SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 19, 1996
KATZ MEDIA GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13674 13-3779269
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(State of Incorporation)(Commission File Number) (IRS Employer
Identification No.)
125 West 55th Street, New York, New York 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 424-6000
<PAGE>
5. Other Events
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On December 19, 1996, Katz Media Group, Inc. ("KMG"), through its
wholly-owned subsidiary, Katz Media Corporation (the "Company"), completed the
refinancing of its existing indebtedness (the "Refinancing"). In connection with
the Refinancing, the Company (i) accepted for payment $97.7 million principal
amount of its 12 3/4% Senior Subordinated Notes due 2002 (the "Katz Notes"),
(ii) consummated a private offering under Rule 144A of the Securities Act of
1933, as amended (the "Securities Act"), of $100,000,000 aggregate principal
amount of its 10 1/2% Senior Subordinated Notes due 2007 (the "Notes") and (iii)
refinanced its existing credit facility with a new revolving credit and term
loan facility providing for loans of up to $180.0 million.
The Notes were issued pursuant to an indenture, dated as of
December 19, 1996 (the "Indenture"), by and among the Company, American Stock
Transfer & Trust Company, as trustee, and Katz Communications, Inc., Katz
Millennium Marketing Inc., Banner Radio Sales, Inc., Christal Radio Sales, Inc.,
Eastman Radio Sales, Inc., Seltel Inc., Katz Cable Corporation and The National
Payroll Company, Inc., as initial guarantors, a copy of which is attached
hereto. The Notes mature on January 15, 2007. Interest on the Notes will accrue
at the rate of 10 1/2% per annum and is payable semi-annually in cash on January
15 and July 15, commencing on July 15, 1997.
The Notes may be redeemed at the option of the Company, in whole
or in part, on or after January 15, 2002, at the redemption prices set forth in
the Indenture, plus accrued and unpaid interest and Liquidated Damages (as
defined in the Indenture), if any, to the date of redemption. In addition, on or
prior to January 15, 2000, the Company may redeem up to 35% in aggregate
principal amount of the Notes at a redemption price of 109.5% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the redemption date, with the net proceeds of an offering of equity
securities of the Company or its parent; provided that at least 65% in aggregate
principal amount of Notes originally issued remains outstanding immediately
after the occurrence of each such redemption.
The Notes are general unsecured obligations of the Company,
subordinate in right of payment to all existing and future Senior Debt (as
defined in the Indenture) of the Company, including indebtedness under the New
Credit Agreement, and senior in right of payment to the Katz Notes and any other
future subordinated indebtedness of the Company. As a result of the Refinancing,
the Company has available an aggregate of approximately $63.3 million under the
New Credit Agreement for working capital purposes, including the purchase of
representation contracts, potential acquisitions and other general corporate
purposes, and the possible repurchase by KMG of its common stock from time to
time in the open market. Of the aggregate available amount, approximately $44.4
million is immediately available and the remainder will become available in the
future, subject to the achievement of certain financial ratios and compliance
with certain other conditions.
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The Notes are guaranteed (the "Subsidiary Guarantees") on an
unsecured, senior subordinated basis by substantially all of the Company's
existing and future subsidiaries (collectively, the "Guarantors"). The
Subsidiary Guarantees are senior in right of payment to the obligations of the
Guarantors in respect of the Katz Notes, but are subordinated in right of
payment to all existing and future Senior Debt of the Guarantors, including the
guarantees by the Guarantors of the New Credit Agreement.
Upon a Change of Control (as defined in the Indenture), the
holders of Notes will have the right to require the Company to purchase their
Notes, in whole or in part, at a price equal to 101% of the aggregate principal
amount thereof.
The Indenture contains certain covenants with respect to the
Company and its Restricted Subsidiaries (as defined in the Indenture) that limit
the ability of the Company and its Restricted Subsidiaries to, among other
things, (i) incur additional indebtedness and issue preferred stock; (ii) pay
dividends or make other distributions or make certain other restricted payments;
(iii) layer indebtedness; (iv) create certain liens; (v) sell assets; (vi) enter
into certain transactions with affiliates; (vii) enter into certain mergers or
consolidations; or (viii) sell or issue capital stock of the Company's
subsidiaries.
The Company has agreed to file with the Securities and Exchange
Commission, within 45 days after the date of issuance of the Notes, a
registration statement under the Securities Act relating to an exchange offer
for the Notes, and will use its reasonable best efforts to cause such
registration statement to become effective within 120 days after the Issue Date.
In addition, under certain circumstances, the Company may be required to file a
shelf registration statement under which the holders of Notes will be entitled
to offer and sell the Notes from time to time without restrictions or
limitations under the Securities Act.
Net proceeds from the sale of the Notes of approximately $97.2
million, together with borrowings under the New Credit Agreement, will be
applied primarily to the repurchase of the Katz Notes in the tender offer
(approximately $109.9 million), the repayment of all outstanding obligations
under the old credit facility (approximately $96.0 million) and the repayment of
all outstanding obligations under the interim facility of KMG (approximately
$5.6 million).
In connection with the Refinancing, the Company has also entered
into the New Credit Agreement, a copy of which is attached hereto, pursuant to
which Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") acts as
arranger, an affiliate of DLJ as syndication agent and The First National Bank
of Boston as administrative agent. Under the New Credit Agreement, certain
lenders (the "Lenders") will provide the Company will a secured revolving credit
and term loan facility of up to $180.0 million, consisting of Tranche A term
loans of up to $60.0 million, Tranche B loans of up to $40.0 million and
revolving loans of up to $80.0 million. Tranche A term loans begin amortizing in
1999 and have a final maturity of September 30, 2003. Tranche B term loans begin
amortizing in 1999 and have a final maturity of December 31, 2004. Mandatory
prepayments of the term loans and reductions in the revolving commitments under
3
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the New Credit Agreement will be required to be made in the amount of $0.16
million in 1997, $0.16 million in 1998, $6.16 million in 1999, $14.16 million in
2000, $24.16 million in 2001, $38.16 million in 2002, $69.6 million in 2003 and
the remaining $32.0 million on the final maturity of the New Credit Agreement in
2004. In addition, in the event the Company's pro forma ratio of total debt to
EBITDA (as defined in the New Credit Agreement) exceeds a certain level, the
Company will be required to make certain mandatory reductions in borrowings or
commitments under the New Credit Agreement to the extent of 50% of the net
proceeds from any issuance of equity securities.
Interest is payable on borrowings under the New Credit Agreement
at rates based on either a "Base Rate" or a "Eurodollar Rate" (each as defined
in the New Credit Agreement), as selected by the Company plus a margin ranging
from 0% to 2 5/8%, depending on whether the selected rate is a "Base Rate" or a
"Eurodollar Rate," the Company's ratio of total debt to EBITDA on a trailing
four-quarter basis and whether such loans are Tranche A term loans, Tranche B
term loans or revolving credit loans.
The New Credit Agreement contains certain restrictive covenants
that impose limitations or prohibitions upon the Company, including covenants
with respect to: (i) the creation, incurrence or existence of any additional
indebtedness or contingent obligations; (ii) the creation, incurrence or
existence of liens; (iii) mergers, stock issuances and sales of assets; (iv) the
making of investments in other persons; (v) the payment of dividends, the
repurchase of capital stock and the prepayment or repurchase of subordinated
indebtedness; (vi) transactions with affiliates; (vii) the sale or disposition
of any ownership of any Restricted Subsidiary (as defined in the New Credit
Agreement); (viii) any change in the nature of the business; (ix) sale-
leaseback transactions; (x) any modification of any Related Document (as defined
in the New Credit Agreement) or of any material agreement; (xi) modifications to
the capital structure of the Company or its subsidiaries; (xii) capital
expenditures; (xiii) the formation or acquisition of new subsidiaries; and (xiv)
other covenants customarily found in loan agreements of this type. The New
Credit Agreement also requires the Company and its subsidiaries, among other
things (x) to maintain customary insurance and material licenses, permits and
intellectual property rights; (y) to comply with applicable laws and
regulations; and (z) to provide the Lenders annual audited and quarterly
unaudited financial statements and certain other reports and certificates.
The New Credit Agreement also provides that as long as any
commitments or loans remain outstanding thereunder, the Company shall maintain a
certain (i) fixed charge coverage ratio, (ii) total interest coverage ratio and
(iii) total debt to EBITDA ratio, as specified in the New Credit Agreement for
each fiscal quarter.
The New Credit Agreement is secured by (i) pledge agreements
executed by the Company and all of its domestic subsidiaries, pursuant to which
each of them has pledged all (or, in the case of foreign subsidiaries, 65%) of
the common stock and intercompany notes of their respective subsidiaries; (ii)
security agreements, pursuant to which the Company and all of its domestic
subsidiaries has granted security interests in substantially all of their
assets; and (iii) a pledge agreement executed by Katz Media Services, Inc.
("KMSI"), a wholly-owned subsidiary of KMG and direct parent of the Company,
4
<PAGE>
pursuant to which KMSI has pledged all of the common stock of the Company, in
each case for the ratable benefit of the Lenders and the agents under the New
Credit Agreement. In addition, KMSI and all of the domestic subsidiaries of the
Company guarantee payment of all borrowings under the New Credit Agreement. The
guarantees by such subsidiaries of obligations under the New Credit Agreement
will rank senior to the Subsidiary Guarantees.
5
<PAGE>
Item 7. Financial Statements and Exhibits
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(c) Exhibits
1. Indenture, dated as of December 19, 1996, by and among Katz Media
Corporation, American Stock Transfer & Trust Company, as trustee,
and Katz Communications, Inc., Katz Millennium Marketing Inc.,
Banner Radio Sales, Inc., Christal Radio Sales, Inc., Eastman
Radio Sales, Inc., Seltel Inc., Katz Cable Corporation and The
National Payroll Company, Inc., as guarantors.
2. U.S. $180,000,000 Credit Agreement, dated as of December 19,
1996, by and among Katz Media Corporation, as borrower, the
lenders party thereto, The First National Bank of Boston, as
Administrative Agent, and DLJ Capital Funding, Inc., as
Syndication Agent.
3. Press release dated December 19, 1996.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
KATZ MEDIA GROUP, INC.
By: /s/ Richard E. Vendig
-------------------------------
Richard E. Vendig
Senior Vice President
Chief Financial & Administrative Officer
Treasurer
Date: December 19, 1996
7
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EXHIBIT INDEX
Exhibit No. Description Page No.
1 Indenture, dated as of December 19, 1996, by and among Katz 10
Media Corporation, American Stock Transfer & Trust Company, as
trustee, and Katz Communications, Inc., Katz Millennium
Marketing Inc., Banner Radio Sales, Inc., Christal Radio
Sales, Inc., Eastman Radio Sales, Inc., Seltel Inc., Katz
Cable Corporation and The National Payroll Company, Inc., as
initial guarantors.
2 U.S. $180,000,000 Credit Agreement dated as of December 19, 109
1996 among Katz Media Corporation, as borrower, the lenders
party thereto, The First National Bank of Boston, as Admin-
istrative Agent, and DLJ Capital Funding, Inc., as Syndication
Agent.
3 Press release dated December 19, 1996. 212
8
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EXECUTION COPY
Katz Media Corporation
----------------------------------------
SERIES A AND SERIES B
10 1/2% SENIOR SUBORDINATED NOTES DUE 2007
----------------------------------------
-------------------
INDENTURE
DATED AS OF DECEMBER 19, 1996
-------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
Trustee
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<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)..................................................... 7.10
(a)(2)..................................................... 7.10
(a)(3) .................................................... N.A.
(a)(4)..................................................... N.A.
