each Issuing Lender for any payment that such Issuing
Lender makes under
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any Letter of Credit not later than 11:00 a.m. (San Francisco time) on or before
the date of such payment; provided, however, that if the conditions precedent
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set forth in Section 4.02 can be satisfied, the Company may request a Borrowing
of Loans under the Revolving Commitment to reimburse the Issuing Lender for such
payment on or before the date thereof by complying with Section 2.03, or the
Company may allow a deemed Borrowing of Base Rate Loans to take place on such
payment date pursuant to subsection (e) below.
(e) FUNDING BY LENDERS WHEN ISSUING LENDER NOT REIMBURSED. If the
Company fails to timely make the payment required pursuant to subsection (d)
above, the Issuing Lender shall notify the Administrative Agent of such fact and
the amount of such unreimbursed payment. The Administrative Agent shall promptly
notify each Lender having a Revolving Commitment of its Pro Rata Share of such
amount by Requisite Notice. Each such Lender shall make funds in an amount equal
its Pro Rata Share of such amount available to the Administrative Agent at the
Administrative Agent's Office not later than 11:00 a.m. (San Francisco time) on
(i) if the Administrative Agent notified the Lenders prior to 9:00 a.m. on any
Business day, the following Business Day and (ii) if the Administrative Agent
notified the Lenders after 9:00 a.m. on any Business day, on the second
following Business Day. The obligation of each Lender under such Tranche to so
reimburse the Issuing Lender shall be absolute and unconditional and shall not
be affected by the occurrence of an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of Company to reimburse the Issuing Lender for the amount of any
payment made by the Issuing Lender under any Letter of Credit, together with
interest as provided herein
(f) NATURE OF LENDERS' FUNDING. If the conditions precedent set
forth in Section 4.02 can be satisfied (except for the giving of a Notice of
Borrowing) on the date that the Lenders are to make their funds available to the
Company pursuant to subsection (e) above, the funding by the Lender pursuant
thereto shall be deemed to be part of a Borrowing of Base Rate Loans under the
Revolving Commitment requested by the Company. If the conditions precedent set
forth in Section 4.02 cannot be satisfied on such date, the funding by the
Lenders pursuant to subsection (e) above shall be deemed to be a funding by each
Lender of its participation in such Letter of Credit, and such funds shall be
payable by the Company upon demand and shall bear interest at rate specified in
Section 2.10(c), and each Lender making such funding shall thereupon acquire a
pro rata participation, to the extent of such reimbursement, in the claim of the
Issuing Lender against Company in respect of such payment and shall share, in
accordance with that pro rata participation, in any payment made by the Company
with respect to such claim.
(g) SPECIAL PROVISIONS RELATING TO EVERGREEN LETTERS OF CREDIT. The
Company may request Letters of Credit that have automatic extension or renewal
provisions ("evergreen" Letters of Credit) so long as the relevant Issuing
Lender has the right to not permit any such extension or renewal at least
annually within a notice period to be agreed upon at the time each such
evergreen Letter of Credit is issued. Once an evergreen Letter of Credit is
issued, the Issuing Lender shall thereafter notify the Administrative Agent if
and when the Company requests that such Letter of Credit be allowed to be
extended or renewed. The Administrative Agent shall notify the Issuing Lender
whether the conditions precedent set forth in Section 4.02 can then be
satisfied, and only if they can be, shall such Letter of Credit be extended or
renewed with the consent, given in its sole discretion, of such Issuing Lender.
Notwithstanding anything
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the contrary, no evergreen Letter of Credit shall have an expiration date later
than 15 days prior to the Revolving Commitment Maturity Date.
(h) OBLIGATIONS ABSOLUTE. The obligations of the Company to
reimburse any Issuing Lender for payments and disbursements made by the Issuing
Lender under any Letter of Credit honoring a demand for payment by the
beneficiary thereunder, and each Lender's obligation to participate in such
payments and disbursements in accordance with this Agreement, shall be
irrevocable, absolute and unconditional under any and all circumstances,
including the following circumstances:
(i) any lack of validity or enforceability of this Agreement,
any Letter of Credit, any Letter of Credit Application or any other
agreement or instrument relating thereto (collectively, the "L/C Related
Documents");
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Company in
respect of any Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Company may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Lender or
any other Person, whether in connection with this Agreement, the
transactions contemplated by the L/C Related Documents or any unrelated
transaction ;
(iv) any statement and other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate that does not comply with
the terms of any Letter of Credit;
(vi) any exchange, release or non-perfection of any Collateral,
or any release or amendment or waiver of or consent to departure from
any guaranty, for all or any of the obligations of the Company in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, the Company, or any account party.
(i) APPLICABILITY OF UNIFORM CUSTOMS AND PRACTICE. The Uniform
Customs and Practice for Documentary Credits, as published in its most current
version by the International Chamber of Commerce, shall be deemed a part of this
Section and shall apply to all Letters of Credit to the extent not inconsistent
with applicable Laws.
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(j) INDEMNIFICATION BY THE LENDERS AND THE COMPANY. Each of the
Company and the Lenders severally agree to indemnify the Administrative Agent,
any Issuing Lender and each officer, director, employee, agent and Affiliate of
the Administrative Agent and any Issuing Lender ratably according to their
respective Pro Rata Share of the combined Revolving Commitments, to the extent
not reimbursed by the Company, from and against any and all actions, causes of
action, suits, losses, liabilities, damages, and expenses which may at any time
(including at any time following the payment of any drawing under any Letter of
Credit and/or following the expiration or termination of any or all Letters of
Credit) be imposed on, incurred by or asserted against such Person in any way
relating to or arising out of the issuance of, transfer of, or payment or
failure to pay under any Letter of Credit issued pursuant to this Agreement or
the use of proceeds of any payment made under any Letter of Credit issued in
accordance with the terms of this Agreement; provided, however, that no Lender
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shall be liable for the payment of any portion of such actions, causes of
action, suits, losses, liabilities, damages and expenses resulting solely from
such Person's gross negligence or willful misconduct. This Section shall not
diminish the obligations of the Company to indemnify each Lender under Section
10.05 in the event a Lender is obligated to make a payment hereunder.
2.06 TERMINATION OR REDUCTION OF COMMITMENTS.
(a) VOLUNTARY REDUCTIONS AND TERMINATIONS. The Company may, upon not
less than three Business Days' prior Requisite Notice to the Administrative
Agent, terminate or permanently reduce any Tranche, specifying: (i) the amount
of the reduction or termination, which shall be in an aggregate minimum
principal amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof; (ii) the date of such reduction or termination, and (iii) which
Tranche's Commitments are to be reduced or terminated.
(b) MANDATORY REDUCTIONS--REVOLVING COMMITMENTS. Subject to Section
2.06(f), on each Reduction Date, the combined Revolving Commitments shall
automatically reduce to the amount indicated on Schedule 2.01(a) hereto.
----------------
(c) MANDATORY REDUCTIONS--TRANCHE A TERM LOAN COMMITMENTS. Subject
to Section 2.06(f), on the Tranche A Term Loan Availability Termination Date,
the combined Tranche A Term Loan Commitments shall automatically reduce to the
amount of Tranche A Term Loans outstanding on such date. Thereafter, the
combined Tranche A Term Loan Commitments shall automatically reduce by an amount
equal to any prepayment or repayment of the Tranche A Term Loans on the date of
such prepayment or repayment.
(d) MANDATORY REDUCTIONS--TRANCHE B TERM LOAN COMMITMENTS. Subject
to Section 2.06(f), after the Borrowing of the Tranche B Term Loans, the
combined Tranche B Term Commitments shall automatically reduce to the aggregate
principal amount of Tranche B Term Loans outstanding. Thereafter, the combined
Tranche B Term Loan Commitments shall automatically reduce by an amount equal to
any prepayment or repayment of the Tranche B Term Loans on the date of such
prepayment or repayment.
(e) MANDATORY REDUCTIONS--TRANCHE C TERM LOAN COMMITMENTS. Subject
to Section 2.06(f), on the Tranche C Term Loan Availability Termination Date,
the combined Tranche C Term Loan Commitments shall automatically reduce to the
amount of Tranche C Term Loans outstanding on such date. Thereafter, the
combined Tranche C
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Term Loan Commitments shall automatically reduce by an amount equal to any
prepayment or repayment of the Tranche C Term Loans on the date of such
prepayment or repayment.
(f) TERMINATION OF COMMITMENTS UPON CHANGE IN CONTROL EVENT. The
Commitments shall automatically terminate 90 days after a Change in Control
Event not consented to by the Super Majority Lenders.
(g) COMMITMENT REDUCTIONS-- GENERAL. After giving effect to any
voluntary or mandatory Commitment reductions or terminations, and to any
prepayments of the Loans made on the effective date of such reduction or
termination, the Outstanding Obligations under each Tranche shall not exceed the
combined Commitments under such Tranche. The Company shall prepay the Loans in
accordance with Section 2.08(g) and/or Cash Collateralize outstanding Letter of
Credit Usage as required to comply with the foregoing. Any reductions shall be
applied ratably to each Lender under the applicable Tranche. If any Tranche's
Commitment is terminated in its entirety, all accrued commitment fees, interest
and Letter of Credit fees in respect of such Tranche to, but not including the
effective date of such termination shall be payable on the effective date of
such termination without any premium or penalty. Once reduced, no Commitment
under any Tranche may be increased or reinstated.
2.07 OPTIONAL PREPAYMENTS. Subject to Section 3.04, the Company may,
at any time or from time to time prepay Loans it designates in whole or in part.
All Loans within a given Tranche must be ratably prepaid. The Company shall
deliver by Requisite Notice a notice of any prepayment hereunder which must be
received by the Administrative Agent not later than 9:00 a.m. (San Francisco
time) at least (a) three Business Days prior to the date of prepayment in the
case of prepayment of any Eurodollar Rate Loans; and (b) one Business Day prior
to the date of prepayment in the case of prepayment of any Base Rate Loans,
specifying: (i) the amount of the prepayment, which shall be in an aggregate
minimum principal amount of $5,000,000 or any integral multiple of $1,000,000 in
excess thereof; (ii) the date of prepayment, (iii) whether such prepayment is of
Base Rate Loans or Eurodollar Rate Loans, or any combination thereof and (iv)
the Tranche under which such prepayment is being made. Such notice shall not
thereafter be revocable by the Company and the Administrative Agent will
promptly notify each Lender under the affected Tranche and of such Lender's
ratable share of such prepayment. If such notice is given, the Company shall
make such prepayment on the date specified in such notice, together with, in the
case of a prepayment of Eurodollar Rate Loans, accrued interest to each such
date on the amount prepaid and the amounts required pursuant to Section 3.04.
Any prepayments of Term Loans under any Tranche shall be applied ratably to all
Term Loans outstanding under that Tranche and to the remaining unpaid
installments of all Term Loans under such Tranche.
2.08 MANDATORY PREPAYMENTS OF LOANS.
(a) ASSET DISPOSITIONS. Subject to Section 2.08(a)(i) and (ii)
below, upon the receipt of any Net Cash Proceeds of any Disposition (other than
Excluded Dispositions) by the Company or any of its Subsidiaries, the Company
shall promptly prepay the Term Loans in an amount equal to 100% of such Net Cash
Proceeds.
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(i) So long as no Default or Event of Default shall have
occurred and be continuing, the Company may promptly deliver a
certificate to the Administrative Agent stating that it intends, in good
faith, to use some or all of such Net Cash Proceeds in a Covered
Transaction. In such case the Company shall not be required to make a
prepayment using such Net Cash Proceeds, provided that the Company shall
--------
make a prepayment using such Net Cash Proceeds upon the earliest to
occur of (A) the date which is 360 days after such Disposition if a
definitive agreement to acquire or develop theatre properties or other
activities incidental thereto which would utilize such Net Cash Proceeds
has not theretofore been entered into, (B) the last day specified in the
definition of "Covered Transaction" that such Net Cash Proceeds could
have been used in a Covered Transaction, and (C) the date any Default or
Event of Default occurs. Any Net Cash Proceeds not immediately paid to
the Managing Agent as permitted above, shall be deposited by the Company
into a segregated deposit account with Bank of America National Trust
and Savings Association within ten Business Days of receipt and the
Company shall invest such Net Cash Proceeds only in Permitted
Investments; and
(ii) So long as no Event of Default shall have occurred and be
continuing, any prepayments under this Section 2.08(a) shall be made
from time to time only after the Company and its Subsidiaries shall have
received, since the last prepayment under this Section 2.08(a),
aggregate Net Cash Proceeds from such Dispositions of not less than
$3,000,000, at which time the Company shall make a prepayment in an
amount equal to all of such retained amounts (other than such amounts
that the Company is not required to prepay in connection with Covered
Transactions as aforesaid).
(b) EXCESS CASH. Following delivery of each compliance certificate
pursuant to Section 6.02(b) commencing in respect of the fiscal year ending
December 31, 1998, but not later than each April 30 of each year, beginning
April 30, 1999, the Company shall prepay the Term Loans in an amount equal to
the Net Cash Proceeds Percentage of any Excess Cash during the preceding fiscal
year.
(c) PROCEEDS OF ADDITIONAL INDEBTEDNESS. Upon the receipt by the
Company or any of its Subsidiaries of any Net Cash Proceeds of any additional
Indebtedness (excluding Indebtedness hereunder and Indebtedness permitted under
Section 7.01) incurred or issued by the Company or any of its Subsidiaries, the
Company shall prepay the Term Loans in an amount equal to the Net Cash Proceeds
Percentage of such Net Cash Proceeds.
(d) PROCEEDS OF ADDITIONAL EQUITY. Upon the receipt by the Company
or any of its Subsidiaries of any Net Cash Proceeds of any additional equity
issued by the Company or any of its Subsidiaries, the Company shall prepay the
Term Loans in an amount equal to the Net Cash Proceeds Percentage of such Net
Cash Proceeds; provided, however, that the first $50,000,000 of such Net Cash
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Proceeds received after the Closing Date may, at the Company's election, be used
to instead prepay principal of, together with interest on and premium, if any,
on any portion prepaid, the Senior Subordinated Notes; provided, further, that
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up to $5,000,000 of such Net Cash Proceeds received upon the exercise of stock
options or the purchase of stock by officers and employees of the Company and
its Subsidiaries shall not be required to be prepaid.
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(e) CHANGE IN CONTROL EVENT. The Company shall prepay all Loans in
full 90 days after a Change in Control Event not consented to by the Super
Majority Lenders.
(f) COMMITMENT REDUCTIONS. Simultaneously with the reductions of any
Tranche's Commitment pursuant to Section 2.06 and this Section 2.08, the Company
shall prepay any Loans outstanding in accordance with subsection (g) below
and/or Cash Collateralize outstanding Letters of Credit Usage in excess of such
reduced Tranche's Commitment.
(g) GENERAL. Any prepayments of Term Loans pursuant to Section 2.06
or this Section 2.08 shall be applied pro rata among all Tranches of Term Loans
to the remaining unpaid installments of the Term Loans, then outstanding, and
when all Term Loans are prepaid, to prepayments of Revolving Loans; provided,
--------
however, that the Company may, in its sole discretion, elect to give each Lender
- - -------
in any designated Tranche the right to waive any prepayment to which it is
otherwise entitled to receive under Section 2.08(a)-(e). If any such Lender
waives the right to receive such prepayment, the amount that would have been
used to prepay such Lender shall be used instead to prepay other Lenders not
electing to so waive receipt of such prepayment. Any prepayments made on a day
other than an Interest Payment Date for any Loan shall be applied first to any
Base Rate Loans then outstanding and then to Eurodollar Rate Loans with the
shortest Interest Periods remaining; provided, however, that if the amount of
--------
Base Rate Loans then outstanding is not sufficient to satisfy the entire
prepayment requirement, the Company may, at its option, place any amounts which
it would otherwise be required to use to prepay Eurodollar Rate Loans on a day
other than the last day of the Interest Period therefor in a Cash Collateral
Account until the end of such Interest Period at which time such pledged amounts
will be applied to prepay such Eurodollar Rate Loans; provided, further, that
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the required date for repayment shall not be extended pursuant to the foregoing
proviso (and such repayment when made shall be subject to Section 3.04) if: (i)
an Event of Default or Default has occurred and is continuing or (ii) with
respect to any Eurodollar Rate Loans with an Interest Period that expires more
than three months, after the date prepayment would otherwise be due hereunder.
2.09 REPAYMENT.
(a) THE REVOLVING LOANS. The Company agrees to repay the principal
amount of the Revolving Loans on the Revolving Commitment Maturity Date. No
Letter of Credit shall have an expiration date (including all rights of renewal)
later than 15 days prior to the Revolving Commitment Maturity Date.
(b) THE TRANCHE A TERM LOANS. The Company agrees to repay the
Tranche A Term Loans on each Principal Payment Date applicable thereto in an
aggregate principal amount equal to the applicable Principal Payment Amount. All
outstanding Tranche A Term Loans shall be repaid in full on the Tranche A Term
Loan Maturity Date.
(c) THE TRANCHE B TERM LOANS. The Company agrees to repay the
Tranche B Term Loans on each Principal Payment Date applicable thereto in an
aggregate principal amount equal to the applicable Principal Payment Amount. All
outstanding Tranche B Term Loans shall be repaid in full on the Tranche B Term
Loan Maturity Date.
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(b) THE TRANCHE TERM LOANS. The Company agrees to repay the
Tranche C Term Loans on each Principal Payment Date applicable thereto in an
aggregate principal amount equal to the applicable Principal Payment Amount. All
outstanding Tranche C Term Loans shall be repaid in full on the Tranche C Term
Loan Maturity Date.
2.10 INTEREST.
(a) Subject to Section 2.10(c), each Loan shall bear interest on the
outstanding principal amount thereof from the date when made until it becomes
due at a rate per annum equal to the Eurodollar Rate or the Base Rate, as the
case may be, PLUS the Applicable Amount.
(b) Interest on each Loan shall be payable in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Eurodollar Rate Loans for the portion of the Loans so prepaid and
upon payment (including prepayment) in full thereof, and on the date of
prepayment of any Loan that is made in connection with the complete termination
of any Tranche. After the occurrence and during the continuance of any Event of
Default, interest shall be payable on demand.
(c) While any Event of Default exists and is continuing, before and
after exercise by the Lenders of any remedies under Section 8.02, the Company
shall pay interest (after as well as before judgment to the extent permitted by
law) on the principal amount of all Loans due and unpaid, at a rate per annum
which is determined in accordance with Section 2.10(a) plus 200 basis points If
any interest on any Loan, or any other amount payable hereunder or under any of
the other Loan Documents is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Company agrees to pay
interest on such unpaid amount, from the date such amount becomes due until the
date such amount is paid in full, payable on demand, at a fluctuating rate per
annum equal to the sum of the Base Rate plus the Applicable Amount then in
effect for Base Rate Loans plus 200 basis points.
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(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Lender, and in any event
the Company shall pay such Lender interest at the highest rate permitted by
applicable law.
2.11 FEES.
(a) FEES PAYABLE ON CLOSING DATE. The Company shall pay on the
Closing Date to each of Bank of America National Trust and Savings Association,
BankBoston, N.A., NationsBank of Texas, N.A., Merrill Lynch Capital Corporation
and Morgan Stanley Senior Funding, Inc. (collectively, the "Underwriters") and
the Arranger for its own respective account, fees in the amounts set forth in a
letter agreement dated as of April 17, 1998 among the Company and the
Underwriters and the Arrangers.
(b) AGENCY FEE. The Company shall pay to the Administrative Agent
for the Administrative Agent's own account an agency fee in the amount and at
the times set forth in a letter agreement between the Company and the
Administrative Agent.
(c) COMMITMENT FEES. The Company shall pay to the Administrative
Agent for the ratable account of each Lender, a commitment fee on the average
daily unused portion of such Lender's Tranche A Term Loan Commitment ,Tranche C
Term Loan Commitment and Revolving Commitment equal to the Applicable Amount
therefor. The commitment fee shall accrue from the Closing Date until (a) in the
case of the Revolving Commitments, the Revolving Commitment Termination Date,
(b) in the case of the Tranche A Term Loan Commitments, the Tranche A Term Loan
Availability Termination Date, and (c) in the case of the Tranche C Term Loan
Commitments, the Tranche C Term Loan Availability Termination Date and shall be
payable quarterly in arrears on the last day of each fiscal quarter of the
Company, commencing on the first such date to occur after the Closing Date.
(d) LETTER OF CREDIT FEES. The Company agrees to pay the following
with respect to each Letter of Credit:
(i) subject to clause (iii), to the Administrative Agent for the
ratable account of each Lender having a Revolving Commitment, a fee
equal to the Applicable Amount for Letter of Credit fees on the average
daily amount available for drawings under all outstanding Letters of
Credit. This fee shall accrue from the Closing Date until the Revolving
Commitment Termination Date and shall be payable quarterly in arrears on
the last day of each fiscal quarter of the Company, commencing on the
first such date to occur after the Closing Date.
(ii) to the Issuing Lenders, such fees for services including
issuance, amendment and other servicing of such Letters of Credit as may
be from time to time agreed between such Issuing Lenders and the
Company.
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(iii) while any Event of Default exists and is continuing,
before as well as after exercise by the Lenders of any remedies under
Section 8.02, the Company shall pay on the outstanding, undrawn face
amount of all Letters of Credit commissions computed at a rate per annum
which is determined by increasing the Applicable Amount then in effect
by 200 basis points.
(e) FEES NONREFUNDABLE. No fee paid by the Company pursuant to this
Agreement, any Loan Document or any side letter entered into in connection with
the transactions contemplated in this Agreement is refundable absent manifest
error in the computation of any such fee.
2.12 COMPUTATION OF FEES AND INTEREST.
(a) All other computations of interest, commissions, fees and other
amounts under this Agreement shall be made on the basis of a 360 day year and
actual days elapsed, which results in a greater fee or charge than if computed
on the basis of a 365-day year. Fees shall accrue during each period during
which such fees are computed from the first day thereof through the last day
thereof. Interest shall accrue during each period during which interest is
computed from the first day thereof to the last day thereof.
(b) The Administrative Agent will, with reasonable promptness,
notify the Company and the Lenders of each determination of a Eurodollar Rate;
provided, however, that any failure to do so shall not relieve the Company of
- - -------- -------
any liability hereunder.
(c) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error.
(d) If any Reference Lender's Commitment shall terminate (otherwise
than on termination of all the Commitments), or if for any reason whatsoever the
Reference Lender shall cease to be a Lender hereunder, or if any Reference
Lender shall sell participations in all of its Commitments and Loans hereunder,
that Reference Lender shall thereupon cease to be a Reference Lender, and the
Eurodollar Rate shall be determined on the basis of the rates as notified by the
remaining Reference Lenders.
(e) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Lenders shall be unable or otherwise fails to supply such rates
to the Administrative Agent upon its request, the rate of interest shall be
determined on the basis of the quotations of the remaining Reference Lenders or
Reference Lender.
2.13 PAYMENTS BY THE COMPANY.
(a) All payments (including prepayments) to be made by the Company
on account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Administrative Agent, for the account of
the Lenders (except as otherwise provided in Sections 2.05(d), 2.14(b), 3.01,
3.03, 3.04 and 3.06), to the Administrative Agent's Payment Account, in dollars
and in immediately available funds no later than 11:00 a.m. (San Francisco
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time). The Administrative Agent will promptly distribute to each Lender entitled
to such payment its Pro Rata Share of such amount in like funds as received. Any
payment which is received by the Administrative Agent later than 11:00 a.m. (San
Francisco time) shall be deemed to have been received on the immediately
succeeding Business Day.
(b) Subject to the provisions set forth in the definition of
"Interest Period," whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
(c) Unless the Administrative Agent shall have received Requisite
Notice from the Company prior to the date on which any payment is due to the
Lenders hereunder that the Company will not make such payment in full, the
Administrative Agent may assume that the Company has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Company shall not have made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender, together
with interest thereon for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate as in effect on such date.
2.14 PAYMENTS BY THE LENDERS TO THE ADMINISTRATIVE AGENT
(a) On the terms and conditions set forth in this Agreement, each
Lender shall make available to the Administrative Agent in immediately available
funds for the account of the Company the amount of its Pro Rata Share of any
Borrowing under a Tranche under which it is a Lender. If any Lender is to make
any Loan on a day on which the Company is to repay all or any part of an
outstanding Loan from such Lender, the Lender shall apply the proceeds of its
new Loan to make repayment of its outstanding Loan, and only an amount equal to
the difference (if any) between the amount being borrowed and the amount being
repaid shall be made available to the Administrative Agent by such Lender and be
remitted to the Company by the Administrative Agent. If the Company is to make
any payment on any Loans on a day on which the Lenders are making new Loans, the
Company shall apply the proceeds of its new Loans to make repayment of its
outstanding Loans and only an amount equal to the difference (if any) between
the amount being paid and the amount being borrowed shall be made available to
the Administrative Agent by the Company and be remitted to the applicable
Lenders by the Administrative Agent.
(b) Unless the Administrative Agent shall have received Requisite
Notice from a Lender on the Closing Date or, with respect to each Borrowing
after the Closing Date, at least one Business Day prior to the date of any
proposed Borrowing that such Lender will not make available to the
Administrative Agent for the account of the Company the amount of that Lender's
Pro Rata Share of the Borrowing, the Administrative Agent may assume that each
Lender has made such amount available to the Administrative Agent on the
borrowing date and the Administrative Agent may (but shall not be so required),
in reliance upon such assumption, make available to the Company on such date a
corresponding amount. If and to the extent any
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Lender shall not have made its full amount available to the Administrative
Agent and the Administrative Agent in such circumstances has made available to
the Company such amount, that Lender shall within one Business Day following the
date of such Borrowing make such amount available to the Administrative Agent,
together with interest at the Federal Funds Rate for each day during such
period. A certificate of the Administrative Agent submitted to any Lender with
respect to amounts owing under this subsection (b) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the
Administrative Agent shall constitute such Lender's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Administrative Agent within one Business Day following the date
of such Borrowing, the Administrative Agent shall notify the Company of such
failure to fund and, upon demand by the Administrative Agent, the Company shall
pay such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
(c) The failure of any Lender to make any Loan on any date of
Borrowing or to purchase a participation in accordance with the terms hereof
shall not relieve any other Lender of any obligation hereunder to make a Loan on
the date of such Borrowing or to purchase a participation in accordance with the
terms hereof. No Lender shall be responsible for the failure of any other Lender
to make a Loan, to issue a Letter of Credit or to purchase a participation in
accordance with the terms hereof.
2.15 SHARING OF PAYMENTS, ETC. If, other than as provided in Section
3.01, 3.03, 3.04 or 3.06, any Lender shall obtain on account of the Loans made
by it or Unreimbursed Drawings under any Tranche, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Pro Rata Share of payments on account of the Loans
or Unreimbursed Drawings under such Tranche (or, following the acceleration of
the Obligations, all Tranches) obtained by all the Lenders under such Tranche
(or, following the acceleration of the Obligations, all Tranches), such Lender
shall forthwith (a) notify the Administrative Agent of such fact, and (b)
purchase from the other Lenders under such Tranche (or, following the
acceleration of the Obligations, all Tranches) such participations in the Loans
made by them or Unreimbursed Drawings under such Tranche (or, following the
acceleration of the Obligations, all Tranches) as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each Lender
under such Tranche (or, following the acceleration of the Obligations, all
Tranches); provided, however, that if all or any portion of such excess payment
-------- -------
is thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender under such Tranche (or, following the
acceleration of the Obligations, all Tranches) shall repay to the purchasing
Lender the purchase price paid thereto together with an amount equal to such
paying Lender's Pro Rata Share (according to the proportion of (i) the amount of
such paying Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other similar amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Company agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 10.08) with respect to such participation as fully as if such Lender
were the direct creditor of the Company in the
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amount of such participation. The Administrative Agent shall keep records
(which shall be conclusive and binding in the absence of manifest error), of
participations purchased pursuant to this Section and shall in each case notify
the Lenders following any such purchases; provided, however, that any failure by
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the Administrative Agent to so notify the Lenders shall not alter the Lenders'
rights or duties hereunder.
2.16 COLLATERAL DOCUMENTS AND SUBSIDIARY GUARANTY. All Obligations
shall be secured in accordance with the Collateral Documents and shall be
unconditionally guaranteed under the Subsidiary Guaranty.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Subject to Section 3.01(g), any and all payments by the Company
to each Lender or the Administrative Agent under this Agreement shall be made
free and clear of, and without deduction or withholding for, any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, imposed
by any taxing authority and all liabilities with respect thereto, excluding, in
the case of each Lender and the Administrative Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction under the laws of which such Lender or the
Administrative Agent, as the case may be, is organized, does business or
maintains a Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) Subject to Section 3.01(g), the Company shall indemnify and hold
harmless each Lender and the Administrative Agent for the full amount, net of
any reduction in Taxes, levies, imposts, deductions, charges or withholding
therefrom, of Taxes or Other Taxes imposed with respect to amounts payable under
this Agreement (including without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 3.01) paid by the
Lender or the Administrative Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days from
the date the Lender or the Administrative Agent makes written demand therefor.
(d) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Administrative Agent, then, subject to Section 3.01(g): (i) the
sum payable shall be increased
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as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.01) such
Lender or the Administrative Agent, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made; (ii) the
Company shall make such deductions; and (iii) the Company shall pay the full
amount deducted to the relevant taxation authority in accordance with applicable
law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Administrative Agent.
(f) Subject, in the case of clauses (f)(i), (ii) and (iii) below, to
Section 3.01(j), each Lender which is a foreign Person (i.e., a Person other
than a United States Person for United States Federal income tax purposes)
agrees that: (i) it shall, no later than the Closing Date (or, in the case of a
Lender which becomes a party hereto pursuant to Section 10.07 after the Closing
Date, the date upon which the Lender becomes a party hereto) deliver to the
Company through the Administrative Agent: (A) if any Lending Office is located
in the United States, two accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"), and (B) if any
Lending Office is located outside the United States, two accurate and complete
signed originals of Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"), in each case indicating that the Lender is on the date of
delivery thereof entitled to receive payments of principal, interest and fees
for the account of each such Lending Office under this Agreement free from
withholding of United States Federal income tax; (ii) if at any time the Lender
changes its Lending Office or selects an additional Lending Office as herein
provided, it shall within 30 days thereof deliver to the Company through the
Administrative Agent in replacement for, or in addition to, the forms previously
delivered by it hereunder: (A) if such changed or additional Lending Office is
located in the United States, two accurate and complete signed originals of Form
4224, or (B) otherwise, two accurate and complete signed originals of Form 1001,
in each case indicating that the Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
such changed or additional Lending Office under this Agreement free from
withholding of United States Federal income tax; (iii) it shall, before or
promptly after the occurrence of any event (including the passing of time but
excluding any event mentioned in (ii) above) requiring a change in the most
recent Form 4224 or Form 1001 previously delivered by such Lender and if the
delivery of the same be lawful, deliver to the Company through the
Administrative Agent two accurate and complete original signed copies of Form
4224 or Form 1001 in replacement for the forms previously delivered by the
Lender; and (iv) it shall, promptly upon the Company's reasonable request to
that effect, deliver to the Company such other forms or similar documentation as
may be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes.
(g) The Company will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to Section 3.01(a), (c)
or (d) to any Lender for the account of any Lending Office of such Lender: (i)
if the obligation to pay such additional amounts would not have arisen but for a
failure by such Lender to comply with its obligations
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under Section 3.01(f) and (j) in respect of such Lending Office;
(ii) if such Lender shall have delivered to the Administrative Agent and the
Company a Form 4224 in respect of such Lending Office pursuant to Section
3.01(f)(i)(A), and such Lender shall not at any time be entitled to exemption
from deduction or withholding of United States Federal income tax in respect of
payments by the Company hereunder for the account of such Lending Office for any
reason other than a change in United States law or regulations or in the
official interpretation of such law or regulations by any governmental authority
charged with the interpretation or administration thereof (whether or not having
the force of law) after the Closing Date; (iii) if the Lender shall have
delivered to the Administrative Agent and the Company a Form 1001 in respect of
such Lending Office pursuant to Section 3.01(f)(i)(B), and such Lender shall not
at any time be entitled to exemption from deduction or withholding of United
States Federal income tax in respect of payments by the Company hereunder for
the account of such Lending Office for any reason other than a change in United
States law or regulations or any applicable tax treaty or regulations or in the
official interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the Closing Date ; or (iv) if the
Lender shall have delivered to the Administrative Agent and the Company a Form
W-8 and Nonbank Certificate (as defined below) pursuant to Section 3.01(j), and
such Lender shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by the
Company hereunder for any reason other than a change in United States law or
regulations or in the official interpretation of such law or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the Closing Date.
(h) If, at any time, the Company requests any Lender to deliver any
forms or other documentation pursuant to Section 3.01(f)(iv), then the Company
shall, on demand of such Lender, reimburse such Lender for any costs and
expenses (including expenses of outside legal counsel and the allocated costs of
in-house counsel) reasonably incurred by such Lender in the preparation or
delivery of such forms or other documentation.
(i) If the Company is required to pay additional amounts to any
Lender or the Administrative Agent pursuant to Section 3.01(c) or (d), then such
Lender shall use its reasonable best efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Company which may thereafter
accrue if such change in the sole judgment of such Lender is not otherwise
disadvantageous to such Lender.
(j) Any Lender organized under the laws of any jurisdiction other
than the United States or any state or other political subdivision thereof that
is not legally able to deliver IRS Form 1001 or 4224 pursuant to Section
3.01(f)(i) agrees that: (i) it shall deliver to the Company through the
Administrative Agent prior to or at the time such Lender becomes a registered
holder of any Note, two accurate and complete signed originals of (A) IRS Form
W-8 (Certificate of Foreign Status of the U.S. Department of Treasury) (or such
successor and related forms as may from time to time be adopted by the relevant
U.S. taxing authorities), and (B) a certificate stating that such Lender is not
a "bank" or other Person described in Section 881(c)(3) of the Code and that
such Lender is on the date of delivery thereof entitled to receive payments of
principal, interest and fees under this Agreement free from withholding of
United
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States Federal income tax (a "Nonbank Certificate"); (ii) it shall,
before or promptly after the occurrence of any event (including the passing of
time) requiring a change in the most recent Form W-8 or Nonbank Certificate
previously delivered by such Lender and if the delivery of the same be lawful,
deliver to the Company through the Administrative Agent two accurate and
complete original signed copies of Form W-8 and Nonbank Certificate in
replacement for the forms previously delivered by the Lender; and (iii) such
Lender shall promptly notify the Administrative Agent if, at any time, such
Lender determines that it has become subject to taxes of the type described in
Section 3.01(a), (c) or (d) or is no longer in a position to provide such Form
W-8 and Nonbank Certificate to the Administrative Agent and Company (or any
other form or certification adopted by the relevant U.S. taxing authorities).
(k) Upon any Lender making a claim for compensation under this
Section 3.01, the Company may, so long as no Default or Event of Default shall
have occurred and be continuing, replace or remove such Lender in accordance
with Section 10.12.
(l) The agreements and obligations of the Company contained in this
Section 3.01 shall survive the payment in full of all other Obligations.
3.02 ILLEGALITY.
(a) If any Lender shall determine that the introduction of any
Requirement of Law or any change therein or in the interpretation or
administration thereof has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for any Lender or its
Lending Office to make Eurodollar Rate Loans, then, on Requisite Notice thereof
by the Lender to the Company through the Administrative Agent, the obligation of
the Lender to make Eurodollar Rate Loans shall be suspended until the Lender
shall have notified the Administrative Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender shall determine that it is unlawful to maintain any
Eurodollar Rate Loan, the Company shall prepay in full all Eurodollar Rate Loans
of the Lender then outstanding, together with interest accrued thereon, either
on the last day of the Interest Period thereof if the Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
the Lender may not lawfully continue to maintain such Eurodollar Rate Loans,
together with any amounts required to be paid in connection therewith pursuant
to Section 3.04.
(c) If the Company is required to prepay any Eurodollar Rate Loan
immediately as provided in Section 3.02(b), then concurrently with such
prepayment, the Company shall borrow from the affected Lender, in the amount of
such prepayment, a Base Rate Loan.
(d) If the obligation of any Lender to make or maintain Eurodollar
Rate Loans has been terminated, the Company may elect, by giving Requisite
Notice to the Lender through the Administrative Agent that all Loans which would
otherwise be made by the Lender as Eurodollar Rate Loans shall be instead Base
Rate Loans.
(e) Before giving any notice to the Administrative Agent pursuant to
this Section 3.02, the affected Lender shall designate a different Lending
Office with respect to its
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Eurodollar Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Lender, be
illegal or otherwise disadvantageous to the Lender.
3.03 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender shall determine that, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost (except for any increase relating to
taxes) to such Lender of agreeing to make or making, funding or maintaining any
Loans or Letters of Credit (or participation therein), then the Company shall be
liable for, and shall from time to time, upon demand therefor by such Lender
(with a copy of such demand to the Administrative Agent), pay to such Lender,
additional amounts as are sufficient to compensate such Lender for such
increased costs.
(b) If any Lender shall have determined that the introduction of any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein or any change in the interpretation or administration thereof by
any central bank or other Governmental Authority charged with the interpretation
or administration thereof, or compliance by the Lender (or its Lending Office)
or any corporation controlling the Lender, with any request, guideline or
directive regarding capital adequacy (whether or not having the force of law) of
any such central Lender or other authority, affects or would affect the amount
of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) determines that the amount of such capital
is increased as a consequence of its obligation under this Agreement, then, upon
demand of such Lender, the Company shall immediately pay to the Lender, from
time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.
3.04 FUNDING LOSSES. The Company agrees to reimburse each Lender and
to hold each Lender harmless from any reasonable loss or expense which the
Lender may sustain or incur as a consequence of (a) the failure of the Company
to make any payment or prepayment of principal of any Eurodollar Rate Loan
(including payments to be made after any acceleration thereof); (b) the failure
of the Company to borrow, continue or convert a Loan after the Company has given
(or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/
Continuation; (c) the failure of the Company to make any prepayment after the
Company has given Requisite Notice in accordance with Section 2.06 or 2.07; or
(d) the prepayment of a Eurodollar Rate Loan on a day which is not the last day
of the Interest Period with respect thereto; including any such reasonable loss
or expense arising from the liquidation or reemployment of funds obtained by it
to maintain its Eurodollar Rate Loans hereunder or from fees payable to
terminate the deposits from which such funds were obtained. This covenant shall
survive the payment in full of all other Obligations; provided, however, any
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Lender desiring to make a claim for reimbursement under this Section 3.04, shall
do so within 180 days after the Maturity Date of the Tranche under which such
Loans were made.
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3.05 INABILITY TO DETERMINE RATES. If: (a) any two Reference Lenders
or, if there is only one Reference Lender, such Reference Lender shall have
determined that for any reason adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan, or (b) if Majority Lenders shall have
determined and notified the Administrative Agent that the Eurodollar Rate
applicable for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, then the Administrative Agent will forthwith give
notice of such determination to the Company and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Rate Loans hereunder
shall be suspended until the Administrative Agent upon the instruction of
Majority Lenders revokes such notice in writing. Upon receipt of such notice,
the Company may revoke any Notice of Borrowing or Notice of Conversion/
Continuation then submitted by it. If the Company does not revoke such notice,
the Lenders shall make, convert or continue the Loans, as proposed by the
Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Eurodollar Rate Loans.
3.06 RESERVES ON EURODOLLAR RATE LOANS. The Company shall pay to
each Lender, as long as such Lender shall be required under regulations of the
Federal Reserve Board to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency Liabilities"), additional costs on the unpaid principal amount of
each Eurodollar Rate Loan equal to actual costs of such reserves allocated to
such Loan by the Lender (as determined by the Lender in good faith, which
determination shall be conclusive), payable on each date on which interest is
payable on such Loan provided the Company shall have received at least 15 days'
prior written Requisite Notice (with a copy to the Administrative Agent) of such
additional interest from the Lender. If a Lender fails to give Requisite Notice
15 days prior to the relevant Interest Payment Date, such additional interest
shall be payable fifteen days from receipt of such notice. This covenant shall
survive the payment in full of all other Obligations; provided, however, any
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Lender desiring to make a claim for reimbursement under this Section 3.06, shall
do so within 270 days after the Maturity Date of the Tranche under which such
Loans were made.
3.07 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation pursuant to this Article III shall deliver to the Company (with a
copy to the Administrative Agent) a certificate setting forth in reasonable
detail the amount payable to the Lender hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error.
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ARTICLE IV
CONDITIONS PRECEDENT
4.01 CONDITIONS OF INITIAL EXTENSION OF CREDIT 4.01. The obligation
of each Lender to make its initial Loans or to participate in the initial
Letters of Credit hereunder is subject to the condition that the Administrative
Agent shall have received on or before the Closing Date all of the following, in
form and substance satisfactory to the Administrative Agent and its counsel and,
except for Notes and the instruments or documents representing Collateral, in
sufficient copies for each Lender:
(a) CREDIT AGREEMENT. This Agreement duly executed by the Company and
each of the Lenders.
(b) NOTES. Notes for each Lender requesting Notes.
(c) SUBSIDIARY GUARANTY. The Subsidiary Guaranty duly executed by
UATC.
(d) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the board of directors of the
Company approving and authorizing the execution, delivery and
performance by the Company of this Agreement, the other Loan Documents
to be delivered hereunder and authorizing the borrowing of the Loans,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of the Company;
(ii) Certified copies of the resolutions of the board of directors
of each Loan Party other than the Company approving the Loan Documents
to be delivered by it hereunder; and
(iii) A certificate of the Secretary or Assistant Secretary of
each Loan Party certifying the names and true signatures of the officers
of such Loan Party authorized to execute and deliver, as applicable,
this Agreement, and all other Loan Documents to be delivered hereunder.
(e) OTHER DOCUMENTS. With respect to each Loan Party, such
documentation as the Administrative Agent may require to establish the due
organization, valid existence and good standing of such Loan Party, its
qualification to engage in business in each material jurisdiction in which it is
engaged in business or required to be so qualified, its authority to execute,
deliver and perform any Loan Documents to which it is a party, the identity,
authority and capacity of each officer thereof authorized to act on its behalf,
including certified copies of articles of incorporation and amendments thereto,
bylaws and amendments thereto, certificates of good standing and/or
qualification to engage in business, tax clearance certificates, certificates of
corporate resolutions, incumbency certificates, certificates of Responsible
Officers, and the like.
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(f) LEGAL OPINIONS. Written legal opinion of counsel to the Company
and its Subsidiaries .
(g) CERTIFICATE. A certificate signed by a Responsible Officer,
dated as of the Closing Date:
(i) stating that the representations and warranties contained
in Article V are true and correct on and as of such date;
(ii) stating that no Default or Event of Default exists or
would result from the Borrowings or the issuances or continuances of any
Letters of Credit on the Closing Date;
(iii) stating that there has occurred since December 31, 1997 no
Material Adverse Effect;
(iv) attaching calculations showing that the debt incurrence
test set forth in the UATC Pass-Through Certificates do not prohibit
UATC from executing and delivering the Subsidiary Guaranty; and
(v) stating that the execution, delivery and performance by
UATC under the Subsidiary Guaranty are permitted by the UATC Pass-
Through Certificates.
(h) NET PROCEEDS FROM SENIOR SUBORDINATED NOTES. Evidence that the
Company is concurrently receiving the net proceeds from the sale of the Senior
Subordinated Notes having an aggregate principal amount of at least
$275,000,000.
(i) IRREVOCABLE REDEMPTION NOTICE FOR UATC SENIOR SECURED NOTES.
Evidence that on or prior to the Closing Date UATC has issued an irrevocable
notice to redeem all of the UATC Senior Secured Notes within 45 days of the
Closing Date pursuant to the terms of the UATC Senior Secured Notes Indenture.
(j) IRREVOCABLE REDEMPTION NOTICE FOR COMPANY PREFERRED STOCK.
Evidence that on or prior to the Closing Date the Company has issued an
irrevocable notice to redeem all of the Company Preferred Stock within 15
Business Days of the Closing Date.
(k) EVIDENCE THAT FORMER COLLATERAL AGENT WILL DELIVER COLLATERAL
HELD BY IT TO ADMINISTRATIVE AGENT. Evidence that UATC has irrevocably directed
the Former Collateral Agent to redeliver all Collateral being held by it under
the Former Collateral Documents which is to be pledged under the Collateral
Documents directly to the Administrative Agent promptly following repayment of
the UATC Senior Secured Notes.
(l) EVIDENCE OF REPAYMENT OF OBLIGATIONS UNDER EXISTING CREDIT
AGREEMENT. Evidence that all obligations outstanding under the Existing Credit
Agreement have been, or concurrently herewith are being, repaid and the Existing
Credit Agreement, and all commitments and obligations thereunder, has been, or
concurrently herewith is being, terminated.
(m) FINANCIAL STATEMENTS. A certified copy of the financial
statements of the Company and its Subsidiaries referred to in Section 5.11.
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(n) COMPLIANCE CERTIFICATE. A compliance certificate of the Company
dated as of the Closing Date showing the computations for the covenants
contained in Section 7.12(a) and (b) utilizing (i) Operating Cash Flow for the
period ended December 31, 1997 and (ii) Pro Forma Lease Expense, Pro Forma Debt
Service and Funded Indebtedness and issued and outstanding letters of credit on
a pro forma basis after giving effect to the UATC Secured Senior Notes being
repaid and refinanced hereunder and the Company Preferred Stock being redeemed
and refinanced hereunder. Such compliance certificate shall be certified by a
Responsible Officer of the Company prepared in accordance with the requirements
of Section 6.02(b).
(o) PAYMENT OF FEES. The Company shall have paid all costs, accrued
and unpaid fees (including all fees due and payable pursuant to the letter
agreements referred to in Section 2.11) and expenses (including, without
limitation, legal fees and expenses) to the extent then due and payable on the
Closing Date.
(p) OTHER DOCUMENTS. Such other approvals, opinions or documents as
any Lender may reasonably request.
4.02 CONDITIONS TO ALL BORROWINGS. The obligation of each Lender to
make any Loan to be made by it hereunder, for any Issuing Lender to issue or to
renew, increase continue, amend or take another credit action with respect to
any Letter of Credit, or for any Lender to purchase any participation in a
Letter of Credit is subject to the satisfaction of the following conditions
precedent on the relevant borrowing date:
(a) NOTICE OF BORROWING. The Administrative Agent or the Issuing
Lender with a copy to the Administrative Agent, as applicable, shall have
received a Notice of Borrowing or a Letter of Credit Application.
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. Except with
respect to Borrowings under the Tranche A Term Loan Commitments and Tranche C
Term Loan Commitments, the proceeds of which are used to prepay the UATC Senior
Secured Notes, the representations and warranties made by the Company contained
in Article V shall be true and correct on and as of such borrowing date with the
same effect as if made on and as of such borrowing date.
(c) NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Borrowing.
Each Borrowing by the Company hereunder shall constitute a
representation and warranty by the Company hereunder as of the date of each such
Borrowing that the conditions in this Section 4.02 have been satisfied.
Continuations and conversions of Loans do not require the Company to make
representations and warranties contained in Article V.
4.03 PLEDGE AND DELIVERY OF COLLATERAL; SUBSIDIARY GUARANTORS. On
any date when Collateral is required to be pledged under the Collateral
Documents or any Subsidiary is required to become a Subsidiary Guarantor, the
Company shall deliver, or cause to be delivered, to the Administrative Agent the
following items, as applicable, in form and substance satisfactory to the
Administrative Agent and its counsel.
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(a) PLEDGED COLLATERAL UNDER THE SUBSIDIARY PLEDGE AGREEMENT. When
the stock of Prop I or any Wholly-Owned First-Tier Subsidiary is required to be
pledged, the Subsidiary Pledge Agreement, or a supplement thereto, duly executed
and delivered by UATC and UAR, together with all stock and other equity
ownership interests in Prop I and such Wholly-Owned First-Tier Subsidiaries,
together with undated stock transfer powers duly executed in blank for each such
certificate.
(b) COMPANY PLEDGE AGREEMENT; STOCK CERTIFICATES; INTERCOMPANY NOTE.
On the UATC Senior Secured Note Repayment Date, the Company Pledge Agreement,
duly executed and delivered by the Company, together with the Intercompany Note
duly endorsed and all certificates and instruments representing all stock and
other equity ownership interests in UATC (other than the UATC Preferred Stock
which is being contributed to UATC) and UAR, together with undated stock
transfer powers duly executed in blank for each such stock certificate.
(c) OPINION OF COUNSEL. On each such date, a written opinion of
counsel to the Company and its Subsidiaries as to (i) the enforceability of the
Loan Documents being delivered on such date against the Loan Parties executing
and delivering the same, (ii) the due perfection and first priority of the
Administrative Agent's security interest in any Collateral being pledged on such
date, and (iii) such other matters as the Administrative Agent or any Lender may
reasonably request in connection therewith, in each case subject to customary
equity, bankruptcy and other exceptions and assumptions reasonably acceptable to
the Administrative Agent and its counsel.
(d) COLLATERAL BEING HELD BY THE FORMER COLLATERAL AGENT. On the
UATC Senior Secured Note Repayment Date, all Collateral being held by the Former
Collateral Agent which is to be pledged under the Collateral Documents,
delivered directly by the Former Collateral Agent, for pledging under the
Collateral Documents.
(e) SUPPLEMENT TO SUBSIDIARY GUARANTY. On the UATC Senior Secured
Note Repayment Date, a supplement to the Subsidiary Guaranty duly executed and
delivered by UAR. On the Prop I Mortgage Debt Repayment Date, a supplement to
the Subsidiary Guaranty duly executed and delivered by Prop I.
(f) RESOLUTIONS; INCUMBENCY. The items set forth in Sections
4.01(d)(ii) and 4.01(d)(iii) pertaining to the Persons executing and delivering
Loan Documents on such date.