(a)(5)..................................................... 7.10
(b) ....................................................... 7.10
(c) ....................................................... N.A.
311 (a) ....................................................... 7.11
(b) ....................................................... 7.11
(c) ....................................................... N.A.
312 (a) ....................................................... 2.05
(b) ....................................................... 11.03
(c) ....................................................... 11.03
313 (a) ....................................................... 7.06
(b)(1) .................................................... 10.03
(b)(2) .................................................... 7.07
(c) ....................................................... 7.06, 11.02
(d) ....................................................... 7.06
314 (a) ....................................................... 4.04, 11.02
(b) ....................................................... 10.02
(c)(1) .................................................... 11.04
(c)(2) .................................................... 11.04
(c)(3) .................................................... N.A.
(d) ....................................................... 10.03, 10.04
(e) ...................................................... 11.07
(f) ....................................................... N.A.
315 (a) ....................................................... 7.01
(b) ....................................................... 7.05, 11.02
(c) ...................................................... 7.01
(d) ....................................................... 7.01
(e) ....................................................... 6.11
316 (a)(last sentence) ........................................ 2.09
(a)(1)(A) ................................................. 6.05
(a)(1)(B) ................................................. 6.04
(a)(2) .................................................... N.A.
(b) ....................................................... 6.07
(c) ....................................................... 2.12
317 (a)(1) .................................................... 6.08
(a)(2)..................................................... 6.09
(b) ....................................................... 2.04
318 (a) ....................................................... 11.01
(b) ....................................................... N.A.
(c) ....................................................... 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions................................................. 1
Section 1.02. Other Definitions........................................... 12
Section 1.03. Incorporation by Reference of Trust Indenture Act........... 12
Section 1.04. Rules of Construction....................................... 12
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating............................................. 12
Section 2.02. Execution and Authentication................................ 14
Section 2.03. Registrar and Paying Agent.................................. 14
Section 2.04. Paying Agent to Hold Money in Trust......................... 15
Section 2.05. Holder Lists................................................ 15
Section 2.06. Transfer and Exchange....................................... 15
Section 2.07. Replacement Notes........................................... 21
Section 2.08. Outstanding Notes........................................... 21
Section 2.09. Treasury Notes.............................................. 21
Section 2.10. Temporary Notes............................................. 22
Section 2.11. Cancellation................................................ 22
Section 2.12. Defaulted Interest.......................................... 22
Section 2.13. Record Date................................................. 23
Section 2.14. CUSIP Number................................................ 23
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.......................................... 23
Section 3.02. Selection of Notes to be Redeemed or Purchased.............. 23
Section 3.03. Notice of Redemption........................................ 24
Section 3.04. Effect of Notice of Redemption.............................. 24
Section 3.05. Deposit of Redemption Price................................. 25
Section 3.06. Notes Redeemed in Part...................................... 25
Section 3.07. Optional Redemption Provisions.............................. 25
Section 3.08. Mandatory Purchase Provisions............................... 25
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................................ 27
Section 4.02. Reports..................................................... 27
Section 4.03. Compliance Certificate...................................... 27
Section 4.04. Stay, Extension and Usury Laws.............................. 28
Section 4.05. Restricted Payments......................................... 28
Section 4.06. Corporate Existence......................................... 30
Section 4.07. Incurrence of Indebtedness and Issuance of Preferred Stock.. 30
Section 4.08. Transactions With Affiliates................................ 31
<PAGE>
Section 4.09. Liens....................................................... 32
Section 4.10. Compliance With Laws, Taxes................................. 32
Section 4.11. Dividend and Other Payment Restrictions Affecting
Subsidiaries............................................... 32
Section 4.12. Maintenance of Office or Agencies........................... 33
Section 4.13. Change of Control........................................... 33
Section 4.14. Asset Sales................................................. 33
Section 4.15. Additional Guarantees....................................... 34
Section 4.16. Activities of the Company................................... 34
Section 4.17. No Senior Subordinated Debt................................. 34
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.................... 35
Section 5.02. Successor Corporation Substituted........................... 35
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default........................................... 35
Section 6.02. Acceleration................................................ 37
Section 6.03. Other Remedies.............................................. 37
Section 6.04. Waiver of Past Defaults..................................... 37
Section 6.05. Control by Majority......................................... 37
Section 6.06. Limitation on Suits......................................... 38
Section 6.07. Rights of Holders to Receive Payment........................ 38
Section 6.08. Collection Suit by Trustee.................................. 38
Section 6.09. Trustee May File Proofs of Claim............................ 38
Section 6.10. Priorities.................................................. 38
Section 6.11. Undertaking for Costs....................................... 39
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee........................................... 39
Section 7.02. Rights of Trustee........................................... 40
Section 7.03. Individual Rights of Trustee................................ 40
Section 7.04. Trustee's Disclaimer........................................ 40
Section 7.05. Notice to Holders of Defaults and Events of Default......... 40
Section 7.06. Reports by Trustee to Holders............................... 41
Section 7.07. Compensation and Indemnity.................................. 41
Section 7.08. Replacement of Trustee...................................... 41
Section 7.09. Successor Trustee by Merger, Etc............................ 42
Section 7.10. Eligibility; Disqualification............................... 42
Section 7.11. Preferential Collection of Claims Against the Company....... 42
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ARTICLE 8
FEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.... 42
Section 8.02. Legal Defeasance and Discharge.............................. 43
Section 8.03. Covenant Defeasance......................................... 43
Section 8.04. Conditions to Legal or Covenant Defeasance.................. 43
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions...................... 45
Section 8.06. Repayment to The Company.................................... 45
Section 8.07. Reinstatement............................................... 45
ARTICLE 9
AMENDMENTS
Section 9.01. Amendments and Supplements Permitted Without Consent of
Holders.................................................... 46
Section 9.02. Amendments and Supplements Requiring Consent of Holders..... 46
Section 9.03. Compliance with TIA......................................... 47
Section 9.04. Revocation and Effect of Consents........................... 47
Section 9.05. Notation on or Exchange of Notes............................ 47
Section 9.06. Trustee Protected........................................... 47
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.................................... 48
Section 10.02. Liquidation; Dissolution; Bankruptcy........................ 48
Section 10.03. Default on Designated Senior Debt........................... 48
Section 10.04. Acceleration of Notes....................................... 49
Section 10.05. When Distribution Must Be Paid Over......................... 49
Section 10.06. Notice by Company........................................... 49
Section 10.07. Subrogation................................................. 49
Section 10.08. Relative Rights............................................. 49
Section 10.09. Subordination May Not Be Impaired by Company................ 50
Section 10.10. Distribution or Notice to Representative.................... 50
Section 10.11. Rights of Trustee and Paying Agent.......................... 50
Section 10.12. Authorization to Effect Subordination....................... 50
Section 10.13. Amendments.................................................. 51
ARTICLE 11
GUARANTEE OF NOTES
Section 11.01. Subsidiary Guarantees....................................... 51
Section 11.02. Execution and Delivery of Subsidiary Guarantee.............. 51
Section 11.03. Guarantors May Consolidate, Etc., On Certain Terms.......... 52
Section 11.04. Releases.................................................... 52
Section 11.05. Additional Guarantors....................................... 53
Section 11.06. Limitation on Guarantor Liability........................... 53
Section 11.07. "Trustee" to Include Paying Agent........................... 53
Section 11.08. Subordination of Subsidiary Guarantee....................... 53
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ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls............................... 53
Section 12.02. Notices.................................................... 54
Section 12.03. Communication by Holders with Other Holders................ 54
Section 12.04. Certificate and Opinion as to Conditions Precedent......... 55
Section 12.05. Statements Required in Certificate or Opinion.............. 55
Section 12.06. Rules by Trustee and Agents................................ 55
Section 12.07. Legal Holidays............................................. 55
Section 12.08. No Recourse Against Others................................. 55
Section 12.09. Counterparts............................................... 55
Section 12.10. Variable Provisions........................................ 56
Section 12.11. Governing Law.............................................. 56
Section 12.12. No Adverse Interpretation of Other Agreements.............. 56
Section 12.13. Successors................................................. 56
Section 12.14. Severability............................................... 56
Section 12.15 Table of Contents, Headings, Etc........................... 56
Exhibit A-1 Form of Note .............................................. A-1
Exhibit A-2 Form of Regulation S Temporary Global Note ................ A-2
Exhibit B-1 Form of Certificate of Exchange or Registration of
Transfer From Rule 144A Global Note to Regulation
S Global Note .............................................B-1
Exhibit B-2 Form of Certificate of Exchange or Registration of
Transfer From Regulation S Global Note to Rule
144A Global Note ..........................................B-2
Exhibit B-3 Form of Certificate of Exchange or Registration of
Transfer of Certificated Notes ............................B-3
Exhibit B-4 Form of Certificate of Exchange or Registration of
Transfer From Rule 144A Global Note or Regulation
S Permanent Global Note to Definitive Note.................B-4
Exhibit C Certificate of Institutional Accredited Investor.............C
Exhibit D Certificate of Guarantee ....................................D
Exhibit E Form of Supplemental Indenture...............................E
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This Indenture, dated as of December 19, 1996, is among Katz Media
Corporation, a Delaware corporation (the "Company"), Katz Communications, Inc.,
a Delaware corporation, Katz Millennium Marketing Inc., a Delaware corporation,
Banner Radio Sales, Inc., a Delaware corporation, Christal Radio Sales, Inc., a
Delaware corporation, Eastman Radio Sales, Inc., a Delaware corporation, Seltel
Inc., a Delaware corporation, Katz Cable Corporation, a Delaware corporation and
The National Payroll Corporation, Inc., a Delaware corporation (the
"Guarantors") and American Stock Transfer & Trust Company, a New York trust
corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the holders of the Company's 10 1/2% Series
A Senior Subordinated Notes due 2007 (the "Series A Notes") and the Company's 10
1/2% Series B Senior Subordinated Notes due 2007 (the "Series B Notes" and,
together with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merges
with or into or becomes a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" means any members of, or participants in, the
Depositary.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets other than Marketable Securities (including, without
limitation, by way of a sale and leaseback) other than in the ordinary course of
business and other than any Contract Buy Out or sub-lease of real property
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole will be governed by Section 4.13 and/or Section 5.01 hereof and not by the
provisions of Section 4.14 hereof), and (ii) the issue or sale by the Company or
any of its Restricted Subsidiaries of Equity Interests of any of the Company's
Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $2.0 million or (b) for net proceeds in excess of $2.0
million; provided that with respect to Contract Buy Outs of the station
representation contracts of the Company and its Restricted Subsidiaries, if, as
of any Buy Out Proceeds Determination Date after the date hereof, the Buy Out
Proceeds Amount exceeds $6.0 million, the Buy Out Proceeds Amount will be deemed
to be Net Proceeds in respect of an Asset Sale as of such date and shall be
applied in accordance with Section 4.14(b) hereof. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Restricted Subsidiary or
by a Restricted Subsidiary to the Company or to another Restricted Subsidiary,
(ii) an issuance or sale of Equity Interests by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary or any such issuance or sale in a
manner that does not reduce the percentage ownership of the Equity Interests of
such Restricted Subsidiary by the Company or any Restricted Subsidiary, and
(iii) a Restricted Payment that is permitted by Section 4.05 hereof will not be
deemed to be an Asset Sale.
1
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"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Company's
board of directors or any authorized committee of such board of directors (or
similar governing body) of such Person.
"Business Day" means any day other than a Legal Holiday.
"Buy Out Proceeds Amount" means an amount equal to (a) the aggregate
amount of cash consideration actually received by the Company and its Restricted
Subsidiaries in connection with Contract Buy Outs during a fiscal year (whether
or not a Contract Buy Out pursuant to which any such consideration was received
occurred during such fiscal year), minus (b) the aggregate amount of cash
consideration actually paid by the Company and its Restricted Subsidiaries in
connection with Contract Buy Outs during a fiscal year (whether or not a
Contract Buy Out pursuant to which any such consideration was paid occurred
during such fiscal year). On each Buy Out Proceeds Determination Date, the Buy
Out Proceeds Amount will be reset at zero.
"Buy Out Proceeds Determination Date" means the last day of each
fiscal year of the Company.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means, (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Change of Control" means the occurrence of any of the following: (i)
all or substantially all of the assets of the Company, KMG or KMSI are sold as
an entirety to any Person or group (within the meaning of Rule 13d-5 under the
Exchange Act and Sections 13(d) and 14(d) of the Exchange Act (a "Group") other
than a Group including the Principals or their Related Parties); (ii) the
stockholders of the Company, KMG or KMSI approve a plan of liquidation or
dissolution (other than in connection with a merger of KMG or KMSI with or into
each other or the Company); or (iii) any Person or Group (other than the
Principals or their Related Parties) becomes, directly or indirectly, the
"beneficial owner," as defined in Rule 13d-3 under the Exchange Act (in a single
transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or otherwise) of greater than (A)
40% of the total voting power entitled to vote in the election of directors of
the Company, KMG or KMSI or such other person surviving the transaction and (B)
the total voting power entitled to vote in the election of directors of the
Company, KMG or KMSI beneficially owned by the Principals or their Related
Parties.
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"Company" means Katz Media Corporation, a Delaware corporation.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period, plus, to the extent deducted in computing
Consolidated Net Income, (a) provision for taxes based on income or profits of
such Person and its Restricted Subsidiaries for such period, (b) Consolidated
Interest Expense of such Person and its Restricted Subsidiaries for such period,
(c) depreciation and amortization (including amortization of goodwill and other
intangibles) and all other non-cash items (whether positive or negative)
(including, without limitation, Non-Cash Rent Expense) of such Person and its
Restricted Subsidiaries for such period and (d) an amount equal to any
extraordinary loss and any net loss realized in connection with any Asset Sale,
in each case, on a consolidated basis determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, a Subsidiary of a Person
shall be added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Cash Interest Expense" means, with respect to any Person
for any period, the Consolidated Interest Expense of such Person and its
Restricted Subsidiaries for such period, less all non-cash charges of such
Person included in Consolidated Interest Expense for such period.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the interest expense (net of interest income) of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP (including amortization of original issue discount and
deferred financing costs, commissions, discounts, fees and charges, non-cash
interest payments, the interest component of all payments associated with
Capital Lease Obligations and net payments (if any) pursuant to Hedging
Obligations).
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"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the Net Income of any Person that is not
a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions actually paid in that period to the referent Person or a Wholly
Owned Restricted Subsidiary thereof, (b) the Net Income of any Person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (c) the cumulative effect of a change in
accounting principles shall be excluded, and (d) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Subsidiaries except as set forth in (a) above.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date hereof in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Contract Buy Out" means the involuntary disposition or termination
(including, without limitation, pursuant to a buy out) of a contract between a
media representation company and a client station.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of Exhibit A
attached hereto (but without including the text referred to in footnotes 1 and 2
thereto).
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" means any Indebtedness outstanding under (i)
the New Credit Agreement and (ii) any other Senior Debt permitted under this
Indenture, the principal amount of which is $20.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means 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 redeemable at
the option of the holder thereof, in whole or in part, on or prior to date on
which the Notes mature.
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"DLJ" means Donaldson, Lufkin and Jenrette Securities Corporation.
"DLJMB" means DLJ Merchant Banking Partners, L.P. and related
investors.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $100.0 million or its equivalent
in foreign currency, whose short-term debt is rated "A-2" (or higher) according
to S&P or "P-2" or higher according to Moody's or carrying an equivalent rating
by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer by the Company to Holders to exchange
Series B Notes for Series A Notes.
"Existing Indebtedness" means up to $24.5 million in aggregate
principal amount of Katz Notes in existence and not repaid on the date hereof
pursuant to the Tender Offer, the Katz Notes being repaid pursuant to the Tender
Offer until the closing of the Tender Offer and up to $5.0 million of
Indebtedness of the Company and its Restricted Subsidiaries (other than
Indebtedness under the Old Credit Agreement and the New Credit Agreement), in
existence on the date hereof until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect on the date hereof.
"Global Notes" means, individually and collectively, the Regulation S
Temporary Global Note, the Regulation S Permanent Global Note and the Rule 144A
Global Note.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America or any agency or instrumentality
thereof for the payment of which guarantee or obligations the full faith and
credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means each of (i) Katz Communications, Inc., Katz
Millennium Marketing Inc., Banner Radio Sales, Inc., Christal Radio Sales, Inc.,
Eastman Radio Sales, Inc., Seltel Inc., Katz Cable Corporation and The National
Payroll Company, Inc. and (ii) any other subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of Section 4.15 and Article 11
hereof, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (b) other agreements or
arrangements designed to protect such person against fluctuations in currency
exchange rates or interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
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credit (or reimbursement agreements in respect thereof) or bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable or
liabilities in respect of representation contracts payable, if and to the extent
any of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of
indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability of any guarantees at such date; provided that for purposes of
calculating the amount of any non-interest bearing or other discount security,
such Indebtedness shall be deemed to be the principal amount thereof that would
be shown on the balance sheet of the issuer dated such date prepared in
accordance with GAAP but that such security shall be deemed to have been
incurred only on the date of the original issuance thereof.
"Indebtedness to Cash Flow Ratio" means, with respect to any Person,
the ratio of (a) the aggregate principal amount of all outstanding Indebtedness
of such Person and its Restricted Subsidiaries as of such date on a consolidated
basis, plus the aggregate liquidation preference or redemption amount of all
Disqualified Stock of the Company and its Restricted Subsidiaries (excluding any
such Disqualified Stock held by the Company or its Wholly Owned Restricted
Subsidiaries), to (b) such Person's Consolidated Cash Flow for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such event for which such
calculation is being made shall occur; provided that any Indebtedness incurred
or retired by the Company or any of its Restricted Subsidiaries during the
fiscal quarter in which the date of determination occurs shall be calculated as
if such Indebtedness was so incurred or retired on the first day of the fiscal
quarter in which the date of determination occurs; and provided, further, that
(x) if the transaction giving rise to the need to calculate the Indebtedness to
Cash Flow Ratio would have the effect of increasing or decreasing Indebtedness
or Consolidated Cash Flow in the future, Indebtedness or Consolidated Cash Flow
shall be calculated on a pro forma basis as if such transaction had occurred on
the first day of such four fiscal quarter period preceding the date of
determination, and (y) if during such four fiscal quarter period, the Company or
any of its Restricted Subsidiaries shall have engaged in any Asset Sale,
Consolidated Cash Flow for such period shall be reduced by an amount equal to
the Consolidated Cash Flow (if positive), or increased by an amount equal to the
Consolidated Cash Flow (if negative), directly attributable to the assets which
are the subject of such Asset Sale and any related retirement of Indebtedness as
if such Asset Sale and related retirement of Indebtedness had occurred on the
first day of such four fiscal quarter period or (z) if during such four fiscal
quarter period the Company or any of its Restricted Subsidiaries shall have
acquired any material assets outside the ordinary course of business,
Consolidated Cash Flow shall be calculated on a pro forma basis as if such asset
acquisition and related financing had occurred on the first day of such four
fiscal quarter period.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Initial Purchaser" means Donaldson, Lufkin & Jenrette Securities
Corporation.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy or similar case or proceeding, or any reorganization, receivership,
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, or (ii) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company.
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<PAGE>
"Interim Credit Facility" means that certain credit facility of KMSI
providing up to $5.6 million of credit borrowings, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Subsidiary Guarantees), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, and all other items that are or would be classified as investments
on a balance sheet prepared in accordance with GAAP. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Equity Interests of
any direct or indirect Restricted Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in Section 4.05(d) hereof.
"Katz Notes" means the Company's $100.0 million original principal
amount ($97.8 million principal amount outstanding prior to the Tender Offer) of
12 3/4% Senior Subordinated Notes due 2002.
"KCC Merger" means the merger between the Company and the company
formerly known as Katz Media Corporation, the survivor of which is the Company.
"KMG" means Katz Media Group, Inc., a Delaware corporation, and
indirect corporate parent of the Company.
"KMSI" means Katz Media Services, Inc., a Delaware corporation, and
direct corporate parent of the Company.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York, the city in which the principal corporate
trust office of the Trustee is located or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
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"Marketable Securities" means (a) Government Securities, (b) any
certificate of deposit maturing not more than 270 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution, (c)
commercial paper maturing not more than 270 days after the date of acquisition
of an issuer (other than an Affiliate of the Company) with a rating, at the time
as of which any investment therein is made, of "A-2" (or higher) according to
S&P or "P-2" (or higher) according to Moody's or carrying an equivalent rating
by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments, (d) any bankers acceptances or
money market deposit accounts issued by an Eligible Institution, (e) any fund
investing exclusively in investments of the types described in clauses (a)
through (d) above, and (f) any repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (a),
(b) and (d) above entered into with any domestic commercial bank having capital
and surplus in excess of $500 million and a Keefe Bank Watch Rating of "B" or
better.
"Media Representation Venture" means any entity principally engaged in
the business of media representation.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"NCC" means National Cable Communications, L.P., a Delaware limited
partnership.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that are
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
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"New Credit Agreement" means that certain secured credit facility by
and among the Company, as borrower, all of the Company's domestic Subsidiaries,
as guarantors, the lenders party thereto, The First National Bank of Boston, as
administrative agent, and DLJ Capital Funding, Inc., as syndication agent,
providing up to $180 million of revolving credit and term borrowings, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, extended, refunded, replaced or refinanced from time to time.
"Non-Cash Rent Expense" means an amount equal to the difference
between rent expense recorded pursuant to SFAS No. 13 and the portion of rent
expense requiring the use of current corporate resources.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian for the Depository
with respect to the Notes in global form, or any successor entity thereto.
"Notes" means the Series A Notes and the Series B Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, costs, expenses, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offer and sale of the Notes as contemplated by
the Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated December
13, 1996, relating to the offering and placement of the Series A Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Principal Accounting Officer, the Treasurer,
any Assistant Treasurer, the Controller, the Secretary or any Vice-President of
such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the Chief Executive
Officer, the Chief Financial Officer, the Treasurer or the Principal Accounting
Officer of the Company, that meets the requirements of Section 12.04 hereof.
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"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, which opinion meets the requirements of
Section 12.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Permitted Business" means the business of media representation, sale
of advertising and such other activities as are incidental or similar or related
thereto.
"Permitted Investments" means (a) Investments in the Company or in a
Restricted Subsidiary of the Company, (b) Investments in cash and Marketable
Securities, (c) Investments by the Company or any Restricted Subsidiary of the
Company in a Person if, as a result of such Investment, (i) such person becomes
a Restricted Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company, (d) Investments in accounts and notes receivable
acquired in the ordinary course of business, (e) all Investments received in
settlement of debts or as a result of bankruptcy or insolvency proceedings or
upon foreclosure of a lien securing such Obligations, (f) notes from employees
issued to the Company representing payment of the exercise price of options to
purchase Capital Stock of the Company or KMG, (g) any securities received in
connection with an Asset Sale that complies with Section 4.14, (h) endorsements
of negotiable instruments and deposits, (i) Hedging Obligations to the extent
permitted under the clause (vii) of Section 4.07(b) and (j) other Investments in
any Unrestricted Subsidiary of the Company or any other Person (whether or not a
Subsidiary; provided that such Person otherwise at all times satisfies the
requirements of clauses (a)-(d) of the definition of "Unrestricted Subsidiary")
that do not exceed $10.0 million at any time outstanding; provided that to the
extent any such Investments are not made in cash, the amount of such Investment
shall be the fair value of such Investment as determined in good faith by the
Board of Directors of the Company.