(g) OTHER DOCUMENTS. Such other approvals, opinions, financing
statements, instruments, writings, endorsements or other documents as the
Administrative Agent or any Lender may reasonably request in connection
therewith, including such items with respect to the continuance, confirmation or
perfection of the security interest of the Administrative Agent for the benefit
of the Secured Parties in any Collateral being pledged and evidence that all
other actions necessary, including delivery of any Collateral requiring a
possessory interest to create a perfected security interest therein, or, in the
opinion of the Administrative Agent, desirable to perfect and protect the first
priority security interest created by the Collateral Documents have been or will
be taken.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Administrative Agent,
each Lender and each Issuing Lender that:
5.01 CORPORATE EXISTENCE AND POWER. POWER. Each of the Company and
its Subsidiaries is a corporation or partnership duly organized or formed,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated or formed, has all requisite power and authority,
including, without limitation, all licenses, permits, franchises, patents,
copyrights, trademarks, trade names, consents and approvals, to own its property
and assets and to carry on its business as presently conducted and each is duly
qualified and is in good standing as a foreign corporation or partnership, as
applicable, and is authorized to do business in each jurisdiction where such
qualification or authorization is required, except where such failures as would
not result in a Material Adverse Effect. The Company has the corporate power to
execute, deliver and perform its obligations under this Agreement and the Loan
Documents, and the Company has the corporate power to borrow hereunder. Each of
the Loan Parties has the corporate power to execute, deliver and perform its
obligations under the Loan Documents.
5.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Company of the Loan Documents, the execution,
delivery and performance by each of the Loan Parties of the Loan Documents, the
Borrowings hereunder by the Company, and the grant of security interests in the
Collateral pursuant to the Collateral Documents (a) have been duly authorized by
all requisite corporate and, if required, stockholder or other action on the
part of the Company and the Subsidiaries of the Company, as the case may be, and
(b) will not (i) violate (A) any Requirement of Law or the certificate or
articles of incorporation or other constitutive documents or the by-laws or
regulations of the Company or any Subsidiary of the Company, (B) any order of
any court, or any rule, regulation or order of any other agency of government
binding upon the Company or any Subsidiary of the Company or (C) any provisions
of any indenture, agreement or other instrument to which the Company or any
Subsidiary of the Company is a party, or by which the Company or any Subsidiary
of the Company or any of their properties or assets is or may be bound, which
violation would be likely to result in a Material Adverse Effect, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any indenture, agreement or other
instrument referred to in (b)(i)(C) above which violation would be likely to
result in a Material Adverse Effect, or (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
property or assets of the Company or any Subsidiary of the Company other than as
contemplated by the Loan Documents and the UATC Senior Secured Notes Indenture.
5.03 GOVERNMENTAL AUTHORIZATION. All consents and approvals of,
filings and registrations with, and other actions in respect of, all
governmental agencies, authorities or instrumentalities which are or will be
required in connection with the execution, delivery and
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performance of the Loan Documents have been or, prior to the time when
required, will have been, obtained, given, filed or taken and are or will be in
full force and effect, other than any which the failure to obtain, give, file or
take would not have a Material Adverse Effect under the Loan Documents or on the
ability of the Company, or any Loan Party, as the case may be, to perform timely
its respective obligations under or in connection with the Loan Documents.
5.04 BINDING EFFECT. This Agreement and each other Loan Document,
when executed and delivered, will constitute, legal, valid and binding
obligations of the Company, and the Loan Parties, as applicable, in each case
enforceable in accordance with their respective terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity).
5.05 LITIGATION. Except as set forth in Schedule 5.05 hereto, there
-------------
are no actions, suits, proceedings, claims or disputes pending, at law, in
equity, in arbitration or before any Governmental Authority, against the
Company, or its Subsidiaries or any of their respective properties (or to the
best knowledge of the executive management of the Company, threatened or
contemplated by any Governmental Authority against the Company, or its
Subsidiaries or any of their respective properties) which:
(a) purport to affect or pertain to this Agreement, or any Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) is reasonably likely to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.06 NO DEFAULT. No Default or Event of Default exists
or would result from the incurring of obligations by the Company under this
Agreement or any other Loan Document. Neither the Company, nor any of its
Subsidiaries, is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, is
reasonably likely to have a Material Adverse Effect.
5.07 ERISA COMPLIANCE.
(a) Schedule 5.07 lists all Plans maintained or sponsored by the
-------------
Company or to which it is obligated to contribute as of the Closing Date, and
separately identifies Plans intended to be Qualified Plans and Multiemployer
Plans as of the Closing Date.
(b) Each Plan set forth on Schedule 5.07, which is maintained or
-------------
sponsored by the Company, is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state law,
including all requirements under the Code or ERISA for filing reports (which are
true and correct in all material respects as of the date filed), and benefits
have been paid in accordance with the provisions of the Plan, except as would
not have a reasonable likelihood of having a Material Adverse Effect.
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(c) Except as set forth in Schedule 5.07, each Qualified Plan has
--------
been determined by the Internal Revenue Service to qualify under Section 401 of
the Code, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the Code, and to the best
knowledge of the Company nothing has occurred which would cause the loss of such
qualification or tax-exempt status, except as would not have a reasonable
likelihood of having a Material Adverse Effect.
(d) Except as set forth in Schedule 5.07, there is no outstanding
-------------
liability under Title IV of ERISA with respect to any Plan maintained or
sponsored by the Company or any ERISA Affiliate (as to which the Company is or
may be liable), nor with respect to any Plan to which the Company or any ERISA
Affiliate (wherein the Company is or may be liable) contributes or is obligated
to contribute which has a reasonable likelihood of having a Material Adverse
Effect.
(e) Except as set forth on Schedule 5.07, none of the Qualified
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Plans subject to Title IV of ERISA has any Unfunded Pension Liability as to
which the Company is or may be liable which if such Plan were to be terminated
has a reasonable likelihood of having a Material Adverse Effect.
(f) Except as set forth in Schedule 5.07, no Plan maintained or
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sponsored by the Company provides medical or other welfare benefits or extends
coverage relating to such benefits beyond the date of a participant's
termination of employment with the Company, except to the extent required by
Section 4980B of the Code and at the sole expense of the participant or the
beneficiary of the participant to the fullest extent permissible under such
Section of the Code. The Company has complied in all material respects with the
notice and continuation coverage requirements of Section 4980B of the Code,
except as would not have a reasonable likelihood of having a Material Adverse
Effect.
(g) Except as set forth in Schedule 5.07, no ERISA Event has
-------------
occurred or is reasonably expected to occur with respect to any Plan maintained
or sponsored by the Company or to the knowledge of the Company, to which the
Company is obligated to contribute, which has a reasonable likelihood of having
a Material Adverse Effect.
(h) There are no pending or, to the best knowledge of the executive
management of Company, threatened claims, actions or lawsuits, other than
routine claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the Company or its
assets, (ii) any member of the Controlled Group with respect to any Qualified
Plan of the Company, or (iii) any fiduciary with respect to any Plan for which
the Company may be directly or indirectly liable, through indemnification
obligations or otherwise, in each case, which has a reasonable likelihood of
having a Material Adverse Effect.
(i) Except as set forth in Schedule 5.07, the Company has not
-------------
incurred nor reasonably expects to incur (i) any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan or (ii) any liability under Title IV of ERISA (other than
premiums due and not delinquent under Section 4007 of ERISA) with
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respect to a Plan, in each case, which has a reasonable likelihood of
having a Material Adverse Effect.
(j) Except as set forth in Schedule 5.07, the Company has not
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engaged in a transaction that could reasonably be subject to Section 4069 or
4212(c) of ERISA, except as would not have a reasonable likelihood of having a
Material Adverse Effect.
(k) The Company has not engaged, directly or indirectly, in a
non-exempt prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Plan which has a reasonable
likelihood of having a Material Adverse Effect.
5.08 USE OF PROCEEDS; MARGIN REGULATIONS. No portion of the Loans
will be used, directly or indirectly, (a) to purchase or carry Margin Stock or
to repay or otherwise refinance indebtedness of the Company or others incurred
to purchase or carry Margin Stock, (b) to extend credit for the purpose of
purchasing or carrying any Margin Stock or (c) to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
other than the UATC Senior Secured Notes. Neither the Company nor the Company
and its Subsidiaries on a Consolidated basis holds, or will hold or acquire, any
Margin Stock unless not more than 25% of the value of the assets of the Company
and the Company and its Subsidiaries on a Consolidated basis, as the case may
be, is represented by assets consisting of Margin Stock.
5.09 TITLE TO PROPERTIES; LEASES. The Company and each of its
Subsidiaries has good record and marketable title in fee simple to or valid
leasehold interests in all its property, except for such defects in title as
could not, individually or in the aggregate, have a Material Adverse Effect. The
property is free and clear of all Liens or rights of others, except Liens
permitted by Section 7.02. The Company and its Subsidiaries, taken as a whole,
have complied with all obligations under all leases to which any of them is a
party and under which any of them is in occupancy, except such failures to
comply as would not have a Material Adverse Effect and all such leases are in
full force and effect. Each of the Company and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases except such failures to have
peaceful and undisturbed possession as would not result in a Material Adverse
Effect.
5.10 TAXES. The Company and its Subsidiaries have filed all Federal,
State and other tax returns and reports required to be filed and have paid all
Federal, State and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no material Notice of Lien has been filed
or recorded. Except as set forth in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, there is no proposed tax assessment against
the Company or any of its Subsidiaries which would, if the assessment were made,
have a Material Adverse Effect.
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5.11 FINANCIAL CONDITION;.
(a) The audited consolidated financial statements and statements of
financial condition of the Company and its Subsidiaries dated December 31, 1997,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the fiscal year ended on that date and the unaudited consolidated
financial statements and statements of financial condition, if any, delivered to
the Administrative Agent for the Lenders on or before the Closing Date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly
noted therein;
(ii) are complete, accurate and fairly present the financial
condition of the Company and its Subsidiaries as of the date thereof
and results of operations for the period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent of the Company and its consolidated
Subsidiaries as of the date thereof which are required to be
reflected in accordance with GAAP (including liabilities for taxes
and material commitments).
(b) Since December 31, 1997, there has been no Material Adverse
Effect.
5.12 ENVIRONMENTAL MATTERS.
(a) Except as specifically identified in Schedule 5.12, the
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operations of the Company and each of its Subsidiaries comply in all material
respects with all Environmental Laws except such non-compliance which would not
result in liability in excess of $5,000,000 in the aggregate.
(b) Except as specifically identified in Schedule 5.12, the Company
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and each of its Subsidiaries has obtained all licenses, permits, authorizations
and registrations required under any Environmental Law ("Environmental Permits")
necessary for its operations, and all such Environmental Permits are in good
standing, and the Company and each of its Subsidiaries is in compliance with all
terms and conditions of such Environmental Permits except to the extent that any
noncompliance therewith will not result in a Material Adverse Effect.
(c) Except as specifically identified in Schedule 5.12, none of the
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Company, any of its Subsidiaries or any of their present property or operations
is subject to any outstanding written order from or agreement with any
Governmental Authority or other Person, nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material, except such orders, agreements, or proceedings which are
not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.
(d) Except as specifically identified in Schedule 5.12, the Company
-------------
is not aware of any conditions or circumstances which may give rise to any
Environmental Claim arising from the operations of the Company or its
Subsidiaries, including Environmental Claims associated
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with any operations of the Company or its Subsidiaries with a potential
liability in excess of $5,000,000 in the aggregate. Without limiting the
generality of the foregoing, (i) neither the Company nor any of its
Subsidiaries, to its knowledge, has any underground storage tanks (x) that are
not properly registered or permitted under applicable Environmental Laws or (y)
that are leaking or disposing of Hazardous Materials off-site, either of which
reasonably would be likely to have a Material Adverse Effect, except such
underground storage tanks that the Company has obtained knowledge of 90 days or
less prior to the date of giving the representation set forth herein and, if
removal is required under any Requirement of Law, as to which the removal has
been contractually committed by the Company or one or more of its Subsidiaries,
or, if not contractually committed, the Company or one or more of its
Subsidiaries is engaged in reasonable activities to secure such commitments, and
(ii) the Company and its Subsidiaries have used their reasonable best efforts to
notify all of their employees of the existence, if any, of any health hazard
arising from the conditions of their employment and to meet all notification
requirements under Title III of CERCLA or any other Environmental Law.
5.13 COLLATERAL DOCUMENTS. Subject to Section 4.03, the security
interest of the Administrative Agent in the Collateral has been fully perfected
and constitutes a first priority security interest in all of such Collateral
described therein, prior and superior to all other Liens. Subject to Section
4.03, the Collateral includes all outstanding capital stock and other equity
interests of UATC (other than the UATC Preferred Stock which is being
contributed to UATC), Prop I and UAR and all Wholly-Owned First-Tier
Subsidiaries of UATC and the Intercompany Note.
5.14 REGULATED ENTITIES. None of the Company, any Person
controlling the Company, or any Subsidiaries of the Company, is (a) an
"Investment Company" within the meaning of the Investment Company Act of 1940;
or (b) subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or any other Federal or state statute or regulation limiting its
ability to incur Indebtedness.
5.15 LABOR RELATIONS. There are no strikes, lockouts or other labor
disputes against the Company or any of its Subsidiaries, or, to the best
knowledge of the executive management of the Company, threatened against or
affecting the Company or any of its Subsidiaries which are likely to have a
Material Adverse Effect, and no unfair labor practice complaint is pending
against the Company or any of its Subsidiaries or, to the best knowledge of the
executive management of the Company, threatened against any of them before any
Governmental Authority, which is reasonably likely to have a Material Adverse
Effect.
5.16 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. Except as
set forth in Schedule 5.16, the Company and each of its Subsidiaries owns or is
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licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, franchises, authorizations and other
rights that are reasonably necessary for the operation of its business, without
conflict with the rights of any other Person. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed by the Company or any of its Subsidiaries infringes upon any rights
owned by any other Person; except as set forth in Schedule 5.16, no claim or
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litigation regarding any of the foregoing is pending or threatened,
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and no patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or, to the knowledge of the
Company, proposed, which, in either case, would be likely to result in a
Material Adverse Effect.
5.17 SUBSIDIARIES OF THE COMPANY. As of the Closing Date, the
Company has no direct or indirect Subsidiaries other than those listed on
Schedule 5.17 hereto and has no equity investments in any other corporation or
- - -------------
entity other than those listed on Schedule 5.17 hereto. Schedule 5.17 indicates
------------- -------------
all Wholly-Owned First-Tier Subsidiaries and Material Subsidiaries as of the
Closing Date.
5.18 INSURANCE. The properties of the Company and its Subsidiaries
are insured with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as is customarily carried
by companies engaged in similar businesses and owning similar properties in
localities where the Company or such Subsidiary operates.
5.19 FULL DISCLOSURE. None of the representations or warranties made
by the Company or any of its Subsidiaries in the Loan Documents, and in
connection with the Senior Subordinated Notes, as of the date of such
representations and warranties, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Company or any of its Subsidiaries in connection with the Loan Documents
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Obligations shall remain unpaid, unless
the Majority Lenders waive compliance in writing:
6.01 FINANCIAL STATEMENTS. The Company shall deliver to
the Administrative Agent and to each Lender in form and detail satisfactory to
the Administrative Agent and the Majority Lenders:
(a) as soon as available, but in any event within 105 days after the
end of each fiscal year of the Company, a copy of the balance sheet and income
statement showing the financial condition as of the end of such fiscal year and
the results of operations during such fiscal year, for the Company and its
Subsidiaries on a Consolidated basis, together with the related statement of
stockholders' equity and statement of cash flows as of and through the end of
such fiscal year, setting forth in each case in comparative form the figures for
the preceding fiscal year. Each balance sheet, income statement, statement of
stockholders' equity and statement of cash flows shall be prepared in accordance
with GAAP consistently applied (except for such changes therein as the
accountants for the Company referred to below conclude are appropriate) and
audited by Arthur Andersen LLC or other independent certified public accountants
of recognized national standing acceptable to Majority Lenders and accompanied
by an opinion of
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such accountants which opinion shall state that said financial statements fairly
present the financial condition and results of operations of the Company and its
Subsidiaries on a Consolidated basis, at the end of, and for, such fiscal year
with such exceptions or qualifications as such accountants deem appropriate
except that the opinion of such accountants shall be free of exceptions or
qualifications as to scope;
(b) as soon as available, but in any event not later than 60 days
after the end of the first three quarterly accounting periods in each fiscal
year of the Company, a copy of the unaudited balance sheet and income statement
and a statement of cash flows showing the financial condition and results of
operations for the Company and its Subsidiaries on a Consolidated basis as at
the end of and for such quarterly period and for the elapsed portion of the
fiscal year through such date, setting forth in each case in comparative form
the figures for the corresponding periods of the preceding fiscal year. The
foregoing financial statements shall be certified by a Responsible Officer of
the Company as being complete and correct in all material respects and as
presenting fairly the financial condition and results of operations of the
Company and its Subsidiaries on a Consolidated basis; and
(c) concurrently with the delivery of financial statements described
in Sections 6.01(a) or if delivered to the Company at any time other than in
conjunction with the delivery of such financial statements, copies of all audit
reports, management audit letters and such other reports and letters that may be
delivered from time to time by Arthur Andersen LLC or other independent auditors
of the Company.
6.02 CERTIFICATES; OTHER INFORMATION. The Company shall furnish to
the Administrative Agent and to each Lender:
(a) concurrently with delivery of the financial reports described in
Sections 6.01(a) and (b), a compliance letter of the firm or person referred to
therein (which compliance letter furnished by the independent certified public
accountants referred to in Section 6.01(a) above may be limited to accounting
matters and disclaim responsibility for legal interpretations) certifying that
to the best of its or his knowledge no Default or Event of Default has occurred,
and, if such a Default or Event of Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be taken with
respect thereto;
(b) concurrently with delivery of the financial reports described in
Sections 6.01(a) and (b), a certificate of a Responsible Officer of the Company:
(i) certifying that, to the best of such officer's
knowledge, as of the date of such financial reports and as of the
date of the certificate described herein, the Company, during
such period, has observed or performed all of its covenants and
other agreements, and satisfied every condition contained in this
Agreement and the Loan Documents to be observed, performed or
satisfied by it;
(ii) certifying that, as of the date of such financial
reports and as of the date of the certificate described herein,
such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate;
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(iii) demonstrating compliance with the covenants set
forth in Sections 7.05 (Investments) and Section 7.12 (Financial
Ratios), together with supporting computations, as of the dates of the
financial statements being furnished at such time, commencing with the
financial statements for the fiscal quarter of the Company ending June
30, 1998;
(iv) certifying, as of the dates of the financial
statements being furnished at such time, (1) the Company's Capital
Expenditures for the period then ended, (2) total attendance at the
theatres during the period then ended, (3) the total theatres, owned or
operated by the Company and its Subsidiaries, in each case for the
period then ended, (4) total theatre screens at such theatres, in each
case as at the end of such period, (5) a listing of all theatres opened
or closed and actual cash flows for the past 12 months for closed
theatres and projected cash flows for the succeeding 12 months for newly
opened theatres, in each case for the period then ended and, with
respect to the theatres closed during such period, a description of the
reason for such closure and whether such closure was an Involuntary
Closing, and (6) pro forma statements of cash flow and operating budgets
for theatres and screens projected for opening within six months
following the date of such financial statements including projected
opening dates; and
(v) certifying that the representations and warranties
made by the Company contained in Article V are true and correct in all
material respects as of the date of the financial statements being
furnished at such time and as of the date of the certificate with the
same effect as if made on and as of such dates;
(c) promptly after the same become publicly available, and in any
event within five days after the filing thereof with the Securities and Exchange
Commission, copies of such annual, periodic and other reports, if any, as shall
be filed by the Company with the Securities and Exchange Commission pursuant to
the requirements of the Securities Exchange Act of 1934, including, without
limitation, copies of the annual report and the information, documents and other
reports (or copies of such portions of any of the foregoing as the Securities
and Exchange Commission may by rules and regulations prescribe) which the
Company is required to file with the Securities and Exchange Commission pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934;
(d) On or before January 31 of each year, operating budgets and the
Company's and its Subsidiaries' business plan for the fiscal year commencing on
January 1 of such year;
(e) On or before January 31 of each year a certificate updating
Schedule 5.17 as of the prior fiscal year end with the information required by
- - -------------
Section 5.17 thereon, including any changes in such information; and
(f) promptly, from time to time, such other information regarding
the affairs, operations or condition (financial or otherwise) of the Company and
its Subsidiaries as the Administrative Agent or any Lender may reasonably
request and which is capable of being obtained, produced or generated by the
Company or any of its Subsidiaries or of which any of them has knowledge.
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6.03 NOTICES. The Company shall promptly notify the Administrative
Agent and each Lender of:
(a) the occurrence of any Default or Event of Default and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default, specifying the nature and extent thereof
and the action (if any) which is proposed to be taken with respect thereto;
(b) any material breach or non-performance of, or any default under
the UATC Pass-Through Certificates;
(c) any breach or non-performance of, or any default under any
Contractual Obligation of the Company or any of its Subsidiaries (other than as
described in Section 6.03(a) or (b)), which, in the reasonable judgement of the
Company or such Subsidiary, is likely to result in a Material Adverse Effect;
(d) any material breach or non-performance of, or any default under
any obligation of Prop I under the Prop I Agreement or under any document
related thereto or issued in connection therewith;
(e) the issuance by any court or Governmental Authority of any
injunction, order, decision or other restraint prohibiting, or having the effect
of prohibiting, the making of the Loans or invalidating, or having the effect of
invalidating, any provision of any Loan Document or of the initiation of any
litigation or similar proceeding seeking any such injunction, order or other
restraint;
(f) the filing or commencement of, or any material development in,
any litigation or proceeding affecting the Company or any Subsidiary (i) in
which the amount of damages claimed is $5,000,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect, or (iii) in which the relief sought is an
injunction or other stay of the performance of this Agreement or any Loan
Document or of the material operations of the Company or any of its
Subsidiaries;
(g) any investigation, proceeding or suspension which may exist at
any time between the Company or any of its Subsidiaries and any Governmental
Authority which could reasonably be expected to result in a Material Adverse
Effect;
(h) promptly after, but in no event later than ten days after,
becoming aware thereof (i) any and all material enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
against the Company or any Subsidiary, or any of their properties pursuant to
any applicable Environmental Laws, (ii) all other material Environmental Claims,
and (iii) any environmental or similar condition on any real property adjoining
or in the vicinity of the property of the Company or any Subsidiary that could
reasonably be anticipated to cause such property or any part thereof to be
subject to any material restrictions on the ownership or transferability of such
property or to any material restrictions on the occupancy or use of such
property under any Environmental Laws;
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(i) (i) promptly, an in any event within 10 days, after
receiving notice thereof, any ERISA Event affecting the Company or any
Subsidiary and any ERISA Event affecting any member of its Controlled
Group which is reasonably likely to have a Material Adverse Effect,
together with (A) a copy of any notice with respect to such ERISA Event
that may be required to be filed with the PBGC and (B) any notice
delivered by the PBGC to the Company or any member or its Controlled
Group with respect to such ERISA Event;
(ii) as soon as possible, and in any event within 30 days
after any Responsible Officer of the Company knows or has reason to know
of the occurrence thereof, any Reportable Event with respect to any Plan
that, alone or together with any other Reportable Event with respect to
the same or another Plan, could reasonably be expected to result in
liability of the Company or any Subsidiary thereof to the PBGC in an
aggregate amount exceeding $5,000,000, together with a copy of the
notice of such Reportable Event, if any, given to the PBGC;
(iii) promptly after receipt thereof, a copy of any notice the
Company or any Subsidiary may receive from the PBGC stating the
intention of the PBGC to terminate any Plan or Plans (other than a Plan
maintained by a Subsidiary of the Company which is considered an ERISA
Affiliate of the Company only pursuant to Section (m) or (o) of Section
414 of the Code), or to appoint a trustee to administer any Plan or
Plans
(iv) within 10 days after the filing thereof, notice of any
filing by the Company or any of its Subsidiaries with the PBGC pursuant
to Section 412(n) of the Code with respect to a failure to make a
required installment or other payment with respect to a Plan, together
with a copy of any such notice given to the PBGC; and
(v) promptly and in any event within 30 days after receipt
thereof by the Company or any Subsidiary of the Company from the sponsor
of a Multiemployer Plan, a copy of each notice received by the Company
or such Subsidiary thereof concerning (A) the imposition of Withdrawal
Liability by a Multiemployer Plan in an amount exceeding $5,000,000 or
(B) a determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, both within the meaning of Title IV of
ERISA, and which, in each case, is expected to result in an increase in
annual contributions of the Company or any Subsidiary to such
Multiemployer Plan in an amount exceeding $1,000,000;
(j) promptly after becoming aware thereof, (i) any Material Adverse
Effect subsequent to the Closing Date or (ii) any development in the business or
affairs of the Company or any of its Subsidiaries which has resulted in or which
with the passage of time is likely, in the reasonable judgement of the Company
or such Subsidiary, to result in a Material Adverse Effect;
(k) any change in accounting policies or financial reporting
practices;
(l) upon becoming aware thereof, any labor controversy resulting in
or threatening to result in any strike, work stoppage, boycott, shutdown or
other labor disruption against or
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involving the Company or any Subsidiary which could reasonably be expected to
result in a Material Adverse Effect;
(m) any event or condition which would permit the holder or obligee
of any Indebtedness of the Company or any Subsidiary thereof in an aggregate
amount in excess of $5,000,000 to accelerate the maturity of such Indebtedness;
(n) not less than 30 days prior to the effectiveness thereof, any
change in the Company's name permitted herein, together with, as they become
available, certified copies of amendments to the Company's articles of
incorporation , amendments to the Company's bylaws, certificates of good
standing, certificates of corporate resolutions, and the like with respect to
such name change; and
(o) upon the occurrence thereof, any transaction permitted under
Section 7.03 or 7.04; provided, however, that if such transaction would affect
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Collateral or any Subsidiary Guarantor, such notice shall be given not less than
30 days prior to the effectiveness thereof.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Company setting forth details
of the occurrence referred to therein and stating what action the Company
proposes to take with respect thereto.
6.04 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Company shall and
shall cause each of its Material Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation (except for a failure to maintain or preserve the existence of a
Subsidiary upon the occurrence of a transaction permitted under Section 7.03 or
7.04 involving such Subsidiary);
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business (except in connection with
transactions permitted under Section 7.03 or 7.04 and except to the extent the
failure to comply therewith could not result in a Material Adverse Effect);
(c) use its reasonable efforts, in the ordinary course and
consistent with past practice, to preserve its business organization and
preserve the goodwill and business of the customers, suppliers and others having
business relations with it; and
(d) preserve or renew all of its material trademarks, trade names
and service marks;
provided, however, that the Company may change its name to United
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Artists Theatre Company so long as the Company complies with Sections 6.03(n)
and 6.18 with respect thereto.
6.05 MAINTENANCE OF PROPERTY. The Company shall, and shall cause
each of its Subsidiaries to, at all times do or cause to be done all things
necessary to preserve, renew and keep in full force and effect the rights,
licenses, permits, franchises, patents, trade secrets and copyrights material to
the conduct of its business; maintain and operate such business in
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substantially the manner in which it is presently conducted and operated;
take all action which may be required to obtain, preserve, renew and extend all
licenses, permits and other authorizations which reasonably are likely to be
material to the operation of such business; and at all times maintain, preserve
and protect all property material to the conduct of such business and keep such
property in good repair, working order and condition, and from time to time
make, or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times;
provided, however, that neither the Company nor any of its Subsidiaries shall be
- - -------- -------
required to take any of the foregoing actions with respect to businesses sold or
disposed of in accordance with the terms hereof.
6.06 INSURANCE. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable insurers, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts, and with such deductibles, as are customarily
carried under similar circumstances by such other Persons, including workers'
compensation insurance, public liability and property and casualty insurance.
6.07 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause its
Subsidiaries to, pay and discharge as the same shall become payable, all their
respective material obligations and liabilities, including:
(a) all material tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all material obligations with respect to accounts payable to
trade creditors for goods and services and current operating liabilities (not
the result of the borrowing of money) incurred in the ordinary course of the
Company's or the Subsidiary's business, unless contested in good faith by
appropriate proceedings and reserved for in accordance with GAAP; and
(c) all material lawful claims which, if unpaid, might by law become
a Lien upon
its property.
6.08 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
each of its Subsidiaries to comply, in all respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist and except
to the extent that the failure to comply therewith is not reasonably expected by
the Company to have a Material Adverse Effect.
6.09 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company shall
maintain and shall cause each of its Subsidiaries to maintain, proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company
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and such Subsidiaries. The Company will permit, and will cause each of its
Subsidiaries to permit, representatives of the Administrative Agent or any
Lender to visit and inspect any of their respective properties, to examine their
respective corporate, financial and operating records and make copies thereof or
abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, employees and independent
public accountants, all at the expense of the Company and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Company; provided, however, when an Event
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of Default exists the Administrative Agent or any Lender may visit and inspect
at the expense of the Company such properties at any time during business hours
upon notice to the Company.
6.10 ENVIRONMENTAL LAWS.
(a) The Company shall, and shall cause each of its Subsidiaries to,
conduct its operations and keep and maintain its property in compliance with all
Environmental Laws except to the extent the failure to comply is not reasonably
expected to have a Material Adverse Effect.
(b) Upon written request of the Administrative Agent or any Lender,
the Company shall submit and cause each of its Subsidiaries to submit, to the
Administrative Agent and such Lender, at the Company's sole cost and expense at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report required pursuant to this Section 6.10 and any other
environmental, health or safety compliance obligation, remedial obligation or
liability, that could, individually or in the aggregate, reasonably expected to
result in liability in excess of $5,000,000.
6.11 USE OF PROCEEDS. The Company shall use the proceeds of the
Loans as set forth on Schedule 2.01 hereto.
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6.12 ERISA. The Company shall, and shall cause each of its
Subsidiaries to, comply in all material respects with the applicable provisions
of ERISA and the provisions of the Code relating thereto.
6.13 INTEREST RATE PROTECTION. (a) Subject subsection (b) below, the
Company or its Subsidiaries shall maintain in effect in a notional principal
amount not less than 50% of all Funded Indebtedness (but including, without
duplication, the aggregate amount of the combined Revolving Commitments),
protection against fluctuation in interest rates in the form of either (i) one
or more Rate Contracts and/or interest rate cap agreements providing protection
against fluctuations in interest rates with, in the case of Rate Contracts, one
or more lenders each having a combined capital and surplus of at least
$100,000,000, (ii) Indebtedness bearing interest at a rate per annum that is
fixed from the date of borrowing until maturity or (iii) any combination
thereof.
(b) If the Total Leverage Ratio is less than 4.00 to 1 for two
consecutive fiscal quarters, the Company and its Subsidiaries shall not be
required to maintain the Rate Contracts or cap agreements referred to in
subsection (a) above; provided, however, that if, thereafter, the
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Total Leverage Ratio is 4.00 to 1 or more as of the end of any fiscal quarter,
the Company or its Subsidiaries shall enter into such Rate Contracts or cap
agreements required by Section 6.13(a) within 30 days of the delivery of the
compliance certificate pursuant to Section 6.02(b)(iii) reporting such Total
Leverage Ratio.
6.14 PLEDGED SUBSIDIARIES. On the UATC Senior Secured
Note Repayment Date, the Company shall pledge, or cause to be pledged, under the
Collateral Documents all the issued and outstanding capital stock of UATC (other
than the UATC Preferred Stock which is being contributed to UATC), UAR, Prop I
and all Wholly-Owned First-Tier Subsidiaries by complying with the applicable
provisions of Section 4.03. Thereafter, upon the creation, acquisition or
beneficial ownership of any Wholly-Owned First-Tier Subsidiary, the Company
shall cause UATC to promptly comply with the applicable provisions of Section
4.03.
6.15 SUBSIDIARY GUARANTORS. The Company shall cause UATC to become a
Subsidiary Guarantor as of the Closing Date. The Company shall cause UAR to
become a Subsidiary Guarantor under the Subsidiary Guaranty not later than the
UATC Senior Secured Note Repayment Date and cause Prop I to become a Subsidiary
Guarantor under the Subsidiary Guaranty not later than the Prop I Mortgage Debt
Repayment Date, in each case by delivering to the Administrative Agent a
supplement to the Subsidiary Guaranty duly executed and delivered by UAR or Prop
I, together with the applicable items referred to in Section 4.03.
6.16 REPAYMENT OF UATC SENIOR SECURED NOTES. The Company shall not
revoke its notice to redeem the UATC Senior Secured Notes and shall repay, or
cause to be repaid, the UATC Senior Secured Notes in full not later than 45 days
after the Closing Date.
6.17 REDEMPTION OF COMPANY PREFERRED STOCK. The Company shall not
revoke its notice to redeem the Company Preferred Stock and shall redeem all
Company Preferred Stock not later than 15 Business Days after the Closing Date.
6.18 FURTHER ASSURANCES.
(a) The Company shall ensure that all written information, exhibits
and reports furnished to the Administrative Agent and to the Lenders do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Administrative Agent and the Lenders and
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.
(b) Promptly upon request by the Administrative Agent or the
Majority Lenders through the Administrative Agent, the Company shall (and shall
cause any of its Subsidiaries to) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and all such further
acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and other
instruments as the Administrative Agent or such Lenders may reasonably require
from time to time in order (i) to carry out more effectively the purposes of
this Agreement or any other Loan Document, (ii)
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to subject the Collateral to the Liens created by any of the Collateral
Documents any of the properties, rights or interests covered by any of the
Collateral Documents, (iii) to perfect and maintain the validity, effectiveness
and priority of any of the Collateral Documents and the Liens intended to be
created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Administrative Agent and the Lenders the
rights granted or now or hereafter intended to be granted to the Administrative
Agent and/or the Lenders under any Loan Document or under any other instrument
executed in connection therewith; provided, however, that nothing herein shall
-------- -------
be construed as a requirement that the Company or any Subsidiary provide
collateral for its Obligations in addition to that which is described in this
Agreement and the Collateral Documents.
(c) The Company agrees to execute and deliver or cause to be
executed and delivered to the Administrative Agent from time to time such
documents, agreements, endorsements, notifications, registrations, assignments,
financing statements, and other writings deemed necessary or appropriate by the
Administrative Agent to perfect, maintain and protect, the priority and
existence of the security interest of the Administrative Agent on behalf the
Secured Parties in any Cash Collateral Account established hereunder, including,
without limitation, provision of assurances from depositaries, certificate of
deposit issuers or other holders or issuers of such interest bearing account
regarding the Administrative Agent's access to, right to collect, foreclose on
or sell such interest bearing account and right to realize the practical
benefits of such foreclosure or sale.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Lender
shall have any Commitment hereunder, or any Obligation shall remain unpaid,
unless the Majority Lenders waive compliance in writing:
7.01 LIMITATION ON INDEBTEDNESS. The Company shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume, guaranty, suffer
to exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(a) the Obligations and the Intercompany Note;
(b) Indebtedness existing on the Closing Date and set forth in
Schedule 7.01, and, except with respect to the UATC Senior Secured Notes and the
- - -------------
Prop I Mortgage Debt, any extension, renewal, refunding and refinancing thereof;
provided, however, that after giving effect to such extension, renewal,
- - -------- -------
refunding or refinancing, (i) the principal amount thereof is not increased, and
(ii) neither the tenor nor the remaining average life thereof is reduced;
(c) Indebtedness secured by Liens permitted by Section 7.02(f);
(d) Rate Contracts provided for under Section 6.13, or interest rate
or foreign currency exchange risk protection agreements entered into with
respect to obligations incurred or existing in the ordinary course of business;
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(e) Indebtedness in an aggregate outstanding amount not exceeding
$7,500,000 in the aggregate; provided, however, that (i) the terms of such
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additional Indebtedness do not impose a Negative Pledge and (ii) immediately
before and after giving effect to the incurrence thereof, no Default or Event of
Default shall have occurred or be continuing;
(f) the Senior Subordinated Notes:
(g) unsecured Subordinated Indebtedness in addition to the Senior
Subordinated Notes not exceeding $50,000,000 in the aggregate at any time;
PROVIDED, HOWEVER, immediately before and after giving effect to the incurrence
thereof, no Default or Event of Default shall have occurred or be continuing;
(h) Contingent Obligations comprised of endorsements for collection
or deposit in the ordinary course of business and accounts payable to suppliers
incurred in the ordinary course of business and paid in the ordinary course of
business;
(i) Contingent Obligations incurred in connection with various
employee benefit plans or collective bargaining agreements to the extent not
otherwise prohibited and subject to any restrictions in this Agreement or any
other Loan Document;
(j) assumption by UAR or any Subsidiary thereof of the guarantees
listed in clause (b) of the definition of "UAR Financing Agreements" at the time
any Prop I Letters of Credit are outstanding related thereto;
(k) Indebtedness not exceeding $10,000,000 in the aggregate at any
time outstanding relating to property or Indebtedness of Persons existing at the
time such property or such Person is acquired by the Company or any of its
Subsidiaries (and not created in contemplation of such acquisition), and any
extension, renewal, refunding and refinancing thereof; provided, however, that
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after giving effect to such extension, renewal, refunding or refinancing, (i)
the principal amount thereof is not increased, and (ii) neither the tenor nor
the remaining average life thereof is reduced; and
(l) Indebtedness contemplated by Sections 7.05 and 7.06.
7.02 LIMITATION ON LIENS. The Company shall not, nor shall it permit
any of its Subsidiaries to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien or Negative Pledge upon or with respect to any part
of its property or assets, whether now owned or hereafter acquired, or offer or
agree to do so, except:
(a) Permitted Liens;
(b) Liens and Negative Pledges created under any Loan Document;
(c) Liens and Negative Pledges on the Collateral securing
obligations of the Company or any Subsidiary in respect of Rate Contracts
entered into with any Swap Party permitted by Section 7.01(d), in each case, on
a pari passu basis with the Obligations;
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(d) Liens and Negative Pledges (other than Liens and Negative
Pledges on the Collateral) existing on the property of the Company or its
Subsidiaries or created pursuant to Contractual Obligations existing on the
Closing Date and set forth in Schedule 7.02 securing, in the case of
-------------
Indebtedness, Indebtedness permitted under Section 7.01(b);
(e) Liens and Negative Pledges securing Indebtedness permitted under
Section 7.01(e); provided, that any such Liens and Negative Pledges shall not
--------
apply to any property of the Company or its Subsidiaries that is not the subject
of such Indebtedness;
(f) Liens and Negative Pledges created pursuant to Contractual
Obligations in effect at the time any property or Person is acquired by the
Company or its Subsidiaries relating to, in the case of Indebtedness,
Indebtedness permitted under Section 7.01(k); provided that Contractual
--------
Obligations were not created in contemplation of such acquisition;
(g) extensions, renewals and replacements of Liens and Negative
Pledges referred to in subsections (a) through (f) above; provided, however,
-------- -------
that any such extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or replaced and that
the obligations secured by any such extension, renewal or replacement Lien shall
be in an amount not greater than the amount of the obligations secured by the
original Lien extended, renewed or replaced; and
(h) Liens and Negative Pledges securing the UATC Senior Secured
Notes and related obligations.
7.03 DISPOSITION OF ASSETS. The Company shall not, nor shall it
permit any of its Subsidiaries to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise make any Disposition, whether in one or a series
of transactions, or enter into any agreement to do any of the foregoing except:
(a) Excluded Dispositions; and
(b) Dispositions of assets for fair market value in an arm's length
transaction not otherwise prohibited under this Agreement, the Net Cash Proceeds
of which are paid to the Administrative Agent for the account of the Lenders to
the extent required under Section 2.08(a).
7.04 CONSOLIDATIONS AND MERGERS. The Company shall not, and shall
not permit any of its Subsidiaries to, merge into or consolidate or combine with
any other Person, or permit any Subsidiary of the Company so to do, except:
(a) any Person, including the Company or any wholly-owned Subsidiary
of the Company, may be merged, consolidated or liquidated into or combined with
the Company (so long as the Company is the survivor thereof) or any other
wholly-owned Subsidiary of the Company; provided, that the Company or a
--------
Subsidiary Guarantor is the survivor thereof in any merger, consolidation or
liquidation involving a Subsidiary Guarantor or the Company; and
(b) transactions permitted under Section 7.03;
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provided, that in each case, immediately after giving effect to any merger,
- - --------
consolidation or liquidation permitted under this Section 7.04, no Default or
Event of Default shall occur or be continuing.
7.05 LOANS AND INVESTMENTS. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly purchase, acquire or
hold beneficially any stock, other securities or evidences of Indebtedness of,
or make or permit to exist any loans or advances to or make any investment or
acquire any interest whatsoever in, any other Person (collectively,
"investments"), except:
(a) Permitted Investments;
(b) loans, equity interests and investments existing on the Closing
Date and listed on Schedule 7.05 and, except as may be otherwise provided in any
-------------
Collateral Document, any accretions or increases in such equity interests and
investments and may extend, renew, refund, or refinance any such loan; provided,
that after giving effect to such extension, renewal, refunding or refinancing,
the principal amount thereof is not increased;
(c) investments in theatre operations outside the United States not
exceeding $5,000,000 from the Closing Date;
(d) investments in the Company, Pledged Subsidiaries or Subsidiary
Guarantors;
(e) other investments in Persons, including Subsidiaries of the
Company which are not Pledged Subsidiaries or Subsidiary Guarantors not
exceeding the sum of (i) $10,000,000 in the aggregate from the Closing Date plus
----
(ii) an amount equal to dividends and other distributions received from such
Subsidiaries from time to time; provided, however, that the total of such
-------- -------
investments under this subsection (e) shall not exceed $25,000,000 in the
aggregate from the Closing Date, and immediately before and after giving effect
to such investment, no Default or Event of Default shall exist;
(f) exchanges of theatre properties to the extent there are no
additional incremental investments in connection with such exchanges;
(g) redemptions, purchases, retirements or other acquisitions for
consideration of shares of capital stock of a Subsidiary of the Company;
provided, that (i) such stock is not owned by the Company or any Subsidiary of
the Company and (ii) such redemption or acquisition is not otherwise prohibited
under this Agreement;
(h) investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers, suppliers and other Persons
arising in the ordinary course of business;
(i) securities and evidences of Indebtedness that represent proceeds
other than Net Cash Proceeds, and Net Cash Proceeds of, Dispositions, in each
case to the extent otherwise permitted under this Agreement; provided, that the
Company is in compliance with its obligations under Section 2.08(a);
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(j) loans permitted under Sections 7.01 and 7.06;
(k) redemption of the UATC Senior Notes and the Company Preferred
Stock;
(l) redemptions or purchases of the Prop I Mortgage Debt; and
(m) investments by any Subsidiary of the Company in the Company, any
Subsidiary Guarantor or any Pledged Subsidiary.
7.06 TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall
not permit any of its Subsidiaries to, sell or transfer any assets to, purchase
or acquire any assets of, enter into any lease, make any loan or investment in,
or otherwise engage in any material transaction with any Affiliate, except in
the ordinary course of business and upon fair and reasonable terms no less
favorable than the Company or any such Subsidiary could obtain or could become
entitled to in an arm's length transaction with a Person which was not an
Affiliate; except:
(a) payments to Prop I under theatre leases and subleases entered
into prior to the Closing Date and under other UAR Leases as in effect on the
Closing Date;
(b) payments of management fees or similar fees paid by UAR or its
subsidiaries to the Company or any Subsidiary;
(c) loans by the Company of proceeds of the Loans to UATC; provided,
--------
however, that all of such loans are made pursuant to, and evidenced by, the
- - -------
Intercompany Note; and
(e) unsecured Indebtedness of the Company to its Subsidiaries and
Indebtedness of its Subsidiaries to the Company arising from time to time, on a
day-to-day basis, through operation of the cash management practices of the
Company as ordinarily and customarily conducted as of the Closing Date;
(f) transactions done pursuant to the agreements and arrangements
set forth on Schedule 7.06 hereto;
(g) transactions among the Company and its Subsidiaries in
connection with the management and operation of such Subsidiaries in the
ordinary course of business as conducted as of the Closing Date; and
(h) transactions among the Company, Subsidiary Guarantors and
Pledged Subsidiaries; and
(i) transactions permitted under Sections and 7.04 and 7.05.
7.07 CHANGE IN BUSINESS. The Company shall not, and shall not permit
any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it on the
date hereof.
7.08 COMPLIANCE WITH ERISA. The Company shall not directly or
indirectly, and shall not permit or direct any of its Subsidiaries directly or
indirectly to (a) terminate, any Plan
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subject to Title IV of ERISA so as to result in any liability to the
Company or any Subsidiary, which would have a Material Adverse Effect, (b)
permit to exist any ERISA Event or any other event or condition, which is
reasonably likely to result in a liability of the Company or any Subsidiary,
which would have an Material Adverse Effect, or (c) make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer
Plan which is reasonably likely to result in any liability to the Company or any
ERISA Affiliate, which would have a Material Adverse Effect, (d) enter into any
new Qualified Plan or modify any existing Qualified Plan so as to increase its
obligations thereunder except in the ordinary course of business, and which
would not have a Material Adverse Effect or (e) permit the minimum funding
requirements of ERISA to be violated with respect to any Plan if the liability
to the Company resulting therefrom could have a Material Adverse Effect.
7.09 LEASE OBLIGATIONS. The Company shall not, nor shall it permit
any of its Subsidiaries to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, entered into
pursuant to any Sale-and-Leaseback Transaction except Sale-and-Leaseback
Transactions entered into in an arm's length transaction with a Person other
than a Subsidiary of the Company; provided, that: (a) immediately prior to
--------
giving effect to such lease, the property or asset subject to such lease was
sold by the Company or any such Subsidiary to the lessor under such lease for
not less than fair market value; (b) the Net Cash Proceeds of such sale are
applied simultaneously to reduce the Loans to the extent required by Section
2.08; and (c) no Default or Event of Default would occur as a result of such
sale and subsequent lease.
7.10 CAPITAL STOCK AND EQUITY INTERESTS OF SUBSIDIARIES. The Company
shall not permit any of its Subsidiaries to issue any class of common stock,
preferred stock, whether or not redeemable, or other capital stock or other
equity interests, or otherwise change its equity structure, except as permitted
by Section 7.05(d) or (g) and except that the Company may contribute the UATC
Preferred Stock to the capital of UATC.
7.11 RESTRICTED PAYMENTS. The Company shall not, nor permit any of
its Subsidiaries to, declare or make any dividend payment or other distribution
of assets, properties, cash, rights, obligations or securities on account of any
shares of any class of its capital stock, or purchase, redeem or otherwise
acquire for value any shares of its capital stock or any warrants, rights or
options to acquire such shares, now or hereafter outstanding, or enter into
derivative transactions related to the foregoing; except:
(a) dividends or distributions by Subsidiaries of the Company on
their capital stock to the Company or any Subsidiaries of the Company; provided,
--------
however, that dividends or distributions by non wholly-owned Subsidiaries of the
- - -------
Company shall be paid ratably to holders of their capital stock;
(b) repurchases of its common stock held by retired, or former
officers and employees (or from the estate, heirs or legatees of any deceased
officer or employee); provided, however, that the aggregate cash amount expended
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for such purpose shall not exceed $2,000,000 during any consecutive period of
twelve months and shall not exceed $10,000,000 in the aggregate from and after
the Closing Date;
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(c) transactions permitted by Section 7.04 and 7.05;
(d) contribution of the UATC Preferred Stock to the capital of
UATC;
(e) dividends in the form of stock (which stock dividends paid to
the Company or any Guarantor Subsidiary shall be pledged under the Collateral
Documents if required thereby); and
(f) redemption of the Company Preferred Stock pursuant to the
notice copied to the Administrative Agent on the Closing Date.
7.12 FINANCIAL RATIOS. The Company shall not:
(a) As of the end of any fiscal quarter, commencing with the fiscal
quarter ending June 30, 1998, permit the Senior Leverage Ratio or the Total
Leverage Ratio to exceed the ratios set forth below:
PERIOD SENIOR TOTAL
LEVERAGE LEVERAGE
RATIO RATIO
----------------------------------------------------------
Closing Through 12/31/1998 4.25:1 6.25:1
3/31/1999 through 12/31/1999 4.00:1 6.00:1
3/31/2000 through 12/31/2000 3.50:1 5.50:1
3/31/2001 through 12/30/2001 3.00:1 5.00:1
3/31/2002 and thereafter 3.00:1 4.50:1
(b) As of the end of any fiscal quarter, commencing with the fiscal
quarter ending June 30, 1998, permit the ratio of (i) Operating Cash Flow plus
----
Pro Forma Lease Expense to (ii) Pro Forma Debt Service to be less than 1.15 to
1.0;
(c) As of the end of any fiscal quarter, commencing with the fiscal
quarter ending June 30, 1998, permit the ratio of (i) Operating Cash Flow plus
----
Consolidated Lease Expense, to (ii) Consolidated Interest Expense PLUS
Consolidated Lease Expense to be less than the ratios set forth below; provided,
--------
however, that, notwithstanding the definitions of Operating Cash Flow,
- - -------
Consolidated Interest Expense and Consolidated Lease Expense, when calculating
covenant compliance for this Section 7.12(c) (i) for the fiscal quarter ending
June 30, 1998 only the results for the prior fiscal quarter ending on such date
shall be included when computing such items; (ii) for the fiscal quarter ending
September 30, 1998 only the results for the prior two fiscal quarters ending on
such date shall be included when computing such items; and (iii) for the fiscal
quarter ending December 31, 1998 only the results for the prior three fiscal
quarters ending on such date shall be included when computing such items:
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PERIOD MINIMUM
RATIO
--------------------------------- -------------
Closing Through 12/31/2000 1.30 to 1
3/31/2001 through 12/31/2003 1.40 to 1
3/31/2004 and thereafter 1.50 to 1
7.13 PRIORITY OF LOAN PAYMENTS. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly make any optional or
other voluntary payment, prepayment, retirement, repurchase or redemption on
account of the principal of or interest on any Indebtedness or set aside money
or securities for a sinking or other similar fund for the payment of principal
of or premium or interest in respect of any Indebtedness or set apart money for
the defeasance of any Indebtedness; except for:
(a) the Obligations;
(b) payments and prepayments by UATC to the Company of loans
evidenced by, the Intercompany Note so long as all of such payments are paid
directly to the Administrative Agent for application to outstanding Obligations
as directed by the Company; provided, however, that following the occurrence and
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during the continuance of a Default or Event of Default, the application of such
payments shall be determined by the Majority Lenders;
(c) prepayments of the Senior Subordinated Notes not exceeding
$50,000,000 in the aggregate;
(d) prepayments of existing Indebtedness permitted under Section
7.01(b) from the proceeds of Dispositions and Excess Cash not required to prepay
Loans pursuant to Section 2.08;
(e) refinancings or refundings of Indebtedness otherwise permitted
under this Agreement;
(f) payments otherwise permissible under Sections 7.05 and 7.11;
(g) payments or prepayments of the Prop I Mortgage Debt; and
(h) payment or prepayment in full of the UATC Senior Secured Notes
pursuant to the notice copied to the Administrative Agent on the Closing Date.