"Permitted Junior Securities" means (i) equity securities of KMG,
KMSI, the Company or a successor entity and (ii) debt securities of the Company
that are unsecured and subordinated at least to the same extent as the Notes to
Senior Debt of the Company and guarantees of any such debt by any Guarantor that
are unsecured and subordinated at least to the same extent as the Subsidiary
Guarantee of such Guarantor to the Senior Debt of such Guarantor, as the case
may be, and has a final maturity date at least as late as the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Notes.
"Permitted Liens" means (a) Liens in favor of the Company or any
Restricted Subsidiary, (b) Liens on property of a Person existing at the time
such Person is merged into or consolidated with the Company or any Restricted
Subsidiary of the Company, provided, that such Liens were not incurred in
connection with, or in contemplation of, such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Company or such Restricted Subsidiary; (c) Liens on property existing
at the time of acquisition thereof by the Company or any Restricted Subsidiary
of the Company; provided that such Liens were not incurred in connection with,
or in contemplation of, such acquisition and do not extend to any assets of the
Company or any of its Restricted Subsidiaries other than the property so
acquired; (d) Liens to secure the performance of statutory obligations, surety
or appeal bonds or performance bonds, or landlords', carriers', warehousemen's,
mechanics', suppliers', materialmen's or other like Liens, in any case incurred
in the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate process of law, if a
reserve or other appropriate provision, if any, as is required by GAAP shall
have been made therefor; (e) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (f) Liens to
secure Indebtedness (including Capital Lease Obligations) permitted by Section
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4.07(b)(iii) covering only the assets acquired with such Indebtedness and
accessions, modifications and products thereof; (g) Liens securing Indebtedness
incurred to refinance or replace Indebtedness that has been secured by a Lien
permitted under this Indenture; provided that (x) any such Lien shall not extend
to or cover any assets or property not securing the Indebtedness so refinanced
or replaced and (y) the refinancing Indebtedness secured by such Lien shall have
been permitted to be incurred under Section 4.07; (h) Liens existing on the date
hereof; (i) charges or levies (other than any Lien imposed by the Employee
Retirement Income Security Act of 1974, as amended) that are not yet subject to
penalties for non-payment or are being contested in good faith by appropriate
proceedings and for which adequate reserves, if required, have been established
or other provisions have been made in accordance with GAAP; (j) Liens (other
than any Lien under the Employee Retirement Income Security Act of 1974, as
amended) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security; (k) Liens incurred or deposits made to secure the performance
of tenders, bids, leases, statutory or regulatory obligations, bankers'
acceptances, surety and appeal bonds, government contracts, performance and
return of money bonds and other obligations of a similar nature incurred in the
ordinary course of business (exclusive of obligations for the payment of
borrowed money); (l) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $2.0 million in principal amount in the aggregate at any one time
outstanding and (m) Liens in favor of the Trustee pursuant to Sections 6.09 and
7.07 hereof.
"Permitted Refinancing Debt" means any Indebtedness of the Company or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Restricted Subsidiaries; provided
that: (i) the principal amount (or accreted amount, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted amount, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of premiums,
prepayments, penalties, charges and reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes
and such Permitted Refinancing Indebtedness is subordinated in right of payment
to the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principals" means the initial shareholders party to the Shareholders
Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December 19, 1996, by and among the Company, the
Guarantors and the Initial Purchaser.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global note
that is deposited with and registered in the name of the Depositary or its
nominee, representing a series of Notes sold in reliance on Regulation S.
"Regulation S Temporary Global Note" means a single temporary global
note that is deposited with and registered in the name of the Depositary or its
nominee, representing a series of Notes sold in reliance on Regulation S.
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"Related Party" means, with respect to any Principal, (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of any individual) of such Principal, or (B) any
partner of such Principal as of the date hereof, or (C) any employee of such
Principal or any of its Affiliates, or (D) any trust, corporation, partnership
or other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
such Principal and/or such other Persons referred to in the immediately
preceding clauses (A), (B) or (C), or (E) any Affiliate of DLJMB.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration Office of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that is
deposited with and registered in the name of the Depositary or its nominee,
representing a series of Notes sold in reliance on Rule 144A or another
exemption from the registration requirements of the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" of any Person means (i) all Obligations (including
without limitation interest accruing after filing of a petition in bankruptcy
whether or not such interest is an allowable claim in such proceeding) of the
Company or its Subsidiaries, including without limitation any Guarantees of such
Obligations pursuant to the New Credit Agreement and (ii) any other Indebtedness
permitted to be incurred by the Company or the Guarantors under Section 4.07
hereof, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes. Notwithstanding anything to the contrary in the foregoing,
Senior Debt will not include (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) any Indebtedness of the Company to
any of its Restricted Subsidiaries or other Affiliates (other than Indebtedness
arising under the New Credit Agreement), (y) any trade payables or (z) any
Indebtedness that is incurred in violation of this Indenture.
"Series A Notes" means the Company's 10 1/2% Series A Senior
Subordinated Notes due 2007.
"Series B Notes" means the Company's 10 1/2% Series B Senior
Subordinated Notes due 2007.
"SFAS No. 13" means Statement of Financial Accounting Standards No.
13.
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"Shareholders Agreement" means that agreement dated August 12, 1994 by
and among DLJMB, DLJ International Partners, C.V., DLJ Offshore Partners, C.V.,
DLJ Merchant Banking Funding, Inc., KHC Investors, L.P., Bob Marbut, James
Beloyianis, Stuart Olds, Thomas Olson, L. Donald Robinson, William Fortenbaugh,
Paul Amzen, Martin Ozer, John Higgins, Robert McCurdy, Carl Butrum, Raymond
Johns, Harvey Fenster, Michael Chires, Michael Hugger, Jacob Friesel, Michael
Moran, Lucille Luongo, Michael Agovino, Mitch Kline, Michael Speisman, Steven
Shaw, Carl Mathis, A.J. Aurichio, Steven Moskowitz, John Orr, Jeff Hodge and AJ
Seethaler.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"S&P" means Standard & Poor's Ratings Group and its successors.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Tender Offer" means the Offer to Purchase for Cash and Solicitation
of Consents to Amendments to the Related Indenture, dated November 14, 1996, as
amended or supplemented, with respect to the Katz Notes.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of original issuance of the
Notes.
"Transfer Restricted Notes" means securities that bear or are required
to bear the legend set forth in Section 2.06 hereof.
"Trustee" means American Stock Transfer & Trust Company until a
successor replaces it in accordance with the applicable provisions of Article 7
hereof, and thereafter means the successor.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a board
resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the board resolution giving effect to such designation and
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an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.05 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.07 hereof, the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.07 hereof and (ii) no Default or Event
of Default would be in existence following such designation. Until otherwise
designated by the Board of Directors of the Company, NCC shall be an
Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations of the Untied
States of America for the payment of which the full faith and credit of the
United States of America is pledged, provided that no U.S. Government Obligation
shall be callable at the issuer's option.
"U.S. Person" has the meaning specified in Regulation S.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
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SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Acceleration Notice"...............................................6.02
"Affiliate Transaction".............................................4.08
"Asset Sale Payment"................................................3.08
"Cedel Bank"........................................................2.01
"covenant defeasance option"........................................8.01
"Change of Control Payment".........................................4.13
"Custodian".........................................................6.01
"DTC"...............................................................2.03
"Euroclear".........................................................2.01
"Event of Default"..................................................6.01
"Excess Proceeds"...................................................4.14
"Incur".............................................................4.07
"legal defeasance option"...........................................8.01
"Offer".............................................................3.08
"Paying Agent"......................................................2.03
"Payment Blockage Notice"..........................................10.03
"Payment Date"......................................................3.08
"Purchase Date".....................................................3.01
"Registrar".........................................................2.03
"Restricted Payments"...............................................4.05
"Trustee Expenses"..................................................6.08
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in, and made a part of, this Indenture.
Any terms incorporated by reference in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them therein.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it under GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A-1 and A-2 attached hereto. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be issued in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
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(a) Global Notes. Series A Notes offered and sold to (i) qualified
institutional buyers as defined in Rule 144A ("QIBs") in reliance on Rule 144A,
(ii) institutional accredited investors as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act ("Institutional Accredited Investors") that are
not QIBs, and (iii) accredited investors as defined in Rule 501(a)(4), (5) or
(6) under the Securities Act ("Accredited Investors"), shall be issued initially
in the form of the Rule 144A Global Note which, in each case, shall be deposited
on behalf of the purchasers of the Series A Notes represented thereby with the
Depositary or its nominee at its New York office, and registered in the name of
the Depositary or a nominee of the Depositary (the "Global Note Holder"), duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Rule 144A Global Notes may from
time to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
Series A Notes offered and sold in reliance on Regulation S as
provided in the Purchase Agreement shall be issued initially in the form of the
Regulation S Temporary Global Note and shall be deposited on behalf of the
purchasers of the Notes represented thereby with the Trustee, at its New York
office, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear System ("Euroclear") or Cedel Bank,
societe anonyme ("Cedel Bank") duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The "40-day restricted period" (as defined
in Regulation S) shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein pursuant to another
exemption from registration under the Securities Act and who will take delivery
of a beneficial ownership interest in a Rule 144A Global Note, all as
contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate
from the Company. Following the termination of the 40-day restricted period,
beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with the transfer of interest as
hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and transfers of interest. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Note Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by the Agent Members through
Euroclear or Cedel Bank.
Except as set forth in Section 2.06 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
Rule 144A Global Notes and the Regulation S Permanent Global Notes deposited
with or on behalf of the Depositary.
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The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and deliver the Global Notes that (i) shall
be registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Agent Members shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the
Trustee as custodian for the Depositary or under such Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(c) Definitive Notes. Notes issued in certificated form shall be
substantially in the form of Exhibit A-1 attached hereto (but without including
the text referred to in footnotes 1 and 2 thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of an authorized signatory of the Trustee, and the Trustee's signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The form of Trustee's certificate of authentication to be borne by the Notes
shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers directing the Trustee to authenticate the Notes and certifying that all
conditions precedent to the issuance of the Notes contained herein have been
complied with, authenticate Notes for original issuance up to an aggregate
principal amount stated in paragraph 4 of the Notes (the aggregate principal
amount of outstanding Notes may not exceed that amount at any time, except as
provided in Section 2.07 hereof).
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency (the "Registrar") where
Notes may be presented for registration of transfer or for exchange and an
office or agency (the "Paying Agent") where Notes may be presented for payment.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar, and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without prior notice to any Holder. The
Company shall notify in writing the Trustee and the Trustee shall notify the
Holders in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company shall
enter into an appropriate agency agreement with any Agent not a party to this
Indenture, and such agreement shall incorporate the TIA's provisions and
implement the provisions of this Indenture that relate to such Agent.
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The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee as the Registrar and Paying
Agent and to act as Note Custodian with respect to the Global Notes. The Company
initially appoints the Trustee to act as the Registrar and Paying Agent with
respect to the Certificated Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the Holders'
benefit or the Trustee all money the Paying Agent holds for redemption or
purchase of the Notes or for the payment of principal of, or premium, if any, or
interest on, or Liquidated Damages, if any, with respect to the Notes, and will
promptly notify the Trustee of any Default by the Company in providing the
Paying Agent with sufficient funds to (i) purchase Notes tendered pursuant to an
Offer arising under Section 4.13 hereof, (ii) redeem Notes called for
redemption, or (iii) make any payment of principal, premium, interest or
Liquidated Damages, if any, due on the Notes. While any such Default continues,
the Trustee may require the Paying Agent to pay all money it holds to the
Trustee and to account for any funds disbursed. The Company at any time may
require the Paying Agent to pay all money it holds to the Trustee and to account
for any funds disbursed. Upon payment over to the Trustee, the Paying Agent (if
other than the Company or any of its Subsidiaries) shall have no further
liability for the money it delivered to the Trustee. If the Company or any of
its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the Holders' benefit or the Trustee all money it holds as Paying
Agent.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require that sets forth the names and addresses of, and
the aggregate principal amount of Notes held by, each Holder, and the Company
shall otherwise comply with Section 312(a) of the TIA.
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. The Trustee
shall have no obligation to ascertain the Depositary's compliance with such
restrictions on transfer. Beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in the legend in subsection (g) of this Section 2.06. Transfers of
beneficial interests in the Global Notes to Persons required or permitted to
take delivery thereof in the form of an interest in another Global Note shall be
permitted as follows:
(i) Rule 144A Global Note to Regulation S Global Note. If, at
any time, an owner of a beneficial interest in a Rule 144A
Global Note deposited with the Depositary (or the Trustee as
custodian for the Depositary) wishes to transfer its
beneficial interest in such Rule 144A Global Note to a
Person who is required or permitted to take delivery thereof
in the form of an interest in a Regulation S Global Note,
such owner shall, subject to the Applicable Procedures,
exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Regulation S Global Note
as provided in this Section 2.06(a)(i). Upon receipt by the
Trustee of (1) instructions given in accordance with the
Applicable Procedures from an Agent Member directing the
Trustee, as Registrar, to credit or cause to be credited a
beneficial interest in the Regulation S Global Note in an
amount equal to the beneficial interest in the Rule 144A
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Global Note to be exchanged or transferred, (2) a written
order given in accordance with the Applicable Procedures
containing information regarding the participant account of
the Depositary and the Euroclear or Cedel Bank account to be
credited with such increase and (3) a certificate in the
form of Exhibit B-1 hereto given by the owner of such
beneficial interest stating that the transfer of such
interest has been made in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to
and in accordance with Rule 903 or Rule 904 of Regulation S,
then the Trustee, as Registrar, shall instruct the
Depositary to reduce or cause to be reduced the aggregate
principal amount of the Rule 144A Global Note and to
increase or cause to be increased the aggregate principal
amount at maturity of the Regulation S Global Note by the
principal amount at maturity of the beneficial interest in
the Rule 144A Global Note to be exchanged or transferred, to
credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the
Regulation S Global Note equal to the reduction in the
aggregate principal amount of the Rule 144A Global Note, and
to debit, or cause to be debited, from the account of the
Person making such exchange or transfer the beneficial
interest in the Rule 144A Global Note that is being
exchanged or transferred.
(ii) Regulation S Global Note to Rule 144A Global Note. If, at
any time, an owner of a beneficial interest in a Regulation
S Global Note deposited with the Depositary (or with the
Trustee as custodian for the Depositary) wishes to transfer
its beneficial interest in such Regulation S Global Note to
a Person who is required or permitted to take delivery
thereof in the form of an interest in a Rule 144A Global
Note, such owner shall, subject to the Applicable
Procedures, exchange or cause the exchange of such interest
for an equivalent beneficial interest in a Rule 144A Global
Note as provided in this Section 2.06(a)(ii). Upon receipt
by the Trustee of (1) instructions from Euroclear or Cedel
Bank, if applicable, and the Depositary, directing the
Trustee, as Registrar, to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note in an
amount equal to the beneficial interest in the Regulation S
Global Note to be exchanged or transferred, such
instructions to contain information regarding the
participant account with the Depositary to be credited with
such increase, (2) a written order given in accordance with
the Applicable Procedures containing information regarding
the participant account of the Depositary and (3) a
certificate in the form of Exhibit B-2 attached hereto given
by the owner of such beneficial interest stating (A) if the
transfer is pursuant to Rule 144A, that the Person
transferring such interest in a Regulation S Global Note
reasonably believes that the Person acquiring such interest
in a Rule 144A Global Note is a QIB and is obtaining such
beneficial interest in a transaction meeting the
requirements of Rule 144A and any applicable blue sky or
securities laws of any state of the United States, (B) that
the transfer complies with the requirements of Rule 144
under the Securities Act and any applicable blue sky or
securities laws of any state of the United States or (C) if
the transfer is pursuant to any other exemption from the
registration requirements of the Securities Act, that the
transfer of such interest has been made in compliance with
the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with the requirements of the
exemption claimed, such statement to be supported by an
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opinion of counsel from the transferee or the transferor in
form reasonably acceptable to the Company and to the
Registrar, then the Trustee, as Registrar, shall instruct
the Depositary to reduce or cause to be reduced the
aggregate principal amount of such Regulation S Global Note
and to increase or cause to be increased the aggregate
principal amount of the Rule 144A Global Note by the
principal amount of the beneficial interest in the
Regulation S Global Note to be exchanged or transferred, and
the Trustee, as Registrar, shall instruct the Depositary,
concurrently with such reduction, to credit or cause to be
credited to the account of the Person specified in such
instructions a beneficial interest in the applicable Rule
144A Global Note equal to the reduction in the aggregate
principal amount at maturity of such Regulation S Global
Note and to debit or cause to be debited from the account of
the Person making such transfer the beneficial interest in
the Regulation S Global Note that is being exchanged or
transferred.
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(b) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Definitive Notes presented or surrendered for
registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney,
duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Note, such request shall be accompanied by the
following additional information and documents, as
applicable:
(A) if such Transfer Restricted Note is being delivered to
the Registrar by a Holder for registration in the name
of such Holder, without transfer, or such Transfer
Restricted Note is being transferred to the Company, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto);
(B) if such Transfer Restricted Note is being transferred
to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B-3 hereto); or
(C) if such Transfer Restricted Note is being transferred
in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto) and an
opinion of counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Rule 144A Global Note or
Regulation S Permanent Global Note for a Definitive Note.
(i) Any Person having a beneficial interest in a Rule 144A
Global Note or Regulation S Permanent Global Note may upon
request, subject to the Applicable Procedures, exchange such
beneficial interest for a Definitive Note. Upon receipt by
the Trustee of written instructions or such other form of
instructions as is customary for the Depositary (or
Euroclear or Cedel Bank, if applicable), from the Depositary
or its nominee on behalf of any Person having a beneficial
interest in a Rule 144A Global Note or Regulation S
Permanent Global Note, and, in the case of a Transfer
Restricted Note, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of Exhibit B-4
hereto);
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in
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accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act, a certification to that effect from
the transferor (in substantially the form of Exhibit
B-4 hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor," within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act pursuant to a private placement exemption from the
registration requirements of the Securities Act (and
based on an opinion of counsel if the Company so
requests), a certification to that effect from such
Holder (in substantially the form of Exhibit B hereto)
and a certification from the applicable transferee (in
substantially the form of Exhibit C hereto);
(D) if such beneficial interest is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of Exhibit B-4 hereto) and an opinion of counsel
from the transferee or the transferor reasonably
acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the
Securities Act, in which case the Trustee shall, in
accordance with the standing instructions and
procedures existing between the Depositary and the
Trustee, cause the aggregate principal amount of Rule
144A Global Notes or Regulation S Permanent Global
Notes, as applicable, to be reduced accordingly and,
following such reduction, the Company shall execute
and, the Trustee shall authenticate and deliver to the
transferee a Definitive Note in the appropriate
principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Rule 144A Global Note or Regulation S Permanent
Global Note, as applicable, pursuant to this Section 2.06(c)
shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct
the Trustee. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered.
Following any such issuance of Definitive Notes, the Trustee, as
Registrar, shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of the
applicable Global Note to reflect the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(e) Transfer and Exchange of a Definitive Note for a Beneficial
Interest in a Global Note. A Definitive Note may not be transferred or exchanged
for a beneficial interest in a Global Note.
(f) Authentication of Definitive Notes in Absence of Depositary. If at
any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary
for the Global Notes and a successor Depositary for the
Global Notes is not appointed by the Company within 90 days
after delivery of such notice; or
(ii) the Company delivers to the Trustee an Officers' Certificate
or an order signed by two Officers of the Company notifying
the Trustee that it elects to cause the issuance of
Definitive Notes under this Indenture,
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then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Note certificate evidencing Global Notes and
Definitive Notes (and all Notes issued in exchange therefor
or substitution thereof) shall bear a legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c) or (d),
BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS),
(2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a Global
Note) pursuant to Rule 144 under the Securities Act or pursuant
to an effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Note that is a
Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Note for a
Definitive Note that does not bear the legend set forth
in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Note upon receipt
of a certification from the transferring Holder
substantially in the form of Exhibit B-4 hereto; and
(B) in the case of any Transfer Restricted Note represented
by a Global Note, such Transfer Restricted Note shall
not be required to bear the legend set forth in (i)
above, but shall continue to be subject to the
provisions of Section 2.06(a) and (b) hereof; provided,
however, that with respect to any request for an
exchange of a Transfer Restricted Note that is
represented by a Global Note for a Definitive Note that
does not bear the legend set forth in (i) above, which
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request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that
such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of
Exhibit B-4 hereto).
(iii)Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a
Global Note) in reliance on any exemption from the
registration requirements of the Securities Act (other than
exemptions pursuant to Rule 144A or Rule 144 under the
Securities Act) in which the Holder or the transferee
provides an opinion of counsel to the Company and the
Registrar in form and substance reasonably acceptable to the
Company and the Registrar (which opinion of counsel shall
also state that the transfer restrictions contained in the
legend are no longer applicable):
(A) in the case of any Transfer Restricted Note that is a
Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Note for a
Definitive Note that does not bear the legend set forth
in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Note; and
(B) in the case of any Transfer Restricted Note represented
by a Global Note, such Transfer Restricted Note shall
not be required to bear the legend set forth in (i)
above, but shall continue to be subject to the
provisions of Section 2.06(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon consummation of the
Exchange Offer in accordance with the Registration Rights
Agreement, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate the Series B Notes in exchange for
Series A Notes accepted for exchange in the Exchange Offer, which
Series B Notes shall not bear the legend set forth in (i) above,
and the Registrar shall rescind any restriction on the transfer
of such Series B Notes, in each case unless the Holder of such
Series A Notes is either (A) a broker-dealer, (B) a Person
participating in the distribution of the Series A Notes or (C) a
Person who is an affiliate (as defined in Rule 144A) of the
Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for an interest in another Global Note or for Definitive
Notes, redeemed, repurchased or cancelled, the principal amount of Notes
represented by such Global Note shall be reduced accordingly and an endorsement
shall be made on such Global Note, by the Trustee or the Note Custodian, at the
direction of the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer
pursuant to Sections 3.07, 3.08, 4.13, 4.14 and 9.05
hereof).
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(iii)The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in
whole or in part, except the unredeemed portion of any Note
being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to exchange
Notes during a period beginning at the opening of
business 15 days before the day of any selection of
Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of
selection; or
(B) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest
payment date.