7.14 INVESTMENTS IN MARGIN STOCK. The Company shall not, and shall
not permit any Subsidiary to, acquire or hold any Margin Stock, or permit any
Subsidiary of the Company so to do, unless not more than 25% of the value of the
assets of the Company, or the Company on a Consolidated basis, as the case may
be, is represented by assets consisting of Margin Stock.
7.15 AMENDMENTS TO CERTAIN AGREEMENTS. The Company will not, and
shall not permit any of its Subsidiaries to, without the prior written consent
of Majority Lenders, amend,
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waive or modify, or take or refrain from taking any action which has the effect
of amending, waiving or modifying, any provision of:
(a) any other agreements with Affiliates to the extent that such
amendment, waiver modification or action could have a Material Adverse Effect or
could have an adverse effect on the rights of the Administrative Agent, any
Issuing Lender or Lenders under this Agreement or any Loan Document; provided,
--------
however, that the Company and its Subsidiaries shall not be permitted to amend,
- - -------
waive or modify any material agreement with an Affiliate if a Default or Event
of Default has occurred and is continuing or
(b) any documents (other than documents referred to in (a) above)
evidencing Indebtedness
provided, further, that, notwithstanding anything to the contrary
-------- -------
contained in this Section 7.15, amendments may be made to documents evidencing
Indebtedness to the extent that the terms and conditions hereof permit the
Company or its Subsidiaries to enter into an initial agreement which has the
same effect as such amendment.
7.16 ACCOUNTING CHANGES. The Company shall not, and shall not permit
any of its Subsidiaries to, make any significant change in accounting treatment
and reporting practices, except as required by GAAP, or change the fiscal year
of the Company or any of its Subsidiaries.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 EVENT OF DEFAULT. Any of the following events shall
constitute an "Event of Default":
(a) default shall be made in the payment of any principal of any
Loan, of payment of any amount due upon drawing of any Letter of Credit when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise; or
(b) default shall be made in the payment of any interest on any
Loan or any commitment fee, letter of credit commission, or any other fee,
(other than an amount referred to in (a) above or (c) below) due under this
Agreement or any other Loan Document, when and as the same shall become due and
payable, and such Default shall continue for a period of five days; or
(c) default shall be made in the payment of any expense
reimbursement or any other amount (other than an amount referred to in (a) or
(b) above) due under this Agreement or any other Loan Document, when and as the
same shall become due and payable, and such Default shall continue for a period
of 30 days; or
(d) any representation or warranty made in connection with this
Agreement, any other Loan Document, or in any report, certificate, financial
statement or other instrument
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furnished in connection with this Agreement, the other Loan Documents or the
Borrowings hereunder shall prove to have been false or misleading in any
material respect when made; or
(e) default shall be made in the due observance of any covenant,
condition or agreement to be observed or performed by the Company pursuant to
Section 6.02(a), 6.02(b), 6.02(c), 6.09, 6.11, 6.14, 6.15, 6.16, 6,17 or Article
VII; or
(f) default shall be made in the due observance or performance of
any covenant, condition or agreement to be observed or performed by the Company
pursuant to Section 6.02(d) or 6.03 and such Default shall continue unremedied
for a period of 10 Business Days; or
(g) default shall be made in the due observance or performance of
any other covenant, condition or agreement to be observed or performed by any
Loan Party pursuant to the terms of any Loan Document and such default shall
continue unremedied for a period of 30 days; or
(h) (i) the Company or any Material Subsidiary shall (A)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code or any other Federal, state or
foreign bankruptcy, insolvency or similar law, (B) consent to the
institution of, or fail to controvert in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (C)
apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Company, any
Material Subsidiary thereof, or for all or substantially all of its
property or assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, or
(E) make a general assignment for the benefit of creditors, or (F)
through a resolution passed by its Board of Directors or any committee
of its Board of Directors take corporate action for the purpose of
effecting any of the events described in this subsection; or
(ii) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (A) relief in respect of the Company, any Material Subsidiary
thereof, or for all or substantially all of any of its property or
assets, under Title 11 of the United States Code or any other Federal,
state or foreign bankruptcy, insolvency or similar law, (B) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any Material Subsidiary or for all or
substantially all of its property or assets or (C) the winding-up or
liquidation of the Company or any Material Subsidiary, and such
proceeding or petition shall continue undismissed or unstayed for 90
days or an order or decree approving or ordering any of the foregoing
shall continue unstayed and in effect for 90 days;
(i) (i) a default shall occur under any mortgage, indenture,
agreement or instrument or other document evidencing any Indebtedness
(other than a Rate Contract entered into by the Company pursuant to
Section 6.13) of the Company, or any Subsidiary thereof, whether now
existing or hereafter created or incurred, if, as a result of such
default (A) Indebtedness in an aggregate amount in excess of $10,000,000
of the Company, or any Subsidiary thereof shall become or be declared
due and payable prior to
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the date on which it would otherwise become due and payable or (B) the
holder or obligee of any Indebtedness (or any trustee or agent on
behalf of such holder or obligee) shall be permitted to accelerate,
whether or not such acceleration actually occurs, the maturity of any
Indebtedness of the Company or any Subsidiary thereof in an aggregate
amount in excess of $10,000,000; or
(ii) any early termination event shall occur under any Rate
Contracts entered into pursuant to Section 6.13 with any Swap Party,
or the Company or any Subsidiary shall breach or default under any
Rate Contract entered into pursuant to Section 6.13 with any Swap
Party, if the effect of such early termination event, breach or
default is termination of any of such Rate Contracts and a demand or
demands in an aggregate amount in excess of $10,000,000 made upon the
Company or any Subsidiary to pay any claim or claims for compensation,
termination or loss shall have remained unsatisfied for three Business
Days; or any Rate Contracts entered into pursuant to Section 6.13 with
any Swap Party shall have matured and the Company or any Subsidiary
shall have failed to pay an aggregate amount in excess of $10,000,000
in relation thereto for at least three Business Days; or
(j) (i) a Reportable Event or Reportable Events or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code) shall have occurred with respect to any
Plan or Plans that reasonably could be expected to result in aggregate
liability to the Company and the Subsidiaries thereof to the PBGC or
to a Plan in an aggregate amount in excess of $5,000,000 and within 30
days after (A) the reporting of such Reportable Event or Reportable
Events to the Lenders or after (B) receipt by the Administrative Agent
of the statement required by Section 6.03(i), the Administrative
Agent, upon receiving written instructions from Majority Lenders,
shall have notified the Company in writing that (1) the Majority
Lenders have reasonably determined that on the basis of such
Reportable Event or Reportable Events or failure to make a required
payment there are reasonable grounds (x) for termination of the Plan
or Plans by the PBGC, (y) for the appointment by the appropriate
United States District Court of a trustee to administer such Plan or
Plans or (z) for the enforcement of a lien in favor of a Plan in an
amount in excess of $5,000,000 and (2) as a result of such
determination, an Event of Default exists hereunder; or the PBGC shall
have instituted proceedings to terminate any Plan or Plans, or a
trustee shall have been appointed by a United States District Court to
administer any Plan or Plans, with vested Unfunded Pension Liabilities
aggregating in excess of $5,000,000; or
(ii) (A) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (B) the Company or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability and is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner, and (C) the
amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer
Plans in connection with Withdrawal Liabilities (determined as of the
date or dates of such notification), could reasonably be expected to
result in aggregate liability of the Company and the Subsidiaries
thereof in excess of $5,000,000; or
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(iii) the Company or any Subsidiary shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, if solely as a result of such reorganization or termination the
aggregate annual contributions of the Company and the Subsidiaries
thereof to all Multiemployer Plans to which the Company or any ERISA
Affiliate is making or accruing an obligation to make contributions that
are then in reorganization or have been (or are being) terminated have
been or will be increased over the amounts required to be contributed by
the Company or any Subsidiary thereof to such Multiemployer Plans for
their most recently completed plan years by an amount exceeding
$1,000,000; or
(k) one or more final judgments for the payment of money in excess
of $5,000,000 shall be rendered by a court or other tribunal against the Company
or any Subsidiary thereof and shall remain undischarged for a period of 30
consecutive days during which execution of such judgment shall not have been
stayed effectively (by the filing of a bond or otherwise), or any action shall
be legally taken by a judgment creditor to levy upon the assets of the Company
or any Subsidiary thereof to enforce such judgment; or
(l) The Company shall cease to beneficially own, directly or
indirectly, free and clear of all Liens (other than Liens created under any Loan
Document and, until the UATC Senior Secured Notes are paid, the Former
Collateral Documents), all of the issued and outstanding capital stock of any
Subsidiary Guarantor; or
(m) (i) any Collateral Document shall for any reason cease to be, or
be asserted by the Company or any Affiliate, as applicable, not to be, in full
force and effect, enforceable in accordance with its terms, (ii) any security
interest purported to be created by any Collateral Document shall cease to be a
valid and perfected first priority security interest in any such Collateral at
any time for any reason other than the failure of the Administrative Agent to
retain possession of such Collateral after such Collateral have been received by
it; or (iii) except as permitted under Section 7.03 or 7.04, UATC, UAR, Prop I
or any Wholly-Owned First-Tier Subsidiary shall fail to be a Pledged Subsidiary
any time following the UATC Senior Secured Note Repayment Date; or
(n) (i) The Subsidiary Guaranty shall for any reason cease to be, or
be asserted by the Company or any Subsidiary Guarantor, not to be, in full force
and effect, enforceable in accordance with its terms; or (ii) UAR shall fail to
become a Subsidiary Guarantor under the Subsidiary Guaranty as required
hereunder on or before the UATC Senior Secured Note Repayment Date or Prop I
shall fail to become a Subsidiary Guarantor under the Subsidiary Guaranty as
required hereunder on or before the Prop I Mortgage Debt Repayment Date; or
(o) there has occurred a Material Adverse Effect and the
Administrative Agent has notified the Company in writing that Majority Lenders
have determined that there has occurred a Material Adverse Effect and the
Administrative Agent has not withdrawn such notice by the earlier of: (i) 60
days after the date of such notice and (ii) the first date following the date of
such notice when the Company is required to deliver the financial reports and
certificates described in Sections 6.01 (a) or (b), as the case may be, and
Sections 6.02 (a) and (b); or
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(p) if, during any period of 12 consecutive months there occurs
Involuntary Closings of 30 theatres owned, leased or operated by the Company
and/or its Subsidiaries or if during the term of this Agreement there occurs
Involuntary Closings of 60 or more theatres owned, leased or operated by the
Company and/or its Subsidiaries; or
(q) all UATC Senior Secured Notes shall not be repaid in full on or
before 45 days after the Closing Date; or
(r) the Former Collateral Agent shall fail to promptly deliver to
the Administrative Agent the Collateral in its possession under the Former
Collateral Documents which is required to be pledged under the Collateral
Documents; or
(r) all Company Preferred Stock shall not be redeemed on or before
15 Business Days after the Closing Date.
8.02 REMEDIES. If any Event of Default occurs, then, and in any
such event (other than an event with respect to the Company or any Subsidiary
described in Section 8.01 (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, upon the written request of
Majority Lenders shall, by Requisite Notice to the Company, take any or all of
the following actions at the same or different times: (a) terminate forthwith
the Commitments of the Lenders hereunder and (b) declare the Loans then
outstanding and an amount equal to the aggregate amount of all outstanding
Letter of Credit Usage to be forthwith due and payable, whereupon the same,
together with accrued interest thereon and any unpaid accrued fees and all other
liabilities of the Company accrued hereunder, shall become forthwith due and
payable both as to principal, interest and such other liabilities, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Company, anything contained herein or in any
other Loan Document to the contrary notwithstanding. In the case of any event
with respect to the Company or any Subsidiary, described in Section 8.01(h)
above the Commitments of the Lenders shall automatically terminate and the
principal amount of the Loans outstanding, together with all accrued interest
thereon, an amount equal to the aggregate amount of all outstanding Letter of
Credit Usage and any unpaid accrued commitment fees and all other liabilities of
the Company accrued hereunder, shall automatically become due and payable, both
as to principal, interest and such other liabilities, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Company, anything contained herein or in any Loan Document to the
contrary notwithstanding.
8.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement.
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ARTICLE IX
ADMINISTRATIVE AGENT
9.01 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints, designates and authorizes the Administrative Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
9.02 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
9.03 LIABILITY OF AGENT-RELATED PERSONS. None of the Agents, the
Arrangers, their Affiliates, or any of their respective officers, directors,
employees, agents, or attorneys-in-fact (collectively, the "Agent-Related
Persons") shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement (except for its own gross
negligence or willful misconduct) or (b) be responsible in any manner to any
other Person for any recital, statement, representation or warranty made by the
Company or any Subsidiary of the Company or any officer thereof contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or any other Loan Document, or
for the value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any other Person to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of its Subsidiaries.
9.04 RELIANCE BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the
Administrative Agent. The
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Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of Majority Lenders, or all Lenders if
required hereunder, as it deems appropriate and, if it so requests, it shall
first 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. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of Majority
Lenders, or all Lenders if required hereunder, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the conditions
specified in Sections 4.01 and 4.02, each Lender shall be deemed to have
consented to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to the Lender unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from the Lender prior to the initial Borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Administrative Agent to that effect or the Lender shall not have
made available to the Administrative Agent the Lender's ratable portion of such
Borrowing.
9.05 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees payable to the Administrative Agent for the account of the Lenders,
unless the Administrative Agent shall have received written Requisite Notice
from a Lender or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be requested by the Majority Lenders in accordance
with Article VIII; provided, however, that unless and until the Administrative
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Agent shall have received any such request, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Administrative Agent and the Lenders.
9.06 CREDIT DECISION. Each Lender expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it and
that no act by any Agent hereinafter taken, including any review of the affairs
of the Company and its Subsidiaries shall be deemed to constitute any
representation or warranty by any Agent to any Person. Each Lender represents to
the Agents that it has, independently and without reliance upon the Agents and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries and made its own decision to enter into this Agreement and
extend credit to the Company hereunder. Each Lender also represents that it
will, independently and without reliance upon the any Agent and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform
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itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.07 INDEMNIFICATION. The Lenders agree to indemnify the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), ratably
according to the respective amounts of their outstanding Loans, or, if no Loans
are outstanding, their Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind whatsoever which may at any time
(including at any time following the repayment of the Obligations) be imposed
on, incurred by or asserted against the any such person any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by any such person under or in connection with any of
the foregoing; provided, however, that no Lender shall be liable for the payment
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to the Agent-Related Persons of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from such person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs or
out-of-pocket expenses (including fees and expenses of counsel and the allocated
cost of in-house counsel) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein to the extent that the Administrative Agent is not reimbursed
for such expenses by or on behalf of the Company after demand has been made on
the Company for payment.
9.08 AGENTS IN INDIVIDUAL CAPACITY. Each Agent-Related Person may
make loans to, issue letters of credit for the account of, accept deposits from
and generally engage in any kind of business with the Company and its
Subsidiaries and Affiliates as though it were not an Agent or an Arranger
hereunder and without notice to the Lenders. With respect to its Loans, each
Agent shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
9.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may,
and at the request of the Majority Lenders shall, resign as Administrative Agent
upon 30 days' notice to the Lenders. If the Administrative Agent shall resign as
Administrative Agent under this Agreement, the Majority Lenders shall appoint
from among the Lenders a successor agent for the Lenders which successor agent
shall be approved by the Company. If no successor Administrative Agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent shall appoint, after consulting with the Lenders
and the Company, a successor agent from among the Lenders. Upon the acceptance
of its
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appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term "Administrative Agent" shall mean such successor agent and the retiring
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, the provisions of this Article IX and Sections 9.04 and
9.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
Administrative Agent is appointed or accepts such an appointment as aforesaid,
the Administrative Agent's resignation shall nonetheless become effective.
9.10 COLLATERAL MATTERS.
(a) The Administrative Agent is authorized on behalf of all the
Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
Collateral Documents which may be necessary to perfect and maintain perfected
the security interest in and Liens upon the Collateral granted pursuant to the
Collateral Documents.
(b) The Lenders irrevocably authorize the Administrative Agent, at
its option and in its discretion, to release, or to authorize the Former
Collateral Agent to release any Lien granted to or held by the Former Collateral
Agent or Administrative Agent upon any Collateral:
(i) upon termination of the Commitments, the cancellation or
expiry of all Letters of Credit and payment in full of all Loans and all
other Obligations payable under this Agreement and under any other Loan
Document;
(ii) constituting property sold or to be sold or disposed of
as part of or in connection with any Disposition permitted hereunder
subject to any required prepayment of the Loans pursuant to Section
2.08(a) ;
(iii) constituting property in which the Company or any
Subsidiary of the Company owned no interest at the time the Lien was
granted or at any time thereafter;
(iv) constituting property leased to the Company or any
Subsidiary of the Company under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by the Company or
such Subsidiary to be, renewed or extended;
(v) consisting of an instrument evidencing Indebtedness or
other debt instrument if the Indebtedness evidenced thereby has been
paid in full ;
(vi) held for repayments of drawings under a Letter of Credit
if such collateral is to be used to make such repayment, if such
Collateral is to be returned to the Company following expiration of a
Letter of Credit or repayment of such drawing by the Company; or
(viii) if approved, authorized or ratified in writing by all
Lenders.
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Upon request by the Administrative Agent at any time, the Lenders
will confirm in writing the Administrative Agent's authority to release
particular types or items of Collateral pursuant to this Section 9.10(b).
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any of its
Subsidiaries) that the Company's obligation to such Lender under this Agreement
and the other Loan Documents is not and shall not be secured by any real
property collateral now or hereafter acquired by such Lender.
(d) Except as otherwise expressly provided for in this Agreement or
any other Loan Document, the Administrative Agent shall not amend, or give any
consent under, any Collateral Document without the prior written consent thereto
of all Lenders.
9.11 DOCUMENTATION AGENT, SYNDICATION AGENT, CO-SYNDICATION AGENTS.
None of the Lenders identified on the facing page of this Agreement as a
Documentation Agent, Syndication Agent, Co-Syndication Agents shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Lenders so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.
ARTICLE X
MISCELLANEOUS
10.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document and no consent with
respect to any departure by the Company therefrom, shall be effective unless the
same shall be in writing and signed by the Administrative Agent and the Majority
Lenders, and then such waiver shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
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waiver, amendment, or consent shall, unless in writing and signed by the
Administrative Agent and all the Lenders do any of the following:
(a) increase the Commitment or Pro Rata Share of any Lender except
through assignment permitted hereunder;
(b) postpone, waive or delay any date fixed for any payment or
prepayment of principal, interest, fees or other amounts payable to the Lenders
(or any of them) hereunder or under any Loan Document or terminate this
Agreement;
(c) reduce the principal of, or the Applicable Amount specified
herein for, any Loan or any fee or commission with respect to any Letter of
Credit, or of any fees payable to the Administrative Agent for the account of
the Lenders hereunder;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Lenders or
any of them to take any action hereunder;
(e) amend this Section 10.01; or
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(f) except in connection with transactions permitted herein or as
provided in Section 9.10, release the Subsidiary Guaranty, any Subsidiary
Guarantor or any Collateral.
provided, further, that no amendment, waiver or consent shall,
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unless in writing and signed by the affected Agent or the affected Issuing
Lender in addition to Majority Lenders, affect the rights or duties of such
Agent or such Issuing Lender under this Agreement; provided, further, that this
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Section 10.01 does not apply to any Loan specific waivers, solely administrative
in nature (i.e. waivers of Interest Period tenors, minimum borrowing amounts or
integral multiples, pricing options and notice period for funds or paydowns,
other than as specified in this Agreement), for which approval may be given by
Majority Lenders under the applicable Tranche; provided, further, the terms of
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Section 2.08 may be waived or amended only with the consent of the Required
Class Lenders.
10.02 NOTICES. All notices, requests and other communications
provided for hereunder shall be given by Requisite Notice. All such notices and
communications shall be effective: (a) when receipt is confirmed by the carrier
or by receipt of answerback, when sent by overnight delivery, (b) when
transmission has cleared without notice of error if transmitted by facsimile
transmission to a Person other than the Administrative Agent and when receipt
has been confirmed by phone with the Administrative Agent if transmitted by
facsimile transmission to the Administrative Agent, and (c) when delivered, upon
delivery; except that notices pursuant to Article II or Article VIII shall not
be effective until received by the Administrative Agent.
10.03 NO WAIVER; CUMULATIVE REMEDIES. failure to exercise and no
delay in exercising, on the part of any Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
10.04 COSTS AND EXPENSES. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Administrative Agent on demand for all
reasonable costs and expenses incurred in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to, this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including the
reasonable costs and expenses of counsel to the Administrative Agent (and the
allocated cost of internal counsel) with respect thereto;
(b) pay or reimburse each Lender and the Administrative Agent on
demand for all reasonable costs and expenses incurred by them in connection with
the enforcement or preservation of any rights (including in connection with any
"workout" or restructuring regarding the Loans) under this Agreement, any Loan
Document, and any such other documents, including fees and out-of-pocket
expenses of counsel (and the allocated cost of internal counsel) to the
Administrative Agent and to each of the Lenders; and
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(c) pay or reimburse the Administrative Agent on demand for all
reasonable search, filing and similar fees, incurred or sustained by the
Administrative Agent in connection with the matters referred to under paragraphs
(a) and (b) above and following occurrence of an Event of Default, shall pay or
reimburse the Administrative Agent on demand for the reasonable costs and
expenses of all appraisers, consultants, accountants, investment bankers,
auditors and other advisers (including the reasonable allocated costs of such
inhouse advisers) that may be retained to review the business, operations or
condition (financial or otherwise) of the Company or any of its Subsidiaries or
to advise the Administrative Agent and/or the Lenders in connection with
enforcement of their rights under the Loan Documents.
10.05 INDEMNITY. The Company shall pay, indemnify, and hold each
Lender, each Issuing Lender and the Agents and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including reasonable fees and expenses of
counsel and allocated costs of internal counsel) of any kind or nature
whatsoever with respect to: (i) any transaction or proposed transaction (whether
or not consummated) financed or to be financed, in whole or in part, directly or
indirectly, with the proceeds of any Borrowing or otherwise contemplated in this
Agreement; (ii) the execution, delivery, enforcement, performance and
administration of this Agreement and any other Loan Documents or the
transactions contemplated herein; and (iii) with respect to any investigation,
litigation or proceeding related to this Agreement or the Loans or the use of
the proceeds thereof (whether or not any Indemnified Person is a party thereto)
(all the foregoing, collectively, the "Indemnified Liabilities"); provided, that
the Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this section shall
survive payment of all other Obligations.
10.06 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
10.07 ASSIGNMENTS, PARTICIPATIONS ETC.
(a) Any Lender may at any time assign and delegate all or any
ratable part of its Revolving Commitments and Revolving Loans, its Tranche A
Term Loan Commitments and Tranche A Term Loans, its Tranche B Term Loan
Commitments and Tranche B Term Loans and/or its Tranche C Term Loan Commitments
and Tranche C Term Loans, in each case together with the other rights and
obligations of such Lender hereunder with respect to the Commitments and
Obligations being assigned and delegated to any Eligible Assignee, to any of its
wholly-owned Affiliates (including its parent institution) or to any other
Lender (each an "Assignee"); provided, that
--------
(i) all such assignments shall be in a minimum amount of $1,000,000 if
made to another Lender in the Lender Group or $5,000,000 if made to any
other Assignee;
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<PAGE>
(ii) no Lender shall have Commitments, immediately following an
assignment, of an aggregate amount of less than $1,000,000 unless such
Lender shall have assigned all of its Loans, Commitments, rights and
obligations hereunder, and no Assignee, other than a Lender in the
Lender Group, shall have Commitments immediately following an assignment
of an aggregate amount of less than $5,000,000, unless such Assignee
shall have assigned all of its Loans, Commitments, rights and obligation
hereunder;
(iii) the prior written consent of the Administrative Agent
shall be required for assignments other than assignments between members
of the Lender Group or assignments by a Lender to its wholly-owned
Affiliate (or its parent institution), which consent shall not be
unreasonably withheld or delayed;
(iv) the prior written consent of the relevant Issuing Lender
shall be required for all assignments of risk participations in Letters
of Credit other than assignments between members of the Lender Group or
assignments by a Lender to its wholly-owned Affiliate (or its parent
institution), which consent shall not be unreasonably withheld or
delayed; and
(v) so long as there is no Event of Default, the prior written
consent of the Company, which consent shall not be unreasonably withheld
or delayed, shall be required for any assignment except the consent of
the Company shall not be required for (A) assignments by a Lender to its
wholly-owned Affiliate (or its parent institution) or (B) assignments
between members of the Lender Group.
(b) Notwithstanding any assignment, the Company and the
Administrative Agent may continue to deal solely and directly with an assigning
Lender in connection with the interests so assigned to an Assignee until (i)
written notice of such assignment, shall have been given to the Company and the
Administrative Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Company and the Administrative Agent a
Notice of Assignment and Acceptance in the form of Exhibit G hereto(an
---------
"Assignment and Acceptance"); (iii) except in connection with the initial
syndication of the Commitments by the Underwriters, the processing fee of $3,500
shall have been paid to the Administrative Agent for an assignment to an
Assignee outside the Lender Group or a processing fee of $2,500 shall have been
paid to the Administrative Agent for an assignment between members of the Lender
Group; and (iv) all consents from the Administrative Agent, the Company or any
Issuing Lender required pursuant to this Agreement or any Loan Document have
been obtained.
(c) From and after the date that the Administrative Agent notifies
the assignor Lender that the Assignment and Acceptance has become effective, (i)
the Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents. The Administrative Agent shall record the information contained
in the Assignment and Acceptance in the Register.
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<PAGE>
(d) Immediately upon the Assignment and Acceptance becoming
effective, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Notwithstanding any of the foregoing, any Lender may at any time
assign all or any portion of its rights under this Agreement and any Note to a
Federal Reserve Lender, without restriction hereunder; provided, however, that
-------- -------
no such assignment shall release any Lender from its obligations hereunder.
(f) Any Lender may at any time sell to one or more Lenders or
institutional investors (a "Participant") participating interests in any
Commitments together with the related Loans of that Lender together with any
other interest of that Lender hereunder; provided, however, that (i) the
-------- -------
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Company and the Administrative Agent shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and obligations
under this Agreement, and (iv) no Lender shall transfer or grant any
participating interest under which the Participant shall have rights to approve
any amendment to, or any consent or waiver with respect to this Agreement except
to the extent such amendment, consent or waiver would as to such Participant:
(a) postpone or delay any date fixed for any payment of principal,
or interest;
(b) reduce the principal of, or the Applicable Amount specified
herein for any Loan;
(c) reduce the commission on any Letter of Credit, or of any fees
payable to the Administrative Agent for the account of the Lenders hereunder;
(d) release the Subsidiary Guaranty, any Subsidiary Guarantor,
release all or substantially all of the Collateral except as otherwise expressly
provided in the Collateral Documents.
In the case of any such participation, the Participant shall not
have any rights under this Agreement, or any of the other Loan Documents, and
all amounts payable by the Company hereunder shall be determined as if such
Lender had not sold such participation, except that if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(g) Each Lender agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all non-public information
provided to it by the Company or any Subsidiary of the Company or by the
Administrative Agent in connection with this Agreement or any Collateral
Document and neither it nor any of its Affiliates shall use any such information
for any purpose or in any manner other than pursuant to the terms contemplated
by this Agreement, except to the extent such information (i) was or becomes
generally available to
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<PAGE>
the public other than as a result of a disclosure by such Lender, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Company, provided that such source is not bound by a confidentiality agreement
with the Company known to such Lender; provided, further, that any Lender may
-------- -------
disclose such information (A) at the request of any Lender regulatory authority
or in connection with an examination of such Lender by any such authority; (B)
pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable law; (D) at the express
direction of any other agency of any State of the United States of America or of
any other jurisdiction in which such Lender conducts its business; and (E) to
such Lender's independent auditors and other professional advisors.
Notwithstanding the foregoing, the Company authorizes each Lender to disclose to
any Participant or Assignee (each, a "Transferee") and any prospective
Transferee such financial and other information in such Lender's possession
concerning the Company or its Subsidiaries which has been delivered to the
Lenders pursuant to this Agreement or which has been delivered to the Lenders by
the Company in connection with the Lenders' credit evaluation of the Company
prior to entering into this Agreement; provided, that such Transferee or
--------
prospective Transferee has executed a Confidentiality Agreement substantially in
the form of Annex C to Exhibit G.
---------
10.08 SET-OFF. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists, each Lender is authorized at any
time and from time to time, without prior notice to the Company, any such notice
being waived by the Company to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Company against any and all
obligations when due of the Company now or hereafter existing under this
Agreement or any other Loan Document and any Loan held by such Lender
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Agreement or any Loan Document and although such
obligations may be contingent or unmatured. Each Lender agrees promptly to
notify the Company and the Administrative Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
-------- -------
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section 10.08 are in addition to the other
rights and remedies (including without limitation, other rights of set-off)
which the Lender may have.
10.09 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Lender
shall notify the Administrative Agent by Requisite Notice of any changes in the
address to which notices to the Lender should be directed, of addresses of its
Eurodollar Lending Office and its Domestic Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Administrative Agent shall reasonably
request.
10.10 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Administrative Agent.
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<PAGE>
10.11 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.12 REMOVAL OF A LENDER. If the Company elects to remove any
Lender as a party to this Agreement under Section 3.01(k) by reason of such
Lender making a claim for compensation under Section 3.01, such Lender shall,
upon notice from the Company, execute and deliver an Assignment and Acceptance
covering that Lender's Commitments in favor of an Eligible Assignee as the
Company may designate which is acceptable to the Administrative Agent, subject
to (a) payment in full of all principal, interest, fees and other amounts owing
to such Lender through the date of such assignment (including any amounts
payable pursuant to Article III) and (b) if such departing Lender has issued a
Letter of Credit, delivery by such Eligible Assignee of such appropriate
assurances and indemnities (which may include letters of credit) as such
departing Lender may reasonably require with respect to any such Letter of
Credit, until any such Letter of Credit is terminated or cancelled, and the
Company shall use best efforts to promptly terminate or cancel any such Letters
of Credit. Alternatively, the Company may reduce the Commitments by an amount
equal to that Lender's Commitments, pay and provide to such Lender the amounts,
assurances and indemnities described above and release such Lender from its
Commitments. In order to make all Lender's interests in any Outstanding
Obligations under any Tranche ratable in accordance with any revised Pro Rata
Shares of such Tranche after giving effect to the removal of any Lender, the
Company shall pay or prepay, if necessary, on the effective date of such
removal, the outstanding Loans of such removed Lender and pay, to the extent
applicable, any amounts due under Section 3.04. If the removed Lender has been
replaced, the Company may then continue or convert such Loans with such new
Lender.
10.13 GOVERNING LAW AND JURISDICTION1.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE COMPANY, CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE JURISDICTION OF THOSE COURTS. THE COMPANY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
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<PAGE>
10.14 WAIVER OF JURY TRIAL. THE COMPANY, THE LENDERS AND THE
ADMINISTRATIVE AGENT WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE
ADMINISTRATIVE AGENT AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY ARE WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.15 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire Agreement and understanding among the Company,
the Lenders and the Administrative Agent and supersedes all prior or
contemporaneous agreements and understandings of such persons, verbal or
written, relating to the subject matter hereof and thereof except for the fee
agreements referenced in Section 2.11 and any prior arrangements made with
respect to the payment by the Company of (or any indemnification for) any fees,
costs or expenses payable to or incurred (or to be incurred) by or on behalf of
the Administrative Agent or the Lenders.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
OSCAR I CORPORATION
By /s/ Kurt Hall
-------------------------------
Kurt Hall
President
S-1
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS
ADMINISTRATIVE AGENT
By /s/ David Price
-------------------------------
David Price
Vice President
S-2
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS A LENDER
By /s/ Shannon T. Ward
--------------------------------
Name SHANNON T. WARD
Title VICE PRESIDENT
S-3
<PAGE>
BANKBOSTON, N.A., AS DOCUMENTATION
AGENT AND A LENDER
By /s/ Donna F. Fraser
-------------------------------
Name Donna F. Fraser
Title Vice President
S-4
<PAGE>
NATIONSBANK OF TEXAS, N.A. AS
SYNDICATION AGENT AND A LENDER
By /s/ illegible
---------------------------
Name
Title Vice President
S-5
<PAGE>
MERRILL LYNCH CAPITAL CORPORATION,
AS A CO-SYNDICATION AGENT
AND A LENDER
By /s/ Christopher Birosak
-------------------------------
Name CHRISTOPHER BIROSAK
Title VICE PRESIDENT
S-6
<PAGE>
MORGAN STANLEY SENIOR
FUNDING, INC., AS A CO-SYNDICATION
AGENT AND A LENDER
By /s/ Michael A. Hart
----------------------------
Name Michael A. Hart
Title Principal
S-7
<PAGE>
EXHIBIT 10.3
================================================================================
CREDIT AGREEMENT
Dated as of April 21, 1998
among
Oscar I Corporation
(to be renamed United Artists Theatre Company),
the Financial Institutions Party Hereto,
Bank of America National Trust
and Savings Association,
as Administrative Agent
BankBoston, N.A.,
as Documentation Agent,
NationsBank of Texas, N.A.,
as Syndication Agent,
and
Merrill Lynch Capital Corporation
and
Morgan Stanley Senior Funding, Inc.,
as Co-Syndication Agents
Arranged By
[LOGO] BancAmerica ROBERTSON STEPHENS
BancBoston Securities Inc.
NationsBanc Montgomery Securities LLC
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
ARTICLE IDEFINITIONS.............................................................1
1.01 Defined Terms..........................................................1
1.02 Other Definitional Provisions.........................................26
ARTICLE IITHE CREDITS...........................................................27
2.01 Amounts and Availability of Commitments...............................27
(a) The Revolving Commitments.............................................27
(b) The Tranche A Term Loan Commitments...................................27
(c) The Tranche B Term Loan Commitments...................................27
(d) The Tranche C Term Loan Commitments...................................28
2.02 Loan Accounts.........................................................28
2.03 Procedure for Borrowing...............................................29
2.04 Conversion and Continuation Elections................................30
2.05 Letters of Credit.....................................................31
2.06 Termination or Reduction of Commitments...............................34
2.07 Optional Prepayments..................................................35
2.08 Mandatory Prepayments of Loans........................................35
2.09 Repayment.............................................................37
2.10 Interest..............................................................38
2.11 Fees..................................................................38
2.12 Computation of Fees and Interest......................................39
2.13 Payments by the Company...............................................40
2.14 Payments by the Lenders to the Administrative Agent...................41
2.15 Sharing of Payments, Etc..............................................42
2.16 Collateral Documents and Subsidiary Guaranty..........................42
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.............................42
3.01 Taxes.................................................................42
3.02 Illegality............................................................45
3.03 Increased Costs and Reduction of Return...............................46
3.04 Funding Losses........................................................47
3.05 Inability to Determine Rates..........................................47
3.06 Reserves on Eurodollar Rate Loans.....................................47
3.07 Certificates of Lenders...............................................48
ARTICLE IVCONDITIONS PRECEDENT..................................................48
4.01 Conditions of Initial Extension of Credit.............................48
4.02 Conditions to all Borrowings..........................................50
4.03 Pledge and Delivery of Collateral; Subsidiary Guarantors..............51
ARTICLE VREPRESENTATIONS AND WARRANTIES.........................................52
5.01 Corporate Existence and Power.........................................52
5.02 Corporate Authorization; No Contravention.............................52
5.03 Governmental Authorization............................................53
5.04 Binding Effect........................................................53
5.05 Litigation............................................................53
5.06 No Default............................................................53
5.07 ERISA Compliance......................................................53
5.08 Use of Proceeds; Margin Regulations...................................55
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.09 Title to Properties; Leases...........................................55
5.10 Taxes.................................................................55
5.11 Financial Condition;..................................................56
5.12 Environmental Matters.................................................56
5.13 Collateral Documents..................................................57
5.14 Regulated Entities....................................................57
5.15 Labor Relations.......................................................57
5.16 Copyrights, Patents, Trademarks and Licenses, etc.....................57
5.17 Subsidiaries of the Company...........................................58
5.18 Insurance.............................................................58
5.19 Full Disclosure.......................................................58
ARTICLE VIAFFIRMATIVE COVENANTS.................................................58
6.01 Financial Statements..................................................58
6.02 Certificates; Other Information.......................................59
6.03 Notices...............................................................60
6.04 Preservation of Corporate Existence, Etc..............................63
6.05 Maintenance of Property...............................................63
6.06 Insurance.............................................................64
6.07 Payment of Obligations................................................64
6.08 Compliance with Laws..................................................64
6.09 Inspection of Property and Books and Records..........................64
6.10 Environmental Laws....................................................65
6.11 Use of Proceeds.......................................................65
6.12 ERISA.................................................................65
6.13 Interest Rate Protection..............................................65
6.14 Pledged Subsidiaries..................................................65
6.15 Subsidiary Guarantors.................................................66
6.16 Repayment of UATC Senior Secured Note.................................66
6.17 Redemption of Company Preferred Stock.................................66
6.18 Further Assurances....................................................66
ARTICLE VII NEGATIVE COVENANTS.............................................67
7.01 Limitation on Indebtedness............................................67
7.02 Limitation on Liens...................................................68
7.03 Disposition of Assets.................................................69
7.04 Consolidations and Mergers............................................69
7.05 Loans and Investments.................................................69
7.06 Transactions with Affiliates..........................................71
7.07 Change in Business....................................................71
7.08 Compliance with ERISA.................................................71
7.09 Lease Obligations.....................................................72
7.10 Capital Stock and Equity Interests of Subsidiaries....................72
7.11 Restricted Payments...................................................72
7.12 Financial Ratios......................................................73
7.13 Priority of Loan Payments.............................................73
7.14 Investments in Margin Stock...........................................74
7.15 Amendments to Certain Agreements......................................74
7.16 Accounting Changes....................................................75
ARTICLE VIII EVENTS OF DEFAULT..............................................75
8.01 Event of Default......................................................75
8.02 Remedies..............................................................78
8.03 Rights Not Exclusive..................................................79
ARTICLE IXADMINISTRATIVE AGENT..................................................79
</TABLE>
<PAGE>
<TABLE>
<S> <C>
9.01 Appointment and Authorization.........................................79
9.02 Delegation of Duties..................................................79
9.03 Liability of Agent-Related Persons....................................79
9.04 Reliance by Administrative Agent......................................80
9.05 Notice of Default.....................................................80
9.06 Credit Decision.......................................................81
9.07 Indemnification.......................................................81
9.08 Agents in Individual Capacity.........................................82
9.09 Successor Administrative Agent........................................82
9.10 Collateral Matters....................................................82
9.11 Documentation Agent, Syndication Agent, Co-Syndication Agents.........83
ARTICLE X MISCELLANEOUS.........................................................83
10.01 Amendments and Waivers................................................83
10.02 Notices...............................................................84
10.03 No Waiver; Cumulative Remedies........................................84
10.04 Costs and Expenses....................................................85
10.05 Indemnity.............................................................85
10.06 Successors and Assigns................................................86
10.07 Assignments, Participations Etc.......................................86
10.08 Set-off..............................................................88
10.09 Notification of Addresses, Lending Offices, Etc.......................89
10.10 Counterparts..........................................................89
10.11 Severability..........................................................89
10.12 Removal of a Lender...................................................89
10.13 Governing Law and Jurisdiction........................................90
10.14 WAIVER OF JURY TRIAL..................................................90
10.15 Entire Agreement......................................................90
</TABLE>
Signatures S-1
<PAGE>
SCHEDULES
1.01(a) Applicable Amounts
1.01(b) Annualizaton Factors
1.01(c) Existing Letters of Credit
2.01 Commitments, Availability, Reduction Amounts, Use Of Proceeds:
2.01(a) Revolving Commitments,
2.01(b) Tranche A Term Commitments
2.01(c) Tranche B Term Commitments
2.01(d) Tranche C Term Commitments
5.05 Litigation
5.07 ERISA Compliance
5.12 Environmental Matters
5.16 Intellectual Property Claims
5.17 Subsidiaries of the Company
7.01 Existing Indebtedness
7.02 Liens
7.05 Existing Loans, Equity Interests and Investments
7.06 Existing Affiliate Agreements
10.02 Lending Offices and Addresses for Notices
EXHIBITS
Form of
A-1 Revolving Loan Promissory Note
A-2 Tranche A Term Loan Promissory Note
A-3 Tranche B Term Loan Promissory Note
A-4 Tranche C Term Loan Promissory Note
B Notice of Borrowing
C Notice of Continuation/Conversion
D-1 Prop I Expense Value Letter of Credit
D-2 Prop I Property Value Letter of Credit
E Subsidiary Guaranty
F-1 Company Pledge Agreement
F-2 Subsidiary Pledge Agreement
F-3 Intercompany Note
G Assignment and Acceptance Agreement
-i-
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 21, 1998, is entered into
by and among Oscar I Corporation (intended to be renamed United Artists Theatre
Company), a Delaware corporation (the "Company"), the several financial
institutions from time to time party hereto (individually, a "Lender" and
collectively, the "Lenders"), Bank of America National Trust and Savings
Association, as administrative agent (in such capacity, the "Administrative
Agent"), BankBoston, N.A., as documentation agent (in such capacity, the
"Documentation Agent"), NationsBank of Texas, N.A., as syndication agent (in
such capacity, the "Syndication Agent") and Merrill Lynch Capital Corporation
and Morgan Stanley Senior Funding, Inc., as co-syndication agents (in such
capacity, the "Co-Syndication Agents").
RECITAL
The parties hereto desire to provide credit facilities to the
Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Administrative Agent" means Bank of America National Trust and
Savings Association in its capacity as Administrative Agent hereunder, and any
successor thereto in such capacity.
"Administrative Agent's Payment Account" means Bank of America
National Trust and Savings Association, 121000358, Attention: Agency
Administrative Services #5596, Account No.12330-16202, Reference: Oscar I
Corporation, or such other account or accounts of the Administrative Agent as it
may from time to time specify to the Company and the Lenders.
"Affiliate" means, as to any specified Person, (a) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or (b) any other Person that owns
directly or indirectly, 10% or more of such Person's capital stock or any
officer or director of any such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
other Person, whether through the ownership of voting securities, by contract,
or otherwise.
"Agents" means the Administrative Agent, the Documentation Agent,
the Syndication Agent and the Co-Syndication Agents (individually, an "Agent").
"Agent-Related Persons" has the meaning specified in Section 9.03.
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<PAGE>
"Agreement" means this Credit Agreement, as amended, supplemented or
modified from time to time.
"Applicable Amount" means, as of any date of determination, the
amounts set forth on Schedule 1.01(a) hereto. The Applicable Amount shall be
----------------
based upon the most recent compliance certificate delivered from time to time
pursuant to Section 6.02(b)(iii). Any change in the Applicable Amount shall be
effective from and after such Determination Date until the following
Determination Date. If the Company fails to timely deliver such compliance
certificate, the Applicable Amount shall be the highest amount indicated on
Schedule 1.01(a) until the Administrative Agent receives such compliance
- - ----------------
certificate. The Administrative Agent will with reasonable promptness notify the
Company and the Lenders of the effective date and the amount of each such
change; provided, however, that any failure to do so shall not relieve the
-------- -------
Company of any liability hereunder. "Determination Date" means each date that
the Administrative Agent receives the compliance certificate pursuant to Section
6.02(b)(iii).
"Arrangers" means BancAmerica ROBERTSON STEPHENS, BancBoston
Securities Inc. and NationsBanc Montgomery Securities LLC.
"Assignee" has the meaning specified in Section 10.07(a).
"Assignment and Acceptance" has the meaning specified in Section
10.07(b).
"Available Tranche A Term Loan Commitments" means, as of any date of
determination, the portion of the combined Tranche A Term Loan Commitments set
forth under the heading "Available Tranche A Term Loan Commitments" on Schedule
--------
2.01(b) hereto.
- - -------
"Available Tranche C Term Loan Commitments" means, as of any date of
determination, the portion of the combined Tranche C Term Loan Commitments set
forth under the heading "Available Tranche C Term Loan Commitments" on Schedule
--------
2.01(d) hereto.
- - -------
"Base Rate" means, for any day, a rate per annum (rounded upwards to
the next 1/100 of 1%) equal to the higher of (a) the Reference Rate in effect on
such day and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"BofA" means Bank of America National Trust and Savings Association.
"Borrowing" means an extension of credit consisting of (a) the
making of Loans under any Tranche on the same day by the Lenders ratably in
accordance with their Pro Rata Shares of such Tranche, or (b) the issuance,
amendment which increases the amount of, or extension of, any Letter of Credit
under the Revolving Commitment and the participation therein by the Lenders
having a Revolving Commitment.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial Lenders in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Eurodollar Rate Loan, a day on which dealings are carried on in the London
interbank market.
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<PAGE>
"Capital Expenditures" means for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which are placed in service and which should be capitalized under
GAAP on a consolidated balance sheet of such Person and its Subsidiaries. For
the purpose of this definition, the purchase price of equipment which is
purchased simultaneously with the trade-in of existing equipment owned by such
Person or any of its Subsidiaries or with insurance proceeds shall be included
in Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment for such equipment
being traded in at such time, or the amount of such insurance proceeds, as the
case may be. Except where otherwise specified in this Agreement, Capital Lease
Obligations for leases of theatres (including any related real property
interests) shall be excluded from the definition of "Capital Expenditures".
"Capital Lease Obligations" means all monetary obligations of the
Company or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease.
"Cash Collateral Account" means an interest-bearing cash collateral
account established with the Administrative Agent or other institution
satisfactory to the Administrative Agent in a location satisfactory to the
Administrative Agent in which the Company hereby grants a security interest to
the Administrative Agent for the benefit of the Secured Parties.
"Cash Collateralize" means to deposit in a Cash Collateral Account
cash in amount equal to the affected Letter of Credit Usage.
"Cash Equivalents" means:
(a) any security, maturing not more than six months after the
date of acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to principal,
premium, if any, and interest by the United States of America;
(b) any certificate of deposit, time deposit, Eurodollar time
deposit, or bankers' acceptance maturing not more than six months after
the date of acquisition, issued by any member of the Lender Group or a
commercial banking institution that is a member of the Federal Reserve
System and that has combined capital and surplus and undivided profits
of not less than $100,000,000, whose debt has a rating, at the time of
which any investment therein is made or on the date of such acquisition
by any Person, as the case may be, of "P-1" (or higher) by Moody's or
any successor rating agency, or "A-1" (or higher) by S&P or any
successor rating agency;
(c) commercial paper, maturing not more than three months after
the date of acquisition, issued by any Lender in the Lender Group or a
corporation (other than an Affiliate or Subsidiary of the Company)
organized and existing under the law of the United States of America
with a rating, at the time as of which any investment therein is made,
or on the date of such acquisition by any Person, as the case may be, of
"P-1" (or
-3-
<PAGE>
higher) by Moody's or any successor rating agency, or "A-1" (or higher)
by S&P or any successor rating agency; and
(d) any security, on the date of acquisition by any Person, that is
listed for trading on any national securities exchange, trades of which
are reported on the National Association of Securities Dealers Automated
Quotations System or that has a stated maturity on or before the first
anniversary of the date of such acquisition.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws".
"Change in Control Event" means (a) the Company not directly owning,
beneficially and of record, 100% of the issued and outstanding voting stock of
UATC (other than in connection with the merger of UATC into and with the Company
in which the Company is the surviving corporation) or (b) the Merrill Lynch
Entities not owning, directly or indirectly, over 50% of the issued and
outstanding voting stock of the Company.
"Closing Date" means the first date all conditions set forth in Section
4.01 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and interests in property and proceeds
covered by the Collateral Documents.
"Collateral Documents" means, collectively, the Company Pledge
Agreement, the Subsidiary Pledge Agreement and all other security agreements,
mortgages, deeds of trust, patent and trademark assignments, lease assignments,
guarantees, financing statements, and other similar agreements from time to time
relating to the Collateral, and any amendments, supplements, modifications,
renewals, replacements, consolidations, substitutions and extensions of any of
the foregoing, and "Collateral Document" means any of the Collateral Documents.
"Commitments" means the Revolving Commitments, the Tranche A Term
Loan Commitments, the Tranche B Term Loan Commitments and/or the Tranche C Term
Loan Commitments.
"Company Pledge Agreement" means the Company Pledge Agreement,
substantially in the form of Exhibit F-1 hereto, as the same may be amended,
-----------
supplemented or otherwise modified from time to time.
"Company Preferred Stock" means the Series A Cumulative Redeemable
Exchangeable Preferred Stock issued by the Company.
"Consolidated" means, as applied to any financial or accounting term
with reference to any Person, such term determined on a consolidated basis for
such Person in accordance with GAAP, including principles of consolidation,
consistently applied.
"Consolidated Interest Expense" means, as of any date of determination,
with respect to the Company and its Subsidiaries on a Consolidated basis, all
cash payments of commitment,
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<PAGE>
facility and other fees due on all commitments to lend and all cash payments of
interest on outstanding Indebtedness during the period of four consecutive
fiscal quarters ending on such date of determination.
"Consolidated Lease Expense" means, as of any date of determination,
with respect to the Company and its Subsidiaries on a Consolidated basis, all
cash operating rental expense (which is the sum of actual base rent, additional
rent and percentage rent) paid during the period of four consecutive fiscal
quarters ending on such date of determination.
"Co-Syndication Agents" means Merrill Lynch Capital Corporation and
Morgan Stanley Senior Funding, Inc.
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, or
dividend or the guaranty of any payment obligation (the "primary obligations")
of another Person (the "primary obligor"), including, without limitation, any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance or provide
funds (i) for the payment or discharge of any such primary obligation, or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company or any of its Subsidiaries pursuant to Section 414(b), (c), (m) or (o)
of the Code.
"Conversion Date" means any date on which the Company elects to
convert a Base Rate Loan into a Eurodollar Rate Loan or a Eurodollar Rate Loan
into a Base Rate Loan.
"Covered Transaction" means, with respect to any Disposition, (a)
the acquisition or development of theatre properties or other activities
incidental thereto within 360 days of such Disposition, (b) the entering into of
definitive agreements to acquire or develop theatre properties or other
activities incidental thereto within 360 days of such Disposition, provided that
such acquisition or development is completed within 360 days of the date of the
applicable definitive agreement, or (c) Sale-and-Leaseback Transactions of
theatre properties and equipment entered
-5-
<PAGE>
into within 360 days of when such properties were opened or such equipment was
acquired by the Company or any Subsidiary of the Company.
"Credit Exposure" means, as of any date of determination, as the
context requires, (a) the aggregate Revolving Commitment Exposure of all
Lenders, the aggregate Tranche A Term Loan Exposure of all Lenders, the
aggregate Tranche B Term Loan Exposure of all Lenders or the aggregate Tranche C
Term Loan Exposure of all Lenders or (b) the sum of the foregoing.
"Default" means any event which, with the giving of notice, the
lapse of time, or both, would constitute an Event of Default.
"Designated Lease" means an agreement for the use or possession of
property entered into in connection with a Sale-and-Leaseback Transaction that
does not create Capital Lease Obligations and that has a Weighted Average Life
to Expiration that is less than either the Weighted Average Life to Maturity of
the Obligations or the number of years remaining at such time until April 21,
2007. Notwithstanding anything to the contrary contained herein, no Contractual
Obligations existing on the date hereof (including any extensions or renewals
thereof) will constitute a Designated Lease under this Credit Agreement.
"Disposition" means any sale, issuance, conveyance, transfer, lease
or other disposition (including, without limitation, by way of merger or
consolidation) (collectively, a "transfer"), directly or indirectly, in one or a
series of related transactions, of or through (a) any capital stock of any
Subsidiary of the Company, (b) any other properties, assets, lines, businesses
or divisions, other than in the ordinary course of business, (c) any
Sale-and-Leaseback Transaction, (d) any Event of Loss or (e) sales of accounts
and notes receivable, with or without recourse.
"Documentation Agent" means BankBoston, N.A.
"documents" includes any and all instruments, documents, agreements,
certificates and other writings, however evidenced.
"dollars" and "$" means lawful money of the United States.
"Domestic Lending Office" means, with respect to each Lender, the
office of that Lender designated as such on Schedule 10.02 or such other office
--------------
of the Lender as it may from time to time specify to the Company and the
Administrative Agent.
"Eligible Assignee" means (a) a commercial lender organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial lender organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$100,000,000; provided that such lender is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (c) any other entity which is an "accredited investor" (as
defined in Regulation D under the Securities Act) which extends credit or buys
loans as one of its businesses, including but not limited to, insurance
companies, mutual funds and lease financing companies, or (d) other lenders or
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<PAGE>
institutional investors approved in writing in advance by the Administrative
Agent and the Company which approval is not to be unreasonably withheld or
delayed.
"Environmental Claim" means all claims, however asserted, by any
Governmental Authority or other Person, of potential liability or responsibility
for violation of any Environmental Law or for release or injury to the
environment or threat to public health, personal injury (including sickness,
disease or death), property damage, natural resources damage, or otherwise
alleging liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or criminal
penalties, injunctive relief, or other type of relief, resulting from or based
upon (a) the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in or from property,
whether or not owned by the Company, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic Substances Control
Act, the Emergency Planning and Community Right-to-Know Act, each as amended.
"Environmental Permits" has the meaning specified in Section
5.12(b).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any regulation promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary of the
Company within the meaning of Section 414(b), 414(c) or 414(m) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a
Qualified Plan or a Multiemployer Plan; (b) a withdrawal by any member of the
Controlled Group from a Qualified Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA); (c) a complete or partial withdrawal by any member of the
Controlled Group from a Multiemployer Plan; (d) the filing of a notice of intent
to terminate, the treatment of a plan amendment as a termination under Section
4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure by any member of the Controlled Group to make required
contributions to a Qualified Plan or Multiemployer Plan; (f) an event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Qualified Plan or Multiemployer Plan; (g) the imposition of any
liability under Title IV of ERISA, other than
-7-
<PAGE>
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
member of the Controlled Group; (h) an application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code with
respect to any Qualified Plan; (i) a non-exempt prohibited transaction
involving, or resulting in liability to, the Company or any of its Subsidiaries;
or (j) a violation of the applicable requirements of Section 404 or 405 of ERISA
or the exclusive benefit rule under Section 401(a) of the Code by any fiduciary
with respect to any Qualified Plan for which the Company or any of its
Subsidiaries may be directly or indirectly liable.
"Eurodollar Lending Office" means with respect to each Lender, the
office of such Lender designated as such on Schedule 10.02 or such other office
--------------
of such Lender as such Lender may from time to time specify to the Company and
the Administrative Agent.
"Eurodollar Rate" means, for each Interest Period for Eurodollar
Rate Loans comprising the same Borrowing, the rate per annum equal to the
average (rounded upward to the nearest whole multiple of 1/16 of one percent) of
the rates of interest per annum notified to the Administrative Agent by each
Reference Lender as the rate at which Dollar deposits for such Interest Period
and in an amount comparable to the amount of the Eurodollar Rate Loan that such
Reference Lender will make (or, if not a Lender under the applicable Tranche,
would make if it were such a Lender) during such Interest Period would be
offered by its Eurodollar Lending Office to major Lenders in the London
eurodollar market at or about 11:00 a.m. (London time) on the second Business
Day before the commencement of such Interest Period. If no such rates are
notified to the Administrative Agent, the "Eurodollar Rate" shall be the rate
set forth on the Reuters Telerate screen for eurodollar deposits with major
Lenders in London as of the date and time of such determination.
"Eurodollar Rate Loan" means a Loan that bears interest based on the
Eurodollar Rate.
"Event of Default" means any of the events specified in Section
8.01.
"Event of Loss" means, with respect to any property or asset
(tangible or intangible, real or personal) any of the following: (a) any loss,
destruction or damage of such property or asset; or (b) any actual condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation of such property or asset or the
requisition of the use of such property or asset.
"Excess Cash" means, for the most recently completed four fiscal
quarters for the Company and its Subsidiaries on a Consolidated basis, (a)
Operating Cash Flow for such period less (b) the sum of (i) regularly scheduled
----
payments and required prepayments of principal of Indebtedness for borrowed
money of the Company and its Subsidiaries to the extent not prohibited under
this Agreement and actually paid during such period, plus (ii) Consolidated
----
Interest Expense actually paid by the Company and its Subsidiaries in respect of
Indebtedness for borrowed money during such period, plus (iii) Capital
----
Expenditures actually made during such period, plus (iv) tax payments actually
----
paid or to be paid in respect of such period.
"Excluded Disposition" means:
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<PAGE>
(a) Dispositions of inventory, or used, worn-out or surplus
property and other property or assets, all in the ordinary course of
business;
(b) Dispositions of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar
replacement equipment or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
and
(c) transactions permitted under Sections 7.04 and 7.09.
"Existing Credit Agreement" means the Restated Credit Agreement
dated as of May 1, 1995, as amended, among United Artists Theatre Circuit, Inc.,
certain banks and co-agents and Bank of America National Trust and Savings
Association as managing agent.
"Existing Letters of Credit" means the "facility letters of credit"
issued under the Existing Credit Agreement and the Prop I Letters of Credit, in
each case that are outstanding on the Closing Date and described on Schedule
--------
1.01(c) hereto.
- - -------
"Federal Funds Rate" means, 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, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Lender of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. For purposes of this Agreement,
any change in the Base Rate due to a change in the Federal Funds Rate shall be
effective as of the opening of business on the effective date of such change. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Rate for any reason, including, without limitation,
the inability or failure of the Administrative Agent to obtain sufficient bids
or publications in accordance with the terms hereof, the Base Rate shall be the
Reference Rate until the circumstances giving rise to such inability no longer
exist.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letters" means the fee letters referred to in Section 2.11.
"Former Collateral Agent" means Bankers Trust Company in its
capacity as collateral agent under the Former Collateral Documents.
"Former Collateral Documents" means all "Collateral Documents" and
the "Intercreditor Agreement" defined in the Existing Credit Agreement.
"Funded Indebtedness" means, without duplication, all Indebtedness
for borrowed money and all Contingent Obligations relating thereto, Designated
Leases, Capital Lease Obligations
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<PAGE>
and any net obligations of such Person under Rate Contracts on or after
termination of the applicable Rate Contract.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination. In computing
compliance with the covenants set forth in Section 7.12 the Company shall use
GAAP as in effect on the Closing Date unless the Company and Majority Lenders
have agreed to use GAAP as in effect on the date of determination of compliance
with such covenant; and the computations supporting the compliance certificates
provided pursuant to Section 6.02(b) shall reflect such use of GAAP.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central Lender (or similar monetary
or regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a pollutant,
contaminant, waste, solid waste, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or petroleum
or petroleum derived substance or waste.
"Indebtedness" of any Person means without duplication, (a) all
obligations for borrowed money, or with respect to deposits or advances of any
kind (including repurchase obligations); (b) all obligations evidenced by notes,
bonds, debentures or similar instruments; (c) all obligations on which interest
charges are customarily paid; (d) all obligations under conditional sale or
other title retention agreements relating to property purchased by such Person;
(e) all Capital Lease Obligations; (f) all net obligations with respect to Rate
Contracts on or after termination of the applicable Rate Contract; (g) all
reimbursement obligations under surety bonds, letters of credit, bankers'
acceptances and similar instruments (in each case whether or not matured); (h)
all Contingent Obligations; provided that obligations constituting contingent
liabilities of such Person as a general partner in respect of operating
liabilities of the partnership in which it is such a general partner shall
constitute Indebtedness only when and to the extent that such contingent
liabilities become due and payable obligations of such general partner; (i) all
obligations issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers incurred and paid in the
ordinary course of business); (j) all Designated Leases and (k) all Indebtedness
referred to in clauses (a) through (j) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, but only to the extent of the
lesser of (x) the principal amount of such Indebtedness and (y) the fair market
value of the property taken as security.
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<PAGE>
"Indemnified Person" has the meaning specified in Section 10.05.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or any other similar
arrangement; in each case (a) and (b) under U.S. Federal, State or foreign law.
"Intercompany Note" means a promissory note substantially in the
form of Exhibit F-3 hereto executed and delivered by UATC in favor of the
-----------
Company.
"Interest Payment Date" means (a) with respect to Base Rate Loans,
the last day of each fiscal quarter of the Company and (b) with respect to any
Eurodollar Loan, the last day of each Interest Period applicable to such Loan;
provided, however, that if any Interest Period for a Eurodollar Rate Loan
- - -------- -------
exceeds three months, interest shall also be paid on the date which falls three
months after the beginning of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Rate Loan,
the period commencing on the Business Day the Loan is disbursed or continued or
on the Conversion Date on which the Loan is converted to the Eurodollar Rate
Loan and ending on the date one, two, three or six months thereafter, as
selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
--------
(a) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding Business
Day;
(b) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(c) no Interest Period for any Term Loan shall extend beyond the
Maturity Date applicable for such Term Loan; and
(d) no Interest Period applicable to any Loan under any Tranche
or portion thereof shall extend beyond the next Reduction Date or
Principal Payment Date, as applicable to such Tranche, unless, on that
Reduction Date or Principal Payment Date, either (i) the Outstanding
Obligations under such Tranche will not exceed the combined Commitments
under such Tranche (after giving effect to any reduction required to be
made on such Reduction Date or payment required to be made on such
Principal Payment Date) or (ii) the sum of (A) the aggregate principal
------
amount of Base Rate Loans plus (B) the aggregate principal amount of all
----
Eurodollar Rate Loans with an Interest Period ending on or prior to such
Reduction Date or Principal Payment Date is at least equal to
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<PAGE>
the Reduction Amount for such Tranche for such Reduction Date or the
Principal Payment Amount for such Tranche on such Principal Payment
Date.
"Involuntary Closing" means a closing or loss of use of a property
which is not in the best interests of the Company in the reasonable business
judgement of the Company.
"Issuing Lender" means any Lender, in its sole discretion, issuing a
Letter of Credit under the combined Revolving Commitments.
"Lender" means each lender from time to time party to this Agreement
(collectively, the "Lenders").
"Lender Group" means the Lenders party to this Agreement.
"Lending Office" means, with respect to any Lender, the office or
offices of the Lender specified as its "Lending Office" or "Domestic Lending
Office" or "Eurodollar Lending Office", as the case may be, opposite its name on
Schedule 10.02 hereto, or such other office or offices of such Lender as it may
- - --------------
from time to time specify to the Company and the Administrative Agent.
"Letter of Credit" means a Letter of Credit issued and outstanding
under the combined Revolving Commitments, including without limitation the Prop
I Letters of Credit (collectively, the "Letters of Credit").
"Letter of Credit Action" means the issuance, supplement, amendment,
renewal, extension, modification or other action relating to a Letter of Credit
hereunder.
"Letter of Credit Application" means an application for issuances
of, or amendments to, letters of credit as shall at any time be in use at the
Issuing Lender.
"Letter of Credit Usage" means, as at any date of determination, the
undrawn face amount of outstanding Letters of Credit plus Unreimbursed Drawings.
----
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
otherwise) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the UCC or any
comparable law) and any contingent or other agreement to provide any of the
foregoing.
"Loan" means an extension of credit by a Lender to the Company
pursuant to Article II other than an Unreimbursed Drawing, and may be a Base
Rate Loan or a Eurodollar Rate Loan.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Collateral Documents, the Subsidiary Guaranty, the Fee Letters and
all documents delivered to the Administrative Agent in connection herewith (each
individually a "Loan Document").
-12-
<PAGE>
"Loan Parties" means the Company and each Subsidiary which is a
party from time to time to any Loan Document (each individually a "Loan Party").
"Majority Lenders" means, at any time of determination, Lenders
having or holding more than 51% of the sum of the aggregate Credit Exposure of
all Lenders under all Tranches. As to any Tranche, Majority Lenders means
Lenders having or holding more than 51% of the sum of the aggregate Credit
Exposure of all Lenders under such Tranche.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business, properties,
or condition (financial or otherwise) of the Company and its Subsidiaries taken
as a whole; (b) the ability of any Loan Party to perform under any Loan
Document; (c) the legality, validity, binding effect or enforceability of any
Loan Document; or (d) the perfection or priority of any Lien granted to the
Lenders or to the Administrative Agent for the benefit of the Lenders under any
of the Collateral Documents. For purposes of this Agreement and the Loan
Documents, consummation of the transactions contemplated or permitted by this
Agreement shall not be deemed to be a Material Adverse Effect.
"Material Subsidiary" means, at any particular time, any Subsidiary
of the Company that, together with the Subsidiaries of such Subsidiary, (a)
accounted for more than five percent of Operating Cash Flow for the most
recently completed four fiscal quarters of the Company and its Subsidiaries on a
Consolidated basis or (b) was the owner of more than five percent of the
Consolidated assets of the Company and its Subsidiaries as at the end of the
most recent fiscal quarter of the Company. Notwithstanding the foregoing, each
Subsidiary Guarantor shall be a Material Subsidiary.
"Maturity Date" means, as applicable, the Revolving Commitment
Maturity Date, the Tranche A Term Loan Maturity Date, the Tranche B Term Loan
Maturity Date or Tranche C Term Loan Maturity Date.
"Merrill Lynch Entity" means Merrill Lynch and Co., its wholly-owned
Subsidiaries, general or limited partnerships of which Merrill Lynch and Co. or
its wholly-owned Subsidiaries are the sole general partners, or any other
"Permitted Holder" as defined in the indenture governing the Senior Subordinated
Notes.
"Moody's" means Moody's Investors Service, a corporation organized
and existing under the laws of the State of Delaware, and its successors.
"Multiemployer Plan" means a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA) and to which any member of the
Controlled Group makes, is making, or is obligated to make contributions or has
within the immediately preceding period including five full Plan years made, or
been obligated to make, contributions.
"Negative Pledge" means a Contractual Obligation that contains a
covenant binding on the Company or any of its Subsidiaries that prohibits Liens
on any of its or their property in favor
-13-
<PAGE>
of the Secured Parties, other than any such covenant contained in a Contractual
Obligation which affects only the property that is the subject of such
Contractual Obligation.
"Net Cash Proceeds" means, with respect to any Disposition or any
offering of Indebtedness or equity securities of the Company or its
Subsidiaries, the gross cash sales proceeds received by the Company and its
Subsidiaries from such Disposition or offering (including cash or Cash
Equivalents, including payments in respect of, deferred payment obligations,
when received in the form of, or stock or other assets when such obligations are
disposed of for, cash or Cash Equivalents (except to the extent that such
obligations are financed or sold with recourse to such Person or any Subsidiary
thereof) net of (a) the reasonable direct costs relating to such Disposition or
------
offering, (b) sale, use or other transaction taxes but not actual or estimated
income taxes payable on any gain from the Disposition or offering paid or
payable as a result thereof (provided, that a reasonable estimate of income
--------
taxes on the gain from Disposition as the Company actually expects to pay in the
year in which such Disposition occurs or such Net Cash Proceeds are received may
be netted), and (c) amounts required to be applied to repay principal, interest
and prepayment premiums and penalties on Indebtedness secured by a Lien on the
asset which is the subject of such Disposition. "Net Cash Proceeds" shall also
include proceeds received by any Person in the form of cash or Cash Equivalents
including payments in respect of deferred payment obligations when received in
the form of cash or Cash Equivalents in respect of any Event of Loss net of (i)
all money actually applied (or committed to be applied within six months of the
Disposition) to repair or reconstruct the damaged property or property affected
by the condemnation or taking, (ii) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or other
payments and (iii) any amounts retained by or paid to parties having superior
rights to such proceeds, awards or other payments. "Net Cash Proceeds
Percentage" means, with respect to prepayments required pursuant to Section
2.08, an amount equal to the percentage set forth below, based upon the Total
Leverage Ratio as shown on the most recent compliance certificate delivered
pursuant to Section 6.02(b) (adjusted, in the case of Dispositions, for such
Disposition on a pro forma basis) for (a) in the case of Levels 2 and 3, the
fiscal quarter preceding the date of receipt by the Company or its Subsidiary of
such Net Cash Proceeds and (b) in the case of Level 4, the two most recent
fiscal quarters preceding the date of receipt by the Company or its Subsidiary
of such Net Cash Proceeds:
-14-
<PAGE>
<TABLE>
<CAPTION>
LEVEL TOTAL LEVERAGE RATIO NET CASH PROCEEDS PERCENTAGE
- - --------------------------------------------------------------------------------------------
EXCESS CASH FLOW EQUITY PROCEEDS
SECTION 2.08(b) SECTION 2.08(d)
<S> <C> <C> <C>
- - --------------------------------------------------------------------------------------------
1 Default or Event of Default exists, 100% 100%
regardless of Total Leverage Ratio
- - --------------------------------------------------------------------------------------------
2 >5.00:1 75% 100%
-
- - --------------------------------------------------------------------------------------------
3 = 4.00:1 but 5.00:1 50% 50%
- - --------------------------------------------------------------------------------------------
4 4.00:1 for two consecutive Fiscal 0% 0%
Quarters
- - --------------------------------------------------------------------------------------------
</TABLE>
"Note" means a promissory note substantially in the form of Exhibit
-------
A-1, Exhibit A-2, Exhibit A-3 or Exhibit A-4 hereto, as from time to time
- - --- ----------- ----------- -----------
amended, modified or supplemented (collectively, the "Notes").
"Notice of Borrowing" means a notice substantially in the form of
Exhibit B hereto.
- - ---------
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit C hereto.
---------
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or Governmental Authority for the purpose of evidencing,
creating, perfecting or preserving the priority of a Lien securing obligations
owing to a Governmental Authority.
"Obligations" means all Loans, Letter of Credit Usage and other
Indebtedness, advances, debts, liabilities, obligations, covenants and duties
owing by any Loan Party to any Lender, Swap Party, any Agent, or any other
Person required to be indemnified under any Loan Document, of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under any Loan Document, or, in respect of any Rate
Contract with any Swap Party, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification or
in any other manner, whether direct or indirect (including those acquired by
assignment), voluntary or involuntary, absolute or contingent, whether or not
jointly owed with others, direct or indirect, due or to become due, liquidated
or unliquidated, now existing or hereafter arising and however acquired.
"Operating Cash Flow" means, with respect to any Person for any
period, (a) the gross operating revenues of such Person for such period derived
in the ordinary course of its business from operations (including, in the case
of the Company, revenues received as management fees under agreements entered
into by Subsidiaries of the Company), minus (b) all operating expenses from
-----
operations of such Person for such period, including without limitation,
technical, film, actual operating lease rent (including actual operating lease
rent payable to an Affiliate of such
-15-
<PAGE>
Person), selling, advertising, general and administrative expenses and corporate
overhead of such Person during such period, minus (c) income taxes paid by such
-----
Person during such period, plus (d) depreciation, amortization, deferred taxes
----
and other non-cash charges in each case including, without limitation, any
increase or decrease, resulting from any adjustments for appreciation or
depreciation in the value of any option to acquire the common stock of the
Company to the extent deducted in calculating operating income from continuing
operations of such Person for such period, but only to the extent not paid in
cash.
In the calculation of Operating Cash Flow there shall be
excluded interest expense, interest income, extraordinary items and
gains or losses on (and proceeds from) sales or dispositions of assets
outside the ordinary course of business. With respect to the
Consolidated Operating Cash Flow of any Person, the effect of revenues
and expenses associated with any minority interest in Subsidiaries of
such Person, and intercompany transactions, including the payment of
dividends by Subsidiaries of such Person shall be excluded. All
dividends of unconsolidated (owned 50% or less) subsidiaries or other
Persons shall be included to the extent they are paid in cash.
In the case of the sale, transfer or other disposition, or an
acquisition of an operating theatre by any such Person during any
period, Operating Cash Flow shall be adjusted as it would have been if
such acquisition, sale, transfer or other disposition had been
consummated on the first day of the most recently completed four fiscal
quarter period of such Person.
In the case of newly constructed theatres or screens which have
not had 12 complete months of operations during a measurement period,
the Operating Cash Flow for such theatres or screens shall be PPOCF plus
----
PFOCF. PFOCF shall be calculated by annualizing the Operating Cash Flow
for those complete months during which such new theatre or screen has
been in operation based on the monthly annualization factors for such
month(s) set forth in Schedule 1.01(B) hereto in accordance with the
---------------
following formula:
PFOCF = OCFM - PPOCF
----
AF
Where
PFOCF = Pro Forma Operating Cash Flow.
OCFM = Sum of actual Operating Cash Flow for each
Included Month. "Included Month" is each
full month that such theatre or screen was
in operation covered by the most recent
compliance certificate (the "Prior Period
Operating Cash Flow") plus each full month
that such theatre or screen was in
operation from the end of the period
covered by the compliance certificate to
the date of calculation.
-16-
<PAGE>
AF = Sum of annualization factors set forth in
Schedule 1.01(b) for the Included Months.
----------------
PPOCF = Prior Period Operating Cash
Flow, which is the actual
aggregate cash flow for the
theatres or screens included in
the measurement period.
"Other Taxes" has the meaning specified in Section 3.01(b).
"Outstanding Obligations" means, as of any date of determination, as
to any or all Lenders under any or all Tranches, as the case may be, and giving
effect to making any Loans or Letters of Credit requested on such date and all
payments, repayments and prepayments made on such date under such Tranches, the
sum of (a) the aggregate outstanding principal of all Loans of such Lenders
under such Tranches, and (b) all Letter of Credit Usage, if any, in which such
Lender(s) are participating.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Participant" has the meaning specified in Section 10.07(g).
"Permitted Investments" means (a) commercial paper of any of the
Lenders, or of any other Person if rated P-1 or better by Moody's or A-1 or
better by S&P or similarly rated by any successor to either of such rating
services, (b) certificates of deposit, money market deposit accounts, time
deposits and banker's acceptances issued by any Person in the Lender Group, (c)
certificates of deposit, money market deposit accounts, time deposits and
banker's acceptances issued by any commercial Lender registered to do business
in any state of the United States having combined capital and surplus and
undivided profits in excess of $500,000,000 and whose short term debt is rated A
or better by S&P or by Moody's, or similarly rated by any successor to either of
such rating services, and (d) obligations of the United States government or any
agency thereof which are backed by the full faith and credit of the United
States; provided, however, that, in the case of clauses (a), (b) and (c) above,
-------- -------
such obligations shall mature not more than one year from the date of
acquisition thereof.
"Permitted Liens" means:
(a) Assignments or other encumbrances on theatre leases and
subleases, and extensions thereof, and other encumbrances on
property of the Company or its Subsidiaries existing on the Closing
Date and set forth in Schedule 7.02 hereto;
-------------
(b) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with worker's compensation,
unemployment insurance, old-age pensions and other social security
benefits;
(c) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of Indebtedness), statutory
obligations, surety, customs and appeal bonds and other obligations
of like nature, incurred as an incident to and in the ordinary
course of business;
-17-
<PAGE>
(d) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's, landlords', laborers' suppliers' and
vendors' liens, incurred in good faith in the ordinary course of
business and securing obligations which are not yet due or which are
being contested in good faith by appropriate proceedings as to which
the Company or such Subsidiary, shall, to the extent required by
GAAP consistently applied, have set aside on its books adequate
reserves;
(e) Liens securing the payment of taxes, assessments and
governmental charges or levies, either (i) not delinquent or (ii)
being contested in good faith by appropriate legal or administrative
proceedings and as to which the Company or such Subsidiary, as the
case may be, shall, to the extent required by GAAP applied on a
consistent basis, have set aside on its books adequate reserves; and
(f) Zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use
of property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
property, with or without consent of the lessee), none of which
materially impairs the use of any parcel of property material to the
operation of the business of the Company or such Subsidiary or the
value of such property for the purpose of such business;
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, limited liability
company, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or member of the Controlled Group makes or is
obligated to make contributions, and includes any Multiemployer Plan or a
Qualified Plan.
"Pledged Subsidiaries" means Subsidiaries of the Company, all the
issuing and outstanding capital stock or other ownership interest of which are
pledged pursuant to the Collateral Documents (individually, a "Pledged
Subsidiary").
"Principal Payment Date" means each of the dates set forth on
Schedule 2.01 hereto as being a Principal Payment Date.
- - -------------
"Principal Payment Amount" means, as to any Tranche of Term Loans,
the principal amount of such Term Loans set forth on Schedule 2.01 hereto
-------------
opposite that Principal Payment Date under the heading Principal Payment Amount.
"Pro Forma Debt Service" means, as of any date of determination, for
the Company and its Subsidiaries on a Consolidated basis, the sum of (a) all
cash payments of principal of Indebtedness scheduled by the terms of such
Indebtedness to be paid during the four fiscal quarters immediately following
the date of determination thereof (excluding, until the fiscal quarter ending
December 31, 1998, the principal of the Prop I Mortgage Debt due on the Prop I
Mortgage Debt Repayment Date) plus (b) all Pro-Forma Interest Expense for such
----
period;
-18-
<PAGE>
provided, however, that in calculating the amount of principal payments that
- - -------- -------
will be required under the combined Revolving Commitments by reason of the
commitment reductions set forth in Section 2.06, the amount, if any, by which
the aggregate Revolving Loans and Letter of Credit Usage outstanding on such
date of determination exceeds the combined Revolving Commitments, as so reduced,
shall be included. For purposes of section 7.12(b), Pro Forma Debt Service shall
include Pro Forma Lease Expense.
"Pro Forma Interest Expense" means, as of any date of determination,
for the Company and its Subsidiaries on a Consolidated basis, for the period of
the next four fiscal quarters immediately following such date of determination,
all cash payments of commitment, facility and other fees due on all commitments
to lend and interest on the outstanding Indebtedness on such date of
determination, in each case after giving effect to all scheduled amortization
payments of Indebtedness scheduled by the terms of such Indebtedness to be paid
during such period. For purposes of this calculation, interest on any
Indebtedness that is based on a floating rate or a rate that is not fixed for
such period (after giving effect to all Rate Contracts and interest rate cap
transactions) will be assumed to be fixed at the equivalent of a three-month
Eurodollar Rate plus the Applicable Amount as of the first day of the period
referred to in the preceding sentence.
"Pro Forma Lease Expense" means, as of any date of determination,
for the Company and its Subsidiaries on a Consolidated basis, operating cash
rental expense (which is the sum of actual base rent, additional rent and
percentage rent) for the immediately preceding fiscal quarter of the Company
multiplied by 4. In the case of the sale, transfer or other disposition, or an
acquisition of an operating theatre or screen by the Company or any of its
Subsidiaries during any period, Pro Forma Lease Expense shall be adjusted as it
would have been if such acquisition, sale, transfer or other disposition had
been consummated on the first day of the most recently completed fiscal quarter
of such Person. In the case of a newly opened or constructed theatre or screen,
Pro Forma Lease Expense shall be determined by using actual lease expense for
the first full month that such theatre or screen was in operation and
multiplying the actual lease expense for that month by twelve.
"Pro Rata Share" means as to any Lender (a) under a particular
Tranche, the percentage, as adjusted from time to time as set forth herein, set
forth opposite such Lender's name under Pro Rata Share in the table for such
Tranche on Schedule 2.01(a), 2.01(b), 2.01(c) or 2.01(d) hereto, as applicable,
---------------- ------- ------- -------
and (b) under all Tranches taken as a whole, such Lender's Credit Exposure under
all Tranches as a percentage of the aggregate Credit Exposure of all Lenders
under all Tranches.
"Prop I" means United Artists Properties I Corporation, a Colorado
corporation.
"Prop I Agreement" means those UAR Financing Agreements described in
clauses (a) through (d) of the definition of UAR Financing Agreements, as
amended, supplemented or otherwise modified from time to time.
"Prop I Letters of Credit" means (a) the standby letter of credit in
the initial face amount of $12,000,000 as described in the Prop I Agreement
substantially in the form of Exhibit D-1 hereto and (b) the standby letter of
-----------
credit in the initial face amount of $500,000 issued pursuant to the Prop I
Agreement and substantially in the form of Exhibit D-2 hereto.
-----------
-19-
<PAGE>
"Prop I Mortgage Debt" means the Secured Principal Notes due
November 1, 1998 issued pursuant to and in connection with the Prop I Agreement
not exceeding $60,000,000 in principal amount.
"Prop I Mortgage Debt Repayment Date" means the date which is the
earlier of (a) the date the Prop I Mortgage Debt is paid and (b) November 30,
1998.
"Purchase Money Mortgages" means secured Indebtedness of the Company
or any Subsidiary (a) issued to finance or refinance the purchase or
construction of any assets of the Company or any Subsidiary or (b) secured by a
Lien on any assets of the Company or any Subsidiary where the lender's sole
recourse is to the assets so encumbered, in either case (i) to the extent the
purchase or construction prices for such assets are or should be included in
"addition to property, plant or equipment" in accordance with GAAP, (ii) if the
purchase or construction of such assets is not part of any acquisition of a
Person or business unit, and (iii) if the Lien securing such Indebtedness is
created within 90 days of such purchase or construction.
"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes or
is obligated to make contributions, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding period including five full Plan years, but
excluding any Multiemployer Plan.
"Rate Contracts" means interest rate and currency swap agreements,
floor and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements (other than caps) designed to
provide protection against fluctuations in interest or currency exchange rates.
"Reduction Amount" means the principal amount of Revolving Loans
necessary to reduce the combined Revolving Commitments to the level set forth on
Schedule 2.01 hereto opposite that Reduction Date.
- - -------------
"Reduction Date" means each of the dates set forth under "Reduction
Date" on Schedule 2.01(a) hereto.
----------------
"Reference Lender" means each of BofA, BankBoston, N.A. and
NationsBank of Texas, N.A. or any successor(s) thereto in such capacity
(collectively, the "Reference Lenders" in such capacity); provided, that a
Reference Lender shall be included in the determination of the interest rate for
any particular Borrowing only if such Reference Lender is participating in any
Borrowing.
"Reference Rate" means the rate per annum determined by BofA from
time to time as its Reference Rate of interest and publicly announced as such
from time to time by BofA. The Reference Rate is set by BofA based upon various
factors including its costs and desired return, general economic conditions and
other factors, and such rate is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in the reference rate announced shall take effect at the opening of business on
the day BofA publicly announces such rate.
-20-
<PAGE>
"Register" has the meaning set forth in Section 2.02(a)(i).
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder excluding those events for which
the 30-day notice requirement is waived, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Required Class Lenders" means, at any time of determination, (a)
Lenders having or holding more than 51% of the sum of the aggregate Revolving
Commitment Exposure of all Lenders plus the aggregate Tranche A Term Loan
----
Exposure of all Lenders and (b) Lenders having or holding more than 51% of the
sum of the aggregate Tranche B Term Loan Exposure of all Lenders plus the
----
aggregate Tranche C Term Loan Exposure of all Lenders.
"Requisite Notice" means, unless otherwise provided herein, (a)
irrevocable written notice to the intended recipient or (b) except with respect
to Letter of Credit Actions (which must be in writing), irrevocable telephonic
notice to the intended recipient, promptly confirmed by a written notice to such
recipient. Such notices shall be (i) delivered or made to such recipient at the
address, telephone number or facsimile number set forth on Schedule 10.02 or as
--------------
otherwise designated by such recipient by Requisite Notice to the Administrative
Agent and (ii) if made by the Company, given or made by a Responsible Officer.
Any written notice shall be in the form, if any, prescribed in the applicable
section herein and may be given by facsimile provided such facsimile is promptly
--------
confirmed by a telephone call to such recipient.
"Responsible Officer" means the Chief Executive Officer or the
President of the Company, any Executive Vice President of the Company or the
Chief Financial Officer or the Treasurer, or the Assistant Treasurer, of the
Company.
"Revolving Commitment" means, as to any Lender, the amount set forth
opposite such Lender's name on Schedule 2.01(a) hereto under the heading
----------------
Revolving Commitments, as such amount may be reduced from time to time pursuant
to Section 2.06 or as a result of one or more assignments pursuant to Section
10.07.
"Revolving Commitment Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Revolving
Commitments, that Lender's Revolving Commitment and (b) after the termination of
the Revolving Commitments, the sum of (i) the aggregate outstanding principal
amount of the Revolving Loans of that Lender plus (ii) the amounts of such
----
Lender's Pro Rata Share of Letter of Credit Usage.
"Revolving Commitment Maturity Date" means the earlier to occur of
(a) April 21, 2005 and (b) the date on which the combined Revolving Commitments
shall terminate in accordance with the provisions of this Agreement.
"Revolving Loan" has the meaning specified in Section 2.01(a).
-21-
<PAGE>
"Sale-and-Leaseback Transaction" means any transaction or series of
related transactions pursuant to which the Company or any of its Subsidiaries
sells or transfers any real or tangible property or asset in connection with the
leasing, or the resale against installment payments, or as part of an
arrangement involving the leasing or the resale against installment payments, of
such property or asset to the seller or transferor.
"Secured Parties" means the Agents, the Lenders, the Issuing Lenders
and any Lender in its capacity as a counterparty under a Rate Contract (each
individually a "Secured Party").
"Senior Leverage Ratio" means, for the most recently completed four
fiscal quarters for the Company and its Subsidiaries on a Consolidated basis,
the ratio of (a) without duplication, all Funded Indebtedness at the end of such
period less the Senior Subordinated Notes and any other Subordinated
----
Indebtedness outstanding at the end of such period plus an amount equal to all
----
issued and outstanding letters of credit to (b) Operating Cash Flow plus
----
Consolidated Lease Expense related to Designated Leases during that period.
"Senior Subordinated Notes" means (a) the Floating Rate Senior
Subordinated Notes due 2007 in an aggregate principal amount of $50,000,000 and
(b) the 9-3/4% Senior Subordinated Notes due 2008 in an aggregate principal
amount of $225,000,000, in each case containing terms and conditions disclosed
to the Administrative Agent and Lenders prior to the Closing Date.
"S&P" means Standard & Poor's Ratings Services, a division of
McGraw-Hill Companies., a corporation organized and existing under the laws of
the State of New York, and its successors.
"Subordinated Indebtedness" means subordinated Indebtedness the
terms of which (a) do not impose a Negative Pledge on any assets of the Company
or any Subsidiary thereof, (b) are not materially more restrictive on the
Company and its Subsidiaries than the terms of the Senior Subordinated Notes,
and (c) do not contain subordination provisions more favorable to the lenders
thereof than the terms of the Senior Subordinated Notes.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.
"Subsidiary Guarantor" means each of UATC, UAR and Prop I and any
other Subsidiary of the Company becoming a guarantor, from and after the time
each becomes a party to the Subsidiary Guaranty (collectively, the "Subsidiary
Guarantors").
"Subsidiary Guaranty" means the Subsidiary Guaranty, substantially
in the form of Exhibit E as the same may be amended, supplemented or otherwise
---------
modified from time to time.
"Subsidiary Pledge Agreement" means the Subsidiary Pledge Agreement
substantially in the form of Exhibit F-2 hereto, as the same may be amended,
-----------
supplemented or otherwise modified from time to time.
-22-
<PAGE>
"Super Majority Lenders" means, at any time of determination,
Lenders having or holding more than 75% of the sum of the aggregate Credit
Exposure of all Lenders under all Tranches.
"Swap Party" means any Lender or any of its Affiliates in its
capacity as an individual counterparty under any Rate Contract entered into as
contemplated by Section 6.13.
"Syndication Agent" means NationsBank of Texas, N.A.
"Taxes" has the meaning specified in Section 3.01(a).
"Term Loans" means, as the context indicates, the Tranche A Term
Loans, the Tranche B Term Loans and/or the Tranche C Term Loans.
"Total Leverage Ratio" means, for the most recently completed four
fiscal quarters for the Company and its Subsidiaries on a Consolidated basis,
the ratio of (a) without duplication, all Funded Indebtedness at the end of such
period plus an amount equal to all issued and outstanding letters of credit to
----
(b) Operating Cash Flow plus Consolidated Lease Expense related to Designated
----
Leases during such period; provided, however, that for purposes of determining
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the Applicable Amount, outstanding letters of credit shall be excluded from the
numerator when calculating the Total Leverage Ratio.
"Tranche" means, as the context indicates, the Revolving Commitments
or the Revolving Loans, the Tranche A Term Loan Commitments or the Tranche A
Term Loans, the Tranche B Term Loan Commitments or the Tranche B Term Loans, the
Tranche C Term Loan Commitments or the Tranche C Term Loans.
"Tranche A Term Loan" has the meaning specified in Section 2.01(b).
"Tranche A Term Loan Availability Termination Date" means the
earlier to occur of (a) December 31, 1998 and (b) the date on which the combined
Tranche A Term Loan Commitments shall terminate in accordance with the
provisions of this Agreement.
"Tranche A Term Loan Commitment" means, as to any Lender, the amount
set forth opposite such Lender's name on Schedule 2.01(b) hereto under the
----------------
heading Tranche A Term Loan Commitments, as such amount may be changed from time
to time pursuant to Section 2.06 or as a result of one or more assignments
pursuant to Section 10.07.
"Tranche A Term Loan Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Tranche A Term
Loan Commitments, that Lender's Tranche A Term Loan Commitment and (b) after the
termination of the Tranche A Term Loan Commitments, the aggregate outstanding
principal amount of the Tranche A Term Loans of that Lender.
"Tranche A Term Loan Maturity Date" means the earlier to occur of
(a) April 21, 2005 and (b) the date on which the combined Tranche A Term Loan
Commitments shall terminate in accordance with the provisions of this Agreement.
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"Tranche B Term Loan" has the meaning specified in Section 2.01(c).
"Tranche B Term Loan Commitment" means, as to any Lender, the amount
set forth opposite such Lender's name on Schedule 2.01(c) hereto under the
----------------
heading Tranche B Term Loan Commitments, as such amount may be changed from time
to time pursuant to Section 2.06 or as a result of one or more assignments
pursuant to Section 10.07.
"Tranche B Term Loan Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Tranche B Term
Loan Commitments, that Lender's Tranche B Term Loan Commitment and (b) after the
termination of the Tranche B Term Loan Commitments, the aggregate outstanding
principal amount of the Tranche B Term Loans of that Lender.
"Tranche B Term Loan Maturity Date" means the earlier to occur of
(a) April 21, 2006 and (b) the date on which the combined Tranche B Term Loan
Commitments shall terminate in accordance with the provisions of this Agreement.
"Tranche C Term Loan" has the meaning specified in Section 2.01(d).
"Tranche C Term Loan Availability Termination Date" means the
earlier to occur of (a) the UATC Senior Secured Note Repayment Date and (b) the
date on which the combined Tranche C Term Loan Commitments shall terminate in
accordance with the provisions of this Agreement.
Tranche C Term Loan Commitment" means, as to any Lender, the amount
set forth opposite such Lender's name on Schedule 2.01(d) hereto under the
----------------
heading Tranche C Term Loan Commitments, as such amount may be changed from time
to time pursuant to Section 2.06 or as a result of one or more assignments
pursuant to Section 10.07.
"Tranche C Term Loan Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Tranche C Term
Loan Commitments, that Lender's Tranche C Term Loan Commitment and (b) after the
termination of the Tranche C Term Loan Commitments, the aggregate outstanding
principal amount of the Tranche C Term Loans of that Lender.
"Tranche C Term Loan Maturity Date" means the earlier to occur of
(a) April 21, 2007 and (b) the date on which the Tranche A Term Loan Commitments
shall terminate in accordance with the provisions of this Agreement.
"Transferee" has the meaning specified in Section 10.07(g).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"UAR" means United Artists Realty Company, a Delaware corporation.
"UAR Financing Agreements" means (a) the Indenture of Mortgage and
Deed of Trust, dated as of November 1, 1988, from Prop. I to the Connecticut
Lender and Trust Company, N.A. and its successors and assigns, ("Connecticut
Lender") and Lese Amato; (b) the Guaranty, dated
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as of November 1, 1988, from United Artists Communications, Inc. ("UAC") to
Connecticut Lender and Lese Amato, (c) the Note Purchase Agreements, each dated
November 1, 1988, between Prop. I and the noteholders listed therein, (d) the
Assignment of Lease Agreement, dated as of November 1, 1988, from Prop. I to
Connecticut Lender and Lese Amato; and (e) two Promissory Notes, each dated
October 4, 1988, from UAR to Commonwealth Theatres, Inc., including, in each
case, any amendments, renewals, extensions, substitutions, refinancings,
replacements, restructurings, supplements or other modifications thereof
otherwise permitted hereby.
"UAR Leases" means (a) the Lease Agreement, dated as of November 1,
1988, between Prop I and the Company, as amended or otherwise modified by (i)
the First Amendment thereto, dated as of May 1, 1990, (ii) the Second Amendment
thereto, dated as of September 1, 1990, and (iii) the Assignment of Lease
Agreement, dated as of November 1, 1988, from Prop. I to The Connecticut Lender,
and (b) the Master Lease Agreement and Master Sublease Agreement, each dated as
of the date of the Indenture, between UAR and the Company, in each case, as such
agreements are amended, supplemented or otherwise modified as permitted
hereunder.
"UATC" means United Artists Theatre Circuit, Inc., a Maryland
company, a wholly-owned Subsidiary of the Company.
"UATC Pass-Through Certificates" means the Pass Through
Certificates, Series 1995-A in an aggregate principal amount not exceeding
$116,753,000 issued by the United Artists Theatre Circuit, Inc. 1995-A Pass
Through Trust pursuant to the Pass Through Trust Agreement dated as of December
13, 1995 between UATC and Shawmut Bank Connecticut, National Association, as
trustee.
"UATC Preferred Stock" means the Series A Cumulative Redeemable
Exchangeable Preferred Stock issued by UATC to the Company.
"UATC Senior Secured Notes" means UATC's 11-1/2% Senior Secured
Notes due 2002, Series B issued pursuant to the UATC Senior Secured Notes
Indenture.
"UATC Senior Secured Notes Indenture" means the Trust Indenture,
dated as of May 12, 1992, among UATC, the Company, as guarantor, and The Bank of
New York, as Trustee as the same may be amended, supplemented or otherwise
modified from time to time as permitted hereunder.
"UATC Senior Secured Note Repayment Date" means the date which is
the earlier of (a) the date the UATC Senior Secured Notes are paid and (b) 45
days after the Closing Date.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"Unfunded Pension Liabilities" means the excess of the present value
of a Plan's accrued benefits, as defined in Section 3(23) of ERISA, as of the
most recent valuation date for such Plan utilizing the actuarial assumptions set
forth in such valuation, over the current value of that Plan's assets, as
defined in Section 3(26) of ERISA, as of such date.
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"Unreimbursed Drawings" means the aggregate amount of all drawings
under a Letter of Credit honored by the relevant Issuing Lender, and not
reimbursed by the Company whether from the proceeds of a Loan or from any other
source.
"United States" and "U.S." each means the United States of America.
"Weighted Average Life to Expiration" means, when applied to any
agreement for the use or possession of Property entered into in connection with
a Sale-and-Leaseback Transaction at any date, the number of years obtained by
dividing (a) the sum of the products obtained by multiplying (i) the amount of
each of the then remaining installments or other required payments of base rent
under such agreement, including the final payment thereof by (ii) the number of
years (calculated to the nearest one-twelfth) that will elapse between the date
of determination and the making of such payment, by (b) the then aggregate
unpaid amount of such base rent payments payable thereunder.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each of the then
remaining required payments of principal, including payment at final maturity,
in respect hereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between the date of determination and the making
of such payment, by (b) the then outstanding principal amount of such
Indebtedness.
"Wholly-Owned First-Tier Subsidiary" means any domestic first tier
Subsidiary of UATC which is wholly-owned, in the aggregate, by the Company and
UATC.
"Withdrawal Liability" means the aggregate amount of a liability
incurred pursuant to Section 4201 of ERISA with respect to a Multiemployer Plan
and any increase in contributions pursuant to Section 4243 of ERISA.
1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified herein or therein, all terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto.
(b) All accounting terms not expressly defined herein shall be
construed, except where the context otherwise requires, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "including" is not
limiting and means "including without limitation".
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(d) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but excluding," and the word "through" means "to and
including."
(e) References to agreements and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document.
(f) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(g) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the construction of this Agreement.
ARTICLE II THE CREDITS
2.01 AMOUNTS AND AVAILABILITY OF COMMITMENTS.
(a) THE REVOLVING COMMITMENTS. Until the Revolving Maturity
Termination Date, each Lender having a Revolving Commitment severally agrees, on
the terms and conditions hereinafter set forth, to (a) make Loans to the Company
(each such loan, a "Revolving Loan") and (b) purchase risk participations in
outstanding Letter of Credit Usage; provided, however, that (a) each Lender's
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Outstanding Obligations consisting of Revolving Loans and Letter of Credit Usage
shall not exceed its Revolving Commitment, and all Lenders' Outstanding
Obligations consisting of Revolving Loans and Letter of Credit Usage shall not
exceed the combined Revolving Commitments. Within the limits of each Lender's
Revolving Commitment and subject to the other terms and conditions hereof, the
Company may borrow under this Section 2.01(a), prepay pursuant to Section 2.07
and reborrow pursuant to this Section 2.01(a).
(b) THE TRANCHE A TERM LOAN COMMITMENTS. Until the Tranche A Term
Loan Availability Termination Date, each Lender having a Tranche A Term Loan
Commitment severally agrees, on the terms and conditions hereinafter set forth,
to make term loans to the Company (each such loan, a "Tranche A Term Loan") in
one or more disbursements; provided, however, that each Lender's Outstanding
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Obligations under its Tranche A Term Loan Commitment shall not exceed its Pro
Rata Share of the Available Tranche A Term Loan Commitments, and all Lenders'
Outstanding Obligations under the Tranche A Term Loan Commitments shall not
exceed the Available Tranche A Term Loan Commitments. Amounts borrowed under the
Tranche A Term Loan Commitments which are repaid or prepaid may not be
reborrowed
(c) THE TRANCHE B TERM LOAN COMMITMENTS. Each Lender having a
Tranche B Term Loan Commitment severally agrees, on the terms and conditions
hereinafter set forth, to make a term loan to the Company (each such loan, a
"Tranche B Term Loan") in one disbursement on the Closing Date; provided,
--------
however, that each Lender's Outstanding Obligations under its Tranche B Term
- - -------
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Loan Commitment shall not exceed its Tranche B Term Loan Commitment, and all
Lenders' Outstanding Obligations under the Tranche B Term Loan Commitments shall
not exceed the combined Tranche B Term Loan Commitments. Amounts borrowed under
the Tranche B Term Loan Commitments which are repaid or prepaid may not be
reborrowed.
(d) THE TRANCHE C TERM LOAN COMMITMENTS. Until the Tranche C Term
Loan Availability Termination Date, each Lender having a Tranche C Term Loan
Commitment severally agrees, on the terms and conditions hereinafter set forth,
to make term loans to the Company (each such loan, a "Tranche C Term Loan") in
one or more disbursements; provided, however, that each Lender's Outstanding
-------- -------
Obligations under its Tranche C Term Loan Commitment shall not exceed its Pro
Rata Share of the Available Tranche C Term Loan Commitments and all Lenders'
Outstanding Obligations under the Tranche C Term Loan Commitments shall not
exceed the Available Tranche C Term Loan Commitments. Amounts borrowed under the
Tranche C Term Loan Commitments which are repaid or prepaid may not be
reborrowed.
2.02 LOAN ACCOUNTS.
(a) THE REGISTER.