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(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving
payment of principal of and interest on such Note, and
neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii)The Trustee shall authenticate Definitive Notes and Global
Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company, and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the receipt of an Officers' Certificate, shall authenticate a replacement
Note if the Trustee's requirements are met. If the Trustee or the Company
requires it, the Holder must supply an indemnity bond that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee, any
Agent or any authenticating agent from any loss that any of them may suffer if a
Note is replaced. The Company and the Trustee may charge for their expenses in
replacing a Note. Every replacement Note is an additional Obligation of the
Company.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes the Trustee has
authenticated except for those it has cancelled, those delivered to it for
cancellation, those representing reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section 2.08 as not outstanding.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that a bona
fide purchaser holds the replaced Note.
If the entire principal of, and premium, if any, and accrued interest
on, and Liquidated Damages, if any, with respect to any Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest and
Liquidated Damages, if any, on it cease to accrue.
Subject to Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate (other than DLJ) shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee knows are so owned shall be so
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disregarded. Notwithstanding the foregoing, Notes that the Company or an
Affiliate offers to purchase or acquires pursuant to an Offer, exchange offer,
tender offer or otherwise shall not be deemed to be owned by the Company or an
Affiliate until legal title to such Notes passes to the Company or such
Affiliate, as the case may be.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee, upon receipt of the Company's written
order signed by two Officers which shall specify the amount of temporary Notes
to be authenticated and the date on which the temporary Notes are to be
authenticated, shall authenticate Definitive Notes and deliver them in exchange
for temporary Notes. Until such exchange, Holders of temporary Notes shall be
entitled to the same rights, benefits and privileges as Definitive Notes.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange,
replacement, payment (including all Notes called for redemption and all Notes
accepted for payment pursuant to an Offer) or cancellation, and the Trustee
shall cancel all such Notes and shall destroy all cancelled Notes (subject to
the Exchange Act's record retention requirements) and deliver a certificate of
their destruction to the Company unless by written order, signed by two Officers
of the Company, the Company shall direct that cancelled Notes be returned to it.
The Company may not issue new Notes to replace any Notes that have been
cancelled by the Trustee or that have been delivered to the Trustee for
cancellation. If the Company or an Affiliate acquires any Notes (other than by
redemption or pursuant to an Offer), such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Notes unless
and until such Notes are delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to Holders on a subsequent
special record date, in each case at the rate provided in the Notes and in
Section 4.01 hereof. The Company shall fix or cause to be fixed each such
special record date and payment date. As early as practicable prior to the
special record date, the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail a notice that states the special record date,
the related payment date and the amount of interest to be paid. SECTION 2.13.
RECORD DATE.
The record date for purposes of determining the identity of Holders of
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in section
316(c) of the TIA.
SECTION 2.14. CUSIP NUMBER.
A "CUSIP" number shall be printed on the Notes, and the Trustee shall
use the CUSIP number in notices of redemption, purchase or exchange as a
convenience to Holders, provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
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ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to Section 3.07 hereof,
it shall furnish to the Trustee, at least 35 days prior to the redemption date
and at least 5 days prior to the date that notice of the redemption is to be
mailed by the Company to Holders (or such shorter time as may be acceptable to
the Trustee), an Officers' Certificate stating that the Company has elected to
redeem Notes pursuant to Section 3.07(a) or 3.07(b) hereof, as the case may be,
the date notice of redemption is to be mailed to Holders, the redemption date,
the aggregate principal amount of Notes to be redeemed, the redemption price for
such Notes and the amount of accrued and unpaid interest on and Liquidated
Damages, if any, with respect to such Notes as of the redemption date. If the
Trustee is not the Registrar, the Company shall, concurrently with delivery of
its notice to the Trustee of a redemption, cause the Registrar to deliver to the
Trustee a certificate (upon which the Trustee may rely) setting forth the name
of, and the aggregate principal amount of Notes held by, each Holder.
If the Company is required to offer to purchase Notes pursuant to
Section 4.13 or 4.14 hereof, it shall furnish to the Trustee, at least two
Business Days before notice of the Offer is to be mailed to Holders (or such
shorter time as may be acceptable to the Trustee), an Officers' Certificate
setting forth that the Offer is being made pursuant to Section 4.13 or 4.14
hereof, as the case may be, the date upon which such purchase will occur ("the
Purchase Date"), the maximum principal amount of Notes the Company is offering
to purchase pursuant to the Offer, the purchase price for such Notes, and the
amount of accrued and unpaid interest on and Liquidated Damages, if any, with
respect to such Notes as of the Purchase Date.
The Company will also provide the Trustee with any additional
information that the Trustee reasonably requests in connection with any
redemption or Offer.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED.
If less than all outstanding Notes are to be redeemed or if less than
all Notes tendered pursuant to an Offer are to be accepted at any time,
selection of Notes for redemption or acceptance shall be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or by such other method as the Trustee deems fair and
appropriate, provided that no Notes with a principal amount of $1,000 or less
shall be redeemed in part. Notices of redemption shall be mailed by first class
mail at least 30 but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at its registered address. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof shall be issued in the
name of the Holder thereof upon cancellation of the original Note. On and after
the redemption date, interest shall cease to accrue on Notes or portions thereof
called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption to each Holder of Notes or
portions thereof that are to be redeemed.
The notice shall identify the Notes or portions thereof to be redeemed
and shall state:
(1) the redemption date;
(2) the redemption price for the Notes and separately
stating the amount of unpaid and accrued interest on,
and Liquidated Damages, if any, with respect to, such
Notes as of the date of redemption;
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(3) if any Note is being redeemed in part, the portion of
the principal amount of such Notes to be redeemed and
that, after the redemption date, upon surrender of such
Note, a new Note or Notes in principal amount equal to
the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price for,
and any accrued and unpaid interest on, and Liquidated
Damages, if any, with respect to such Notes;
(6) that, unless the Company defaults in making such
redemption payment, interest (including Liquidated
Damages, if any) on Notes called for redemption ceases
to accrue on and after the redemption date;
(7) the paragraph of the Notes and section of this
Indenture pursuant to which the Notes called for
redemption are being redeemed; and
(8) the CUSIP number; provided that no representation is
made as to the correctness or accuracy of the CUSIP
number listed in such notice and printed on the Notes.
At the Company's request, the Trustee shall (at the Company's expense)
give the notice of redemption in the Company's name at least 30 but not more
than 60 days before a redemption; provided, however, that the Company shall
deliver to the Trustee, at least 45 days prior to the redemption date and at
least 10 days prior to the date that notice of the redemption is to be mailed to
Holders, an Officers' Certificate that (i) requests the Trustee to give notice
of the redemption to Holders (or such shorter time as may be acceptable to the
Trustee), (ii) sets forth the information to be provided to Holders in the
notice of redemption, as set forth in the preceding paragraph, (iii) states that
the Company has elected to redeem Notes pursuant to Section 3.07(a) or 3.07(b)
hereof, as the case may be, and (iv) sets forth the aggregate principal amount
of Notes to be redeemed and the amount of accrued and unpaid interest and
Liquidated Damages, if any, thereon as of the redemption date. If the Trustee is
not the Registrar, the Company shall, concurrently with any such request, cause
the Registrar to deliver to the Trustee a certificate (upon which the Trustee
may rely) setting forth the name of, the address of, and the aggregate principal
amount of Notes held by, each Holder.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Notes called for redemption
become due and payable on the redemption date at the price set forth in the
Note. Upon surrender to the Trustee or Paying Agent, such Notes called for
redemption shall be paid at the redemption price (which shall include accrued
interest thereon and Liquidated Damages, if any, to the redemption date) but
installments of interest, the maturity of which is on or prior to the redemption
date, shall be payable to Holders of record at the close of business on the
relevant record dates.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to any redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price
of, and accrued interest on, and Liquidated Damages, if any, with respect to all
Notes to be redeemed on that date. The Trustee or the Paying Agent shall return
to the Company any money that the Company deposited with the Trustee or the
Paying Agent in excess of the amounts necessary to pay the redemption price of,
and accrued interest on, and Liquidated Damages, if any, with respect to all
Notes to be redeemed.
If the Company complies with the preceding paragraph, interest and
Liquidated Damages, if any, on the Notes to be redeemed will cease to accrue on
such Notes on the applicable redemption date, whether or not such Notes are
presented for payment. If a Note is redeemed on or after an interest record date
but on or prior to the related interest payment date, then any accrued and
unpaid interest and Liquidated Damages, if any, shall be paid to the Person in
whose name such Note was registered at the close of business on such record
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date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest will be paid on the unpaid principal, premium, if any,
interest and Liquidated Damages, if any, from the redemption date until such
principal, premium, interest and Liquidated Damages, if any, is paid, at the
rate of interest provided in the Notes and Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder at the Company's expense
a new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION PROVISIONS.
(a) Except as provided in Section 3.07(b) hereof, the Notes will not
be redeemable at the Company's option prior to January 15, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on January 15 of the years indicated below:
Year Percentage
2003................................................................105.250%
2003................................................................103.938%
2004................................................................102.625%
2005................................................................101.313%
2006 and thereafter.................................................100.000%
(b) Notwithstanding the foregoing, at any time prior to January 15,
2000, the Company may redeem up to 35% in aggregate principal amount of the
Notes with the net proceeds of (i) one or more offerings of Equity Interests
(other than Disqualified Stock) of the Company or (ii) one or more offerings of
Equity Interests or other securities of KMG or KMSI, to the extent the net
proceeds thereof are contributed or advanced to the Company as a capital
contribution to common equity, in each case, at a redemption price equal to
109.5% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date; provided that at least 65%
in aggregate principal amount of the Notes originally issued remain outstanding
immediately after the occurrence of any such redemption; and provided, further,
that each such redemption will occur within 90 days of the date of the closing
of such offering.
SECTION 3.08. MANDATORY PURCHASE PROVISIONS.
(a) Subject to Section 4.13 hereof, within 30 days after any Change of
Control or upon the Company's obligation to make an Asset Sale Offer pursuant to
Section 4.14 (b) hereof, the Company shall mail a notice to each Holder at such
Holder's registered address stating (i) that a Change of Control Offer or an
Asset Sale Offer (each, an "Offer") is being made pursuant to Section 4.13 or
Section 4.14 hereof, as the case may be, and that all Notes tendered will be
accepted for payment pursuant to such Offer; (ii) the purchase price for the
Notes (as set forth in Section 4.13 or 4.14 hereof, as the case may be), the
amount of accrued and unpaid interest on, and Liquidated Damages thereon, if
any, and the purchase date which shall be no earlier than 30 days nor later than
60 days from the date such notice is mailed (the "Payment Date"); (iii) that any
Notes not properly tendered will continue to accrue interest and Liquidated
Damages, if any, in accordance with the terms of this Indenture; (iv) that,
unless the Company defaults in the payment of the Change of Control Payment, all
Notes accepted for payment pursuant to the Offer, shall cease to accrue interest
after the Payment Date; (v) that Holders electing to have any Notes purchased
pursuant to an Offer will be required to surrender the Notes, with a form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, or transfer by book-entry, to the Paying Agent at the address
specified in the notice prior to the close of business on the fourth Business
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Day 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 preceding the Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have 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,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof.
(b) On the Payment Date, the Company shall, to the extent lawful, (i)
in the case of a Change of Control Offer, accept for payment all Notes or
portions thereof properly tendered pursuant to such Offer and, in the case of an
Asset Sale Offer, accept for payment the maximum principal amount of Notes or
portions thereof tendered pursuant to such Offer that can be purchased out of
Excess Proceeds from the date of such Asset Sale, (ii) deposit with the Paying
Agent in the case of a Change of Control Offer, an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so accepted and, in
the case of an Asset Sale Offer, the aggregate purchase price of all Notes or
portions thereof accepted for payment and any accrued and unpaid interest and
Liquidated Damages, if any, on such Notes as of the Payment Date (an "Asset Sale
Payment"), and (iii) deliver or cause to be delivered to the Trustee the Notes
so accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the Company.