(i) The Administrative Agent shall maintain, at its address referred
to in Section 10.02, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"), The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) The Administrative Agent shall record in the Register the
Commitments, Loans and Letter of Credit Usage from time to time of each
Lender, and each repayment or prepayment in respect of the principal
amount of the Loans of each Lender. Any recordation shall be conclusive
and binding on the Company and each Lender, absent manifest error;
provided, however, that that failure to make any such recordation, or
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any error in such recordation, shall not affect any Lender's Commitments
or the Company's obligations in respect of any applicable Loans or
Letter of Credit Usage.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of the
Loan made by it and each payment in respect thereof. Any recordation
shall be conclusive and binding on the Company, absent manifest error;
PROVIDED, HOWEVER, that that failure to make any such recordation, or
any error in such recordation, shall not affect any Lender's Commitments
or the Company's obligations in respect of Loans and Letter of Credit
Usage; provided, further, that in the event of any inconsistency between
--------
the Register and any Lender's records, the recordations in the Register
shall govern.
(iv) The Company, Administrative Agent and the Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments, Loans and Letter of Credit
Usage listed therein for all purposes hereof, and no assignment or
transfer of any such Commitment, Loans or Letter
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of Credit Usage shall be effective, in each case, unless and until an
Assignment and Acceptance effecting the assignment or transfer thereof
shall have been accepted by the Administrative Agent and recorded in
the Register as provided in Section 10.07(c). Prior to such
recordation, all amounts owed with respect to the applicable
Commitment, Loan or Letter of Credit Usage shall be owed to the Lender
listed in the Register as the owner thereof, and any request,
authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register
as Lender shall be conclusive and binding on any subsequent holder,
assignee or transferee of the corresponding Commitments, Loans or
Letter of Credit Usage.
(b) THE NOTES. The Loans shall be evidenced by Notes executed and
delivered by the Company in favor of each Lender. The Administrative Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until an Assignment and Acceptance effecting the assignment or
transfer thereof shall have been accepted by the Administrative Agent and
recorded in the Register as provided in Section 10.07(c). Any request, authority
or consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, assignee or transferee of that Note or of any Note or
Notes issued in exchange therefor.
2.03 PROCEDURE FOR BORROWING.
(a) Except as otherwise provided in this Agreement, each Borrowing
of Loans shall be made upon Requisite Notice by the Company to the
Administrative Agent in the form of a Notice of Borrowing, which must be
received by the Administrative Agent not later than 9:00 a.m. (San Francisco
time) at least (i) three Business Days prior to the requested borrowing date in
the case of Eurodollar Rate Loans; and (ii) one Business Day prior to the
requested borrowing date in the case of Base Rate Loans, specifying: (A) the
amount of the Borrowing, which shall be in an aggregate minimum principal amount
of $5,000,000 or any integral multiple of $1,000,000 in excess thereof in the
case of Base Rate Loans and Eurodollar Rate Loans; (B) the requested borrowing
date, which shall be a Business Day; (C) whether the Borrowing is to be
comprised of Eurodollar Rate Loans or Base Rate Loans; (D) the Tranche under
which such Borrowing is requested; and (E) the duration of the Interest Period
applicable to Eurodollar Rate Loans included in such notice. If the Notice of
Borrowing shall fail to specify the duration of the Interest Period for any
Borrowing comprised of Eurodollar Rate Loans, such Interest Period shall be one
month.
(b) Upon receipt of the Notice of Borrowing, the Administrative Agent
will promptly notify each Lender under the applicable Tranche of the amount of
such Lender's Pro Rata Share of the Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of the
Borrowing available to the Administrative Agent for the account of the Company
at the Administrative Agent's Payment Account for payment by 11:00 a.m. (San
Francisco time) on the borrowing date requested by the Company in funds
immediately available to the Administrative Agent. Unless any applicable
condition specified in Article IV has not been satisfied, the proceeds of all
such Loans will then be made available to the Company by the Administrative
Agent at the office at which Administrative Agent's Payment Account is located
by crediting the account of the
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Company on the books of BofA with the aggregate of the amounts made available to
the Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
(d) Notwithstanding any other provision contained in this Agreement,
after giving effect to any Borrowing, conversion or continuation of any Loans,
there shall not be more than an aggregate of 15 Interest Periods for all
Eurodollar Rate Loans outstanding at the time any such determination is made in
effect at any one time.
(e) At the election of the Majority Lenders, no Loans may be
borrowed as, converted into or continued as, Eurodollar Rate Loans after the
occurrence and during the continuance of any Default or Event of Default exists.
2.04 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Company may upon Requisite Notice to the Administrative
Agent: (i) elect to convert on any Business Day, any Base Rate Loans (or any
part thereof in an amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof) into Eurodollar Rate Loans; (ii) elect to convert
on any Interest Payment Date, any Eurodollar Rate Loans maturing on such
Interest Payment Date (or any part thereof in an amount not less than $5,000,000
or an integral multiple of $1,000,000 in excess thereof), into Base Rate Loans;
or (iii) elect to renew, on any Interest Payment Date therefor, any Eurodollar
Rate Loans (or any part thereof in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof); provided, that if the
aggregate amount of Eurodollar Rate Loans shall have been reduced, by payment,
prepayment, or conversion of part thereof to be less than $5,000,000, the
Eurodollar Rate Loans shall automatically convert into Base Rate Loans, and on
and after such date the right of the Company to continue such Loans as
Eurodollar Rate Loans shall terminate.
(b) The Company shall deliver by Requisite Notice a Notice of
Conversion/Continuation to be received by the Administrative Agent not later
than 9:00 a.m. (San Francisco time) at least (i) three Business Days in advance
of the conversion date or continuation date, if the Loans are to be converted
into or continued as Eurodollar Rate Loans; and (ii) one Business Day in advance
of the conversion date, if the Loans are to be converted into Base Rate Loans,
specifying: (A) the proposed conversion date or continuation date; (B) the
aggregate amount of Loans to be converted or renewed; (C) the nature of the
proposed conversion or continuation; and (D) the duration of the requested
Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans, (i) the Company has failed to select a new Interest
Period to be applicable to such Eurodollar Rate Loans, as the case may be, or
(ii) if any Event of Default shall then exist, the Company shall be deemed to
have elected to convert such Eurodollar Rate Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period (reduced to
the extent necessary to reflect any reductions of the Commitments on or prior to
such day).
(d) Upon receipt of a Notice of Conversion/ Continuation, the
Administrative Agent will promptly notify each Lender under the applicable
Tranche, or, if Requisite Notice is not timely provided, the Administrative
Agent will promptly notify each Lender of the details of any
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automatic conversion. All conversions and continuations of Loans in any
Tranche shall be made ratably among the Lenders under such Tranche in accordance
with their Pro Rata Shares.
2.05 LETTERS OF CREDIT.
(a) ISSUANCE OF LETTERS OF CREDIT UNDER REVOLVING COMMITMENTS. From
time to time prior to the Revolving Commitment Maturity Date and on the terms
and subject to the conditions hereinafter set forth, with the prior consent of
the Administrative Agent, any Lender may, in the sole exercise of its
discretion, but shall not be required to, agree to issue one or more Letters of
Credit under the Revolving Commitments; provided, however, that outstanding
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Letter of Credit Usage shall not at any time exceed (i) from the Closing Date
until the Prop I Mortgage Debt Repayment Date, $25,000,000, and (ii) $15,000,000
at any time thereafter, and Outstanding Obligations consisting of Revolving
Loans and Letter of Credit Usage shall not exceed the combined Revolving
Commitments. Each Letter of Credit Action shall be in a form reasonably
acceptable to the Issuing Lender and shall not violate any policies of the
Issuing Lender. No Letter of Credit shall have an expiration date (including all
rights of renewal) later than 15 days prior to the Revolving Commitment Maturity
Date. The parties hereto confirm that all Existing Letters of Credit are deemed
Letters of Credit outstanding hereunder. The Company agrees to assume all
obligations of UATC under the Existing Letters of Credit and the applications
and agreements relating thereto, and agrees to execute, acknowledge, deliver and
record all certificates, agreements, assurances and other instruments as the
Administrative Agent or such Issuing Lenders may reasonably require from time to
time in order to assure and confirm such assumption.
(b) REQUESTING LETTER OF CREDIT ACTIONS. The Company may irrevocably
request a Letter of Credit Action by delivering a Letter of Credit Application
therefor to an Issuing Lender and the Administrative Agent (who shall notify the
Lenders), by Requisite Notice not later than 9:00 a.m. (San Francisco time)
three Business Days (or such shorter time as the Administrative Agent and the
Issuing Lender may agree) prior to the proposed date of issuance. The Issuing
Lender shall notify the Administrative Agent of such request. Unless the
Administrative Agent notifies such Issuing Lender that such Letter of Credit
Action is not permitted hereunder or such Issuing Lender determines that such
Letter of Credit Action is contrary to any Requirement of Law or policies of
such Issuing Lender or does not otherwise conform to the requirements of this
Agreement, such Issuing Lender shall effect such Letter of Credit Action. This
Agreement shall control in the event of any conflict with any Letter of Credit
Application.
(c) LENDERS' PARTICIPATION IN LETTERS OF CREDIT. Upon the issuance
of each Letter of Credit, each Lender having a Revolving Commitment shall be
deemed to have purchased an undivided risk participation therein from the
Issuing Lender issuing such Letter of Credit in an amount equal to that Lender's
Pro Rata Share thereof. Each such Lender confirms that it has purchased an
undivided risk participation in each "facility" Letter of Credit originally
issued under the Existing Credit Agreement remaining outstanding hereunder and
each Prop I Letter of Credit from the Issuing Lender issuing such Letter of
Credit in an amount equal to that Lender's Pro Rata Share thereof.
(d) REIMBURSEMENT OF PAYMENTS UNDER LETTERS OF CREDIT. The Company
shall directly reimburse each Issuing Lender for any payment that such Issuing
Lender makes under
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any Letter of Credit not later than 11:00 a.m. (San Francisco time) on or before
the date of such payment; provided, however, that if the conditions precedent
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set forth in Section 4.02 can be satisfied, the Company may request a Borrowing
of Loans under the Revolving Commitment to reimburse the Issuing Lender for such
payment on or before the date thereof by complying with Section 2.03, or the
Company may allow a deemed Borrowing of Base Rate Loans to take place on such
payment date pursuant to subsection (e) below.
(e) FUNDING BY LENDERS WHEN ISSUING LENDER NOT REIMBURSED. If the
Company fails to timely make the payment required pursuant to subsection (d)
above, the Issuing Lender shall notify the Administrative Agent of such fact and
the amount of such unreimbursed payment. The Administrative Agent shall promptly
notify each Lender having a Revolving Commitment of its Pro Rata Share of such
amount by Requisite Notice. Each such Lender shall make funds in an amount equal
its Pro Rata Share of such amount available to the Administrative Agent at the
Administrative Agent's Office not later than 11:00 a.m. (San Francisco time) on
(i) if the Administrative Agent notified the Lenders prior to 9:00 a.m. on any
Business day, the following Business Day and (ii) if the Administrative Agent
notified the Lenders after 9:00 a.m. on any Business day, on the second
following Business Day. The obligation of each Lender under such Tranche to so
reimburse the Issuing Lender shall be absolute and unconditional and shall not
be affected by the occurrence of an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of Company to reimburse the Issuing Lender for the amount of any
payment made by the Issuing Lender under any Letter of Credit, together with
interest as provided herein
(f) NATURE OF LENDERS' FUNDING. If the conditions precedent set
forth in Section 4.02 can be satisfied (except for the giving of a Notice of
Borrowing) on the date that the Lenders are to make their funds available to the
Company pursuant to subsection (e) above, the funding by the Lender pursuant
thereto shall be deemed to be part of a Borrowing of Base Rate Loans under the
Revolving Commitment requested by the Company. If the conditions precedent set
forth in Section 4.02 cannot be satisfied on such date, the funding by the
Lenders pursuant to subsection (e) above shall be deemed to be a funding by each
Lender of its participation in such Letter of Credit, and such funds shall be
payable by the Company upon demand and shall bear interest at rate specified in
Section 2.10(c), and each Lender making such funding shall thereupon acquire a
pro rata participation, to the extent of such reimbursement, in the claim of the
Issuing Lender against Company in respect of such payment and shall share, in
accordance with that pro rata participation, in any payment made by the Company
with respect to such claim.
(g) SPECIAL PROVISIONS RELATING TO EVERGREEN LETTERS OF CREDIT. The
Company may request Letters of Credit that have automatic extension or renewal
provisions ("evergreen" Letters of Credit) so long as the relevant Issuing
Lender has the right to not permit any such extension or renewal at least
annually within a notice period to be agreed upon at the time each such
evergreen Letter of Credit is issued. Once an evergreen Letter of Credit is
issued, the Issuing Lender shall thereafter notify the Administrative Agent if
and when the Company requests that such Letter of Credit be allowed to be
extended or renewed. The Administrative Agent shall notify the Issuing Lender
whether the conditions precedent set forth in Section 4.02 can then be
satisfied, and only if they can be, shall such Letter of Credit be extended or
renewed with the consent, given in its sole discretion, of such Issuing Lender.
Notwithstanding anything
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the contrary, no evergreen Letter of Credit shall have an expiration date later
than 15 days prior to the Revolving Commitment Maturity Date.
(h) OBLIGATIONS ABSOLUTE. The obligations of the Company to
reimburse any Issuing Lender for payments and disbursements made by the Issuing
Lender under any Letter of Credit honoring a demand for payment by the
beneficiary thereunder, and each Lender's obligation to participate in such
payments and disbursements in accordance with this Agreement, shall be
irrevocable, absolute and unconditional under any and all circumstances,
including the following circumstances:
(i) any lack of validity or enforceability of this Agreement,
any Letter of Credit, any Letter of Credit Application or any other
agreement or instrument relating thereto (collectively, the "L/C Related
Documents");
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Company in
respect of any Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Company may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Lender or
any other Person, whether in connection with this Agreement, the
transactions contemplated by the L/C Related Documents or any unrelated
transaction ;
(iv) any statement and other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate that does not comply with
the terms of any Letter of Credit;
(vi) any exchange, release or non-perfection of any Collateral,
or any release or amendment or waiver of or consent to departure from
any guaranty, for all or any of the obligations of the Company in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, the Company, or any account party.
(i) APPLICABILITY OF UNIFORM CUSTOMS AND PRACTICE. The Uniform
Customs and Practice for Documentary Credits, as published in its most current
version by the International Chamber of Commerce, shall be deemed a part of this
Section and shall apply to all Letters of Credit to the extent not inconsistent
with applicable Laws.
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(j) INDEMNIFICATION BY THE LENDERS AND THE COMPANY. Each of the
Company and the Lenders severally agree to indemnify the Administrative Agent,
any Issuing Lender and each officer, director, employee, agent and Affiliate of
the Administrative Agent and any Issuing Lender ratably according to their
respective Pro Rata Share of the combined Revolving Commitments, to the extent
not reimbursed by the Company, from and against any and all actions, causes of
action, suits, losses, liabilities, damages, and expenses which may at any time
(including at any time following the payment of any drawing under any Letter of
Credit and/or following the expiration or termination of any or all Letters of
Credit) be imposed on, incurred by or asserted against such Person in any way
relating to or arising out of the issuance of, transfer of, or payment or
failure to pay under any Letter of Credit issued pursuant to this Agreement or
the use of proceeds of any payment made under any Letter of Credit issued in
accordance with the terms of this Agreement; provided, however, that no Lender
-------- -------
shall be liable for the payment of any portion of such actions, causes of
action, suits, losses, liabilities, damages and expenses resulting solely from
such Person's gross negligence or willful misconduct. This Section shall not
diminish the obligations of the Company to indemnify each Lender under Section
10.05 in the event a Lender is obligated to make a payment hereunder.
2.06 TERMINATION OR REDUCTION OF COMMITMENTS.
(a) VOLUNTARY REDUCTIONS AND TERMINATIONS. The Company may, upon not
less than three Business Days' prior Requisite Notice to the Administrative
Agent, terminate or permanently reduce any Tranche, specifying: (i) the amount
of the reduction or termination, which shall be in an aggregate minimum
principal amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof; (ii) the date of such reduction or termination, and (iii) which
Tranche's Commitments are to be reduced or terminated.
(b) MANDATORY REDUCTIONS--REVOLVING COMMITMENTS. Subject to Section
2.06(f), on each Reduction Date, the combined Revolving Commitments shall
automatically reduce to the amount indicated on Schedule 2.01(a) hereto.
----------------
(c) MANDATORY REDUCTIONS--TRANCHE A TERM LOAN COMMITMENTS. Subject
to Section 2.06(f), on the Tranche A Term Loan Availability Termination Date,
the combined Tranche A Term Loan Commitments shall automatically reduce to the
amount of Tranche A Term Loans outstanding on such date. Thereafter, the
combined Tranche A Term Loan Commitments shall automatically reduce by an amount
equal to any prepayment or repayment of the Tranche A Term Loans on the date of
such prepayment or repayment.
(d) MANDATORY REDUCTIONS--TRANCHE B TERM LOAN COMMITMENTS. Subject
to Section 2.06(f), after the Borrowing of the Tranche B Term Loans, the
combined Tranche B Term Commitments shall automatically reduce to the aggregate
principal amount of Tranche B Term Loans outstanding. Thereafter, the combined
Tranche B Term Loan Commitments shall automatically reduce by an amount equal to
any prepayment or repayment of the Tranche B Term Loans on the date of such
prepayment or repayment.
(e) MANDATORY REDUCTIONS--TRANCHE C TERM LOAN COMMITMENTS. Subject
to Section 2.06(f), on the Tranche C Term Loan Availability Termination Date,
the combined Tranche C Term Loan Commitments shall automatically reduce to the
amount of Tranche C Term Loans outstanding on such date. Thereafter, the
combined Tranche C
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Term Loan Commitments shall automatically reduce by an amount equal to any
prepayment or repayment of the Tranche C Term Loans on the date of such
prepayment or repayment.
(f) TERMINATION OF COMMITMENTS UPON CHANGE IN CONTROL EVENT. The
Commitments shall automatically terminate 90 days after a Change in Control
Event not consented to by the Super Majority Lenders.
(g) COMMITMENT REDUCTIONS-- GENERAL. After giving effect to any
voluntary or mandatory Commitment reductions or terminations, and to any
prepayments of the Loans made on the effective date of such reduction or
termination, the Outstanding Obligations under each Tranche shall not exceed the
combined Commitments under such Tranche. The Company shall prepay the Loans in
accordance with Section 2.08(g) and/or Cash Collateralize outstanding Letter of
Credit Usage as required to comply with the foregoing. Any reductions shall be
applied ratably to each Lender under the applicable Tranche. If any Tranche's
Commitment is terminated in its entirety, all accrued commitment fees, interest
and Letter of Credit fees in respect of such Tranche to, but not including the
effective date of such termination shall be payable on the effective date of
such termination without any premium or penalty. Once reduced, no Commitment
under any Tranche may be increased or reinstated.
2.07 OPTIONAL PREPAYMENTS. Subject to Section 3.04, the Company may,
at any time or from time to time prepay Loans it designates in whole or in part.
All Loans within a given Tranche must be ratably prepaid. The Company shall
deliver by Requisite Notice a notice of any prepayment hereunder which must be
received by the Administrative Agent not later than 9:00 a.m. (San Francisco
time) at least (a) three Business Days prior to the date of prepayment in the
case of prepayment of any Eurodollar Rate Loans; and (b) one Business Day prior
to the date of prepayment in the case of prepayment of any Base Rate Loans,
specifying: (i) the amount of the prepayment, which shall be in an aggregate
minimum principal amount of $5,000,000 or any integral multiple of $1,000,000 in
excess thereof; (ii) the date of prepayment, (iii) whether such prepayment is of
Base Rate Loans or Eurodollar Rate Loans, or any combination thereof and (iv)
the Tranche under which such prepayment is being made. Such notice shall not
thereafter be revocable by the Company and the Administrative Agent will
promptly notify each Lender under the affected Tranche and of such Lender's
ratable share of such prepayment. If such notice is given, the Company shall
make such prepayment on the date specified in such notice, together with, in the
case of a prepayment of Eurodollar Rate Loans, accrued interest to each such
date on the amount prepaid and the amounts required pursuant to Section 3.04.
Any prepayments of Term Loans under any Tranche shall be applied ratably to all
Term Loans outstanding under that Tranche and to the remaining unpaid
installments of all Term Loans under such Tranche.
2.08 MANDATORY PREPAYMENTS OF LOANS.
(a) ASSET DISPOSITIONS. Subject to Section 2.08(a)(i) and (ii)
below, upon the receipt of any Net Cash Proceeds of any Disposition (other than
Excluded Dispositions) by the Company or any of its Subsidiaries, the Company
shall promptly prepay the Term Loans in an amount equal to 100% of such Net Cash
Proceeds.
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(i) So long as no Default or Event of Default shall have
occurred and be continuing, the Company may promptly deliver a
certificate to the Administrative Agent stating that it intends, in good
faith, to use some or all of such Net Cash Proceeds in a Covered
Transaction. In such case the Company shall not be required to make a
prepayment using such Net Cash Proceeds, provided that the Company shall
--------
make a prepayment using such Net Cash Proceeds upon the earliest to
occur of (A) the date which is 360 days after such Disposition if a
definitive agreement to acquire or develop theatre properties or other
activities incidental thereto which would utilize such Net Cash Proceeds
has not theretofore been entered into, (B) the last day specified in the
definition of "Covered Transaction" that such Net Cash Proceeds could
have been used in a Covered Transaction, and (C) the date any Default or
Event of Default occurs. Any Net Cash Proceeds not immediately paid to
the Managing Agent as permitted above, shall be deposited by the Company
into a segregated deposit account with Bank of America National Trust
and Savings Association within ten Business Days of receipt and the
Company shall invest such Net Cash Proceeds only in Permitted
Investments; and
(ii) So long as no Event of Default shall have occurred and be
continuing, any prepayments under this Section 2.08(a) shall be made
from time to time only after the Company and its Subsidiaries shall have
received, since the last prepayment under this Section 2.08(a),
aggregate Net Cash Proceeds from such Dispositions of not less than
$3,000,000, at which time the Company shall make a prepayment in an
amount equal to all of such retained amounts (other than such amounts
that the Company is not required to prepay in connection with Covered
Transactions as aforesaid).
(b) EXCESS CASH. Following delivery of each compliance certificate
pursuant to Section 6.02(b) commencing in respect of the fiscal year ending
December 31, 1998, but not later than each April 30 of each year, beginning
April 30, 1999, the Company shall prepay the Term Loans in an amount equal to
the Net Cash Proceeds Percentage of any Excess Cash during the preceding fiscal
year.
(c) PROCEEDS OF ADDITIONAL INDEBTEDNESS. Upon the receipt by the
Company or any of its Subsidiaries of any Net Cash Proceeds of any additional
Indebtedness (excluding Indebtedness hereunder and Indebtedness permitted under
Section 7.01) incurred or issued by the Company or any of its Subsidiaries, the
Company shall prepay the Term Loans in an amount equal to the Net Cash Proceeds
Percentage of such Net Cash Proceeds.
(d) PROCEEDS OF ADDITIONAL EQUITY. Upon the receipt by the Company
or any of its Subsidiaries of any Net Cash Proceeds of any additional equity
issued by the Company or any of its Subsidiaries, the Company shall prepay the
Term Loans in an amount equal to the Net Cash Proceeds Percentage of such Net
Cash Proceeds; provided, however, that the first $50,000,000 of such Net Cash
-------- -------
Proceeds received after the Closing Date may, at the Company's election, be used
to instead prepay principal of, together with interest on and premium, if any,
on any portion prepaid, the Senior Subordinated Notes; provided, further, that
-------- -------
up to $5,000,000 of such Net Cash Proceeds received upon the exercise of stock
options or the purchase of stock by officers and employees of the Company and
its Subsidiaries shall not be required to be prepaid.
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(e) CHANGE IN CONTROL EVENT. The Company shall prepay all Loans in
full 90 days after a Change in Control Event not consented to by the Super
Majority Lenders.
(f) COMMITMENT REDUCTIONS. Simultaneously with the reductions of any
Tranche's Commitment pursuant to Section 2.06 and this Section 2.08, the Company
shall prepay any Loans outstanding in accordance with subsection (g) below
and/or Cash Collateralize outstanding Letters of Credit Usage in excess of such
reduced Tranche's Commitment.
(g) GENERAL. Any prepayments of Term Loans pursuant to Section 2.06
or this Section 2.08 shall be applied pro rata among all Tranches of Term Loans
to the remaining unpaid installments of the Term Loans, then outstanding, and
when all Term Loans are prepaid, to prepayments of Revolving Loans; provided,
--------
however, that the Company may, in its sole discretion, elect to give each Lender
- - -------
in any designated Tranche the right to waive any prepayment to which it is
otherwise entitled to receive under Section 2.08(a)-(e). If any such Lender
waives the right to receive such prepayment, the amount that would have been
used to prepay such Lender shall be used instead to prepay other Lenders not
electing to so waive receipt of such prepayment. Any prepayments made on a day
other than an Interest Payment Date for any Loan shall be applied first to any
Base Rate Loans then outstanding and then to Eurodollar Rate Loans with the
shortest Interest Periods remaining; provided, however, that if the amount of
--------
Base Rate Loans then outstanding is not sufficient to satisfy the entire
prepayment requirement, the Company may, at its option, place any amounts which
it would otherwise be required to use to prepay Eurodollar Rate Loans on a day
other than the last day of the Interest Period therefor in a Cash Collateral
Account until the end of such Interest Period at which time such pledged amounts
will be applied to prepay such Eurodollar Rate Loans; provided, further, that
-------- -------
the required date for repayment shall not be extended pursuant to the foregoing
proviso (and such repayment when made shall be subject to Section 3.04) if: (i)
an Event of Default or Default has occurred and is continuing or (ii) with
respect to any Eurodollar Rate Loans with an Interest Period that expires more
than three months, after the date prepayment would otherwise be due hereunder.
2.09 REPAYMENT.
(a) THE REVOLVING LOANS. The Company agrees to repay the principal
amount of the Revolving Loans on the Revolving Commitment Maturity Date. No
Letter of Credit shall have an expiration date (including all rights of renewal)
later than 15 days prior to the Revolving Commitment Maturity Date.
(b) THE TRANCHE A TERM LOANS. The Company agrees to repay the
Tranche A Term Loans on each Principal Payment Date applicable thereto in an
aggregate principal amount equal to the applicable Principal Payment Amount. All
outstanding Tranche A Term Loans shall be repaid in full on the Tranche A Term
Loan Maturity Date.
(c) THE TRANCHE B TERM LOANS. The Company agrees to repay the
Tranche B Term Loans on each Principal Payment Date applicable thereto in an
aggregate principal amount equal to the applicable Principal Payment Amount. All
outstanding Tranche B Term Loans shall be repaid in full on the Tranche B Term
Loan Maturity Date.
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(b) THE TRANCHE TERM LOANS. The Company agrees to repay the
Tranche C Term Loans on each Principal Payment Date applicable thereto in an
aggregate principal amount equal to the applicable Principal Payment Amount. All
outstanding Tranche C Term Loans shall be repaid in full on the Tranche C Term
Loan Maturity Date.
2.10 INTEREST.
(a) Subject to Section 2.10(c), each Loan shall bear interest on the
outstanding principal amount thereof from the date when made until it becomes
due at a rate per annum equal to the Eurodollar Rate or the Base Rate, as the
case may be, PLUS the Applicable Amount.
(b) Interest on each Loan shall be payable in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Eurodollar Rate Loans for the portion of the Loans so prepaid and
upon payment (including prepayment) in full thereof, and on the date of
prepayment of any Loan that is made in connection with the complete termination
of any Tranche. After the occurrence and during the continuance of any Event of
Default, interest shall be payable on demand.
(c) While any Event of Default exists and is continuing, before and
after exercise by the Lenders of any remedies under Section 8.02, the Company
shall pay interest (after as well as before judgment to the extent permitted by
law) on the principal amount of all Loans due and unpaid, at a rate per annum
which is determined in accordance with Section 2.10(a) plus 200 basis points If
any interest on any Loan, or any other amount payable hereunder or under any of
the other Loan Documents is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Company agrees to pay
interest on such unpaid amount, from the date such amount becomes due until the
date such amount is paid in full, payable on demand, at a fluctuating rate per
annum equal to the sum of the Base Rate plus the Applicable Amount then in
effect for Base Rate Loans plus 200 basis points.
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(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Lender, and in any event
the Company shall pay such Lender interest at the highest rate permitted by
applicable law.
2.11 FEES.
(a) FEES PAYABLE ON CLOSING DATE. The Company shall pay on the
Closing Date to each of Bank of America National Trust and Savings Association,
BankBoston, N.A., NationsBank of Texas, N.A., Merrill Lynch Capital Corporation
and Morgan Stanley Senior Funding, Inc. (collectively, the "Underwriters") and
the Arranger for its own respective account, fees in the amounts set forth in a
letter agreement dated as of April 17, 1998 among the Company and the
Underwriters and the Arrangers.
(b) AGENCY FEE. The Company shall pay to the Administrative Agent
for the Administrative Agent's own account an agency fee in the amount and at
the times set forth in a letter agreement between the Company and the
Administrative Agent.
(c) COMMITMENT FEES. The Company shall pay to the Administrative
Agent for the ratable account of each Lender, a commitment fee on the average
daily unused portion of such Lender's Tranche A Term Loan Commitment ,Tranche C
Term Loan Commitment and Revolving Commitment equal to the Applicable Amount
therefor. The commitment fee shall accrue from the Closing Date until (a) in the
case of the Revolving Commitments, the Revolving Commitment Termination Date,
(b) in the case of the Tranche A Term Loan Commitments, the Tranche A Term Loan
Availability Termination Date, and (c) in the case of the Tranche C Term Loan
Commitments, the Tranche C Term Loan Availability Termination Date and shall be
payable quarterly in arrears on the last day of each fiscal quarter of the
Company, commencing on the first such date to occur after the Closing Date.
(d) LETTER OF CREDIT FEES. The Company agrees to pay the following
with respect to each Letter of Credit:
(i) subject to clause (iii), to the Administrative Agent for the
ratable account of each Lender having a Revolving Commitment, a fee
equal to the Applicable Amount for Letter of Credit fees on the average
daily amount available for drawings under all outstanding Letters of
Credit. This fee shall accrue from the Closing Date until the Revolving
Commitment Termination Date and shall be payable quarterly in arrears on
the last day of each fiscal quarter of the Company, commencing on the
first such date to occur after the Closing Date.
(ii) to the Issuing Lenders, such fees for services including
issuance, amendment and other servicing of such Letters of Credit as may
be from time to time agreed between such Issuing Lenders and the
Company.
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(iii) while any Event of Default exists and is continuing,
before as well as after exercise by the Lenders of any remedies under
Section 8.02, the Company shall pay on the outstanding, undrawn face
amount of all Letters of Credit commissions computed at a rate per annum
which is determined by increasing the Applicable Amount then in effect
by 200 basis points.
(e) FEES NONREFUNDABLE. No fee paid by the Company pursuant to this
Agreement, any Loan Document or any side letter entered into in connection with
the transactions contemplated in this Agreement is refundable absent manifest
error in the computation of any such fee.
2.12 COMPUTATION OF FEES AND INTEREST.
(a) All other computations of interest, commissions, fees and other
amounts under this Agreement shall be made on the basis of a 360 day year and
actual days elapsed, which results in a greater fee or charge than if computed
on the basis of a 365-day year. Fees shall accrue during each period during
which such fees are computed from the first day thereof through the last day
thereof. Interest shall accrue during each period during which interest is
computed from the first day thereof to the last day thereof.
(b) The Administrative Agent will, with reasonable promptness,
notify the Company and the Lenders of each determination of a Eurodollar Rate;
provided, however, that any failure to do so shall not relieve the Company of
- - -------- -------
any liability hereunder.
(c) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error.
(d) If any Reference Lender's Commitment shall terminate (otherwise
than on termination of all the Commitments), or if for any reason whatsoever the
Reference Lender shall cease to be a Lender hereunder, or if any Reference
Lender shall sell participations in all of its Commitments and Loans hereunder,
that Reference Lender shall thereupon cease to be a Reference Lender, and the
Eurodollar Rate shall be determined on the basis of the rates as notified by the
remaining Reference Lenders.
(e) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Lenders shall be unable or otherwise fails to supply such rates
to the Administrative Agent upon its request, the rate of interest shall be
determined on the basis of the quotations of the remaining Reference Lenders or
Reference Lender.
2.13 PAYMENTS BY THE COMPANY.
(a) All payments (including prepayments) to be made by the Company
on account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Administrative Agent, for the account of
the Lenders (except as otherwise provided in Sections 2.05(d), 2.14(b), 3.01,
3.03, 3.04 and 3.06), to the Administrative Agent's Payment Account, in dollars
and in immediately available funds no later than 11:00 a.m. (San Francisco
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time). The Administrative Agent will promptly distribute to each Lender entitled
to such payment its Pro Rata Share of such amount in like funds as received. Any
payment which is received by the Administrative Agent later than 11:00 a.m. (San
Francisco time) shall be deemed to have been received on the immediately
succeeding Business Day.
(b) Subject to the provisions set forth in the definition of
"Interest Period," whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
(c) Unless the Administrative Agent shall have received Requisite
Notice from the Company prior to the date on which any payment is due to the
Lenders hereunder that the Company will not make such payment in full, the
Administrative Agent may assume that the Company has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Company shall not have made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender, together
with interest thereon for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate as in effect on such date.
2.14 PAYMENTS BY THE LENDERS TO THE ADMINISTRATIVE AGENT
(a) On the terms and conditions set forth in this Agreement, each
Lender shall make available to the Administrative Agent in immediately available
funds for the account of the Company the amount of its Pro Rata Share of any
Borrowing under a Tranche under which it is a Lender. If any Lender is to make
any Loan on a day on which the Company is to repay all or any part of an
outstanding Loan from such Lender, the Lender shall apply the proceeds of its
new Loan to make repayment of its outstanding Loan, and only an amount equal to
the difference (if any) between the amount being borrowed and the amount being
repaid shall be made available to the Administrative Agent by such Lender and be
remitted to the Company by the Administrative Agent. If the Company is to make
any payment on any Loans on a day on which the Lenders are making new Loans, the
Company shall apply the proceeds of its new Loans to make repayment of its
outstanding Loans and only an amount equal to the difference (if any) between
the amount being paid and the amount being borrowed shall be made available to
the Administrative Agent by the Company and be remitted to the applicable
Lenders by the Administrative Agent.
(b) Unless the Administrative Agent shall have received Requisite
Notice from a Lender on the Closing Date or, with respect to each Borrowing
after the Closing Date, at least one Business Day prior to the date of any
proposed Borrowing that such Lender will not make available to the
Administrative Agent for the account of the Company the amount of that Lender's
Pro Rata Share of the Borrowing, the Administrative Agent may assume that each
Lender has made such amount available to the Administrative Agent on the
borrowing date and the Administrative Agent may (but shall not be so required),
in reliance upon such assumption, make available to the Company on such date a
corresponding amount. If and to the extent any
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Lender shall not have made its full amount available to the Administrative
Agent and the Administrative Agent in such circumstances has made available to
the Company such amount, that Lender shall within one Business Day following the
date of such Borrowing make such amount available to the Administrative Agent,
together with interest at the Federal Funds Rate for each day during such
period. A certificate of the Administrative Agent submitted to any Lender with
respect to amounts owing under this subsection (b) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the
Administrative Agent shall constitute such Lender's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Administrative Agent within one Business Day following the date
of such Borrowing, the Administrative Agent shall notify the Company of such
failure to fund and, upon demand by the Administrative Agent, the Company shall
pay such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
(c) The failure of any Lender to make any Loan on any date of
Borrowing or to purchase a participation in accordance with the terms hereof
shall not relieve any other Lender of any obligation hereunder to make a Loan on
the date of such Borrowing or to purchase a participation in accordance with the
terms hereof. No Lender shall be responsible for the failure of any other Lender
to make a Loan, to issue a Letter of Credit or to purchase a participation in
accordance with the terms hereof.
2.15 SHARING OF PAYMENTS, ETC. If, other than as provided in Section
3.01, 3.03, 3.04 or 3.06, any Lender shall obtain on account of the Loans made
by it or Unreimbursed Drawings under any Tranche, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Pro Rata Share of payments on account of the Loans
or Unreimbursed Drawings under such Tranche (or, following the acceleration of
the Obligations, all Tranches) obtained by all the Lenders under such Tranche
(or, following the acceleration of the Obligations, all Tranches), such Lender
shall forthwith (a) notify the Administrative Agent of such fact, and (b)
purchase from the other Lenders under such Tranche (or, following the
acceleration of the Obligations, all Tranches) such participations in the Loans
made by them or Unreimbursed Drawings under such Tranche (or, following the
acceleration of the Obligations, all Tranches) as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each Lender
under such Tranche (or, following the acceleration of the Obligations, all
Tranches); provided, however, that if all or any portion of such excess payment
-------- -------
is thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender under such Tranche (or, following the
acceleration of the Obligations, all Tranches) shall repay to the purchasing
Lender the purchase price paid thereto together with an amount equal to such
paying Lender's Pro Rata Share (according to the proportion of (i) the amount of
such paying Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other similar amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Company agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 10.08) with respect to such participation as fully as if such Lender
were the direct creditor of the Company in the
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amount of such participation. The Administrative Agent shall keep records
(which shall be conclusive and binding in the absence of manifest error), of
participations purchased pursuant to this Section and shall in each case notify
the Lenders following any such purchases; provided, however, that any failure by
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the Administrative Agent to so notify the Lenders shall not alter the Lenders'
rights or duties hereunder.
2.16 COLLATERAL DOCUMENTS AND SUBSIDIARY GUARANTY. All Obligations
shall be secured in accordance with the Collateral Documents and shall be
unconditionally guaranteed under the Subsidiary Guaranty.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Subject to Section 3.01(g), any and all payments by the Company
to each Lender or the Administrative Agent under this Agreement shall be made
free and clear of, and without deduction or withholding for, any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, imposed
by any taxing authority and all liabilities with respect thereto, excluding, in
the case of each Lender and the Administrative Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction under the laws of which such Lender or the
Administrative Agent, as the case may be, is organized, does business or
maintains a Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) Subject to Section 3.01(g), the Company shall indemnify and hold
harmless each Lender and the Administrative Agent for the full amount, net of
any reduction in Taxes, levies, imposts, deductions, charges or withholding
therefrom, of Taxes or Other Taxes imposed with respect to amounts payable under
this Agreement (including without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 3.01) paid by the
Lender or the Administrative Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within 30 days from
the date the Lender or the Administrative Agent makes written demand therefor.
(d) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Administrative Agent, then, subject to Section 3.01(g): (i) the
sum payable shall be increased
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as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.01) such
Lender or the Administrative Agent, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made; (ii) the
Company shall make such deductions; and (iii) the Company shall pay the full
amount deducted to the relevant taxation authority in accordance with applicable
law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Administrative Agent.
(f) Subject, in the case of clauses (f)(i), (ii) and (iii) below, to
Section 3.01(j), each Lender which is a foreign Person (i.e., a Person other
than a United States Person for United States Federal income tax purposes)
agrees that: (i) it shall, no later than the Closing Date (or, in the case of a
Lender which becomes a party hereto pursuant to Section 10.07 after the Closing
Date, the date upon which the Lender becomes a party hereto) deliver to the
Company through the Administrative Agent: (A) if any Lending Office is located
in the United States, two accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"), and (B) if any
Lending Office is located outside the United States, two accurate and complete
signed originals of Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"), in each case indicating that the Lender is on the date of
delivery thereof entitled to receive payments of principal, interest and fees
for the account of each such Lending Office under this Agreement free from
withholding of United States Federal income tax; (ii) if at any time the Lender
changes its Lending Office or selects an additional Lending Office as herein
provided, it shall within 30 days thereof deliver to the Company through the
Administrative Agent in replacement for, or in addition to, the forms previously
delivered by it hereunder: (A) if such changed or additional Lending Office is
located in the United States, two accurate and complete signed originals of Form
4224, or (B) otherwise, two accurate and complete signed originals of Form 1001,
in each case indicating that the Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
such changed or additional Lending Office under this Agreement free from
withholding of United States Federal income tax; (iii) it shall, before or
promptly after the occurrence of any event (including the passing of time but
excluding any event mentioned in (ii) above) requiring a change in the most
recent Form 4224 or Form 1001 previously delivered by such Lender and if the
delivery of the same be lawful, deliver to the Company through the
Administrative Agent two accurate and complete original signed copies of Form
4224 or Form 1001 in replacement for the forms previously delivered by the
Lender; and (iv) it shall, promptly upon the Company's reasonable request to
that effect, deliver to the Company such other forms or similar documentation as
may be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes.
(g) The Company will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to Section 3.01(a), (c)
or (d) to any Lender for the account of any Lending Office of such Lender: (i)
if the obligation to pay such additional amounts would not have arisen but for a
failure by such Lender to comply with its obligations
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under Section 3.01(f) and (j) in respect of such Lending Office;
(ii) if such Lender shall have delivered to the Administrative Agent and the
Company a Form 4224 in respect of such Lending Office pursuant to Section
3.01(f)(i)(A), and such Lender shall not at any time be entitled to exemption
from deduction or withholding of United States Federal income tax in respect of
payments by the Company hereunder for the account of such Lending Office for any
reason other than a change in United States law or regulations or in the
official interpretation of such law or regulations by any governmental authority
charged with the interpretation or administration thereof (whether or not having
the force of law) after the Closing Date; (iii) if the Lender shall have
delivered to the Administrative Agent and the Company a Form 1001 in respect of
such Lending Office pursuant to Section 3.01(f)(i)(B), and such Lender shall not
at any time be entitled to exemption from deduction or withholding of United
States Federal income tax in respect of payments by the Company hereunder for
the account of such Lending Office for any reason other than a change in United
States law or regulations or any applicable tax treaty or regulations or in the
official interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the Closing Date ; or (iv) if the
Lender shall have delivered to the Administrative Agent and the Company a Form
W-8 and Nonbank Certificate (as defined below) pursuant to Section 3.01(j), and
such Lender shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by the
Company hereunder for any reason other than a change in United States law or
regulations or in the official interpretation of such law or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the Closing Date.
(h) If, at any time, the Company requests any Lender to deliver any
forms or other documentation pursuant to Section 3.01(f)(iv), then the Company
shall, on demand of such Lender, reimburse such Lender for any costs and
expenses (including expenses of outside legal counsel and the allocated costs of
in-house counsel) reasonably incurred by such Lender in the preparation or
delivery of such forms or other documentation.
(i) If the Company is required to pay additional amounts to any
Lender or the Administrative Agent pursuant to Section 3.01(c) or (d), then such
Lender shall use its reasonable best efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Company which may thereafter
accrue if such change in the sole judgment of such Lender is not otherwise
disadvantageous to such Lender.
(j) Any Lender organized under the laws of any jurisdiction other
than the United States or any state or other political subdivision thereof that
is not legally able to deliver IRS Form 1001 or 4224 pursuant to Section
3.01(f)(i) agrees that: (i) it shall deliver to the Company through the
Administrative Agent prior to or at the time such Lender becomes a registered
holder of any Note, two accurate and complete signed originals of (A) IRS Form
W-8 (Certificate of Foreign Status of the U.S. Department of Treasury) (or such
successor and related forms as may from time to time be adopted by the relevant
U.S. taxing authorities), and (B) a certificate stating that such Lender is not
a "bank" or other Person described in Section 881(c)(3) of the Code and that
such Lender is on the date of delivery thereof entitled to receive payments of
principal, interest and fees under this Agreement free from withholding of
United
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States Federal income tax (a "Nonbank Certificate"); (ii) it shall,
before or promptly after the occurrence of any event (including the passing of
time) requiring a change in the most recent Form W-8 or Nonbank Certificate
previously delivered by such Lender and if the delivery of the same be lawful,
deliver to the Company through the Administrative Agent two accurate and
complete original signed copies of Form W-8 and Nonbank Certificate in
replacement for the forms previously delivered by the Lender; and (iii) such
Lender shall promptly notify the Administrative Agent if, at any time, such
Lender determines that it has become subject to taxes of the type described in
Section 3.01(a), (c) or (d) or is no longer in a position to provide such Form
W-8 and Nonbank Certificate to the Administrative Agent and Company (or any
other form or certification adopted by the relevant U.S. taxing authorities).
(k) Upon any Lender making a claim for compensation under this
Section 3.01, the Company may, so long as no Default or Event of Default shall
have occurred and be continuing, replace or remove such Lender in accordance
with Section 10.12.
(l) The agreements and obligations of the Company contained in this
Section 3.01 shall survive the payment in full of all other Obligations.
3.02 ILLEGALITY.
(a) If any Lender shall determine that the introduction of any
Requirement of Law or any change therein or in the interpretation or
administration thereof has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for any Lender or its
Lending Office to make Eurodollar Rate Loans, then, on Requisite Notice thereof
by the Lender to the Company through the Administrative Agent, the obligation of
the Lender to make Eurodollar Rate Loans shall be suspended until the Lender
shall have notified the Administrative Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender shall determine that it is unlawful to maintain any
Eurodollar Rate Loan, the Company shall prepay in full all Eurodollar Rate Loans
of the Lender then outstanding, together with interest accrued thereon, either
on the last day of the Interest Period thereof if the Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
the Lender may not lawfully continue to maintain such Eurodollar Rate Loans,
together with any amounts required to be paid in connection therewith pursuant
to Section 3.04.
(c) If the Company is required to prepay any Eurodollar Rate Loan
immediately as provided in Section 3.02(b), then concurrently with such
prepayment, the Company shall borrow from the affected Lender, in the amount of
such prepayment, a Base Rate Loan.
(d) If the obligation of any Lender to make or maintain Eurodollar
Rate Loans has been terminated, the Company may elect, by giving Requisite
Notice to the Lender through the Administrative Agent that all Loans which would
otherwise be made by the Lender as Eurodollar Rate Loans shall be instead Base
Rate Loans.
(e) Before giving any notice to the Administrative Agent pursuant to
this Section 3.02, the affected Lender shall designate a different Lending
Office with respect to its
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Eurodollar Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Lender, be
illegal or otherwise disadvantageous to the Lender.
3.03 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender shall determine that, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost (except for any increase relating to
taxes) to such Lender of agreeing to make or making, funding or maintaining any
Loans or Letters of Credit (or participation therein), then the Company shall be
liable for, and shall from time to time, upon demand therefor by such Lender
(with a copy of such demand to the Administrative Agent), pay to such Lender,
additional amounts as are sufficient to compensate such Lender for such
increased costs.
(b) If any Lender shall have determined that the introduction of any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein or any change in the interpretation or administration thereof by
any central bank or other Governmental Authority charged with the interpretation
or administration thereof, or compliance by the Lender (or its Lending Office)
or any corporation controlling the Lender, with any request, guideline or
directive regarding capital adequacy (whether or not having the force of law) of
any such central Lender or other authority, affects or would affect the amount
of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) determines that the amount of such capital
is increased as a consequence of its obligation under this Agreement, then, upon
demand of such Lender, the Company shall immediately pay to the Lender, from
time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.
3.04 FUNDING LOSSES. The Company agrees to reimburse each Lender and
to hold each Lender harmless from any reasonable loss or expense which the
Lender may sustain or incur as a consequence of (a) the failure of the Company
to make any payment or prepayment of principal of any Eurodollar Rate Loan
(including payments to be made after any acceleration thereof); (b) the failure
of the Company to borrow, continue or convert a Loan after the Company has given
(or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/
Continuation; (c) the failure of the Company to make any prepayment after the
Company has given Requisite Notice in accordance with Section 2.06 or 2.07; or
(d) the prepayment of a Eurodollar Rate Loan on a day which is not the last day
of the Interest Period with respect thereto; including any such reasonable loss
or expense arising from the liquidation or reemployment of funds obtained by it
to maintain its Eurodollar Rate Loans hereunder or from fees payable to
terminate the deposits from which such funds were obtained. This covenant shall
survive the payment in full of all other Obligations; provided, however, any
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Lender desiring to make a claim for reimbursement under this Section 3.04, shall
do so within 180 days after the Maturity Date of the Tranche under which such
Loans were made.
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3.05 INABILITY TO DETERMINE RATES. If: (a) any two Reference Lenders
or, if there is only one Reference Lender, such Reference Lender shall have
determined that for any reason adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan, or (b) if Majority Lenders shall have
determined and notified the Administrative Agent that the Eurodollar Rate
applicable for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, then the Administrative Agent will forthwith give
notice of such determination to the Company and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Rate Loans hereunder
shall be suspended until the Administrative Agent upon the instruction of
Majority Lenders revokes such notice in writing. Upon receipt of such notice,
the Company may revoke any Notice of Borrowing or Notice of Conversion/
Continuation then submitted by it. If the Company does not revoke such notice,
the Lenders shall make, convert or continue the Loans, as proposed by the
Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Eurodollar Rate Loans.
3.06 RESERVES ON EURODOLLAR RATE LOANS. The Company shall pay to
each Lender, as long as such Lender shall be required under regulations of the
Federal Reserve Board to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency Liabilities"), additional costs on the unpaid principal amount of
each Eurodollar Rate Loan equal to actual costs of such reserves allocated to
such Loan by the Lender (as determined by the Lender in good faith, which
determination shall be conclusive), payable on each date on which interest is
payable on such Loan provided the Company shall have received at least 15 days'
prior written Requisite Notice (with a copy to the Administrative Agent) of such
additional interest from the Lender. If a Lender fails to give Requisite Notice
15 days prior to the relevant Interest Payment Date, such additional interest
shall be payable fifteen days from receipt of such notice. This covenant shall
survive the payment in full of all other Obligations; provided, however, any
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Lender desiring to make a claim for reimbursement under this Section 3.06, shall
do so within 270 days after the Maturity Date of the Tranche under which such
Loans were made.
3.07 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation pursuant to this Article III shall deliver to the Company (with a
copy to the Administrative Agent) a certificate setting forth in reasonable
detail the amount payable to the Lender hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error.
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ARTICLE IV
CONDITIONS PRECEDENT
4.01 CONDITIONS OF INITIAL EXTENSION OF CREDIT 4.01. The obligation
of each Lender to make its initial Loans or to participate in the initial
Letters of Credit hereunder is subject to the condition that the Administrative
Agent shall have received on or before the Closing Date all of the following, in
form and substance satisfactory to the Administrative Agent and its counsel and,
except for Notes and the instruments or documents representing Collateral, in
sufficient copies for each Lender:
(a) CREDIT AGREEMENT. This Agreement duly executed by the Company and
each of the Lenders.
(b) NOTES. Notes for each Lender requesting Notes.
(c) SUBSIDIARY GUARANTY. The Subsidiary Guaranty duly executed by
UATC.
(d) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the board of directors of the
Company approving and authorizing the execution, delivery and
performance by the Company of this Agreement, the other Loan Documents
to be delivered hereunder and authorizing the borrowing of the Loans,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of the Company;
(ii) Certified copies of the resolutions of the board of directors
of each Loan Party other than the Company approving the Loan Documents
to be delivered by it hereunder; and
(iii) A certificate of the Secretary or Assistant Secretary of
each Loan Party certifying the names and true signatures of the officers
of such Loan Party authorized to execute and deliver, as applicable,
this Agreement, and all other Loan Documents to be delivered hereunder.
(e) OTHER DOCUMENTS. With respect to each Loan Party, such
documentation as the Administrative Agent may require to establish the due
organization, valid existence and good standing of such Loan Party, its
qualification to engage in business in each material jurisdiction in which it is
engaged in business or required to be so qualified, its authority to execute,
deliver and perform any Loan Documents to which it is a party, the identity,
authority and capacity of each officer thereof authorized to act on its behalf,
including certified copies of articles of incorporation and amendments thereto,
bylaws and amendments thereto, certificates of good standing and/or
qualification to engage in business, tax clearance certificates, certificates of
corporate resolutions, incumbency certificates, certificates of Responsible
Officers, and the like.
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(f) LEGAL OPINIONS. Written legal opinion of counsel to the Company
and its Subsidiaries .
(g) CERTIFICATE. A certificate signed by a Responsible Officer,
dated as of the Closing Date:
(i) stating that the representations and warranties contained
in Article V are true and correct on and as of such date;
(ii) stating that no Default or Event of Default exists or
would result from the Borrowings or the issuances or continuances of any
Letters of Credit on the Closing Date;
(iii) stating that there has occurred since December 31, 1997 no
Material Adverse Effect;
(iv) attaching calculations showing that the debt incurrence
test set forth in the UATC Pass-Through Certificates do not prohibit
UATC from executing and delivering the Subsidiary Guaranty; and
(v) stating that the execution, delivery and performance by
UATC under the Subsidiary Guaranty are permitted by the UATC Pass-
Through Certificates.
(h) NET PROCEEDS FROM SENIOR SUBORDINATED NOTES. Evidence that the
Company is concurrently receiving the net proceeds from the sale of the Senior
Subordinated Notes having an aggregate principal amount of at least
$275,000,000.
(i) IRREVOCABLE REDEMPTION NOTICE FOR UATC SENIOR SECURED NOTES.
Evidence that on or prior to the Closing Date UATC has issued an irrevocable
notice to redeem all of the UATC Senior Secured Notes within 45 days of the
Closing Date pursuant to the terms of the UATC Senior Secured Notes Indenture.
(j) IRREVOCABLE REDEMPTION NOTICE FOR COMPANY PREFERRED STOCK.
Evidence that on or prior to the Closing Date the Company has issued an
irrevocable notice to redeem all of the Company Preferred Stock within 15
Business Days of the Closing Date.
(k) EVIDENCE THAT FORMER COLLATERAL AGENT WILL DELIVER COLLATERAL
HELD BY IT TO ADMINISTRATIVE AGENT. Evidence that UATC has irrevocably directed
the Former Collateral Agent to redeliver all Collateral being held by it under
the Former Collateral Documents which is to be pledged under the Collateral
Documents directly to the Administrative Agent promptly following repayment of
the UATC Senior Secured Notes.
(l) EVIDENCE OF REPAYMENT OF OBLIGATIONS UNDER EXISTING CREDIT
AGREEMENT. Evidence that all obligations outstanding under the Existing Credit
Agreement have been, or concurrently herewith are being, repaid and the Existing
Credit Agreement, and all commitments and obligations thereunder, has been, or
concurrently herewith is being, terminated.
(m) FINANCIAL STATEMENTS. A certified copy of the financial
statements of the Company and its Subsidiaries referred to in Section 5.11.
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(n) COMPLIANCE CERTIFICATE. A compliance certificate of the Company
dated as of the Closing Date showing the computations for the covenants
contained in Section 7.12(a) and (b) utilizing (i) Operating Cash Flow for the
period ended December 31, 1997 and (ii) Pro Forma Lease Expense, Pro Forma Debt
Service and Funded Indebtedness and issued and outstanding letters of credit on
a pro forma basis after giving effect to the UATC Secured Senior Notes being
repaid and refinanced hereunder and the Company Preferred Stock being redeemed
and refinanced hereunder. Such compliance certificate shall be certified by a
Responsible Officer of the Company prepared in accordance with the requirements
of Section 6.02(b).
(o) PAYMENT OF FEES. The Company shall have paid all costs, accrued
and unpaid fees (including all fees due and payable pursuant to the letter
agreements referred to in Section 2.11) and expenses (including, without
limitation, legal fees and expenses) to the extent then due and payable on the
Closing Date.
(p) OTHER DOCUMENTS. Such other approvals, opinions or documents as
any Lender may reasonably request.
4.02 CONDITIONS TO ALL BORROWINGS. The obligation of each Lender to
make any Loan to be made by it hereunder, for any Issuing Lender to issue or to
renew, increase continue, amend or take another credit action with respect to
any Letter of Credit, or for any Lender to purchase any participation in a
Letter of Credit is subject to the satisfaction of the following conditions
precedent on the relevant borrowing date:
(a) NOTICE OF BORROWING. The Administrative Agent or the Issuing
Lender with a copy to the Administrative Agent, as applicable, shall have
received a Notice of Borrowing or a Letter of Credit Application.
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. Except with
respect to Borrowings under the Tranche A Term Loan Commitments and Tranche C
Term Loan Commitments, the proceeds of which are used to prepay the UATC Senior
Secured Notes, the representations and warranties made by the Company contained
in Article V shall be true and correct on and as of such borrowing date with the
same effect as if made on and as of such borrowing date.
(c) NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Borrowing.
Each Borrowing by the Company hereunder shall constitute a
representation and warranty by the Company hereunder as of the date of each such
Borrowing that the conditions in this Section 4.02 have been satisfied.
Continuations and conversions of Loans do not require the Company to make
representations and warranties contained in Article V.
4.03 PLEDGE AND DELIVERY OF COLLATERAL; SUBSIDIARY GUARANTORS. On
any date when Collateral is required to be pledged under the Collateral
Documents or any Subsidiary is required to become a Subsidiary Guarantor, the
Company shall deliver, or cause to be delivered, to the Administrative Agent the
following items, as applicable, in form and substance satisfactory to the
Administrative Agent and its counsel.
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(a) PLEDGED COLLATERAL UNDER THE SUBSIDIARY PLEDGE AGREEMENT. When
the stock of Prop I or any Wholly-Owned First-Tier Subsidiary is required to be
pledged, the Subsidiary Pledge Agreement, or a supplement thereto, duly executed
and delivered by UATC and UAR, together with all stock and other equity
ownership interests in Prop I and such Wholly-Owned First-Tier Subsidiaries,
together with undated stock transfer powers duly executed in blank for each such
certificate.
(b) COMPANY PLEDGE AGREEMENT; STOCK CERTIFICATES; INTERCOMPANY NOTE.
On the UATC Senior Secured Note Repayment Date, the Company Pledge Agreement,
duly executed and delivered by the Company, together with the Intercompany Note
duly endorsed and all certificates and instruments representing all stock and
other equity ownership interests in UATC (other than the UATC Preferred Stock
which is being contributed to UATC) and UAR, together with undated stock
transfer powers duly executed in blank for each such stock certificate.
(c) OPINION OF COUNSEL. On each such date, a written opinion of
counsel to the Company and its Subsidiaries as to (i) the enforceability of the
Loan Documents being delivered on such date against the Loan Parties executing
and delivering the same, (ii) the due perfection and first priority of the
Administrative Agent's security interest in any Collateral being pledged on such
date, and (iii) such other matters as the Administrative Agent or any Lender may
reasonably request in connection therewith, in each case subject to customary
equity, bankruptcy and other exceptions and assumptions reasonably acceptable to
the Administrative Agent and its counsel.
(d) COLLATERAL BEING HELD BY THE FORMER COLLATERAL AGENT. On the
UATC Senior Secured Note Repayment Date, all Collateral being held by the Former
Collateral Agent which is to be pledged under the Collateral Documents,
delivered directly by the Former Collateral Agent, for pledging under the
Collateral Documents.
(e) SUPPLEMENT TO SUBSIDIARY GUARANTY. On the UATC Senior Secured
Note Repayment Date, a supplement to the Subsidiary Guaranty duly executed and
delivered by UAR. On the Prop I Mortgage Debt Repayment Date, a supplement to
the Subsidiary Guaranty duly executed and delivered by Prop I.
(f) RESOLUTIONS; INCUMBENCY. The items set forth in Sections
4.01(d)(ii) and 4.01(d)(iii) pertaining to the Persons executing and delivering
Loan Documents on such date.
(g) OTHER DOCUMENTS. Such other approvals, opinions, financing
statements, instruments, writings, endorsements or other documents as the
Administrative Agent or any Lender may reasonably request in connection
therewith, including such items with respect to the continuance, confirmation or
perfection of the security interest of the Administrative Agent for the benefit
of the Secured Parties in any Collateral being pledged and evidence that all
other actions necessary, including delivery of any Collateral requiring a
possessory interest to create a perfected security interest therein, or, in the
opinion of the Administrative Agent, desirable to perfect and protect the first
priority security interest created by the Collateral Documents have been or will
be taken.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Administrative Agent,
each Lender and each Issuing Lender that:
5.01 CORPORATE EXISTENCE AND POWER. POWER. Each of the Company and
its Subsidiaries is a corporation or partnership duly organized or formed,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated or formed, has all requisite power and authority,
including, without limitation, all licenses, permits, franchises, patents,
copyrights, trademarks, trade names, consents and approvals, to own its property
and assets and to carry on its business as presently conducted and each is duly
qualified and is in good standing as a foreign corporation or partnership, as
applicable, and is authorized to do business in each jurisdiction where such
qualification or authorization is required, except where such failures as would
not result in a Material Adverse Effect. The Company has the corporate power to
execute, deliver and perform its obligations under this Agreement and the Loan
Documents, and the Company has the corporate power to borrow hereunder. Each of
the Loan Parties has the corporate power to execute, deliver and perform its
obligations under the Loan Documents.
5.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Company of the Loan Documents, the execution,
delivery and performance by each of the Loan Parties of the Loan Documents, the
Borrowings hereunder by the Company, and the grant of security interests in the
Collateral pursuant to the Collateral Documents (a) have been duly authorized by
all requisite corporate and, if required, stockholder or other action on the
part of the Company and the Subsidiaries of the Company, as the case may be, and
(b) will not (i) violate (A) any Requirement of Law or the certificate or
articles of incorporation or other constitutive documents or the by-laws or
regulations of the Company or any Subsidiary of the Company, (B) any order of
any court, or any rule, regulation or order of any other agency of government
binding upon the Company or any Subsidiary of the Company or (C) any provisions
of any indenture, agreement or other instrument to which the Company or any
Subsidiary of the Company is a party, or by which the Company or any Subsidiary
of the Company or any of their properties or assets is or may be bound, which
violation would be likely to result in a Material Adverse Effect, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any indenture, agreement or other
instrument referred to in (b)(i)(C) above which violation would be likely to
result in a Material Adverse Effect, or (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
property or assets of the Company or any Subsidiary of the Company other than as
contemplated by the Loan Documents and the UATC Senior Secured Notes Indenture.
5.03 GOVERNMENTAL AUTHORIZATION. All consents and approvals of,
filings and registrations with, and other actions in respect of, all
governmental agencies, authorities or instrumentalities which are or will be
required in connection with the execution, delivery and
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performance of the Loan Documents have been or, prior to the time when
required, will have been, obtained, given, filed or taken and are or will be in
full force and effect, other than any which the failure to obtain, give, file or
take would not have a Material Adverse Effect under the Loan Documents or on the
ability of the Company, or any Loan Party, as the case may be, to perform timely
its respective obligations under or in connection with the Loan Documents.
5.04 BINDING EFFECT. This Agreement and each other Loan Document,
when executed and delivered, will constitute, legal, valid and binding
obligations of the Company, and the Loan Parties, as applicable, in each case
enforceable in accordance with their respective terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity).
5.05 LITIGATION. Except as set forth in Schedule 5.05 hereto, there
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are no actions, suits, proceedings, claims or disputes pending, at law, in
equity, in arbitration or before any Governmental Authority, against the
Company, or its Subsidiaries or any of their respective properties (or to the
best knowledge of the executive management of the Company, threatened or
contemplated by any Governmental Authority against the Company, or its
Subsidiaries or any of their respective properties) which:
(a) purport to affect or pertain to this Agreement, or any Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) is reasonably likely to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.06 NO DEFAULT. No Default or Event of Default exists
or would result from the incurring of obligations by the Company under this
Agreement or any other Loan Document. Neither the Company, nor any of its
Subsidiaries, is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, is
reasonably likely to have a Material Adverse Effect.
5.07 ERISA COMPLIANCE.
(a) Schedule 5.07 lists all Plans maintained or sponsored by the
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Company or to which it is obligated to contribute as of the Closing Date, and
separately identifies Plans intended to be Qualified Plans and Multiemployer
Plans as of the Closing Date.
(b) Each Plan set forth on Schedule 5.07, which is maintained or
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sponsored by the Company, is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state law,
including all requirements under the Code or ERISA for filing reports (which are
true and correct in all material respects as of the date filed), and benefits
have been paid in accordance with the provisions of the Plan, except as would
not have a reasonable likelihood of having a Material Adverse Effect.
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(c) Except as set forth in Schedule 5.07, each Qualified Plan has
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been determined by the Internal Revenue Service to qualify under Section 401 of
the Code, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the Code, and to the best
knowledge of the Company nothing has occurred which would cause the loss of such
qualification or tax-exempt status, except as would not have a reasonable
likelihood of having a Material Adverse Effect.
(d) Except as set forth in Schedule 5.07, there is no outstanding
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liability under Title IV of ERISA with respect to any Plan maintained or
sponsored by the Company or any ERISA Affiliate (as to which the Company is or
may be liable), nor with respect to any Plan to which the Company or any ERISA
Affiliate (wherein the Company is or may be liable) contributes or is obligated
to contribute which has a reasonable likelihood of having a Material Adverse
Effect.
(e) Except as set forth on Schedule 5.07, none of the Qualified
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Plans subject to Title IV of ERISA has any Unfunded Pension Liability as to
which the Company is or may be liable which if such Plan were to be terminated
has a reasonable likelihood of having a Material Adverse Effect.
(f) Except as set forth in Schedule 5.07, no Plan maintained or
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sponsored by the Company provides medical or other welfare benefits or extends
coverage relating to such benefits beyond the date of a participant's
termination of employment with the Company, except to the extent required by
Section 4980B of the Code and at the sole expense of the participant or the
beneficiary of the participant to the fullest extent permissible under such
Section of the Code. The Company has complied in all material respects with the
notice and continuation coverage requirements of Section 4980B of the Code,
except as would not have a reasonable likelihood of having a Material Adverse
Effect.
(g) Except as set forth in Schedule 5.07, no ERISA Event has
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occurred or is reasonably expected to occur with respect to any Plan maintained
or sponsored by the Company or to the knowledge of the Company, to which the
Company is obligated to contribute, which has a reasonable likelihood of having
a Material Adverse Effect.
(h) There are no pending or, to the best knowledge of the executive
management of Company, threatened claims, actions or lawsuits, other than
routine claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the Company or its
assets, (ii) any member of the Controlled Group with respect to any Qualified
Plan of the Company, or (iii) any fiduciary with respect to any Plan for which
the Company may be directly or indirectly liable, through indemnification
obligations or otherwise, in each case, which has a reasonable likelihood of
having a Material Adverse Effect.
(i) Except as set forth in Schedule 5.07, the Company has not
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incurred nor reasonably expects to incur (i) any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan or (ii) any liability under Title IV of ERISA (other than
premiums due and not delinquent under Section 4007 of ERISA) with
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respect to a Plan, in each case, which has a reasonable likelihood of
having a Material Adverse Effect.
(j) Except as set forth in Schedule 5.07, the Company has not
-------------
engaged in a transaction that could reasonably be subject to Section 4069 or
4212(c) of ERISA, except as would not have a reasonable likelihood of having a
Material Adverse Effect.
(k) The Company has not engaged, directly or indirectly, in a
non-exempt prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Plan which has a reasonable
likelihood of having a Material Adverse Effect.
5.08 USE OF PROCEEDS; MARGIN REGULATIONS. No portion of the Loans
will be used, directly or indirectly, (a) to purchase or carry Margin Stock or
to repay or otherwise refinance indebtedness of the Company or others incurred
to purchase or carry Margin Stock, (b) to extend credit for the purpose of
purchasing or carrying any Margin Stock or (c) to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
other than the UATC Senior Secured Notes. Neither the Company nor the Company
and its Subsidiaries on a Consolidated basis holds, or will hold or acquire, any
Margin Stock unless not more than 25% of the value of the assets of the Company
and the Company and its Subsidiaries on a Consolidated basis, as the case may
be, is represented by assets consisting of Margin Stock.
5.09 TITLE TO PROPERTIES; LEASES. The Company and each of its
Subsidiaries has good record and marketable title in fee simple to or valid
leasehold interests in all its property, except for such defects in title as
could not, individually or in the aggregate, have a Material Adverse Effect. The
property is free and clear of all Liens or rights of others, except Liens
permitted by Section 7.02. The Company and its Subsidiaries, taken as a whole,
have complied with all obligations under all leases to which any of them is a
party and under which any of them is in occupancy, except such failures to
comply as would not have a Material Adverse Effect and all such leases are in
full force and effect. Each of the Company and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases except such failures to have
peaceful and undisturbed possession as would not result in a Material Adverse
Effect.
5.10 TAXES. The Company and its Subsidiaries have filed all Federal,
State and other tax returns and reports required to be filed and have paid all
Federal, State and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no material Notice of Lien has been filed
or recorded. Except as set forth in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, there is no proposed tax assessment against
the Company or any of its Subsidiaries which would, if the assessment were made,
have a Material Adverse Effect.
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5.11 FINANCIAL CONDITION;.
(a) The audited consolidated financial statements and statements of
financial condition of the Company and its Subsidiaries dated December 31, 1997,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the fiscal year ended on that date and the unaudited consolidated
financial statements and statements of financial condition, if any, delivered to
the Administrative Agent for the Lenders on or before the Closing Date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly
noted therein;
(ii) are complete, accurate and fairly present the financial
condition of the Company and its Subsidiaries as of the date thereof
and results of operations for the period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent of the Company and its consolidated
Subsidiaries as of the date thereof which are required to be
reflected in accordance with GAAP (including liabilities for taxes
and material commitments).
(b) Since December 31, 1997, there has been no Material Adverse
Effect.
5.12 ENVIRONMENTAL MATTERS.
(a) Except as specifically identified in Schedule 5.12, the
-------------
operations of the Company and each of its Subsidiaries comply in all material
respects with all Environmental Laws except such non-compliance which would not
result in liability in excess of $5,000,000 in the aggregate.
(b) Except as specifically identified in Schedule 5.12, the Company
-------------
and each of its Subsidiaries has obtained all licenses, permits, authorizations
and registrations required under any Environmental Law ("Environmental Permits")
necessary for its operations, and all such Environmental Permits are in good
standing, and the Company and each of its Subsidiaries is in compliance with all
terms and conditions of such Environmental Permits except to the extent that any
noncompliance therewith will not result in a Material Adverse Effect.
(c) Except as specifically identified in Schedule 5.12, none of the
-------------
Company, any of its Subsidiaries or any of their present property or operations
is subject to any outstanding written order from or agreement with any
Governmental Authority or other Person, nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material, except such orders, agreements, or proceedings which are
not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.
(d) Except as specifically identified in Schedule 5.12, the Company
-------------
is not aware of any conditions or circumstances which may give rise to any
Environmental Claim arising from the operations of the Company or its
Subsidiaries, including Environmental Claims associated
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with any operations of the Company or its Subsidiaries with a potential
liability in excess of $5,000,000 in the aggregate. Without limiting the
generality of the foregoing, (i) neither the Company nor any of its
Subsidiaries, to its knowledge, has any underground storage tanks (x) that are
not properly registered or permitted under applicable Environmental Laws or (y)
that are leaking or disposing of Hazardous Materials off-site, either of which
reasonably would be likely to have a Material Adverse Effect, except such
underground storage tanks that the Company has obtained knowledge of 90 days or
less prior to the date of giving the representation set forth herein and, if
removal is required under any Requirement of Law, as to which the removal has
been contractually committed by the Company or one or more of its Subsidiaries,
or, if not contractually committed, the Company or one or more of its
Subsidiaries is engaged in reasonable activities to secure such commitments, and
(ii) the Company and its Subsidiaries have used their reasonable best efforts to
notify all of their employees of the existence, if any, of any health hazard
arising from the conditions of their employment and to meet all notification
requirements under Title III of CERCLA or any other Environmental Law.
5.13 COLLATERAL DOCUMENTS. Subject to Section 4.03, the security
interest of the Administrative Agent in the Collateral has been fully perfected
and constitutes a first priority security interest in all of such Collateral
described therein, prior and superior to all other Liens. Subject to Section
4.03, the Collateral includes all outstanding capital stock and other equity
interests of UATC (other than the UATC Preferred Stock which is being
contributed to UATC), Prop I and UAR and all Wholly-Owned First-Tier
Subsidiaries of UATC and the Intercompany Note.
5.14 REGULATED ENTITIES. None of the Company, any Person
controlling the Company, or any Subsidiaries of the Company, is (a) an
"Investment Company" within the meaning of the Investment Company Act of 1940;
or (b) subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or any other Federal or state statute or regulation limiting its
ability to incur Indebtedness.
5.15 LABOR RELATIONS. There are no strikes, lockouts or other labor
disputes against the Company or any of its Subsidiaries, or, to the best
knowledge of the executive management of the Company, threatened against or
affecting the Company or any of its Subsidiaries which are likely to have a
Material Adverse Effect, and no unfair labor practice complaint is pending
against the Company or any of its Subsidiaries or, to the best knowledge of the
executive management of the Company, threatened against any of them before any
Governmental Authority, which is reasonably likely to have a Material Adverse
Effect.
5.16 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. Except as
set forth in Schedule 5.16, the Company and each of its Subsidiaries owns or is
-------------
licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, franchises, authorizations and other
rights that are reasonably necessary for the operation of its business, without
conflict with the rights of any other Person. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed by the Company or any of its Subsidiaries infringes upon any rights
owned by any other Person; except as set forth in Schedule 5.16, no claim or
-------------
litigation regarding any of the foregoing is pending or threatened,
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and no patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or, to the knowledge of the
Company, proposed, which, in either case, would be likely to result in a
Material Adverse Effect.
5.17 SUBSIDIARIES OF THE COMPANY. As of the Closing Date, the
Company has no direct or indirect Subsidiaries other than those listed on
Schedule 5.17 hereto and has no equity investments in any other corporation or
- - -------------
entity other than those listed on Schedule 5.17 hereto. Schedule 5.17 indicates
------------- -------------
all Wholly-Owned First-Tier Subsidiaries and Material Subsidiaries as of the
Closing Date.
5.18 INSURANCE. The properties of the Company and its Subsidiaries
are insured with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as is customarily carried
by companies engaged in similar businesses and owning similar properties in
localities where the Company or such Subsidiary operates.
5.19 FULL DISCLOSURE. None of the representations or warranties made
by the Company or any of its Subsidiaries in the Loan Documents, and in
connection with the Senior Subordinated Notes, as of the date of such
representations and warranties, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Company or any of its Subsidiaries in connection with the Loan Documents
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Obligations shall remain unpaid, unless
the Majority Lenders waive compliance in writing:
6.01 FINANCIAL STATEMENTS. The Company shall deliver to
the Administrative Agent and to each Lender in form and detail satisfactory to
the Administrative Agent and the Majority Lenders:
(a) as soon as available, but in any event within 105 days after the
end of each fiscal year of the Company, a copy of the balance sheet and income
statement showing the financial condition as of the end of such fiscal year and
the results of operations during such fiscal year, for the Company and its
Subsidiaries on a Consolidated basis, together with the related statement of
stockholders' equity and statement of cash flows as of and through the end of
such fiscal year, setting forth in each case in comparative form the figures for
the preceding fiscal year. Each balance sheet, income statement, statement of
stockholders' equity and statement of cash flows shall be prepared in accordance
with GAAP consistently applied (except for such changes therein as the
accountants for the Company referred to below conclude are appropriate) and
audited by Arthur Andersen LLC or other independent certified public accountants
of recognized national standing acceptable to Majority Lenders and accompanied
by an opinion of
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such accountants which opinion shall state that said financial statements fairly
present the financial condition and results of operations of the Company and its
Subsidiaries on a Consolidated basis, at the end of, and for, such fiscal year
with such exceptions or qualifications as such accountants deem appropriate
except that the opinion of such accountants shall be free of exceptions or
qualifications as to scope;
(b) as soon as available, but in any event not later than 60 days
after the end of the first three quarterly accounting periods in each fiscal
year of the Company, a copy of the unaudited balance sheet and income statement
and a statement of cash flows showing the financial condition and results of
operations for the Company and its Subsidiaries on a Consolidated basis as at
the end of and for such quarterly period and for the elapsed portion of the
fiscal year through such date, setting forth in each case in comparative form
the figures for the corresponding periods of the preceding fiscal year. The
foregoing financial statements shall be certified by a Responsible Officer of
the Company as being complete and correct in all material respects and as
presenting fairly the financial condition and results of operations of the
Company and its Subsidiaries on a Consolidated basis; and
(c) concurrently with the delivery of financial statements described
in Sections 6.01(a) or if delivered to the Company at any time other than in
conjunction with the delivery of such financial statements, copies of all audit
reports, management audit letters and such other reports and letters that may be
delivered from time to time by Arthur Andersen LLC or other independent auditors
of the Company.
6.02 CERTIFICATES; OTHER INFORMATION. The Company shall furnish to
the Administrative Agent and to each Lender:
(a) concurrently with delivery of the financial reports described in
Sections 6.01(a) and (b), a compliance letter of the firm or person referred to
therein (which compliance letter furnished by the independent certified public
accountants referred to in Section 6.01(a) above may be limited to accounting
matters and disclaim responsibility for legal interpretations) certifying that
to the best of its or his knowledge no Default or Event of Default has occurred,
and, if such a Default or Event of Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be taken with
respect thereto;
(b) concurrently with delivery of the financial reports described in
Sections 6.01(a) and (b), a certificate of a Responsible Officer of the Company:
(i) certifying that, to the best of such officer's
knowledge, as of the date of such financial reports and as of the
date of the certificate described herein, the Company, during
such period, has observed or performed all of its covenants and
other agreements, and satisfied every condition contained in this
Agreement and the Loan Documents to be observed, performed or
satisfied by it;
(ii) certifying that, as of the date of such financial
reports and as of the date of the certificate described herein,
such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate;
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(iii) demonstrating compliance with the covenants set
forth in Sections 7.05 (Investments) and Section 7.12 (Financial
Ratios), together with supporting computations, as of the dates of the
financial statements being furnished at such time, commencing with the
financial statements for the fiscal quarter of the Company ending June
30, 1998;
(iv) certifying, as of the dates of the financial
statements being furnished at such time, (1) the Company's Capital
Expenditures for the period then ended, (2) total attendance at the
theatres during the period then ended, (3) the total theatres, owned or
operated by the Company and its Subsidiaries, in each case for the
period then ended, (4) total theatre screens at such theatres, in each
case as at the end of such period, (5) a listing of all theatres opened
or closed and actual cash flows for the past 12 months for closed
theatres and projected cash flows for the succeeding 12 months for newly
opened theatres, in each case for the period then ended and, with
respect to the theatres closed during such period, a description of the
reason for such closure and whether such closure was an Involuntary
Closing, and (6) pro forma statements of cash flow and operating budgets
for theatres and screens projected for opening within six months
following the date of such financial statements including projected
opening dates; and
(v) certifying that the representations and warranties
made by the Company contained in Article V are true and correct in all
material respects as of the date of the financial statements being
furnished at such time and as of the date of the certificate with the
same effect as if made on and as of such dates;
(c) promptly after the same become publicly available, and in any
event within five days after the filing thereof with the Securities and Exchange
Commission, copies of such annual, periodic and other reports, if any, as shall
be filed by the Company with the Securities and Exchange Commission pursuant to
the requirements of the Securities Exchange Act of 1934, including, without
limitation, copies of the annual report and the information, documents and other
reports (or copies of such portions of any of the foregoing as the Securities
and Exchange Commission may by rules and regulations prescribe) which the
Company is required to file with the Securities and Exchange Commission pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934;
(d) On or before January 31 of each year, operating budgets and the
Company's and its Subsidiaries' business plan for the fiscal year commencing on
January 1 of such year;
(e) On or before January 31 of each year a certificate updating
Schedule 5.17 as of the prior fiscal year end with the information required by
- - -------------
Section 5.17 thereon, including any changes in such information; and
(f) promptly, from time to time, such other information regarding
the affairs, operations or condition (financial or otherwise) of the Company and
its Subsidiaries as the Administrative Agent or any Lender may reasonably
request and which is capable of being obtained, produced or generated by the
Company or any of its Subsidiaries or of which any of them has knowledge.
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6.03 NOTICES. The Company shall promptly notify the Administrative
Agent and each Lender of:
(a) the occurrence of any Default or Event of Default and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default, specifying the nature and extent thereof
and the action (if any) which is proposed to be taken with respect thereto;
(b) any material breach or non-performance of, or any default under
the UATC Pass-Through Certificates;
(c) any breach or non-performance of, or any default under any
Contractual Obligation of the Company or any of its Subsidiaries (other than as
described in Section 6.03(a) or (b)), which, in the reasonable judgement of the
Company or such Subsidiary, is likely to result in a Material Adverse Effect;
(d) any material breach or non-performance of, or any default under
any obligation of Prop I under the Prop I Agreement or under any document
related thereto or issued in connection therewith;
(e) the issuance by any court or Governmental Authority of any
injunction, order, decision or other restraint prohibiting, or having the effect
of prohibiting, the making of the Loans or invalidating, or having the effect of
invalidating, any provision of any Loan Document or of the initiation of any
litigation or similar proceeding seeking any such injunction, order or other
restraint;
(f) the filing or commencement of, or any material development in,
any litigation or proceeding affecting the Company or any Subsidiary (i) in
which the amount of damages claimed is $5,000,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect, or (iii) in which the relief sought is an
injunction or other stay of the performance of this Agreement or any Loan
Document or of the material operations of the Company or any of its
Subsidiaries;
(g) any investigation, proceeding or suspension which may exist at
any time between the Company or any of its Subsidiaries and any Governmental
Authority which could reasonably be expected to result in a Material Adverse
Effect;
(h) promptly after, but in no event later than ten days after,
becoming aware thereof (i) any and all material enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
against the Company or any Subsidiary, or any of their properties pursuant to
any applicable Environmental Laws, (ii) all other material Environmental Claims,
and (iii) any environmental or similar condition on any real property adjoining
or in the vicinity of the property of the Company or any Subsidiary that could
reasonably be anticipated to cause such property or any part thereof to be
subject to any material restrictions on the ownership or transferability of such
property or to any material restrictions on the occupancy or use of such
property under any Environmental Laws;
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(i) (i) promptly, an in any event within 10 days, after
receiving notice thereof, any ERISA Event affecting the Company or any
Subsidiary and any ERISA Event affecting any member of its Controlled
Group which is reasonably likely to have a Material Adverse Effect,
together with (A) a copy of any notice with respect to such ERISA Event
that may be required to be filed with the PBGC and (B) any notice
delivered by the PBGC to the Company or any member or its Controlled
Group with respect to such ERISA Event;
(ii) as soon as possible, and in any event within 30 days
after any Responsible Officer of the Company knows or has reason to know
of the occurrence thereof, any Reportable Event with respect to any Plan
that, alone or together with any other Reportable Event with respect to
the same or another Plan, could reasonably be expected to result in
liability of the Company or any Subsidiary thereof to the PBGC in an
aggregate amount exceeding $5,000,000, together with a copy of the
notice of such Reportable Event, if any, given to the PBGC;
(iii) promptly after receipt thereof, a copy of any notice the
Company or any Subsidiary may receive from the PBGC stating the
intention of the PBGC to terminate any Plan or Plans (other than a Plan
maintained by a Subsidiary of the Company which is considered an ERISA
Affiliate of the Company only pursuant to Section (m) or (o) of Section
414 of the Code), or to appoint a trustee to administer any Plan or
Plans
(iv) within 10 days after the filing thereof, notice of any
filing by the Company or any of its Subsidiaries with the PBGC pursuant
to Section 412(n) of the Code with respect to a failure to make a
required installment or other payment with respect to a Plan, together
with a copy of any such notice given to the PBGC; and
(v) promptly and in any event within 30 days after receipt
thereof by the Company or any Subsidiary of the Company from the sponsor
of a Multiemployer Plan, a copy of each notice received by the Company
or such Subsidiary thereof concerning (A) the imposition of Withdrawal
Liability by a Multiemployer Plan in an amount exceeding $5,000,000 or
(B) a determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, both within the meaning of Title IV of
ERISA, and which, in each case, is expected to result in an increase in
annual contributions of the Company or any Subsidiary to such
Multiemployer Plan in an amount exceeding $1,000,000;
(j) promptly after becoming aware thereof, (i) any Material Adverse
Effect subsequent to the Closing Date or (ii) any development in the business or
affairs of the Company or any of its Subsidiaries which has resulted in or which
with the passage of time is likely, in the reasonable judgement of the Company
or such Subsidiary, to result in a Material Adverse Effect;
(k) any change in accounting policies or financial reporting
practices;
(l) upon becoming aware thereof, any labor controversy resulting in
or threatening to result in any strike, work stoppage, boycott, shutdown or
other labor disruption against or
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involving the Company or any Subsidiary which could reasonably be expected to
result in a Material Adverse Effect;
(m) any event or condition which would permit the holder or obligee
of any Indebtedness of the Company or any Subsidiary thereof in an aggregate
amount in excess of $5,000,000 to accelerate the maturity of such Indebtedness;
(n) not less than 30 days prior to the effectiveness thereof, any
change in the Company's name permitted herein, together with, as they become
available, certified copies of amendments to the Company's articles of
incorporation , amendments to the Company's bylaws, certificates of good
standing, certificates of corporate resolutions, and the like with respect to
such name change; and
(o) upon the occurrence thereof, any transaction permitted under
Section 7.03 or 7.04; provided, however, that if such transaction would affect
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Collateral or any Subsidiary Guarantor, such notice shall be given not less than
30 days prior to the effectiveness thereof.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Company setting forth details
of the occurrence referred to therein and stating what action the Company
proposes to take with respect thereto.
6.04 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Company shall and
shall cause each of its Material Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation (except for a failure to maintain or preserve the existence of a
Subsidiary upon the occurrence of a transaction permitted under Section 7.03 or
7.04 involving such Subsidiary);
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business (except in connection with
transactions permitted under Section 7.03 or 7.04 and except to the extent the
failure to comply therewith could not result in a Material Adverse Effect);
(c) use its reasonable efforts, in the ordinary course and
consistent with past practice, to preserve its business organization and
preserve the goodwill and business of the customers, suppliers and others having
business relations with it; and
(d) preserve or renew all of its material trademarks, trade names
and service marks;
provided, however, that the Company may change its name to United
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Artists Theatre Company so long as the Company complies with Sections 6.03(n)
and 6.18 with respect thereto.
6.05 MAINTENANCE OF PROPERTY. The Company shall, and shall cause
each of its Subsidiaries to, at all times do or cause to be done all things
necessary to preserve, renew and keep in full force and effect the rights,
licenses, permits, franchises, patents, trade secrets and copyrights material to
the conduct of its business; maintain and operate such business in
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substantially the manner in which it is presently conducted and operated;
take all action which may be required to obtain, preserve, renew and extend all
licenses, permits and other authorizations which reasonably are likely to be
material to the operation of such business; and at all times maintain, preserve
and protect all property material to the conduct of such business and keep such
property in good repair, working order and condition, and from time to time
make, or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times;
provided, however, that neither the Company nor any of its Subsidiaries shall be
- - -------- -------
required to take any of the foregoing actions with respect to businesses sold or
disposed of in accordance with the terms hereof.
6.06 INSURANCE. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable insurers, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts, and with such deductibles, as are customarily
carried under similar circumstances by such other Persons, including workers'
compensation insurance, public liability and property and casualty insurance.
6.07 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause its
Subsidiaries to, pay and discharge as the same shall become payable, all their
respective material obligations and liabilities, including:
(a) all material tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all material obligations with respect to accounts payable to
trade creditors for goods and services and current operating liabilities (not
the result of the borrowing of money) incurred in the ordinary course of the
Company's or the Subsidiary's business, unless contested in good faith by
appropriate proceedings and reserved for in accordance with GAAP; and
(c) all material lawful claims which, if unpaid, might by law become
a Lien upon
its property.
6.08 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
each of its Subsidiaries to comply, in all respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist and except
to the extent that the failure to comply therewith is not reasonably expected by
the Company to have a Material Adverse Effect.
6.09 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company shall
maintain and shall cause each of its Subsidiaries to maintain, proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company
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and such Subsidiaries. The Company will permit, and will cause each of its
Subsidiaries to permit, representatives of the Administrative Agent or any
Lender to visit and inspect any of their respective properties, to examine their
respective corporate, financial and operating records and make copies thereof or
abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, employees and independent
public accountants, all at the expense of the Company and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Company; provided, however, when an Event
-------- -------
of Default exists the Administrative Agent or any Lender may visit and inspect
at the expense of the Company such properties at any time during business hours
upon notice to the Company.
6.10 ENVIRONMENTAL LAWS.
(a) The Company shall, and shall cause each of its Subsidiaries to,
conduct its operations and keep and maintain its property in compliance with all
Environmental Laws except to the extent the failure to comply is not reasonably
expected to have a Material Adverse Effect.
(b) Upon written request of the Administrative Agent or any Lender,
the Company shall submit and cause each of its Subsidiaries to submit, to the
Administrative Agent and such Lender, at the Company's sole cost and expense at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report required pursuant to this Section 6.10 and any other
environmental, health or safety compliance obligation, remedial obligation or
liability, that could, individually or in the aggregate, reasonably expected to
result in liability in excess of $5,000,000.
6.11 USE OF PROCEEDS. The Company shall use the proceeds of the
Loans as set forth on Schedule 2.01 hereto.
-------------
6.12 ERISA. The Company shall, and shall cause each of its
Subsidiaries to, comply in all material respects with the applicable provisions
of ERISA and the provisions of the Code relating thereto.
6.13 INTEREST RATE PROTECTION. (a) Subject subsection (b) below, the
Company or its Subsidiaries shall maintain in effect in a notional principal
amount not less than 50% of all Funded Indebtedness (but including, without
duplication, the aggregate amount of the combined Revolving Commitments),
protection against fluctuation in interest rates in the form of either (i) one
or more Rate Contracts and/or interest rate cap agreements providing protection
against fluctuations in interest rates with, in the case of Rate Contracts, one
or more lenders each having a combined capital and surplus of at least
$100,000,000, (ii) Indebtedness bearing interest at a rate per annum that is
fixed from the date of borrowing until maturity or (iii) any combination
thereof.
(b) If the Total Leverage Ratio is less than 4.00 to 1 for two
consecutive fiscal quarters, the Company and its Subsidiaries shall not be
required to maintain the Rate Contracts or cap agreements referred to in
subsection (a) above; provided, however, that if, thereafter, the
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Total Leverage Ratio is 4.00 to 1 or more as of the end of any fiscal quarter,
the Company or its Subsidiaries shall enter into such Rate Contracts or cap
agreements required by Section 6.13(a) within 30 days of the delivery of the
compliance certificate pursuant to Section 6.02(b)(iii) reporting such Total
Leverage Ratio.
6.14 PLEDGED SUBSIDIARIES. On the UATC Senior Secured
Note Repayment Date, the Company shall pledge, or cause to be pledged, under the
Collateral Documents all the issued and outstanding capital stock of UATC (other
than the UATC Preferred Stock which is being contributed to UATC), UAR, Prop I
and all Wholly-Owned First-Tier Subsidiaries by complying with the applicable
provisions of Section 4.03. Thereafter, upon the creation, acquisition or
beneficial ownership of any Wholly-Owned First-Tier Subsidiary, the Company
shall cause UATC to promptly comply with the applicable provisions of Section
4.03.
6.15 SUBSIDIARY GUARANTORS. The Company shall cause UATC to become a
Subsidiary Guarantor as of the Closing Date. The Company shall cause UAR to
become a Subsidiary Guarantor under the Subsidiary Guaranty not later than the
UATC Senior Secured Note Repayment Date and cause Prop I to become a Subsidiary
Guarantor under the Subsidiary Guaranty not later than the Prop I Mortgage Debt
Repayment Date, in each case by delivering to the Administrative Agent a
supplement to the Subsidiary Guaranty duly executed and delivered by UAR or Prop
I, together with the applicable items referred to in Section 4.03.
6.16 REPAYMENT OF UATC SENIOR SECURED NOTES. The Company shall not
revoke its notice to redeem the UATC Senior Secured Notes and shall repay, or
cause to be repaid, the UATC Senior Secured Notes in full not later than 45 days
after the Closing Date.
6.17 REDEMPTION OF COMPANY PREFERRED STOCK. The Company shall not
revoke its notice to redeem the Company Preferred Stock and shall redeem all
Company Preferred Stock not later than 15 Business Days after the Closing Date.
6.18 FURTHER ASSURANCES.
(a) The Company shall ensure that all written information, exhibits
and reports furnished to the Administrative Agent and to the Lenders do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Administrative Agent and the Lenders and
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.
(b) Promptly upon request by the Administrative Agent or the
Majority Lenders through the Administrative Agent, the Company shall (and shall
cause any of its Subsidiaries to) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and all such further
acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and other
instruments as the Administrative Agent or such Lenders may reasonably require
from time to time in order (i) to carry out more effectively the purposes of
this Agreement or any other Loan Document, (ii)
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to subject the Collateral to the Liens created by any of the Collateral
Documents any of the properties, rights or interests covered by any of the
Collateral Documents, (iii) to perfect and maintain the validity, effectiveness
and priority of any of the Collateral Documents and the Liens intended to be
created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Administrative Agent and the Lenders the
rights granted or now or hereafter intended to be granted to the Administrative
Agent and/or the Lenders under any Loan Document or under any other instrument
executed in connection therewith; provided, however, that nothing herein shall
-------- -------
be construed as a requirement that the Company or any Subsidiary provide
collateral for its Obligations in addition to that which is described in this
Agreement and the Collateral Documents.
(c) The Company agrees to execute and deliver or cause to be
executed and delivered to the Administrative Agent from time to time such
documents, agreements, endorsements, notifications, registrations, assignments,
financing statements, and other writings deemed necessary or appropriate by the
Administrative Agent to perfect, maintain and protect, the priority and
existence of the security interest of the Administrative Agent on behalf the
Secured Parties in any Cash Collateral Account established hereunder, including,
without limitation, provision of assurances from depositaries, certificate of
deposit issuers or other holders or issuers of such interest bearing account
regarding the Administrative Agent's access to, right to collect, foreclose on
or sell such interest bearing account and right to realize the practical
benefits of such foreclosure or sale.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Lender
shall have any Commitment hereunder, or any Obligation shall remain unpaid,
unless the Majority Lenders waive compliance in writing:
7.01 LIMITATION ON INDEBTEDNESS. The Company shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume, guaranty, suffer
to exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(a) the Obligations and the Intercompany Note;
(b) Indebtedness existing on the Closing Date and set forth in
Schedule 7.01, and, except with respect to the UATC Senior Secured Notes and the
- - -------------
Prop I Mortgage Debt, any extension, renewal, refunding and refinancing thereof;
provided, however, that after giving effect to such extension, renewal,
- - -------- -------
refunding or refinancing, (i) the principal amount thereof is not increased, and
(ii) neither the tenor nor the remaining average life thereof is reduced;
(c) Indebtedness secured by Liens permitted by Section 7.02(f);
(d) Rate Contracts provided for under Section 6.13, or interest rate
or foreign currency exchange risk protection agreements entered into with
respect to obligations incurred or existing in the ordinary course of business;
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(e) Indebtedness in an aggregate outstanding amount not exceeding
$7,500,000 in the aggregate; provided, however, that (i) the terms of such
-------- -------
additional Indebtedness do not impose a Negative Pledge and (ii) immediately
before and after giving effect to the incurrence thereof, no Default or Event of
Default shall have occurred or be continuing;
(f) the Senior Subordinated Notes:
(g) unsecured Subordinated Indebtedness in addition to the Senior
Subordinated Notes not exceeding $50,000,000 in the aggregate at any time;
PROVIDED, HOWEVER, immediately before and after giving effect to the incurrence
thereof, no Default or Event of Default shall have occurred or be continuing;
(h) Contingent Obligations comprised of endorsements for collection
or deposit in the ordinary course of business and accounts payable to suppliers
incurred in the ordinary course of business and paid in the ordinary course of
business;
(i) Contingent Obligations incurred in connection with various
employee benefit plans or collective bargaining agreements to the extent not
otherwise prohibited and subject to any restrictions in this Agreement or any
other Loan Document;
(j) assumption by UAR or any Subsidiary thereof of the guarantees
listed in clause (b) of the definition of "UAR Financing Agreements" at the time
any Prop I Letters of Credit are outstanding related thereto;
(k) Indebtedness not exceeding $10,000,000 in the aggregate at any
time outstanding relating to property or Indebtedness of Persons existing at the
time such property or such Person is acquired by the Company or any of its
Subsidiaries (and not created in contemplation of such acquisition), and any
extension, renewal, refunding and refinancing thereof; provided, however, that
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after giving effect to such extension, renewal, refunding or refinancing, (i)
the principal amount thereof is not increased, and (ii) neither the tenor nor
the remaining average life thereof is reduced; and
(l) Indebtedness contemplated by Sections 7.05 and 7.06.
7.02 LIMITATION ON LIENS. The Company shall not, nor shall it permit
any of its Subsidiaries to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien or Negative Pledge upon or with respect to any part
of its property or assets, whether now owned or hereafter acquired, or offer or
agree to do so, except:
(a) Permitted Liens;
(b) Liens and Negative Pledges created under any Loan Document;
(c) Liens and Negative Pledges on the Collateral securing
obligations of the Company or any Subsidiary in respect of Rate Contracts
entered into with any Swap Party permitted by Section 7.01(d), in each case, on
a pari passu basis with the Obligations;
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(d) Liens and Negative Pledges (other than Liens and Negative
Pledges on the Collateral) existing on the property of the Company or its
Subsidiaries or created pursuant to Contractual Obligations existing on the
Closing Date and set forth in Schedule 7.02 securing, in the case of
-------------
Indebtedness, Indebtedness permitted under Section 7.01(b);
(e) Liens and Negative Pledges securing Indebtedness permitted under
Section 7.01(e); provided, that any such Liens and Negative Pledges shall not
--------
apply to any property of the Company or its Subsidiaries that is not the subject
of such Indebtedness;
(f) Liens and Negative Pledges created pursuant to Contractual
Obligations in effect at the time any property or Person is acquired by the
Company or its Subsidiaries relating to, in the case of Indebtedness,
Indebtedness permitted under Section 7.01(k); provided that Contractual
--------
Obligations were not created in contemplation of such acquisition;
(g) extensions, renewals and replacements of Liens and Negative
Pledges referred to in subsections (a) through (f) above; provided, however,
-------- -------
that any such extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or replaced and that
the obligations secured by any such extension, renewal or replacement Lien shall
be in an amount not greater than the amount of the obligations secured by the
original Lien extended, renewed or replaced; and
(h) Liens and Negative Pledges securing the UATC Senior Secured
Notes and related obligations.
7.03 DISPOSITION OF ASSETS. The Company shall not, nor shall it
permit any of its Subsidiaries to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise make any Disposition, whether in one or a series
of transactions, or enter into any agreement to do any of the foregoing except:
(a) Excluded Dispositions; and
(b) Dispositions of assets for fair market value in an arm's length
transaction not otherwise prohibited under this Agreement, the Net Cash Proceeds
of which are paid to the Administrative Agent for the account of the Lenders to
the extent required under Section 2.08(a).
7.04 CONSOLIDATIONS AND MERGERS. The Company shall not, and shall
not permit any of its Subsidiaries to, merge into or consolidate or combine with
any other Person, or permit any Subsidiary of the Company so to do, except:
(a) any Person, including the Company or any wholly-owned Subsidiary
of the Company, may be merged, consolidated or liquidated into or combined with
the Company (so long as the Company is the survivor thereof) or any other
wholly-owned Subsidiary of the Company; provided, that the Company or a
--------
Subsidiary Guarantor is the survivor thereof in any merger, consolidation or
liquidation involving a Subsidiary Guarantor or the Company; and
(b) transactions permitted under Section 7.03;
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provided, that in each case, immediately after giving effect to any merger,
- - --------
consolidation or liquidation permitted under this Section 7.04, no Default or
Event of Default shall occur or be continuing.