(c) The Paying Agent shall promptly mail to each Holder of Notes so
tendered either the Change of Control Payment or the Asset Sale Payment,
whichever the case may be, for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Offer on or as soon as practicable after the Payment
Date.
(d) The Company will publicly announce the results of the Offer on or
as soon as practicable after the Payment Date.
(e) The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with a Change of Control or Asset Sale.
(f) With respect to any Offer, if the Company deposits prior to 12:00
noon New York City time with the Paying Agent on the Payment Date an amount in
available funds sufficient to purchase all Notes accepted for payment, interest
shall cease to accrue on such Notes after the Payment Date; provided, however,
that if the Company fails to deposit such amount on the Payment Date, interest
shall continue to accrue on such Notes until such deposit is made.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of, and premium, if any, and
accrued and unpaid interest on and Liquidated Damages, if any, with respect to
the Notes on the dates and in the manner provided in the Notes. Holders of Notes
must surrender their Notes to the Paying Agent to collect principal payments.
Principal of, premium, if any, and accrued and unpaid interest, and Liquidated
Damages, if any, shall be considered paid on the date due if the Paying Agent
(other than the Company or any of its Subsidiaries), the Global Note Holder or
each Holder that has specified an account, holds, as of 12:00 noon New York City
time, money the Company deposited in immediately available funds designated for
and sufficient to pay in cash all principal, premium, if any, and accrued and
unpaid interest on, and Liquidated Damages, if any, then due; provided that, to
the extent that the Holders have not specified accounts, such amounts shall be
considered paid on the date due if the Company mails a check for such amounts on
such date. The Paying Agent shall return to the Company, no later than five days
following the date of payment, any money (including accrued interest) that
exceeds the amount of principal, premium, if any, accrued and unpaid interest,
and Liquidated Damages, if any, paid on the Notes. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
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set forth in the Registration Rights Agreement. If any Liquidated Damages become
payable, the Company shall not later than 3 Business Days prior to the date that
any payment of Liquidated Damages is due (i) deliver an Officers' Certificate to
the Trustee setting forth the amount of Liquidated Damages payable to Holders
and (ii) instruct the Paying Agent to pay such amount of Liquidated Damages to
Holders entitled to receive such Liquidated Damages.
To the extent lawful, the Company shall pay interest (including
post-petition interest) on (i) overdue principal and premium at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes,
compounded semiannually and (ii) overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same rate as set
forth in clause (i), compounded semiannually.
SECTION 4.02. REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K (excluding
exhibits) if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" that describes the financial condition and results of operations of
the Company and its Restricted Subsidiaries and, with respect to the annual
information only, a report thereon by the Company's certified public accountants
and (ii) all current reports that would be required to be filed with the SEC on
Form 8-K if the Company were required to file such reports. In addition, whether
or not required by the rules and regulations of the SEC, the Company shall file
a copy of all such information and reports with the SEC for public availability
(unless the SEC will not accept such filing) and make such information available
to securities analysts and prospective investors who request it in writing. In
addition, for a period of three years, the Company and the Guarantors shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144(d)(4) under the Securities Act.
The financial information to be distributed to Holders of Notes shall
be filed with the Trustee and mailed to the Holders at their addresses appearing
in the register of Notes maintained by the Registrar, within 120 days after the
end of the Company's fiscal years and within 60 days after the end of each of
the first three fiscal quarters of each such fiscal year.
The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Trustee may
be required to deliver to the Holders under this Section 4.02.
SECTION 4.03. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that, to the best of
his or her knowledge, the Company has, in all material respects, kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he or
she may have knowledge and what action the Company has taken or proposes to take
with respect thereto) and that, to the best of his or her knowledge, no event
has occurred and remains in existence by reason of which payments on account of
the principal of, premium, if any, and accrued and unpaid interest on, and
Liquidated Damages, if any, with respect to the Notes are prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
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So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the financial statements
delivered pursuant to Section 4.02 hereof shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation reasonably satisfactory to the Trustee) that
in making the examination necessary for certification of such financial
statements nothing has come to their attention that would lead them to believe
that the Company has violated Section 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11,
4.13, 4.14, 4.17 or any provisions of Article 5 hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.04. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that might affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, 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 has been
enacted.
SECTION 4.05. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of any Equity Interests of the
Company or any of its Restricted Subsidiaries (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Company or such Restricted Subsidiary or dividends or distributions payable to
the Company or any Restricted Subsidiary) or to the direct or indirect holders
of the Company's Equity Interests in their capacity as such; (ii) purchase,
redeem or otherwise acquire or retire for value any Equity Interests of the
Company, any of its Restricted Subsidiaries or any other Affiliate of the
Company (other than any such Equity Interests owned by the Company or any Wholly
Owned Restricted Subsidiary); (iii) purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is subordinated in right of
payment to the Notes, except in accordance with the scheduled mandatory
redemption or repayment provisions set forth in the original documentation
governing such Indebtedness; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and
be continuing or shall occur as a consequence thereof;
and
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(B) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and
its Restricted Subsidiaries after the date hereof
(excluding Restricted Payments permitted by clauses
(ii), (iii) and (vi) through (xii) of the next
succeeding paragraph), is less than the sum of (1) an
amount equal to the Consolidated Cash Flow of the
Company for the period (taken as one accounting period)
from the beginning of the first fiscal quarter
commencing after the date hereof to the end of the
Company's most recently ended fiscal quarter for which
internal financial statements are available at the time
of such Restricted Payments, less two times the
Consolidated Cash Interest Expense of the Company for
the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after
the date hereof to the end of the Company's most
recently ended fiscal quarter for which internal
financial statements are available at the time of such
Restricted Payment, plus (2) 100% of the aggregate net
cash proceeds received by the Company from
contributions of capital or the issue or sale since the
date hereof of Equity Interests of the Company or of
debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests
(or convertible debt securities) sold to a Subsidiary
of the Company and other than Disqualified Stock or
debt securities that have been converted into
Disqualified Stock), plus (3) 100% of all cash
distributions and cash payments received by the Company
or a Restricted Subsidiary after the date hereof from
an Unrestricted Subsidiary of the Company, plus (4) to
the extent that any Restricted Investment that was made
after the date hereof is sold for cash or otherwise
liquidated or repaid for cash, the net cash proceeds
from such Restricted Investment to the extent not
otherwise included in the Consolidated Cash Flow of the
Company for such period.
(b) The provisions of Section 4.05(a) hereof will not prohibit: (i)
the payment of any dividend within 60 days after the date of declaration
thereof, if at such date of declaration such payment would have complied with
the provisions of this Indenture; (ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company in exchange for, or out
of the net proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of other Equity Interests of the Company
(other than any Disqualified Stock); provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from Section 4.05(a)(B)(2); (iii) the
defeasance, redemption or repurchase of subordinated Indebtedness with the net
cash proceeds from an incurrence of Permitted Refinancing Debt or the
substantially concurrent sale (other than to a Subsidiary of the Company) of
Equity Interests of the Company (other than Disqualified Stock), provided that
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the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
Section 4.05(a)(B)(2); (iv) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company, KMG or any
Restricted Subsidiary of the Company held by any member of the Company's (or any
of its Restricted Subsidiaries') management pursuant to any shareholders
agreement, management equity subscription agreement or stock option agreement;
provided that the aggregate price paid for any such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $2.0 million in any
twelve-month period plus the aggregate cash proceeds received by the Company
during such twelve-month period from any reissuance of Equity Interests by the
Company to members of management of the Company and its Restricted Subsidiaries;
and no Default or Event of Default shall have occurred and be continuing
immediately after such transaction; (v) the payment of additional dividends by
the Company to KMG or KMSI not to exceed $500,000 in any fiscal year; (vi) the
defeasance, redemption or repurchase of the Katz Notes; (vii) the contribution
or loan to KMG or an Affiliate of KMG in the amount of up to $20.0 million for
the repurchase of Capital Stock of KMG or related purposes;(viii) the
contribution or loan to KMG to effect repayment of Indebtedness under the
Interim Credit Facility; (ix) Investments in Media Representation Ventures;
provided that, immediately after giving effect to any such Investment, the
Company would be able to incur at least $1.00 of additional Indebtedness
pursuant to the Indebtedness to Cash Flow Ratio test set forth in Section
4.07(a) hereof; (x) Investments in NCC after the date hereof in an aggregate
amount not to exceed $10.0 million at any one time outstanding under this clause
(x); (xi) Investments in clients or prospective clients (or any of their
Affiliates) of the Company or any of its Restricted Subsidiaries made in
connection with or as a condition to the obtaining of a contract right to
provide media representation or related services to such clients in an aggregate
amount not to exceed $10.0 million at any one time outstanding under this clause
(xi); and (xii) the payment of dividends by a Restricted Subsidiary of the
Company on its common stock if such dividends are paid pro rata to all holders
of such common stock.
(c) The Board of Directors may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation will only
be permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary and has no Indebtedness other than Non-Recourse Debt. If an
Unrestricted Subsidiary is redesignated a Restricted Subsidiary, the amount
available for Restricted Payments will be increased by an amount equal to the
amount of the Investment previously deemed to have been made in such
Unrestricted Subsidiary, to the extent such amount is not otherwise included in
the Consolidated Cash Flow of the Company.
(d) The amount of all Restricted Payments (other than cash) shall be
the fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company or
such Subsidiary, as the case may be, pursuant to the Restricted Payment. Not
later than five Business Days after the date of making any Restricted Payment
(other than Restricted Payments permitted pursuant to clauses (ii), (iii) and
(vi) through (viii) and (xii) of the second paragraph of this covenant), the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.05 hereof were computed, which
calculations shall be based upon the Company's latest available financial
statements.
SECTION 4.06. CORPORATE EXISTENCE.
Subject to Section 4.14 and Article 5 hereof, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each of its Restricted Subsidiaries in accordance with the respective
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organizational documents of each of its Restricted Subsidiaries and the rights
(charter and statutory), licenses and franchises of the Company and each of its
Restricted Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any Restricted Subsidiary, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Restricted Subsidiaries
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders.
SECTION 4.07. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company will not issue any Disqualified Stock and will not
permit any of the Company's Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that (i) the Company may incur Indebtedness
or issue shares of Disqualified Stock and (ii) any Guarantor may incur
Indebtedness or issue shares of preferred stock if, after giving effect to the
incurrence of such Indebtedness or the issuance of such Disqualified Stock or
such preferred stock and the application of the proceeds thereof, the Company's
Indebtedness to Cash Flow Ratio for the Company's most recently ended four full
fiscal quarters would not have exceeded 5.5 to 1 prior to January 15, 1999 or
5.0 to 1 thereon or thereafter, in each case, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.