7.05 LOANS AND INVESTMENTS. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly purchase, acquire or
hold beneficially any stock, other securities or evidences of Indebtedness of,
or make or permit to exist any loans or advances to or make any investment or
acquire any interest whatsoever in, any other Person (collectively,
"investments"), except:
(a) Permitted Investments;
(b) loans, equity interests and investments existing on the Closing
Date and listed on Schedule 7.05 and, except as may be otherwise provided in any
-------------
Collateral Document, any accretions or increases in such equity interests and
investments and may extend, renew, refund, or refinance any such loan; provided,
that after giving effect to such extension, renewal, refunding or refinancing,
the principal amount thereof is not increased;
(c) investments in theatre operations outside the United States not
exceeding $5,000,000 from the Closing Date;
(d) investments in the Company, Pledged Subsidiaries or Subsidiary
Guarantors;
(e) other investments in Persons, including Subsidiaries of the
Company which are not Pledged Subsidiaries or Subsidiary Guarantors not
exceeding the sum of (i) $10,000,000 in the aggregate from the Closing Date plus
----
(ii) an amount equal to dividends and other distributions received from such
Subsidiaries from time to time; provided, however, that the total of such
-------- -------
investments under this subsection (e) shall not exceed $25,000,000 in the
aggregate from the Closing Date, and immediately before and after giving effect
to such investment, no Default or Event of Default shall exist;
(f) exchanges of theatre properties to the extent there are no
additional incremental investments in connection with such exchanges;
(g) redemptions, purchases, retirements or other acquisitions for
consideration of shares of capital stock of a Subsidiary of the Company;
provided, that (i) such stock is not owned by the Company or any Subsidiary of
the Company and (ii) such redemption or acquisition is not otherwise prohibited
under this Agreement;
(h) investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers, suppliers and other Persons
arising in the ordinary course of business;
(i) securities and evidences of Indebtedness that represent proceeds
other than Net Cash Proceeds, and Net Cash Proceeds of, Dispositions, in each
case to the extent otherwise permitted under this Agreement; provided, that the
Company is in compliance with its obligations under Section 2.08(a);
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(j) loans permitted under Sections 7.01 and 7.06;
(k) redemption of the UATC Senior Notes and the Company Preferred
Stock;
(l) redemptions or purchases of the Prop I Mortgage Debt; and
(m) investments by any Subsidiary of the Company in the Company, any
Subsidiary Guarantor or any Pledged Subsidiary.
7.06 TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall
not permit any of its Subsidiaries to, sell or transfer any assets to, purchase
or acquire any assets of, enter into any lease, make any loan or investment in,
or otherwise engage in any material transaction with any Affiliate, except in
the ordinary course of business and upon fair and reasonable terms no less
favorable than the Company or any such Subsidiary could obtain or could become
entitled to in an arm's length transaction with a Person which was not an
Affiliate; except:
(a) payments to Prop I under theatre leases and subleases entered
into prior to the Closing Date and under other UAR Leases as in effect on the
Closing Date;
(b) payments of management fees or similar fees paid by UAR or its
subsidiaries to the Company or any Subsidiary;
(c) loans by the Company of proceeds of the Loans to UATC; provided,
--------
however, that all of such loans are made pursuant to, and evidenced by, the
- - -------
Intercompany Note; and
(e) unsecured Indebtedness of the Company to its Subsidiaries and
Indebtedness of its Subsidiaries to the Company arising from time to time, on a
day-to-day basis, through operation of the cash management practices of the
Company as ordinarily and customarily conducted as of the Closing Date;
(f) transactions done pursuant to the agreements and arrangements
set forth on Schedule 7.06 hereto;
(g) transactions among the Company and its Subsidiaries in
connection with the management and operation of such Subsidiaries in the
ordinary course of business as conducted as of the Closing Date; and
(h) transactions among the Company, Subsidiary Guarantors and
Pledged Subsidiaries; and
(i) transactions permitted under Sections and 7.04 and 7.05.
7.07 CHANGE IN BUSINESS. The Company shall not, and shall not permit
any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it on the
date hereof.
7.08 COMPLIANCE WITH ERISA. The Company shall not directly or
indirectly, and shall not permit or direct any of its Subsidiaries directly or
indirectly to (a) terminate, any Plan
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subject to Title IV of ERISA so as to result in any liability to the
Company or any Subsidiary, which would have a Material Adverse Effect, (b)
permit to exist any ERISA Event or any other event or condition, which is
reasonably likely to result in a liability of the Company or any Subsidiary,
which would have an Material Adverse Effect, or (c) make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer
Plan which is reasonably likely to result in any liability to the Company or any
ERISA Affiliate, which would have a Material Adverse Effect, (d) enter into any
new Qualified Plan or modify any existing Qualified Plan so as to increase its
obligations thereunder except in the ordinary course of business, and which
would not have a Material Adverse Effect or (e) permit the minimum funding
requirements of ERISA to be violated with respect to any Plan if the liability
to the Company resulting therefrom could have a Material Adverse Effect.
7.09 LEASE OBLIGATIONS. The Company shall not, nor shall it permit
any of its Subsidiaries to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, entered into
pursuant to any Sale-and-Leaseback Transaction except Sale-and-Leaseback
Transactions entered into in an arm's length transaction with a Person other
than a Subsidiary of the Company; provided, that: (a) immediately prior to
--------
giving effect to such lease, the property or asset subject to such lease was
sold by the Company or any such Subsidiary to the lessor under such lease for
not less than fair market value; (b) the Net Cash Proceeds of such sale are
applied simultaneously to reduce the Loans to the extent required by Section
2.08; and (c) no Default or Event of Default would occur as a result of such
sale and subsequent lease.
7.10 CAPITAL STOCK AND EQUITY INTERESTS OF SUBSIDIARIES. The Company
shall not permit any of its Subsidiaries to issue any class of common stock,
preferred stock, whether or not redeemable, or other capital stock or other
equity interests, or otherwise change its equity structure, except as permitted
by Section 7.05(d) or (g) and except that the Company may contribute the UATC
Preferred Stock to the capital of UATC.
7.11 RESTRICTED PAYMENTS. The Company shall not, nor permit any of
its Subsidiaries to, declare or make any dividend payment or other distribution
of assets, properties, cash, rights, obligations or securities on account of any
shares of any class of its capital stock, or purchase, redeem or otherwise
acquire for value any shares of its capital stock or any warrants, rights or
options to acquire such shares, now or hereafter outstanding, or enter into
derivative transactions related to the foregoing; except:
(a) dividends or distributions by Subsidiaries of the Company on
their capital stock to the Company or any Subsidiaries of the Company; provided,
--------
however, that dividends or distributions by non wholly-owned Subsidiaries of the
- - -------
Company shall be paid ratably to holders of their capital stock;
(b) repurchases of its common stock held by retired, or former
officers and employees (or from the estate, heirs or legatees of any deceased
officer or employee); provided, however, that the aggregate cash amount expended
-------- -------
for such purpose shall not exceed $2,000,000 during any consecutive period of
twelve months and shall not exceed $10,000,000 in the aggregate from and after
the Closing Date;
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(c) transactions permitted by Section 7.04 and 7.05;
(d) contribution of the UATC Preferred Stock to the capital of
UATC;
(e) dividends in the form of stock (which stock dividends paid to
the Company or any Guarantor Subsidiary shall be pledged under the Collateral
Documents if required thereby); and
(f) redemption of the Company Preferred Stock pursuant to the
notice copied to the Administrative Agent on the Closing Date.
7.12 FINANCIAL RATIOS. The Company shall not:
(a) As of the end of any fiscal quarter, commencing with the fiscal
quarter ending June 30, 1998, permit the Senior Leverage Ratio or the Total
Leverage Ratio to exceed the ratios set forth below:
PERIOD SENIOR TOTAL
LEVERAGE LEVERAGE
RATIO RATIO
----------------------------------------------------------
Closing Through 12/31/1998 4.25:1 6.25:1
3/31/1999 through 12/31/1999 4.00:1 6.00:1
3/31/2000 through 12/31/2000 3.50:1 5.50:1
3/31/2001 through 12/30/2001 3.00:1 5.00:1
3/31/2002 and thereafter 3.00:1 4.50:1
(b) As of the end of any fiscal quarter, commencing with the fiscal
quarter ending June 30, 1998, permit the ratio of (i) Operating Cash Flow plus
----
Pro Forma Lease Expense to (ii) Pro Forma Debt Service to be less than 1.15 to
1.0;
(c) As of the end of any fiscal quarter, commencing with the fiscal
quarter ending June 30, 1998, permit the ratio of (i) Operating Cash Flow plus
----
Consolidated Lease Expense, to (ii) Consolidated Interest Expense PLUS
Consolidated Lease Expense to be less than the ratios set forth below; provided,
--------
however, that, notwithstanding the definitions of Operating Cash Flow,
- - -------
Consolidated Interest Expense and Consolidated Lease Expense, when calculating
covenant compliance for this Section 7.12(c) (i) for the fiscal quarter ending
June 30, 1998 only the results for the prior fiscal quarter ending on such date
shall be included when computing such items; (ii) for the fiscal quarter ending
September 30, 1998 only the results for the prior two fiscal quarters ending on
such date shall be included when computing such items; and (iii) for the fiscal
quarter ending December 31, 1998 only the results for the prior three fiscal
quarters ending on such date shall be included when computing such items:
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PERIOD MINIMUM
RATIO
--------------------------------- -------------
Closing Through 12/31/2000 1.30 to 1
3/31/2001 through 12/31/2003 1.40 to 1
3/31/2004 and thereafter 1.50 to 1
7.13 PRIORITY OF LOAN PAYMENTS. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly make any optional or
other voluntary payment, prepayment, retirement, repurchase or redemption on
account of the principal of or interest on any Indebtedness or set aside money
or securities for a sinking or other similar fund for the payment of principal
of or premium or interest in respect of any Indebtedness or set apart money for
the defeasance of any Indebtedness; except for:
(a) the Obligations;
(b) payments and prepayments by UATC to the Company of loans
evidenced by, the Intercompany Note so long as all of such payments are paid
directly to the Administrative Agent for application to outstanding Obligations
as directed by the Company; provided, however, that following the occurrence and
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during the continuance of a Default or Event of Default, the application of such
payments shall be determined by the Majority Lenders;
(c) prepayments of the Senior Subordinated Notes not exceeding
$50,000,000 in the aggregate;
(d) prepayments of existing Indebtedness permitted under Section
7.01(b) from the proceeds of Dispositions and Excess Cash not required to prepay
Loans pursuant to Section 2.08;
(e) refinancings or refundings of Indebtedness otherwise permitted
under this Agreement;
(f) payments otherwise permissible under Sections 7.05 and 7.11;
(g) payments or prepayments of the Prop I Mortgage Debt; and
(h) payment or prepayment in full of the UATC Senior Secured Notes
pursuant to the notice copied to the Administrative Agent on the Closing Date.
7.14 INVESTMENTS IN MARGIN STOCK. The Company shall not, and shall
not permit any Subsidiary to, acquire or hold any Margin Stock, or permit any
Subsidiary of the Company so to do, unless not more than 25% of the value of the
assets of the Company, or the Company on a Consolidated basis, as the case may
be, is represented by assets consisting of Margin Stock.
7.15 AMENDMENTS TO CERTAIN AGREEMENTS. The Company will not, and
shall not permit any of its Subsidiaries to, without the prior written consent
of Majority Lenders, amend,
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waive or modify, or take or refrain from taking any action which has the effect
of amending, waiving or modifying, any provision of:
(a) any other agreements with Affiliates to the extent that such
amendment, waiver modification or action could have a Material Adverse Effect or
could have an adverse effect on the rights of the Administrative Agent, any
Issuing Lender or Lenders under this Agreement or any Loan Document; provided,
--------
however, that the Company and its Subsidiaries shall not be permitted to amend,
- - -------
waive or modify any material agreement with an Affiliate if a Default or Event
of Default has occurred and is continuing or
(b) any documents (other than documents referred to in (a) above)
evidencing Indebtedness
provided, further, that, notwithstanding anything to the contrary
-------- -------
contained in this Section 7.15, amendments may be made to documents evidencing
Indebtedness to the extent that the terms and conditions hereof permit the
Company or its Subsidiaries to enter into an initial agreement which has the
same effect as such amendment.
7.16 ACCOUNTING CHANGES. The Company shall not, and shall not permit
any of its Subsidiaries to, make any significant change in accounting treatment
and reporting practices, except as required by GAAP, or change the fiscal year
of the Company or any of its Subsidiaries.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 EVENT OF DEFAULT. Any of the following events shall
constitute an "Event of Default":
(a) default shall be made in the payment of any principal of any
Loan, of payment of any amount due upon drawing of any Letter of Credit when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise; or
(b) default shall be made in the payment of any interest on any
Loan or any commitment fee, letter of credit commission, or any other fee,
(other than an amount referred to in (a) above or (c) below) due under this
Agreement or any other Loan Document, when and as the same shall become due and
payable, and such Default shall continue for a period of five days; or
(c) default shall be made in the payment of any expense
reimbursement or any other amount (other than an amount referred to in (a) or
(b) above) due under this Agreement or any other Loan Document, when and as the
same shall become due and payable, and such Default shall continue for a period
of 30 days; or
(d) any representation or warranty made in connection with this
Agreement, any other Loan Document, or in any report, certificate, financial
statement or other instrument
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furnished in connection with this Agreement, the other Loan Documents or the
Borrowings hereunder shall prove to have been false or misleading in any
material respect when made; or
(e) default shall be made in the due observance of any covenant,
condition or agreement to be observed or performed by the Company pursuant to
Section 6.02(a), 6.02(b), 6.02(c), 6.09, 6.11, 6.14, 6.15, 6.16, 6,17 or Article
VII; or
(f) default shall be made in the due observance or performance of
any covenant, condition or agreement to be observed or performed by the Company
pursuant to Section 6.02(d) or 6.03 and such Default shall continue unremedied
for a period of 10 Business Days; or
(g) default shall be made in the due observance or performance of
any other covenant, condition or agreement to be observed or performed by any
Loan Party pursuant to the terms of any Loan Document and such default shall
continue unremedied for a period of 30 days; or
(h) (i) the Company or any Material Subsidiary shall (A)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code or any other Federal, state or
foreign bankruptcy, insolvency or similar law, (B) consent to the
institution of, or fail to controvert in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (C)
apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Company, any
Material Subsidiary thereof, or for all or substantially all of its
property or assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, or
(E) make a general assignment for the benefit of creditors, or (F)
through a resolution passed by its Board of Directors or any committee
of its Board of Directors take corporate action for the purpose of
effecting any of the events described in this subsection; or
(ii) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (A) relief in respect of the Company, any Material Subsidiary
thereof, or for all or substantially all of any of its property or
assets, under Title 11 of the United States Code or any other Federal,
state or foreign bankruptcy, insolvency or similar law, (B) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any Material Subsidiary or for all or
substantially all of its property or assets or (C) the winding-up or
liquidation of the Company or any Material Subsidiary, and such
proceeding or petition shall continue undismissed or unstayed for 90
days or an order or decree approving or ordering any of the foregoing
shall continue unstayed and in effect for 90 days;
(i) (i) a default shall occur under any mortgage, indenture,
agreement or instrument or other document evidencing any Indebtedness
(other than a Rate Contract entered into by the Company pursuant to
Section 6.13) of the Company, or any Subsidiary thereof, whether now
existing or hereafter created or incurred, if, as a result of such
default (A) Indebtedness in an aggregate amount in excess of $10,000,000
of the Company, or any Subsidiary thereof shall become or be declared
due and payable prior to
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the date on which it would otherwise become due and payable or (B) the
holder or obligee of any Indebtedness (or any trustee or agent on
behalf of such holder or obligee) shall be permitted to accelerate,
whether or not such acceleration actually occurs, the maturity of any
Indebtedness of the Company or any Subsidiary thereof in an aggregate
amount in excess of $10,000,000; or
(ii) any early termination event shall occur under any Rate
Contracts entered into pursuant to Section 6.13 with any Swap Party,
or the Company or any Subsidiary shall breach or default under any
Rate Contract entered into pursuant to Section 6.13 with any Swap
Party, if the effect of such early termination event, breach or
default is termination of any of such Rate Contracts and a demand or
demands in an aggregate amount in excess of $10,000,000 made upon the
Company or any Subsidiary to pay any claim or claims for compensation,
termination or loss shall have remained unsatisfied for three Business
Days; or any Rate Contracts entered into pursuant to Section 6.13 with
any Swap Party shall have matured and the Company or any Subsidiary
shall have failed to pay an aggregate amount in excess of $10,000,000
in relation thereto for at least three Business Days; or
(j) (i) a Reportable Event or Reportable Events or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code) shall have occurred with respect to any
Plan or Plans that reasonably could be expected to result in aggregate
liability to the Company and the Subsidiaries thereof to the PBGC or
to a Plan in an aggregate amount in excess of $5,000,000 and within 30
days after (A) the reporting of such Reportable Event or Reportable
Events to the Lenders or after (B) receipt by the Administrative Agent
of the statement required by Section 6.03(i), the Administrative
Agent, upon receiving written instructions from Majority Lenders,
shall have notified the Company in writing that (1) the Majority
Lenders have reasonably determined that on the basis of such
Reportable Event or Reportable Events or failure to make a required
payment there are reasonable grounds (x) for termination of the Plan
or Plans by the PBGC, (y) for the appointment by the appropriate
United States District Court of a trustee to administer such Plan or
Plans or (z) for the enforcement of a lien in favor of a Plan in an
amount in excess of $5,000,000 and (2) as a result of such
determination, an Event of Default exists hereunder; or the PBGC shall
have instituted proceedings to terminate any Plan or Plans, or a
trustee shall have been appointed by a United States District Court to
administer any Plan or Plans, with vested Unfunded Pension Liabilities
aggregating in excess of $5,000,000; or
(ii) (A) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (B) the Company or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability and is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner, and (C) the
amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer
Plans in connection with Withdrawal Liabilities (determined as of the
date or dates of such notification), could reasonably be expected to
result in aggregate liability of the Company and the Subsidiaries
thereof in excess of $5,000,000; or
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(iii) the Company or any Subsidiary shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, if solely as a result of such reorganization or termination the
aggregate annual contributions of the Company and the Subsidiaries
thereof to all Multiemployer Plans to which the Company or any ERISA
Affiliate is making or accruing an obligation to make contributions that
are then in reorganization or have been (or are being) terminated have
been or will be increased over the amounts required to be contributed by
the Company or any Subsidiary thereof to such Multiemployer Plans for
their most recently completed plan years by an amount exceeding
$1,000,000; or
(k) one or more final judgments for the payment of money in excess
of $5,000,000 shall be rendered by a court or other tribunal against the Company
or any Subsidiary thereof and shall remain undischarged for a period of 30
consecutive days during which execution of such judgment shall not have been
stayed effectively (by the filing of a bond or otherwise), or any action shall
be legally taken by a judgment creditor to levy upon the assets of the Company
or any Subsidiary thereof to enforce such judgment; or
(l) The Company shall cease to beneficially own, directly or
indirectly, free and clear of all Liens (other than Liens created under any Loan
Document and, until the UATC Senior Secured Notes are paid, the Former
Collateral Documents), all of the issued and outstanding capital stock of any
Subsidiary Guarantor; or
(m) (i) any Collateral Document shall for any reason cease to be, or
be asserted by the Company or any Affiliate, as applicable, not to be, in full
force and effect, enforceable in accordance with its terms, (ii) any security
interest purported to be created by any Collateral Document shall cease to be a
valid and perfected first priority security interest in any such Collateral at
any time for any reason other than the failure of the Administrative Agent to
retain possession of such Collateral after such Collateral have been received by
it; or (iii) except as permitted under Section 7.03 or 7.04, UATC, UAR, Prop I
or any Wholly-Owned First-Tier Subsidiary shall fail to be a Pledged Subsidiary
any time following the UATC Senior Secured Note Repayment Date; or
(n) (i) The Subsidiary Guaranty shall for any reason cease to be, or
be asserted by the Company or any Subsidiary Guarantor, not to be, in full force
and effect, enforceable in accordance with its terms; or (ii) UAR shall fail to
become a Subsidiary Guarantor under the Subsidiary Guaranty as required
hereunder on or before the UATC Senior Secured Note Repayment Date or Prop I
shall fail to become a Subsidiary Guarantor under the Subsidiary Guaranty as
required hereunder on or before the Prop I Mortgage Debt Repayment Date; or
(o) there has occurred a Material Adverse Effect and the
Administrative Agent has notified the Company in writing that Majority Lenders
have determined that there has occurred a Material Adverse Effect and the
Administrative Agent has not withdrawn such notice by the earlier of: (i) 60
days after the date of such notice and (ii) the first date following the date of
such notice when the Company is required to deliver the financial reports and
certificates described in Sections 6.01 (a) or (b), as the case may be, and
Sections 6.02 (a) and (b); or
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(p) if, during any period of 12 consecutive months there occurs
Involuntary Closings of 30 theatres owned, leased or operated by the Company
and/or its Subsidiaries or if during the term of this Agreement there occurs
Involuntary Closings of 60 or more theatres owned, leased or operated by the
Company and/or its Subsidiaries; or
(q) all UATC Senior Secured Notes shall not be repaid in full on or
before 45 days after the Closing Date; or
(r) the Former Collateral Agent shall fail to promptly deliver to
the Administrative Agent the Collateral in its possession under the Former
Collateral Documents which is required to be pledged under the Collateral
Documents; or
(r) all Company Preferred Stock shall not be redeemed on or before
15 Business Days after the Closing Date.
8.02 REMEDIES. If any Event of Default occurs, then, and in any
such event (other than an event with respect to the Company or any Subsidiary
described in Section 8.01 (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, upon the written request of
Majority Lenders shall, by Requisite Notice to the Company, take any or all of
the following actions at the same or different times: (a) terminate forthwith
the Commitments of the Lenders hereunder and (b) declare the Loans then
outstanding and an amount equal to the aggregate amount of all outstanding
Letter of Credit Usage to be forthwith due and payable, whereupon the same,
together with accrued interest thereon and any unpaid accrued fees and all other
liabilities of the Company accrued hereunder, shall become forthwith due and
payable both as to principal, interest and such other liabilities, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Company, anything contained herein or in any
other Loan Document to the contrary notwithstanding. In the case of any event
with respect to the Company or any Subsidiary, described in Section 8.01(h)
above the Commitments of the Lenders shall automatically terminate and the
principal amount of the Loans outstanding, together with all accrued interest
thereon, an amount equal to the aggregate amount of all outstanding Letter of
Credit Usage and any unpaid accrued commitment fees and all other liabilities of
the Company accrued hereunder, shall automatically become due and payable, both
as to principal, interest and such other liabilities, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Company, anything contained herein or in any Loan Document to the
contrary notwithstanding.
8.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement.
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ARTICLE IX
ADMINISTRATIVE AGENT
9.01 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints, designates and authorizes the Administrative Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
9.02 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
9.03 LIABILITY OF AGENT-RELATED PERSONS. None of the Agents, the
Arrangers, their Affiliates, or any of their respective officers, directors,
employees, agents, or attorneys-in-fact (collectively, the "Agent-Related
Persons") shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement (except for its own gross
negligence or willful misconduct) or (b) be responsible in any manner to any
other Person for any recital, statement, representation or warranty made by the
Company or any Subsidiary of the Company or any officer thereof contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or any other Loan Document, or
for the value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any other Person to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of its Subsidiaries.
9.04 RELIANCE BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the
Administrative Agent. The
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Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of Majority Lenders, or all Lenders if
required hereunder, as it deems appropriate and, if it so requests, it shall
first 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. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of Majority
Lenders, or all Lenders if required hereunder, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the conditions
specified in Sections 4.01 and 4.02, each Lender shall be deemed to have
consented to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to the Lender unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from the Lender prior to the initial Borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Administrative Agent to that effect or the Lender shall not have
made available to the Administrative Agent the Lender's ratable portion of such
Borrowing.
9.05 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees payable to the Administrative Agent for the account of the Lenders,
unless the Administrative Agent shall have received written Requisite Notice
from a Lender or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be requested by the Majority Lenders in accordance
with Article VIII; provided, however, that unless and until the Administrative
-------- -------
Agent shall have received any such request, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Administrative Agent and the Lenders.
9.06 CREDIT DECISION. Each Lender expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it and
that no act by any Agent hereinafter taken, including any review of the affairs
of the Company and its Subsidiaries shall be deemed to constitute any
representation or warranty by any Agent to any Person. Each Lender represents to
the Agents that it has, independently and without reliance upon the Agents and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries and made its own decision to enter into this Agreement and
extend credit to the Company hereunder. Each Lender also represents that it
will, independently and without reliance upon the any Agent and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform
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itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.07 INDEMNIFICATION. The Lenders agree to indemnify the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), ratably
according to the respective amounts of their outstanding Loans, or, if no Loans
are outstanding, their Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind whatsoever which may at any time
(including at any time following the repayment of the Obligations) be imposed
on, incurred by or asserted against the any such person any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by any such person under or in connection with any of
the foregoing; provided, however, that no Lender shall be liable for the payment
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to the Agent-Related Persons of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from such person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs or
out-of-pocket expenses (including fees and expenses of counsel and the allocated
cost of in-house counsel) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein to the extent that the Administrative Agent is not reimbursed
for such expenses by or on behalf of the Company after demand has been made on
the Company for payment.
9.08 AGENTS IN INDIVIDUAL CAPACITY. Each Agent-Related Person may
make loans to, issue letters of credit for the account of, accept deposits from
and generally engage in any kind of business with the Company and its
Subsidiaries and Affiliates as though it were not an Agent or an Arranger
hereunder and without notice to the Lenders. With respect to its Loans, each
Agent shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
9.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may,
and at the request of the Majority Lenders shall, resign as Administrative Agent
upon 30 days' notice to the Lenders. If the Administrative Agent shall resign as
Administrative Agent under this Agreement, the Majority Lenders shall appoint
from among the Lenders a successor agent for the Lenders which successor agent
shall be approved by the Company. If no successor Administrative Agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent shall appoint, after consulting with the Lenders
and the Company, a successor agent from among the Lenders. Upon the acceptance
of its
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appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term "Administrative Agent" shall mean such successor agent and the retiring
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, the provisions of this Article IX and Sections 9.04 and
9.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
Administrative Agent is appointed or accepts such an appointment as aforesaid,
the Administrative Agent's resignation shall nonetheless become effective.
9.10 COLLATERAL MATTERS.
(a) The Administrative Agent is authorized on behalf of all the
Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
Collateral Documents which may be necessary to perfect and maintain perfected
the security interest in and Liens upon the Collateral granted pursuant to the
Collateral Documents.
(b) The Lenders irrevocably authorize the Administrative Agent, at
its option and in its discretion, to release, or to authorize the Former
Collateral Agent to release any Lien granted to or held by the Former Collateral
Agent or Administrative Agent upon any Collateral:
(i) upon termination of the Commitments, the cancellation or
expiry of all Letters of Credit and payment in full of all Loans and all
other Obligations payable under this Agreement and under any other Loan
Document;
(ii) constituting property sold or to be sold or disposed of
as part of or in connection with any Disposition permitted hereunder
subject to any required prepayment of the Loans pursuant to Section
2.08(a) ;
(iii) constituting property in which the Company or any
Subsidiary of the Company owned no interest at the time the Lien was
granted or at any time thereafter;
(iv) constituting property leased to the Company or any
Subsidiary of the Company under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by the Company or
such Subsidiary to be, renewed or extended;
(v) consisting of an instrument evidencing Indebtedness or
other debt instrument if the Indebtedness evidenced thereby has been
paid in full ;
(vi) held for repayments of drawings under a Letter of Credit
if such collateral is to be used to make such repayment, if such
Collateral is to be returned to the Company following expiration of a
Letter of Credit or repayment of such drawing by the Company; or
(viii) if approved, authorized or ratified in writing by all
Lenders.
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<PAGE>
Upon request by the Administrative Agent at any time, the Lenders
will confirm in writing the Administrative Agent's authority to release
particular types or items of Collateral pursuant to this Section 9.10(b).
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any of its
Subsidiaries) that the Company's obligation to such Lender under this Agreement
and the other Loan Documents is not and shall not be secured by any real
property collateral now or hereafter acquired by such Lender.
(d) Except as otherwise expressly provided for in this Agreement or
any other Loan Document, the Administrative Agent shall not amend, or give any
consent under, any Collateral Document without the prior written consent thereto
of all Lenders.
9.11 DOCUMENTATION AGENT, SYNDICATION AGENT, CO-SYNDICATION AGENTS.
None of the Lenders identified on the facing page of this Agreement as a
Documentation Agent, Syndication Agent, Co-Syndication Agents shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Lenders so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.
ARTICLE X
MISCELLANEOUS
10.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document and no consent with
respect to any departure by the Company therefrom, shall be effective unless the
same shall be in writing and signed by the Administrative Agent and the Majority
Lenders, and then such waiver shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
-------- -------
waiver, amendment, or consent shall, unless in writing and signed by the
Administrative Agent and all the Lenders do any of the following:
(a) increase the Commitment or Pro Rata Share of any Lender except
through assignment permitted hereunder;
(b) postpone, waive or delay any date fixed for any payment or
prepayment of principal, interest, fees or other amounts payable to the Lenders
(or any of them) hereunder or under any Loan Document or terminate this
Agreement;
(c) reduce the principal of, or the Applicable Amount specified
herein for, any Loan or any fee or commission with respect to any Letter of
Credit, or of any fees payable to the Administrative Agent for the account of
the Lenders hereunder;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Lenders or
any of them to take any action hereunder;
(e) amend this Section 10.01; or
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<PAGE>
(f) except in connection with transactions permitted herein or as
provided in Section 9.10, release the Subsidiary Guaranty, any Subsidiary
Guarantor or any Collateral.
provided, further, that no amendment, waiver or consent shall,
-------- -------
unless in writing and signed by the affected Agent or the affected Issuing
Lender in addition to Majority Lenders, affect the rights or duties of such
Agent or such Issuing Lender under this Agreement; provided, further, that this
-------- -------
Section 10.01 does not apply to any Loan specific waivers, solely administrative
in nature (i.e. waivers of Interest Period tenors, minimum borrowing amounts or
integral multiples, pricing options and notice period for funds or paydowns,
other than as specified in this Agreement), for which approval may be given by
Majority Lenders under the applicable Tranche; provided, further, the terms of
-------- -------
Section 2.08 may be waived or amended only with the consent of the Required
Class Lenders.
10.02 NOTICES. All notices, requests and other communications
provided for hereunder shall be given by Requisite Notice. All such notices and
communications shall be effective: (a) when receipt is confirmed by the carrier
or by receipt of answerback, when sent by overnight delivery, (b) when
transmission has cleared without notice of error if transmitted by facsimile
transmission to a Person other than the Administrative Agent and when receipt
has been confirmed by phone with the Administrative Agent if transmitted by
facsimile transmission to the Administrative Agent, and (c) when delivered, upon
delivery; except that notices pursuant to Article II or Article VIII shall not
be effective until received by the Administrative Agent.
10.03 NO WAIVER; CUMULATIVE REMEDIES. failure to exercise and no
delay in exercising, on the part of any Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
10.04 COSTS AND EXPENSES. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Administrative Agent on demand for all
reasonable costs and expenses incurred in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to, this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including the
reasonable costs and expenses of counsel to the Administrative Agent (and the
allocated cost of internal counsel) with respect thereto;
(b) pay or reimburse each Lender and the Administrative Agent on
demand for all reasonable costs and expenses incurred by them in connection with
the enforcement or preservation of any rights (including in connection with any
"workout" or restructuring regarding the Loans) under this Agreement, any Loan
Document, and any such other documents, including fees and out-of-pocket
expenses of counsel (and the allocated cost of internal counsel) to the
Administrative Agent and to each of the Lenders; and
-86-
<PAGE>
(c) pay or reimburse the Administrative Agent on demand for all
reasonable search, filing and similar fees, incurred or sustained by the
Administrative Agent in connection with the matters referred to under paragraphs
(a) and (b) above and following occurrence of an Event of Default, shall pay or
reimburse the Administrative Agent on demand for the reasonable costs and
expenses of all appraisers, consultants, accountants, investment bankers,
auditors and other advisers (including the reasonable allocated costs of such
inhouse advisers) that may be retained to review the business, operations or
condition (financial or otherwise) of the Company or any of its Subsidiaries or
to advise the Administrative Agent and/or the Lenders in connection with
enforcement of their rights under the Loan Documents.
10.05 INDEMNITY. The Company shall pay, indemnify, and hold each
Lender, each Issuing Lender and the Agents and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including reasonable fees and expenses of
counsel and allocated costs of internal counsel) of any kind or nature
whatsoever with respect to: (i) any transaction or proposed transaction (whether
or not consummated) financed or to be financed, in whole or in part, directly or
indirectly, with the proceeds of any Borrowing or otherwise contemplated in this
Agreement; (ii) the execution, delivery, enforcement, performance and
administration of this Agreement and any other Loan Documents or the
transactions contemplated herein; and (iii) with respect to any investigation,
litigation or proceeding related to this Agreement or the Loans or the use of
the proceeds thereof (whether or not any Indemnified Person is a party thereto)
(all the foregoing, collectively, the "Indemnified Liabilities"); provided, that
the Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this section shall
survive payment of all other Obligations.
10.06 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
10.07 ASSIGNMENTS, PARTICIPATIONS ETC.
(a) Any Lender may at any time assign and delegate all or any
ratable part of its Revolving Commitments and Revolving Loans, its Tranche A
Term Loan Commitments and Tranche A Term Loans, its Tranche B Term Loan
Commitments and Tranche B Term Loans and/or its Tranche C Term Loan Commitments
and Tranche C Term Loans, in each case together with the other rights and
obligations of such Lender hereunder with respect to the Commitments and
Obligations being assigned and delegated to any Eligible Assignee, to any of its
wholly-owned Affiliates (including its parent institution) or to any other
Lender (each an "Assignee"); provided, that
--------
(i) all such assignments shall be in a minimum amount of $1,000,000 if
made to another Lender in the Lender Group or $5,000,000 if made to any
other Assignee;
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<PAGE>
(ii) no Lender shall have Commitments, immediately following an
assignment, of an aggregate amount of less than $1,000,000 unless such
Lender shall have assigned all of its Loans, Commitments, rights and
obligations hereunder, and no Assignee, other than a Lender in the
Lender Group, shall have Commitments immediately following an assignment
of an aggregate amount of less than $5,000,000, unless such Assignee
shall have assigned all of its Loans, Commitments, rights and obligation
hereunder;
(iii) the prior written consent of the Administrative Agent
shall be required for assignments other than assignments between members
of the Lender Group or assignments by a Lender to its wholly-owned
Affiliate (or its parent institution), which consent shall not be
unreasonably withheld or delayed;
(iv) the prior written consent of the relevant Issuing Lender
shall be required for all assignments of risk participations in Letters
of Credit other than assignments between members of the Lender Group or
assignments by a Lender to its wholly-owned Affiliate (or its parent
institution), which consent shall not be unreasonably withheld or
delayed; and
(v) so long as there is no Event of Default, the prior written
consent of the Company, which consent shall not be unreasonably withheld
or delayed, shall be required for any assignment except the consent of
the Company shall not be required for (A) assignments by a Lender to its
wholly-owned Affiliate (or its parent institution) or (B) assignments
between members of the Lender Group.
(b) Notwithstanding any assignment, the Company and the
Administrative Agent may continue to deal solely and directly with an assigning
Lender in connection with the interests so assigned to an Assignee until (i)
written notice of such assignment, shall have been given to the Company and the
Administrative Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Company and the Administrative Agent a
Notice of Assignment and Acceptance in the form of Exhibit G hereto(an
---------
"Assignment and Acceptance"); (iii) except in connection with the initial
syndication of the Commitments by the Underwriters, the processing fee of $3,500
shall have been paid to the Administrative Agent for an assignment to an
Assignee outside the Lender Group or a processing fee of $2,500 shall have been
paid to the Administrative Agent for an assignment between members of the Lender
Group; and (iv) all consents from the Administrative Agent, the Company or any
Issuing Lender required pursuant to this Agreement or any Loan Document have
been obtained.
(c) From and after the date that the Administrative Agent notifies
the assignor Lender that the Assignment and Acceptance has become effective, (i)
the Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents. The Administrative Agent shall record the information contained
in the Assignment and Acceptance in the Register.
-88-
<PAGE>
(d) Immediately upon the Assignment and Acceptance becoming
effective, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Notwithstanding any of the foregoing, any Lender may at any time
assign all or any portion of its rights under this Agreement and any Note to a
Federal Reserve Lender, without restriction hereunder; provided, however, that
-------- -------
no such assignment shall release any Lender from its obligations hereunder.
(f) Any Lender may at any time sell to one or more Lenders or
institutional investors (a "Participant") participating interests in any
Commitments together with the related Loans of that Lender together with any
other interest of that Lender hereunder; provided, however, that (i) the
-------- -------
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Company and the Administrative Agent shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and obligations
under this Agreement, and (iv) no Lender shall transfer or grant any
participating interest under which the Participant shall have rights to approve
any amendment to, or any consent or waiver with respect to this Agreement except
to the extent such amendment, consent or waiver would as to such Participant:
(a) postpone or delay any date fixed for any payment of principal,
or interest;
(b) reduce the principal of, or the Applicable Amount specified
herein for any Loan;
(c) reduce the commission on any Letter of Credit, or of any fees
payable to the Administrative Agent for the account of the Lenders hereunder;
(d) release the Subsidiary Guaranty, any Subsidiary Guarantor,
release all or substantially all of the Collateral except as otherwise expressly
provided in the Collateral Documents.
In the case of any such participation, the Participant shall not
have any rights under this Agreement, or any of the other Loan Documents, and
all amounts payable by the Company hereunder shall be determined as if such
Lender had not sold such participation, except that if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(g) Each Lender agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all non-public information
provided to it by the Company or any Subsidiary of the Company or by the
Administrative Agent in connection with this Agreement or any Collateral
Document and neither it nor any of its Affiliates shall use any such information
for any purpose or in any manner other than pursuant to the terms contemplated
by this Agreement, except to the extent such information (i) was or becomes
generally available to
-89-
<PAGE>
the public other than as a result of a disclosure by such Lender, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Company, provided that such source is not bound by a confidentiality agreement
with the Company known to such Lender; provided, further, that any Lender may
-------- -------
disclose such information (A) at the request of any Lender regulatory authority
or in connection with an examination of such Lender by any such authority; (B)
pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable law; (D) at the express
direction of any other agency of any State of the United States of America or of
any other jurisdiction in which such Lender conducts its business; and (E) to
such Lender's independent auditors and other professional advisors.
Notwithstanding the foregoing, the Company authorizes each Lender to disclose to
any Participant or Assignee (each, a "Transferee") and any prospective
Transferee such financial and other information in such Lender's possession
concerning the Company or its Subsidiaries which has been delivered to the
Lenders pursuant to this Agreement or which has been delivered to the Lenders by
the Company in connection with the Lenders' credit evaluation of the Company
prior to entering into this Agreement; provided, that such Transferee or
--------
prospective Transferee has executed a Confidentiality Agreement substantially in
the form of Annex C to Exhibit G.
---------
10.08 SET-OFF. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists, each Lender is authorized at any
time and from time to time, without prior notice to the Company, any such notice
being waived by the Company to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Company against any and all
obligations when due of the Company now or hereafter existing under this
Agreement or any other Loan Document and any Loan held by such Lender
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Agreement or any Loan Document and although such
obligations may be contingent or unmatured. Each Lender agrees promptly to
notify the Company and the Administrative Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
-------- -------
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section 10.08 are in addition to the other
rights and remedies (including without limitation, other rights of set-off)
which the Lender may have.
10.09 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Lender
shall notify the Administrative Agent by Requisite Notice of any changes in the
address to which notices to the Lender should be directed, of addresses of its
Eurodollar Lending Office and its Domestic Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Administrative Agent shall reasonably
request.
10.10 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Administrative Agent.
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<PAGE>
10.11 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.12 REMOVAL OF A LENDER. If the Company elects to remove any
Lender as a party to this Agreement under Section 3.01(k) by reason of such
Lender making a claim for compensation under Section 3.01, such Lender shall,
upon notice from the Company, execute and deliver an Assignment and Acceptance
covering that Lender's Commitments in favor of an Eligible Assignee as the
Company may designate which is acceptable to the Administrative Agent, subject
to (a) payment in full of all principal, interest, fees and other amounts owing
to such Lender through the date of such assignment (including any amounts
payable pursuant to Article III) and (b) if such departing Lender has issued a
Letter of Credit, delivery by such Eligible Assignee of such appropriate
assurances and indemnities (which may include letters of credit) as such
departing Lender may reasonably require with respect to any such Letter of
Credit, until any such Letter of Credit is terminated or cancelled, and the
Company shall use best efforts to promptly terminate or cancel any such Letters
of Credit. Alternatively, the Company may reduce the Commitments by an amount
equal to that Lender's Commitments, pay and provide to such Lender the amounts,
assurances and indemnities described above and release such Lender from its
Commitments. In order to make all Lender's interests in any Outstanding
Obligations under any Tranche ratable in accordance with any revised Pro Rata
Shares of such Tranche after giving effect to the removal of any Lender, the
Company shall pay or prepay, if necessary, on the effective date of such
removal, the outstanding Loans of such removed Lender and pay, to the extent
applicable, any amounts due under Section 3.04. If the removed Lender has been
replaced, the Company may then continue or convert such Loans with such new
Lender.
10.13 GOVERNING LAW AND JURISDICTION1.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE COMPANY, CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE JURISDICTION OF THOSE COURTS. THE COMPANY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
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<PAGE>
10.14 WAIVER OF JURY TRIAL. THE COMPANY, THE LENDERS AND THE
ADMINISTRATIVE AGENT WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE
ADMINISTRATIVE AGENT AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY ARE WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.15 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire Agreement and understanding among the Company,
the Lenders and the Administrative Agent and supersedes all prior or
contemporaneous agreements and understandings of such persons, verbal or
written, relating to the subject matter hereof and thereof except for the fee
agreements referenced in Section 2.11 and any prior arrangements made with
respect to the payment by the Company of (or any indemnification for) any fees,
costs or expenses payable to or incurred (or to be incurred) by or on behalf of
the Administrative Agent or the Lenders.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
OSCAR I CORPORATION
By /s/ Kurt Hall
-------------------------------
Kurt Hall
President
S-1
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS
ADMINISTRATIVE AGENT
By /s/ David Price
-------------------------------
David Price
Vice President
S-2
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS A LENDER
By /s/ Shannon T. Ward
--------------------------------
Name SHANNON T. WARD
Title VICE PRESIDENT
S-3
<PAGE>
BANKBOSTON, N.A., AS DOCUMENTATION
AGENT AND A LENDER
By /s/ Donna F. Fraser
-------------------------------
Name Donna F. Fraser
Title Vice President
S-4
<PAGE>
NATIONSBANK OF TEXAS, N.A. AS
SYNDICATION AGENT AND A LENDER
By /s/ illegible
---------------------------
Name
Title Vice President
S-5
<PAGE>
MERRILL LYNCH CAPITAL CORPORATION,
AS A CO-SYNDICATION AGENT
AND A LENDER
By /s/ Christopher Birosak
-------------------------------
Name CHRISTOPHER BIROSAK
Title VICE PRESIDENT
S-6
<PAGE>
MORGAN STANLEY SENIOR
FUNDING, INC., AS A CO-SYNDICATION
AGENT AND A LENDER
By /s/ Michael A. Hart
----------------------------
Name Michael A. Hart
Title Principal
S-7
<PAGE>
Exhibit 10.19
[LETTERHEAD OF UNITED ARTISTS]
May 12, 1998
Mr. Kurt C Hall
United Artists Theatre Circuit, Inc.
9110 E. Nichols Avenue, Suite 200
Englewood, Colorado 80112
Re: United Artists Theatre Circuit, Inc. (the "Company")
Amendment to Employment Agreement
Dear Mr. Hall:
On or about February 21, 1997, you and the Company entered into an Employment
Agreement. The purpose of this letter is to confirm our understanding of
certain amendments to the Employment Agreement. For $10.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby confessed
and acknowledged, it has been agreed to amend the Employment Agreement as
follows:
1. As set forth in the Employment Agreement, the Term of Employment is
scheduled to expire on September 30, 2000. The Term of Employment, as defined
in the Employment Agreement, is extended to December 31, 2000, and on December
31, 2000 and on every second December 31 thereafter it shall be deemed that the
Term of Employment has been extended by two years, unless, prior to any such
extension date, either you or the Company notify the other to the contrary.
2. Except as amended hereby, the Employment Agreement shall remain in full
force and effect.
If this letter accurately sets forth your understanding of the matters discussed
herein, please so signify by signing in the space provided and returning a copy
to the undersigned.
Very truly yours,
UNITED ARTISTS THEATRE CIRCUIT, INC.
By: /s/ John Boyle
------------------------------------
John Boyle, Chairman of the Board
ACCEPTED:
/s/ Kurt C. Hall
- - ---------------------------------------
Kurt C. Hall
<PAGE>
EXHIBIT 12.1
UNITED ARTISTS THEATRE COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------------- -----------------------
PRO FORMA PRO FORMA
1993 1994 1995 1996 1997 1997(1) 1997 1998 1998(1)
------ ----- ----- ----- ----- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income (loss)
from continuing
operations.............. $(30.7) (28.5) (63.0) (44.7) (25.5) (36.3) (1.8) 0.3 (3.7)
Minority interest in
earnings of subsidiaries
that have fixed
charges................. 1.4 1.2 1.3 0.8 1.3 1.3 0.4 0.4 0.4
Share of losses of
affiliates.............. -- -- -- 0.5 1.6 1.6 0.5 -- --
Fixed charges (from
below).................. 60.6 62.6 72.6 69.7 71.6 82.4 17.6 17.0 21.1
------ ----- ----- ----- ----- ----- ----- ----- -----
Total Earnings........ $ 31.3 $35.3 $10.9 $26.3 $49.0 $49.0 $16.7 $17.7 $17.7
====== ===== ===== ===== ===== ===== ===== ===== =====
Fixed Charges:
Interest expense and
amortization of debt
expense................. $ 43.7 45.4 53.8 45.7 46.1 56.9 11.5 10.5 14.5
Rent expense
representing interest... 16.9 17.2 18.8 24.0 25.5 25.5 6.1 6.5 6.5
------ ----- ----- ----- ----- ----- ----- ----- -----
Total Fixed Charges..... $ 60.6 62.6 72.6 69.7 71.6 82.4 17.6 17.0 21.1
====== ===== ===== ===== ===== ===== ===== ===== =====
Ratio of Earnings to
Fixed Charges........... -- -- -- -- -- -- -- 1.0x --
====== ===== ===== ===== ===== ===== ===== ===== =====
Deficiency.............. 29.3 27.3 61.7 43.4 22.6 33.4 0.9 (0.7) 3.3
====== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
- - ----
(1) Assumes that the Transactions occurred on January 1, 1997.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF UNITED ARTISTS THEATRE COMPANY
----------------------------------------------
Name State of Incorporation
- - ---- ----------------------
United Artists Theatre Circuit, Inc. Maryland
United Artists Realty Company Delaware
<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
Denver, Colorado
June 16, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
The Board of Directors and Stockholders
United Artists Theatre Company
(formerly known as OSCAR I Corporation):
We consent to the use of our report, dated March 27, 1996, with respect to the
consolidated statements of operations, stockholders' equity and cash flow of
OSCAR I Corporation (now named United Artists Theatre Company) and subsidiaries
for the year ended December 31, 1995, included herein and to the reference to
our firm under the heading "Experts" in the registration statement.
KPMG Peat Marwick LLP
Denver, Colorado
June 16, 1998
<PAGE>
EXHIBIT 24.1
UNITED ARTISTS THEATRE COMPANY
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of United
Artists Theatre Company whose signature appears below constitutes and appoints
Scott M. Shaw, Kurt C. Hall and Ralph E. Hardy and each of them, with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about June 16, 1998, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as they or he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated as of: June 16, 1998
NAME TITLE
/s/ Kurt C. Hall President, Chief Executive
------------------------------------- Officer and Director
KURT C. HALL
/s/ Trent J. Carman Senior Vice President, Chief
------------------------------------- Financial Officer and
TRENT J. CARMAN Treasurer
/s/ John W. Boyle Chairman of the Board and
------------------------------------- Director
JOHN W. BOYLE
/s/ Albert J. Fitzgibbons, III Director
-------------------------------------
ALBERT J. FITZGIBBONS, III
/s/ James J. Burke, Jr. Director
-------------------------------------
JAMES J. BURKE, JR.
/s/ Scott M. Shaw Director
-------------------------------------
SCOTT M. SHAW
/s/ Robert F. End Director
-------------------------------------
ROBERT F. END
/s/ Michael L. Pade Director
-------------------------------------
MICHAEL L. PADE
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)__
--------------------
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
U.S. NATIONAL BANK 43-1745664
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
127 WEST 10TH STREET, KANSAS CITY, MISSOURI 64105
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
SUSAN JAMES, VICE PRESIDENT
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
211 NORTH BROADWAY, SUITE 3900
ST. LOUIS, MISSOURI 63102
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
--------------------
OSCAR I CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
9110 E. NICHOLS AVENUE
ENGLEWOOD, COLORADO 80112-3405
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
--------------------
$50,000,000 FLOATING RATE SENIOR SUBORDINATED NOTES DUE 2007
$225,000,000 SENIOR SUBORDINATED NOTES, 9.75% DUE 2008
(TITLE OF INDENTURE SECURITIES)
<PAGE>
GENERAL
ITEM 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.
Comptroller of the Currency of the United States, Washington, D.C.
ITEM 2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the
-------------------------
trustee, describe each such affiliation.
The obligor is not an affiliate of the trustee or of its parent, State
Street Bank and Trust Company. (See note on page 2.)
ITEM 3. THROUGH ITEM 15. Not applicable.
ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as part of this
----------------
statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the articles of association of the Trustee, as now in
effect, is attached hereto as Exhibit 1 and made a part hereof.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of the certificate of the Comptroller of the Currency
authorizing the trustee to commence the business of banking as a
national banking association is attached hereto as Exhibit 2 and
made a part hereof.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in paragraph (1) or (2), above.
A copy of the certificate of the Comptroller of the Currency dated
September 15, 1995 authorizing the trustee to exercise corporate
trust powers is attached hereto as Exhibit 3 and made a part
hereof.
2
<PAGE>
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the existing amended and restated by-laws of the trustee
is attached hereto as Exhibit 4.
5. A copy of each indenture referred to in Item 4. if the obligor is
in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligor or any
underwriter for the obligor, the trustee has relied upon information furnished
to it by the obligor and the underwriters, and the trustee disclaims
responsibility for the accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if necessary,
to reflect any facts which differ from those stated and which would have been
required to be stated if known at the date hereof.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, State Street Bank and Trust Company of Missouri N.A., a national
banking association existing under the laws of the United States of America, 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 St.
Louis and the State of Missouri, on the 1st day of May, 1998.
State Street Bank and Trust Company
of Missouri, N.A.
By: /s/ Robert A. Clasquin
------------------------------
Robert A. Clasquin
Assistant Vice President
4
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
STATE STREET BANK AND TRUST COMPANY OF MISSOURI,
NATIONAL ASSOCIATION
For the purpose of organizing an Association to carry on the business of a
limited purpose trust company under the laws of the United States, the
undersigned do enter into the following Articles of Association:
FIRST. The title of this Association shall be State Street Bank and Trust
Company of Missouri, National Association.
SECOND. The Main Office of the Association shall be in the City of Kansas
City, County of Jackson, State of Missouri. The business of the Association will
be limited to the operations of a national trust company and to support
activities incidental thereto. The Association will not expand or alter its
business beyond that stated in this Article Second without the prior approval of
the Comptroller of the Currency.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five shareholders, the exact number to be
fixed and determined from time to time by resolution of a majority of the full
Board of Directors or by resolution of the shareholders at any annual or special
meeting thereof. Each Director, during the full term of his or her
directorship, shall own a minimum of $1,000 aggregate par value of stock of this
Association or a minimum par, market value or equity interest of $1,000 of stock
in the bank holding company controlling this Association.
Any vacancy in the Board of Directors may be filled by action of the Board
of Directors; provided, however, that a majority of the full Board of Directors
may not increase the number of Directors to a number which: (1) exceeds by more
than two the number of Directors last elected by shareholders where the number
was 15 or less; and (2) exceeds by more than four the number of Directors last
elected by shareholders where the number was 16 or more, but in no event shall
the number of directors exceed 25.
Terms of Directors, including Directors selected to fill vacancies, shall
expire at the next regular meeting of shareholders at which Directors are
elected, unless the Directors resign or are removed from office. Despite the
expiration of a Director's term, the Director shall continue to serve until his
or her successor is elected and qualifies or until there is a decrease in the
number of Directors and his or her position is eliminated.
FOURTH. There shall be an annual meeting of the shareholders to elect
Directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place as
the Board of Directors may designate, on the day of each year specified
therefore in the By-laws, but if no election is held on that day, it may be held
on any subsequent day according to such lawful rules as may be prescribed by the
Board of Directors.
<PAGE>
Nominations for election to the Board of Directors may be made by the Board
of Directors or by any shareholder of any outstanding class of capital stock of
this Association entitled to vote for election of Directors. Nominations other
than those made by or on behalf of the existing management shall be made in
writing and be delivered or mailed to the president of this Association and to
the Comptroller of the Currency, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of shareholders called for the election
of Directors; provided, however, that if less than 21 days' notice of the
meeting is given to the shareholders, such nominations shall be mailed or
delivered to the president of this Association and to the Comptroller of the
Currency not later than the close of business on the seventh day following the
day on which the notice of meeting was mailed. Such notification shall contain
the following information to the extent known to the notifying shareholder: the
name and address of each proposed nominee; the principal occupation of each
proposed nominee; the total number of shares of capital stock of this
Association that will be voted for each proposed nominee; the name and residence
address of the notifying shareholder; and the number of shares of capital stock
of this Association owned by the notifying shareholder. Nominations not made in
accordance herewith may, in his or her discretion, be disregarded by the
chairperson of the meeting, and upon his or her instructions, the vote tellers
may disregard all votes cast for each such nominee.
FIFTH. The authorized amount of capital stock of this Association shall
be 1,000,000 shares of common stock of the par value of one dollar ($1) each;
but said capital stock may be increased or decreased from time to time, in
accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of this Association
shall have any preemptive or preferential right of subscription to any shares of
any class of stock of this Association, whether now or hereafter authorized, or
to any obligations convertible into stock of this Association, issued, or sold,
nor any right of subscription to any thereof other than such, if any, as the
Board of Directors, in its discretion may from time to time determine and at
such price as the Board of Directors may from time to time fix.
Transfers of the Association's capital stock are subject to the prior
approval of a federal depository institution regulatory agency. If no other
agency approval is required, the Comptroller of the Currency's approval shall
be obtained prior to the transfers. In such cases where the Comptroller of the
Currency approval is required, the Comptroller of the Currency will apply the
definitions and standards set forth in the Change in Bank Control Act and the
Comptroller of the Currency's implementing regulation (12 U.S.C. 1817(j) and 12
C.F.R. 5.50) to ownership changes in the Association.
This Association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The Board of Directors shall appoint one of its members President
of this Association, who shall be Chairperson of the Board, unless the Board
appoints another director to be the Chairperson. The Board of Directors shall
have the power to appoint one or more Vice Presidents; and to appoint a Cashier
and such other officers and employees as may be required to transact the
business of this Association.
2
<PAGE>
The Board of Directors shall have the power to define the duties of the
officers and employees of this Association; to fix the salaries to be paid to
the officers and employees; to dismiss officers and employees; to require bonds
from officers and employees and to fix the penalty thereof; to regulate the
manner in which any increase of the capital of this Association shall be made;
to manage and administer the business and affairs of this Association; to make
all By-laws that it may be lawful for the Board of Directors to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Kansas City, without the approval of the shareholders, and shall have the power
to establish or change the location of any branch or branches of this
Association to any other location, without the approval of the shareholders.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any shareholder
owning, in the aggregate, not less than ten percent of the stock of this
Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall
be given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.
TENTH. This Association shall to the fullest extent legally permissible
indemnify each person who is or was a director, officer, employee or other agent
of this Association and each person who is or was serving at the request of this
Association as a director, trustee, officer, employee or other agent of another
organization or of any partnership, joint venture, trust, employee benefit plan
or other enterprise or organization against all liabilities, costs and expenses,
including but not limited to amounts paid in satisfaction of judgments, in
settlement or as fines and penalties, and counsel fees and disbursements,
reasonably incurred by him in connection with the defense or disposition of or
otherwise in connection with or resulting from any action, suit or other
proceeding, whether civil, criminal, administrative or investigative, before any
court or administrative or legislative or investigative body, in which he may be
or may have been involved as a party or otherwise or with which he may be or may
have been threatened, while in office or thereafter, by reason of his being or
having been such a director, officer, employee, agent or trustee, or by reason
of any action taken or not taken in any such capacity, except with respect to
any matter as to which he shall have been finally adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that his action was in the best interests of the corporation (any person serving
another organization in one or more of the indicated capacities at the request
of this Association who shall not have been adjudicated in any proceeding not to
have acted in good faith in the reasonable belief that his action was in the
best interest of such other organization shall be deemed so to have acted in
good faith with respect to the National Trust Company) or to the extent that
such matter relates to service with respect to an employee benefit plan, in the
best interest of the participants or beneficiaries of such employee benefit
plan. Expenses, including but not limited to counsel fees and disbursements, so
incurred by any such person in defending any such action, suit or proceeding,
shall be paid from time to time by this Association in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the person
3
<PAGE>
indemnified to repay the amounts so paid if it shall ultimately be determined
that indemnification of such expenses is not authorized hereunder.
As to any matter disposed of by settlement by any such person, pursuant to
a consent decree or otherwise, no such indemnification either for the amount of
such settlement or for any other expenses shall be provided unless such
settlement shall be approved as in the best interests of the National Trust
Company, after notice that it involves such indemnification, (a) by a vote of a
majority of the disinterested directors then in office (even though the
disinterested directors be less than a quorum), or (b) by any disinterested
person or persons to whom the question may be referred by vote of a majority of
such disinterested directors, or (c) by vote of the holders of a majority of the
outstanding stock at the time entitled to vote for directors, voting as a single
class, exclusive of any stock owned by any interested person, or (d) by any
disinterested person or persons to whom the question may be referred by vote of
the holders of a majority of such stock. No such approval shall prevent the
recovery from any such director, officer, employee, agent or trustee of any
amounts paid to him or on his behalf as indemnification in accordance with the
preceding sentence if such person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that his action was in the best interests of this Association. The right of
indemnification hereby provided shall not be exclusive of or affect any other
rights to which any director, officer, employee, agent or trustee may be
entitled or which may lawfully be granted to him. As used herein, the terms
"director", "officer", "employee", "agent", and "trustee", include their
respective executors, administrators and other legal representatives, an
"interested" person is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the same or similar
grounds is then or had been pending or threatened, and a "disinterested" person
is a person against whom no such action, suit or other proceeding is then or had
been pending or threatened. By action of the board of directors, notwithstanding
any interest of the directors in such action, this Association may purchase and
maintain insurance, in such amounts as the board of directors may from time to
time deem appropriate, on behalf of any person who is or was a director,
officer, employee or other agent of this Association, or is or was serving at
the request of this Association as a director, trustee, officer, employee or
other agent of another organization or of any partnership, joint venture, trust,
employee benefit plan or other enterprise or organization against any liability
incurred by him in any such capacity, or arising out of his status as such,
whether or not this Association would have the power to indemnify him against
such liability.
Nothing contained in this Article Tenth shall be construed to (i) allow the
indemnification of or insurance coverage for a director, trustee, officer,
employee or agent of this Association against expenses, penalties or other
payments incurred in an administrative action instituted by an appropriate bank
regulatory agency which results in a final order assessing civil money penalties
or requires the payments of money to the Association, or (ii) exceed the
provisions of Massachusetts General Laws, chapter 156B, section 67, as in effect
from time to time.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
TWELFTH. This Association may be a partner in any business or enterprise
which this Association would have power to conduct by itself.
4
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands this 27th day of April,
1995.
/s/ MARSHALL N. CARTER
----------------------
Marshall N. Carter
/s/ DAVID A. SPINA
----------------------
David A. Spina
/s/ A. EDWARD ALLINSON
----------------------
A. Edward Allinson
/s/ RONALD E. LOGUE
----------------------
Ronald E. Logue
/s/ JOHN R. TOWERS
----------------------
John R. Towers
5
<PAGE>
EXHIBIT 2
[COMPTROLLER OF THE CURRENCY TREASURY DEPARTMENT LOGO]
Washington, D.C.
WHEREAS, satisfactory evidence has been presented to the Comptroller of the
Currency that STATE STREET BANK AND TRUST COMPANY OF MISSOURI, NATIONAL
ASSOCIATION located in KANSAS CITY State of MISSOURI has complied with all
provisions of the statutes of the United States required to be complied with
before being authorized to commence the business of banking as a National
Banking Association;
NOW, THEREFORE, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
IN TESTIMONY WHEREOF, witness my signature and
seal of office this FIFTEENTH day of SEPTEMBER 1995.
/s/ DAVID A. BOMGAARS
-------------------------------------
District Administrator
Comptroller of the Currency
Charter No. 22874
<PAGE>
EXHIBIT 3
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Northeastern District
1114 Avenue of the Americas, Suite 3900
New York, New York 10036
TRUST PERMIT
WHEREAS, STATE STREET BANK AND TRUST COMPANY OF MISSOURI, NATIONAL
ASSOCIATION, located in KANSAS CITY, state of MISSOURI, being a National Banking
Association, organized under the statutes of the United States, has made
application for authority to act as fiduciary;
AND WHEREAS, applicable provisions of the statutes of the United States
authorize the grant of such authority;
NOW THEREFORE, I hereby certify that the said association is authorized to
act in all fiduciary capacities permitted by such statutes.
IN TESTIMONY WHEREOF, witness my signature and seal of Office this 15TH day
of SEPTEMBER, 1995.
CHARTER NO. 22874
/s/ DAVID A. BOMGAARS
----------------------------
David A. Bomgaars
District Administrator
**OCC SEAL**
<PAGE>
EXHIBIT 4
STATE STREET BANK AND TRUST COMPANY
OF MISSOURI, NATIONAL ASSOCIATION
AMENDED AND RESTATED
BY-LAWS
ARTICLE I
Meetings of Shareholders
------------------------
Section 1.1. Annual Meeting. The regular annual meeting of the shareholders
--------------
to elect directors and transact whatever other business may properly come before
the meeting, shall be held at the Main Office of the National Trust Company, in
the City of Kansas City, State of Missouri or such other places as the Board of
Directors may designate, at 10 o'clock, on the fourth Wednesday of April of each
year. Notice of such meeting shall be mailed, postage prepaid, at least ten days
prior to the date thereof, addressed to each shareholder at his/her address
appearing on the books of the National Trust Company. If, for any cause, an
election of directors is not made on that day, the Board of Directors shall
order the election to be held on some subsequent day, as soon thereafter as
practicable, according to the provisions of law; and notice thereof shall be
given in the manner herein provided for the annual meeting.
Section 1.2. Special Meetings. Except as otherwise specifically provided by
----------------
statute, special meetings of the shareholders may be called for any purpose at
any time by the Board of Directors or by any shareholder owning, in the
aggregate, not less than 10 percent of the stock of the National Trust Company.
Every such special meeting, unless otherwise provided by law, shall be called by
mailing, postage prepaid, not less than ten days prior to the date fixed for
such meeting, to each shareholder at his address appearing on the books of the
National Trust Company a notice stating the purpose of the meeting.
Section 1.3. Nominations for Director. Nominations for election to the
------------------------
Board of Directors may be made by the Board of Directors or by any shareholder
of any outstanding class of capital stock of the National Trust Company entitled
to vote for the election of directors. Nominations, other than those made by or
on behalf of the existing management of the National Trust Company, shall be
made in writing and shall be delivered or mailed to the President of the
National Trust Company and to the Comptroller of the Currency, Washington, D.C.,
not less than 14 days nor more than 50 days prior to any meeting of shareholders
called for the election of directors, provided however, that if less than 21
days' notice of the meeting is given to shareholders, such nomination shall be
mailed or delivered to the President of the National Trust Company and to the
Comptroller of the Currency not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder:
(a) the name and address of each proposed nominee;
(b) the principal occupation of each proposed nominee;
<PAGE>
(c) the total number of shares of capital stock of the National Trust Company
that will be voted for each proposed nominee;
(d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the National Trust Company owned
by the notifying shareholder.
Nominations not made in accordance herewith may, in his/her discretion, be
disregarded by the Chairperson of the meeting, and upon his/her instructions,
the vote tellers may disregard all votes cast for each such nominee.
Section 1.4. Proxies. Shareholders may vote at any meeting of the
-------
shareholders by proxies duly authorized in writing, but no officer or employee
of this National Trust Company shall act as proxy. Proxies shall be valid only
for one meeting, to be specified therein, and any adjournments of such meeting.
Proxies shall be dated and shall be filed with the records of the meeting.
Section 1.5. Quorum. A majority of the outstanding capital stock,
------
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
---------
Section 2.1. Board of Directors. The Board of Directors shall have the
------------------
power to manage and administer the business and affairs of the National Trust
Company. Except as expressly limited by law, all corporate powers of the
National Trust Company shall be vested in and may be exercised by the Board of
Directors.
Section 2.2. Number. The Board of Directors shall consist of not less than
------
five nor more than twenty-five shareholders, the exact number within such
minimum and maximum limits to be fixed and determined from time to time by
resolution of a majority of the full Board or by resolution of the shareholders
at any meeting thereof.
Section 2.3. Organization Meeting. The Cashier, upon receiving the results
--------------------
of any election, shall notify the directors-elect of their election and of the
time at which they are required to meet at the Main Office of the National Trust
Company to organize the new Board and elect and appoint officers of the National
Trust Company for the succeeding year. Such meeting shall be held on the day of
the election or as soon thereafter as practicable, and, in any event, within
thirty days thereof. If, at the time fixed for such meeting, there shall not be
a quorum present, the Directors present may adjourn the meeting, from time to
time, until a quorum is obtained.
Section 2.4. Regular Meetings. Regular Meetings of the Board of Directors
----------------
shall be held, without notice, at least once in each quarter on such days and at
such hours as the
2
<PAGE>
Directors may from time to time determine. When any regular meeting of the Board
falls upon a holiday, the meeting shall be held on the next banking business day
unless the Board shall designate some other day. (Amended 1/1/97)
Section 2.5. Special Meetings. Special meetings of the Board of Directors
----------------
may be called by the Chairman of the Board of the National Trust Company, or at
the request of three or more directors. Each member of the Board of Directors
shall be given notice stating the time and place, by telegram, letter, or in
person, of each such special meeting.
Section 2.6. Quorum. A majority of the directors shall constitute a quorum
------
at any meeting, except when otherwise provided by law; but a less number may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice.
Section 2.7. Vacancies. When any vacancy occurs among the directors, the
---------
remaining members of the Board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the Board, or at a special meeting called for that purpose in conformance with
Section 2.2 of this Article.
Section 2.8. Action Without a Meeting. Any action required or permitted to
------------------------
be taken at any meeting of the Directors may be taken without a meeting if all
the Directors consent to the action in writing and the written consents are
filed with the records of the meetings of the Directors. Such consents shall be
treated for all purposes as a vote at a meeting.
Section 2.9. Meeting by Telecommunications. Members of the Board of
-----------------------------
Directors or any committee elected thereby may participate in a meeting of such
Board or committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in a meeting can hear each
other at the time and participation by such means shall constitute presence in
person at the meeting.
ARTICLE III
Committees of the Board
-----------------------
Section 3.1. Investment Committee. There shall be an Investment Committee
--------------------
composed of not less than two Directors, appointed by the Board annually or more
often. The Investment Committee shall have the power to insure adherence to
Investment Policy, to recommend amendments thereto, to purchase and sell
securities, to exercise authority regarding investments and to exercise, when
the Board is not in session, all other powers of the Board regarding investment
securities that may be lawfully delegated. The Investment Committee shall keep
minutes of its meetings, and such minutes shall be submitted at the next regular
meeting of the Board of Directors at which a quorum is present, and any action
taken by the Board with respect thereto shall be entered in the minutes of the
Board.
Section 3.2. Examining Committee. There shall be an Examining Committee
-------------------
composed of not less than two directors, exclusive of any active officers,
appointed by the Board annually or more often, whose duty it shall be to make an
examination at least once during each calendar year into the affairs of the
National Trust Company or cause suitable examinations to be made by auditors
responsible only to the Board of Directors and to report the result of such
examination in writing to the Board at the next regular meeting thereafter. Such
report shall state whether the National Trust Company is in a sound condition,
and whether adequate
3
<PAGE>
internal controls and procedures are being maintained shall recommend to the
Board of Directors such changes in the manner of conducting the affairs of the
National Trust Company as shall be deemed advisable. (Amended 8/5/97)
Section 3.3. Other Committees. The Board of Directors may appoint, from
----------------
time to time, from its own members, other committees of one or more persons, for
such purposes and with such powers as the Board may determine. However, a
committee may not authorize distribution of assets or dividends; approve action
required to be approved by shareholders; fill vacancies on the board of
directors or any of its committees; amend articles of association; adopt, amend
or repeal by-laws; or authorize or approve issuance or sale or contract for sale
of shares, or determine the designation and relative rights, preferences and
limitations of a class or series of shares.
ARTICLE IV
Officers and Employees
----------------------
Section 4.1. Chairperson of the Board. The Board of Directors shall appoint
------------------------
one of its members to be Chairperson of the Board to serve at its pleasure. Such
person shall preside at all meetings of the Board of Directors. The Chairperson
of the Board shall supervise the carrying out of the policies adopted or
approved by the Board; shall have general executive powers, as well as the
specific powers conferred by these Bylaws; and shall also have and may exercise
such further powers and duties as from time to time may be conferred upon, or
assigned by the Board of Directors.
Section 4.2. President. The Board of Directors shall appoint one of its
---------
members to be President of the National Trust Company. In the absence of the
Chairperson, the President shall preside at any meeting of the Board. The
President shall have general executive powers, and shall have and may exercise
any and all other powers and duties pertaining by law, regulations, or practice,
to the Office of President, or imposed by these Bylaws. The President shall also
have and may exercise such further powers and duties as from time to time may be
conferred, or assigned by the Board of Directors.
Section 4.3. Vice President. The Board of Directors may appoint one or more
--------------
Vice Presidents. Each Vice President shall have such powers and duties as may be
assigned by the Board of Directors. One Vice President shall be designated by
the Board of Directors, in the absence of the President, to perform all the
duties of the President.
Section 4.4. Secretary. The Board of Directors shall appoint a Secretary,
---------
Cashier, or other designated officer who shall be Secretary of the Board and of
the National Trust Company, and shall keep accurate minutes of all meetings. The
Secretary shall attend to the giving of all notices required by these Bylaws to
be given; shall be custodian of the corporate seal, records, documents and
papers of the National Trust Company; shall provide for the keeping of proper
records of all transactions of the National Trust Company; shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice, to the Office of Cashier, or imposed by these Bylaws; and shall also
perform such other duties as may be assigned from time to time, by the Board of
Directors.
Section 4.5. Other Officers. The Board of Directors may appoint one or more
--------------
Executive Vice Presidents, Senior Vice Presidents, Assistant Vice Presidents,
one or more
4
<PAGE>
Assistant Secretaries, one or more Assistant Cashiers, one or more Managers and
Assistant Managers of offices and such other officers and attorneys in fact as
from time to time may appear to the Board of Directors to be required or
desirable to transact the business of the National Trust Company. Such officers
shall respectively exercise such powers and perform such duties as pertain to
the several offices, or as may be conferred upon, or assigned to, them by the
Board of Directors, the Chairperson of the Board, or the President. The Board of
Directors may authorize an officer to appoint one or more officers or assistant
officers.
Section 4.6. Tenure of Office. The President and all other officers shall
----------------
hold office for the current year for which the Board was elected, unless they
shall resign, become disqualified, or be removed; and any vacancy occurring in
the Office of President shall be filled promptly by the Board of Directors.
Section 4.7. Resignation. An officer may resign at any time by delivering
-----------
notice to the National Trust Company. A resignation is effective when the notice
is given unless the notice specifies a later effective date.
ARTICLE V
Fiduciary Activities
--------------------
Section 5.1. Trust Department. There shall be a department of the National
----------------
Trust Company known as the Trust Department that shall perform the fiduciary
responsibilities of the National Trust Company.
Section 5.2. Trust Officer. There shall be a Trust Officer of this National
-------------
Trust Company whose duties shall be to manage, supervise and direct all the
activities of the Trust Department. Such persons shall do or cause to be done
all things necessary or proper in carrying on the business of the Trust
Department according to provisions of law and applicable regulations; and shall
act pursuant to opinion of counsel where such opinion is deemed necessary.
Opinions of counsel shall be retained on file in connection with all important
matters pertaining to fiduciary activities. The Trust Officer shall be
responsible for all assets and documents held by the National Trust Company in
connection with fiduciary matters. The Board of Directors may appoint other
trust officers of the Trust Department, as it may deem necessary, with such
duties as may be assigned.
Section 5.3. Trust Investment Committee. There shall be a Trust Investment
--------------------------
Committee of this National Trust Company composed of not less than two members,
who shall be capable and experienced officers or directors of the National Trust
Company. All investments of funds held in a fiduciary capacity shall be made,
retained or disposed of only with the approval of the Trust Investment
Committee, and the Committee shall keep minutes of all its meetings, showing the
disposition of all matters considered and passed upon by it. The Committee
shall, promptly after the acceptance of an account for which the National Trust
Company has investment responsibilities, review the assets thereof, to determine
the advisability of retaining or disposing of such assets. The Committee shall
conduct a similar review at least once during each calendar year thereafter and
within 15 months of the last such review. A report of all such reviews, together
with the action taken as a result thereof, shall be noted in the minutes of the
Committee.
5
<PAGE>
Section 5.4. Trust Audit Committee. The Board of Directors shall appoint a
---------------------
committee of not less than two directors, exclusive of any active officer of the
National Trust Company, which shall, at least once during each calendar year
make suitable audits of the Trust Department or cause suitable audits to be made
by auditors responsible only to the Board of Directors, and at such time shall
ascertain whether the Department has been administered according to law, Part 9
of the Regulations of the Comptroller of the Currency, and sound fiduciary
principles. (Amended 8/5/97)
Section 5.5. Fiduciary Files. There shall be maintained in the Trust
---------------
Department files all fiduciary records necessary to assure that its fiduciary
responsibilities have been properly undertaken and discharged.
Section 5.6. Trust Investments. Funds held in a fiduciary capacity shall be
-----------------
invested according to the instrument establishing the fiduciary relationship and
local law. Where such instrument does not specify the character and class of
investments to be made and does not vest in the National Trust Company a
discretion in the matter, funds held pursuant to such instrument shall be
invested in investments in which corporate fiduciaries may invest under local
law.
ARTICLE VI
Stock and Stock Certificates
----------------------------
Section 6.1. Transfers. Shares of stock shall be transferable on the books
---------
of the National Trust Company, and a transfer book shall be kept in which all
transfers of stock shall be recorded. Every person becoming a shareholder by
such transfer shall, in proportion to his shares, succeed to all rights of the
prior holder of such shares.
Section 6.2. Stock Certificates. Certificates of stock shall bear the
------------------
signature of the President (which may be engraved, printed or impressed), and
shall be signed manually or by facsimile process by the Secretary, Assistant
Secretary, Cashier, Assistant Cashier, or any other officer appointed by the
Board of Directors for that purpose, to be known as an Authorized Officer, and
the seal of the National Trust Company shall be engraved thereon. Each
certificate shall recite on its face that the stock represented thereby is
transferable only upon the books of the National Trust Company properly
endorsed.
ARTICLE VII
Corporate Seal
--------------
The President, the Cashier, the Secretary or any Assistant Cashier or Assistant
Secretary, or other officer thereunto designated by the Board of Directors,
shall have authority to affix the corporate seal to any document requiring such
seal, and to attest the same. Such seal shall be substantially in the following
form:
ARTICLE VIII
Miscellaneous Provisions
------------------------
Section 8.1. Fiscal Year. The Fiscal Year of the National Trust Company
-----------
shall be the calendar year.
6
<PAGE>
Section 8.2. Execution of Instruments. All agreements, indentures,
------------------------
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or accepted
in behalf of the National Trust Company by the Chairperson of the Board, or the
President, or any Executive Vice President, or any Vice President, or the
Secretary, or the Cashier. Any such instruments may also be executed,
acknowledged, verified, delivered or accepted in behalf of the National Trust
Company in such other manner and by such other officers as the Board of
Directors may from time to time direct. The provisions of this Section 8.2. are
supplementary to any other provision of these Bylaws.
Section 8.3. Records. The Articles of Association, the By-laws and the
-------
proceedings of all meetings of the shareholders, the Board of Directors, and
standing committees of the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be signed by the
Secretary, Cashier or other Officer appointed to act as Secretary of the
meeting.
ARTICLE IX
By-laws
-------
Section 9.1. Inspection. A copy of the By-laws, with all amendments
----------
thereto, shall at all times be kept in a convenient place at the Main Office of
the National Trust Company, and shall be open for inspection to all
shareholders, during banking hours.
Section 9.2. Amendments. The By-laws may be amended, altered or repealed,
----------
at any regular meeting of the Board of Directors, by a vote of a majority of the
total number of the Directors.
7
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by Oscar I
Corporation of its $225,000,000 Senior Subordinated Notes, 9.75% Due 2008 and
its $50,000,000 Floating Rate Senior Subordinated Notes Due 2007, we hereby
consent that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
OF MISSOURI, N.A.
By: /s/ ROBERT A. CLASQUIN
---------------------------------
Robert A. Clasquin
Assistant Vice President
Dated: May 1, 1998
<PAGE>
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
CONSOLIDATED STATEMENT OF CONDITION
FEB-98
<TABLE>
<CAPTION>
ASSETS 1998 1997
------------------ ----------------
<S> <C> <C>
Cash and Due from Bank $ 703,340 $ 414,485
Total Investment Securities 292,500 292,500
Total Premises and Equipment 11,171 0
Accrued Income Receivable 246,874 170,046
Other Assets 0 0
Goodwill Net 8,362,411 8,647,287
---------- ----------
TOTAL ASSETS $9,616,297 $9,524,318
---------- ----------
LIABILITIES
Accrued Tax and Other (295,235) (375,233)
Unearned Revenue 206,427 289,013
---------- ----------
TOTAL LIABILITIES $ (88,808) $ (86,221)
---------- ----------
STOCKHOLDERS EQUITY
Common Stock 500,000 500,000
Paid in Surplus 9,250,000 9,250,000
Retained Earning (44,894) (139,461)
---------- ----------
TOTAL STOCKHOLDERS EQUITY $9,705,106 $9,610,539
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $9,616,297 $9,524,318
========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,300
<SECURITIES> 0
<RECEIVABLES> 19,200
<ALLOWANCES> 0
<INVENTORY> 8,280
<CURRENT-ASSETS> 0
<PP&E> 557,600
<DEPRECIATION> 166,800
<TOTAL-ASSETS> 560,500
<CURRENT-LIABILITIES> 0
<BONDS> 429,700
0
200,600
<COMMON> 100
<OTHER-SE> (220,900)
<TOTAL-LIABILITY-AND-EQUITY> 553,300
<SALES> 46,600
<TOTAL-REVENUES> 164,700
<CGS> 6,500
<TOTAL-COSTS> 153,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,400
<INCOME-PRETAX> 300
<INCOME-TAX> 300
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
FORM OF
LETTER OF TRANSMITTAL
UNITED ARTISTS THEATRE COMPANY
OFFER TO EXCHANGE
9 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
FOR ALL OF ITS OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998, UNLESS THE OFFER IS EXTENDED
TO: STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A. (AS "EXCHANGE
AGENT")
By Registered or Certified Mail: By Overnight Courier or By Hand:
Two International Place, 4th Floor 61 Broadway, 15th Floor
Boston, MA 02110 New York, NY 10016
Attention: Corporate Trust Department Attention: Corporate Trust Department
Kellie Mullen
By Facsimile (for eligible institutions only):
(617) 664-5290
Attention: Corporate Trust Department
Confirm by Telephone:
(617) 664-5587
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the one listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of
Transmittal is completed.
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1998 (the "Prospectus") of United Artists Theatre Company (formerly named
Oscar I Corporation) (the "Company") and this Letter of Transmittal, which
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 principal amount of its 9 3/4% Series B Senior Subordinated Notes due
2008 (the "Exchange Notes"), which have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement of which the Prospectus is a part, for each $1,000 principal amount
of its outstanding 9 3/4% Senior Subordinated Notes due 2008 (the "Notes"),
respectively. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on , 1998, unless the Company, in its reasonable judgment, extends
the Exchange Offer, in which case the term shall mean the latest date and time
to which the Exchange Offer is extended. Capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the notes to which this Letter of Transmittal relates. If the
space indicated below is inadequate, the Certificate or Registration Numbers
and Principal Amounts should be listed on a separately signed schedule affixed
hereto.
DESCRIPTION OF 9 3/4% SENIOR SUBORDINATED NOTES DUE 2008 TENDERED HEREBY
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL
CERTIFICATE OR AMOUNT PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) REGISTRATION REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBERS* BY NOTES TENDERED**
<S> <C> <C> <C>
- - -------------------------------------------------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Total
- - -------------------------------------------------------------------------------
</TABLE>
*Need not be completed by Book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered
the full aggregate principal amount represented by such Notes. All
tenders must be in integral multiples of $1,000.
<PAGE>
This Letter of Transmittal is to be used (i) if certificates of Notes are to
be forwarded herewith, (ii) if delivery of Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository
Trust Company (the "Depository") pursuant to the procedures set forth in "The
Exchange Offer--Procedures for Tendering" in the Prospectus or (iii) tender of
the Notes is to be made according to the guaranteed delivery procedures
described in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures." See Instruction 2. Delivery of documents to a book-entry
transfer facility does not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name 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. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. Holders who wish to tender their Notes must
complete this Letter of Transmittal in its entirety.
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITORY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________
Account Number _________________________________________________________
Transaction Code Number ________________________________________________
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date must tender their Notes according to the
guaranteed delivery procedure set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2.
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) ___________________________________________
Name of Eligible Institution that Guaranteed Delivery __________________
IF DELIVERY BY BOOK-ENTRY TRANSFER:
Account Number _________________________________________________________
Transaction Code Number ________________________________________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name ___________________________________________________________________
Address ________________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the Notes
indicated above. Subject to, and effective upon, the acceptance for exchange
of such Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest
in and to such Notes as are being tendered hereby, including all rights to
accrued and unpaid interest thereon as of the Expiration Date. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent acts as the agent of the Company in connection with the
Exchange Offer) to cause the Notes to be assigned, transferred and exchanged.
The undersigned represents and warrants that it has full power and authority
to tender, exchange, assign and transfer the Notes and to acquire Exchange
Notes issuable upon the exchange of such tendered Notes, and that when the
same are accepted for exchange, the Company will acquire good and unencumbered
title to the tendered Notes, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim.
If the undersigned is not a broker-dealer, the undersigned represents to the
Company that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes. If the undersigned or the person receiving the
Exchange Notes covered hereby is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes, it represents that the
Exchange Notes were acquired by it as a result of market-making activities or
other trading activities and acknowledges that it or such other person will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes pursuant to the Exchange
Offer; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. The undersigned and any such other person
acknowledge that, if they are participating in the Exchange Offer for the
purpose of distributing the Exchange Notes, (i) they cannot rely on the
position of the staff of the Securities and Exchange Commission enunciated in
Exxon Capital Holdings Corporation (available April 13, 1989), Morgan Stanley
& Co. Incorporated (available June 5, 1991) or similar no-action letters and,
in the absence of an exemption therefrom, must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
the resale transaction and (ii) failure to comply with such requirements in
such instance could result in the undersigned or any such other person
incurring liability under the Securities Act for which such persons are not
indemnified by the Company. If the undersigned or the person receiving the
Exchange Notes covered by this letter is an affiliate (as defined under Rule
405 of the Securities Act) of the Company, the undersigned represents to the
Company that the undersigned understands and acknowledges that such Exchange
Notes may not be offered for resale, resold or otherwise transferred by the
undersigned or such other person without registration under the Securities Act
or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company
to be necessary or desirable to complete the exchange, assignment and transfer
of tendered Notes or transfer ownership of such Notes on the account books
maintained by a book-entry transfer facility. The undersigned further agrees
that acceptance of any tendered Notes by the Company and the issuance of
Exchange Notes in exchange therefor shall constitute performance in full by
the Company of its obligations under the Registration Rights Agreement and
that the Company shall have no further obligations or liabilities thereunder
for the registration of the Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange OfferConditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Notes tendered hereby
and, in such event, the Notes not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Notes may be withdrawn at
any time prior to the Expiration Date.
3
<PAGE>
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instruction" in this
Letter of Transmittal, certificates for all Exchange Notes delivered in
exchange for tendered Notes, and any Notes delivered herewith but not
exchanged, will be registered in the name of the undersigned and shall be
delivered to the undersigned at the address shown below the signature of the
undersigned. If an Exchange Note is to be issued to a person other than the
person(s) signing this Letter of Transmittal, or if the Exchange Note is to be
mailed to someone other than the person(s) signing this Letter of Transmittal
or to the person(s) signing this Letter of Transmittal at an address different
than the address shown on this Letter of Transmittal, the appropriate boxes of
this Letter of Transmittal should be completed. If Notes are surrendered by
Holder(s) that have completed either the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this
Letter of Transmittal, signature(s) on this Letter of Transmittal must be
guaranteed by an Eligible Institution (defined in Instruction 2).
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the To be completed ONLY if the
Exchange Notes are to be issued in Exchange Notes are to be sent to
the name of someone other than the someone other than the
undersigned. undersigned, or to the undersigned
Name: _____________________________ at an address other than that
Address: __________________________ shown under "Description of 9 3/4%
----------------------------------- Senior Subordinated Notes due 2008
Book-Entry Transfer Facility Tendered Hereby."
Account: Name: _____________________________
----------------------------------- Address: __________________________
Employer Identification or Social -----------------------------------
Security Number:
----------------------------------- Employer Identification or Social
(Please print or type) Security Number:
-----------------------------------
(Please print or type)
REGISTERED HOLDER(S) OF NOTES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X ________________________________________________________
X ________________________________________________________
Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Notes or on a security position listing as the owner or the Notes or
by person(s) authorized to become registered holder(s) by properly
completed bond powers transmitted herewith. If signature is by attorney-
in-fact, trustee, executor, administrator, guardian, officer of a
corporation or other person acting in a fiduciary capacity, please provide
the following information. (Please print or type):
SIGNATURE GUARANTEE
(IF REQUIRED--SEE INSTRUCTION 4)
----------------------------------- -----------------------------------
(Name and Capacity (full title)) (Signature of Representative of
----------------------------------- Signature Guarantor)
----------------------------------- -----------------------------------
----------------------------------- (Name and Title)
(Address (including zip code)) -----------------------------------
----------------------------------- (Name of Plan)
(Area Code and Telephone Number) -----------------------------------
----------------------------------- (Area Code and Telephone Number)
(Taxpayer Identification or Social Dated: ______________________ , 19
Security No.)
Dated: ______________________ , 19
4
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. All physically
delivered Notes or confirmation of any book-entry transfer to the Exchange
Agent's account at a book-entry transfer facility of Notes tendered by book-
entry transfer, as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile thereof, and any other documents required
by this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein on or prior to the Expiration Date (as defined in the
Prospectus). The method of delivery of this Letter of Transmittal, the Notes
and any other required documents is at the election and risk of the Holder,
and except as otherwise provided below, the delivery will be deemed made only
when actually received by the Exchange Agent. If such delivery is by mail, it
is suggested that registered mail with return receipt requested, properly
insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal
(or facsimile thereof), shall waive any right to receive notice of the
acceptance of the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via a
facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes,
but whose Notes are not immediately available and thus cannot deliver their
Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent (or comply with the procedures for book-entry transfer) prior
to the Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., 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");
(b) 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, the registration
number(s) of such Notes and the principal amount of Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof), together with the Notes (or a
confirmation of book-entry transfer of such 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
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer (or a confirmation of book-entry transfer of such 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 New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above. Any Holder who wishes to tender Notes
pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery relating to
such Notes prior to the Expiration Date. Failure to comply with the guaranteed
delivery procedures outlined above will not, of itself, affect the validity or
effect a revocation of any Letter of Transmittal form properly completed and
executed by a Holder who attempted to use the guaranteed delivery procedures.
5
<PAGE>
3. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount of
Notes evidenced by a submitted certificate is tendered, the tendering Holder
should fill in the principal amount tendered in the column entitled "Principal
Amount Tendered" of the box entitled "Description of 9 3/4 Senior Subordinated
Notes due 2008 Tendered Hereby." A newly issued Note for the principal amount
of Notes submitted but not tendered will be sent to such Holder as soon as
practicable after the Expiration Date. All Notes delivered to the Exchange
Agent will be deemed to have been tendered in full unless otherwise indicated.
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date, after which tenders of Notes are irrevocable. To
be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Notes
to be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn
(including the registration number(s) and principal amount of such Notes, or,
in the case of Notes transferred by book-entry transfer, the name and number
of the account at the Depository to be credited), (iii) be signed by the
Holder in the same manner as the original signature on this Letter of
Transmittal (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Notes
register the transfer of such Notes into the name of the person withdrawing
the tender and (iv) specify the name in which any such notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Notes so 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 Notes so withdrawn are validly
retendered. Any Notes which have been tendered but which are not accepted for
exchange, will be returned to the Holder thereof without cost to such Holder
as soon as practicable after withdrawal, rejection of tender or termination of
Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificates without
alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Depository, the signature must
correspond with the name as it appears on the security position listing as the
owner of the Notes.
If any of the Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If a number of notes registered in different names are tendered, it will be
necessary to complete, sign and submit as many separate copies of this Letter
of Transmittal as there are different registrations of Notes.
Signatures of this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the Notes
tendered hereby 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.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Notes (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the Notes) listed and tendered hereby, no endorsements of the
tendered Notes or separate written instruments of transfer or exchange are
required. In any other case, the registered Holder (or acting Holder) must
either properly endorse the Notes or transmit properly completed bond powers
with this Letter of Transmittal (in either case, executed exactly as the
name(s) of the registered Holder(s) appear(s) on the Notes, and, with respect
to a participant in the Depository whose name appears on a security position
listing as the owner of Notes, exactly as the name of the participant appears
on such security position listing), with the signature on the Notes or bond
power guaranteed by an Eligible Institution (except where the Notes are
tendered for the account of an Eligible Institution).
6
<PAGE>
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange 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, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable box, the name and address (or account at the
Depository) in which the Exchange Notes or substitute Notes for principal
amounts not tendered or not accepted for exchange are to be issued (or
deposited), if different from the names and addresses or accounts of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number
of the person named must also be indicated and the tendering Holder should
complete the applicable box.
If no instructions are given, the Exchange Notes (and any Notes not tendered
or not accepted) will be issued in the name of and sent to the acting Holder
of the Notes or deposited at such Holder's account at the Depository.
6. TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Notes to it or its order pursuant
to the Exchange Offer. If a transfer tax is imposed for any reason other than
the transfer and exchange of Notes to the Company or its order pursuant to the
Exchange Offer, 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 exception
therefrom is not submitted herewith, the amount of such transfer taxes will be
collected from the tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Notes listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS. The Company reserves the right, in its reasonable
judgment, to waive, in whole or in part, any of the conditions to the Exchange
Offer set forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Notes have
been mutilated, lost, stolen or destroyed should contact the Exchange Agent at
the address indicated above for further instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange
Agent at the address and telephone number(s) set forth above. In addition, all
questions relating to the Exchange Offer, as well as requests for assistance
or additional copies of the Prospectus and this Letter of Transmittal, may be
directed to United Artists Theatre Company, 9110 E. Nichols Avenue, Suite 200,
Englewood, Colorado 80112-3405, Attention: Gene Hardy, Corporate Secretary;
telephone (303) 792-3600.
10. VALIDITY AND FORM. All questions as to the validity, form, eligibility
(including time of receipt), acceptance of tendered Notes and withdrawal of
tendered 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 Notes not properly tendered or any Notes the
Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right, in its reasonable
judgment, to waive any defects, irregularities or conditions of tender as to
particular Notes. The Company's interpretation of the terms and conditions of
the Exchange Offer (including the instructions in this Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Notes must be cured within such
time as the Company shall determine. Although the Company intends to notify
Holders of defects or irregularities with respect to tenders of Notes, neither
the Company, the Exchange Agent nor any other person shall incur any liability
for failure to give such notification. Tenders of Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Notes received by the Exchange Agent that are not properly tendered and as
to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder as soon as practicable
following the Expiration Date.
7
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form
W-9 below. If such Holder is an individual, the TIN is the Holder's social
security number. The Certificate of Awaiting Taxpayer Identification Number
should be completed if the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future. If
the Exchange Agent is not provided with the correct TIN, the Holder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such Holder with respect to tendered Notes may be
subject to backup withholding.
Certain Holders (including, among others, all domestic corporations) are
exempt from these backup withholding requirements. Such a Holder should
nevertheless complete Substitute Form W-9 by entering its correct TIN,
checking the box in Part 2 and signing and dating the form. In order for a
foreign Holder not to be subject to backup withholding, that Holder must
submit to the Exchange Agent a properly completed Internal Revenue Service
Form W-8, signed under penalties of perjury, attesting to that Holder's exempt
status. Such forms can be obtained from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not
an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9. To prevent backup withholding on payments
that are made to a Holder, the Holder is required to notify the Exchange Agent
of his or her correct TIN by completing the form herein certifying that the
TIN provided on Substitute Form W-9 is correct (or that such Holder is
awaiting a TIN) and that (i) such Holder is exempt, (ii) such Holder has not
been notified by the Internal Revenue Service that he or she is subject to
backup withholding as a result of failure to report all interest or dividends
or (iii) the Internal Revenue Service has notified such Holder that he or she
is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT. Each Holder is required to give the
Exchange Agent the social security number or employer identification number of
the record Holder(s) of the Notes. If Notes are in more than one name or are
not in the name of the actual Holder, consult the instructions on Internal
Revenue Service Form W-9, which may be obtained from the Exchange Agent, for
additional guidance on which number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER. If the tendering
Holder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, write "Applied For" in the space for
the TIN or Substitute Form W-9, sign and date the form and the Certificate of
Awaiting Taxpayer Identification Number and return them to the Exchange Agent.
If such certificate is completed and the Exchange Agent is not provided with
the TIN within 60 days, the Exchange Agent will withhold 31% of all payments
made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: This Letter of Transmittal or a facsimile thereof (together with
Notes or confirmation of book-entry transfer and all other required documents)
or a Notice of Guaranteed Delivery must be received by the Exchange Agent on
or prior to the Expiration Date.
8
<PAGE>
PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A., AS
EXCHANGE AGENT
PART 1--PLEASE PROVIDE
YOUR TIN IN THE BOX AT THE
RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW.
For all accounts, enter
TIN in the box at right.
(For most individuals,
this is your social
security number. If you do
not have a number, see
enclosed Guidelines for
Certification of Taxpayer
Identification Number on
Substitute Form W-9.)
SUBSTITUTE -----------------------
FORM W-9 Social Security Number
OR ____________________
DEPARTMENT OF THE Employer
TREASURY INTERNAL Identification Number
REVENUE SERVICE
(If awaiting TIN write
"Applied For")
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION NUMBER -------------------------------------------------------
(TIN)
PART 2--Certain payees are exempt from backup
withholding (see the enclosed Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9 and complete as instructed
therein). Exempt payees should check this box: [_]
- - -------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number or a Taxpayer Identification Number has not been issued to me and
either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal Revenue
Service ("IRS") or Social Security Administration Office or (b) I intend
to mail or deliver an application in the near future, and
(2) I am not subject to backup withholding either because (a) I am exempt
from backup withholding, (b) I have not been notified by the IRS that I
am subject to backup withholding as a result of failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross our item (2). (Also see instructions in the
enclosed Guidelines.)
- - -------------------------------------------------------------------------------
The IRS does not require your consent to any provision of this document other
than the certifications required to avoid backup withholding.
- - -------------------------------------------------------------------------------
SIGNATURE DATE , 199
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU WROTE "APPLIED FOR"
INSTEAD OF A TIN IN THE SUBSTITUE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number
to the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an
application in the near future. I understand that if I do not provide
a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld until I provide a
number, but will be refunded if I provide a certified taxpayer
identification number within 60 days.
---------------------------------- ----------------------------------
Signature Dated
<PAGE>
FORM OF
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
9 3/4% SENIOR SUBORDINATED NOTES DUE 2008
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
UNITED ARTISTS THEATRE COMPANY
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of United Artists Theatre Company (formerly named Oscar I
Corporation) (the "Company") made pursuant to the Prospectus, dated (the
"Prospectus"), if certificates for the outstanding 9 3/4% Senior Subordinated
Notes due 2008 of the Company (the "Old Notes") are not immediately available
or if the procedure for book-entry transfer cannot be completed on a timely
basis or time will not permit all required documents to reach the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date of the
Exchange Offer. Such form may be delivered or transmitted by telegram, telex,
facsimile transmission, mail or hand delivery to State Street Bank and Trust
Company of Missouri, N.A. (the "Exchange Agent") as set forth below. In
addition, in order to utilize the guaranteed delivery procedure to tender Old
Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal (or facsimile thereof) must also be received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
TO: STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A., EXCHANGE AGENT.
By Registered or Certified Mail:
State Street Bank and Trust Company of Missouri, N.A.
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
Kellie Mullen
By Overnight Courier or By Hand:
State Street Bank and Trust Company of Missouri, N.A.
61 Broadway, 15th Floor
New York, NY 10016
Attention: Corporate Trust Department
By Facsimile (for eligible institutions only):
(617) 664-5290
Attention: Corporate Trust Department
Confirm by Telephone:
(617) 664-5587
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set forth below, pursuant to
the guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Old Notes Tendered:*
$ ___________________________________
Certificate Nos. (if available):
- - -------------------------------------
Total Principal Amount Represented by Certificate(s):
$ ___________________________________
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
PLEASE SIGN HERE
X ___________________________________ -------------------------------------
X ___________________________________ -------------------------------------
Signature(s) of Owner(s) or Date
Authorized Signatory
Area Code and Telephone Number: __________
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If Old Notes will be delivered by book-
entry transfer to The Depository Trust Company, provide account number.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Capacity:
---------------------------------------------------------------------
---------------------------------------------------------------------
Address(es):
---------------------------------------------------------------------
---------------------------------------------------------------------
Account Number:
---------------------------------------------------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees that the undersigned will deliver to the Exchange Agent the
certificates representing the Old Notes being tendered hereby or confirmation
of book-entry transfer of such Old Notes into the Exchange Agent's account at
The Depository Trust Company, in proper form for transfer, together with any
other documents required by the Letter of Transmittal within three New York
Stock Exchange trading days after the Expiration Date.
Name of Firm: _________________________________________________________________
Address: ______________________________________________________________________
__________________________________________________________________________
Area Code & Telephone No.: ____________________________________________________
Authorized Signature: _________________________________________________________
Name: _________________________________________________________________________
(Please Type or Print)
Title: ________________________________________________________________________
Date: _________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF
OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED
LETTER OF TRANSMITTAL.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
- - ---------------------------------------------
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- - ---------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
5. Sole proprietorship The owner(3)
- - ---------------------------------------------
</TABLE>
<TABLE>
------
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
------
<S> <C>
6. Sole proprietorship The owner(3)
7. A valid trust, estate, The legal
or pension trust entity(4)
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt
organization
10. Partnership The partnership
11. A broker or registered The broker or
nominee nominee
12. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security
number or your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE:If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card, or Form SS-4, Application for Employer
Identification Number, at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding with respect to interest
and dividend payments and broker transactions include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), an individual
retirement plan or a custodial account under section 403(b)(7) if the
account satisfies the requirements of section 401(f)(2).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
. A foreign government or any political subdivision, agency or
instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident alien partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Section 404(k) payments made by ESOP.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including the exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, CHECK THE BOX IN PART 2 OF THE FORM, RETURN IT TO THE
PAYER, AND SIGN AND DATE THE FORM.
Payments that are not subject to information reporting also are not subject to
backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
The IRS may also provide this information to the Department of Justice for
civil and criminal litigation and to cities, states, and the District of
Columbia, to carry out their tax laws. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