(b) The provisions of Section 4.07(a) hereof shall not apply to: (i)
the incurrence by the Company and its Restricted Subsidiaries of Indebtedness
(including any subsidiary Guarantees of such Indebtedness) and letters of credit
pursuant to the New Credit Agreement (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the Company
and its Restricted Subsidiaries thereunder), in a maximum principal amount not
to exceed $161.0 million, less the aggregate amount of all Net Proceeds of Asset
Sales applied to permanently reduce such Indebtedness (and, in the case of
revolving Indebtedness, commitments with respect thereto) pursuant to Section
4.14 hereof; (ii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes and the Subsidiary Guarantees,
respectively; (iii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property used in the business of the Company or such Restricted
Subsidiary, in an aggregate principal amount not to exceed $10.0 million at any
time outstanding; (iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Existing Indebtedness; (v) the incurrence by the Company or any
of its Restricted Subsidiaries of Permitted Refinancing Debt in exchange for, or
the net proceeds or which are used to extend, refinance, renew, replace, defease
or refund, Indebtedness that was permitted by this Section 4.07 to be incurred;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its Restricted
Subsidiaries; provided, however, that (i) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior payment
in full in cash of all Obligations with respect to the Notes and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary and (B) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or one of its Restricted Subsidiaries
shall be deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Subsidiary, as the case may be; (vii) the incurrence by
the Company or any of its Restricted Subsidiaries of Hedging Obligations that
are incurred for the purpose of fixing or hedging currency exchange rate risk or
interest rate risk with respect to any floating rate Indebtedness that is
permitted by this Section 4.07 to be outstanding; (viii) the issuance by a
Restricted Subsidiary of the Company of preferred stock to the Company or a
Restricted Subsidiary of the Company; (ix) the incurrence by the Company or any
Restricted Subsidiary of Indebtedness in the form of reimbursement obligations
for letters of credit, bankers' acceptances and similar facilities entered into
in the ordinary course of business; (x) the incurrence by the Company or any
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Restricted Subsidiary of Indebtedness with respect to performance, surety and
appeal bonds in the ordinary course of business; and (xi) the incurrence by the
Company or any of its Restricted Subsidiaries of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an aggregate
principal amount at any time outstanding not to exceed the sum of $15.0 million.
(c) For purposes of determining compliance with this Section 4.07, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories described in Section 4.07(b) hereof or is entitled to be incurred
pursuant to Section 4.07(a) hereof, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this Section
4.07 and such item of Indebtedness will be treated as having been incurred
pursuant to only one of such clauses or pursuant to the first paragraph hereof.
SECTION 4.08. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is in the ordinary course of business and on fair and
reasonable terms that are at least as favorable to the Company or such
Restricted Subsidiary than those that would have been obtained in a comparable
arm's-length transaction by the Company or such Restricted Subsidiary with an
unrelated Person; and (ii) with respect to any Affiliate Transaction that
involves aggregate consideration in excess of $5.0 million, the Company delivers
to the Trustee a resolution of the Board of Directors of the Company set forth
in an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (i) above and such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors of the Company;
provided, however, that (a) any employment agreement entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted Subsidiary,
(b) the payment of employee benefits, including bonuses, retirement plans and
stock options, and director fees in the ordinary course of business, (c)
transactions between or among the Company and/or its Restricted Subsidiaries,
(d) transactions between the Company or its Restricted Subsidiaries on the one
hand, and the Initial Purchaser or its Affiliates on the other hand, involving
the provision of financial or consulting services by the Initial Purchaser or
its Affiliates, provided that the fees payable to the Initial Purchaser or its
Affiliates do not exceed the usual and customary fees of the Initial Purchaser
and its Affiliates for similar services, (e) transactions existing on the date
hereof or contemplated by the arrangements described in the documents
incorporated by reference in the Offering Memorandum as set forth in the
Offering Memorandum under the caption "Information Incorporated by Reference,"
(f) reasonable and customary directors' fees, (g) loans to officers or directors
of the Company in the ordinary course of business, (h) transactions among the
Company or any of its Restricted Subsidiaries and DLJ and its Affiliates in
connection with the Refinancing as contemplated by the Offering Memorandum,
including those in connection with the Tender Offer and the New Credit
Agreement, (i) the repurchase of a station representation contract from KMSI in
connection with the termination of the Interim Credit Facility and (j)
transactions permitted by Section 4.05 hereof, in each case, shall not be deemed
Affiliate Transactions.
SECTION 4.09. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind (other than Permitted Liens) to secure Indebtedness
other than Senior Debt on any property or asset now owned or hereafter acquired,
or on any income or profits therefrom or assign or convey any right to receive
income therefrom, unless all payments due under this Indenture and the Notes are
secured on an equal and ratable basis with the Obligations so secured until such
time as such Obligations are no longer secured by a Lien.
SECTION 4.10. COMPLIANCE WITH LAWS, TAXES.
The Company shall, and shall cause each of its Restricted Subsidiaries
to, comply with all statutes, laws, ordinances, or government rules and
regulations to which it is subject, the non-compliance with which would
materially adversely affect the business, earnings, properties, assets or
condition, financial or otherwise, of the Company and its Restricted
Subsidiaries taken as a whole.
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The Company shall, and shall cause each of its Restricted Subsidiaries
to, pay prior to delinquency all material taxes, assessments and governmental
levies, except those contested in good faith by appropriate proceedings.
SECTION 4.11. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective, any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries on its Capital Stock or (b)
pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries;
(ii) make loans or advances to the Company or any of its Restricted
Subsidiaries; or (iii) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reasons of (a) Existing Indebtedness as in
effect on the date hereof, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive in the aggregate in terms of such encumbrances or restrictions than
those in effect on the date hereof; (b) the New Credit Agreement as in effect on
the date hereof, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are no more restrictive in
the aggregate in terms of such encumbrances or restrictions than those contained
in the New Credit Agreement as in effect on the date hereof; (c) this Indenture,
the Notes and the Subsidiary Guarantees; (d) applicable law; (e) any agreement
relating to the purchase, sale or lease of assets, or any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of acquisition (except to the
extent such Indebtedness or such restriction was incurred in connection with, or
in contemplation of, such acquisition), in each case, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the Consolidated Cash Flow of such Person is not taken
into account in determining whether such acquisition was permitted by the terms
contained herein; (f) by reason of customary non-assignment provisions in leases
and licenses entered into in the ordinary course of business and consistent with
past practices; (g) purchase money or capitalized lease obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in this Section 4.11(iii) hereof on the property so acquired;
(h) Permitted Refinancing Debt, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Debt are no more restrictive in
the aggregate than those contained in the agreements governing the Indebtedness
being refinanced; (i) other Indebtedness permitted by Section 4.07 hereof, so
long as any such encumbrances or restrictions set forth in such Indebtedness are
no more restrictive in the aggregate than those contained in this Indenture or
the New Credit Agreement; or (j) any instrument governing the sale of assets of
the Company or any of its Restricted Subsidiaries, which encumbrance or
restriction applies solely to the assets of the Company or such Restricted
Subsidiary, being sold in such transaction.
SECTION 4.12. MAINTENANCE OF OFFICE OR AGENCIES.
The Company shall maintain in The City of New York an office or an
agency (which may be an office of any Agent) 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 shall give prompt written notice to the Trustee of any change in the
location of such office or agency. If at any time the Company 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.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any matter relieve the
Company of its obligation to maintain an office or agency in The City of New
York for such purposes. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
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The Company hereby designates the Corporate Trust Office of the
Trustee located at 6201 15th Avenue, Brooklyn, New York 11219 as one such office
or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.13. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
will have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at a purchase price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase
(the "Change of Control Payment").
(b) In the event a Change of Control occurs at a time when the Company
is prohibited from purchasing Notes under the terms of any Senior Debt, then
prior to mailing the notice to the Holders of the Notes pursuant to Section
3.08(a) hereof, but in any event within 30 days following any Change of Control,
the Company shall obtain the requisite consents, if any, under all agreements
governing such Senior Debt to the purchase of Notes pursuant to the Change of
Control Offer or repay the Senior Debt containing such a prohibition.
(c) The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.13 and in Article 3 hereof applicable to a Change of
Control Offer made by the Company (including any requirement to repay in full
any Senior Debt or obtain the consents of such lenders to such Change of Control
Offer as set forth in this Section 4.13 (b) hereof) and purchases all Notes
validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.14. ASSET SALES.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors of the Company) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Marketable Securities; provided that the amount of (x)
any liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes or the Subsidiary Guarantees) that are assumed by the transferee of any
such assets and (y) any notes or other obligations or securities received by the
Company or any such Restricted Subsidiary from such transferee that are promptly
(within 90 days) converted by the Company or such Restricted Subsidiary into
cash (to the extent of the cash or Marketable Securities received), will be
deemed to be cash for purposes of the foregoing clauses (i) and (ii); provided
further, however, that the 75% limitation referred to above shall not apply to
any sale, transfer or other disposition of assets in which the cash portion of
the consideration received therefor, determined in accordance with the foregoing
proviso, is equal to or greater than what the after-tax net proceeds would have
been had such transaction complied with the aforementioned 75% limitation.
(b) Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds, at its option, (i) to
permanently reduce Senior Debt of the Company or any Guarantor (and, in the case
of revolving Indebtedness, to permanently reduce the commitments with respect
thereto), (ii) to cash collateralize letters of credit under the New Credit
Agreement, provided that any such cash collateral released to the Company or its
Restricted Subsidiaries upon the expiration of such letters of credit shall
again be deemed to be Net Proceeds received on the date of such release, or
(iii) to an Investment in another business, the making of a capital expenditure
or the acquisition of other assets (including the acquisition of media
representation contracts), in each case, in a Permitted Business. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in this
Section 4.14 (b) will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall
make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in Article 3 hereof. To the extent that the aggregate
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amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis.
(c) Upon completion of an Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
SECTION 4.15. ADDITIONAL GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date hereof and such Subsidiary executes and
delivers a Guarantee with respect to the New Credit Agreement, then such newly
acquired or created Subsidiary shall execute a Subsidiary Guarantee and deliver
an opinion of counsel, in accordance with the terms of Article 11 hereof. If any
additional Guarantor is subsequently released from its Guarantee of the
Company's obligations under the New Credit Agreement, such additional
Guarantor's Subsidiary Guarantee will also be released.
SECTION 4.16. ACTIVITIES OF THE COMPANY.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, engage in any business other than a
Permitted Business.
SECTION 4.17. NO SENIOR SUBORDINATED DEBT.
(a) The Company shall not incur any Indebtedness that is subordinate
or junior in right of payment to any Senior Debt and senior in any respect in
right of payment to the Notes.
(b) No Guarantor shall incur any Indebtedness that is subordinate or
junior in right of payment to any Senior Debt of such Guarantor and senior in
any respect in right of payment to any Subsidiary Guarantee.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving entity), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, another corporation, Person or
entity (other than the KCC Merger) unless (i) the Company is the surviving
corporation or entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition will have been made assumes all the obligations of the
Company under the Notes and this Indenture pursuant to a supplemental indenture
in form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction, no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Indebtedness to Cash Flow Ratio
test set forth in Section 4.07(a) hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
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Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or with which or into the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other 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 has been named as the Company herein; provided, however, that neither
the Company nor any such successor corporation shall be released from its
Obligation to pay the principal of, premium, if any, and accrued and unpaid
interest on, and Liquidated Damages, if any, with respect to the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
(a) An Event of Default is:
(i) default for 30 days in the payment when due of interest on,
or Liquidated Damages, if any, with respect to the Notes
whether or not prohibited by Article 10 hereof;
(ii) default in payment when due of principal or premium, if any,
on the Notes at maturity, upon redemption or otherwise
whether or not prohibited by Article 10 hereof;
(iii)failure by the Company for 30 days after receipt of written
notice from the Trustee or Holders of at least 25% in
principal amount of the Notes then outstanding to comply
with the provisions described under Sections 4.13, 4.14,
4.05, 4.07 or Article 5 hereof;
(iv) failure by the Company for 60 days after written notice from
the Trustee or the Holders of at least 25% in principal
amount of the Notes then outstanding to comply with its
other agreements in this Indenture or the Notes;
(v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date hereof,
which default (A)(i) is caused by a failure to pay when due
at final stated maturity (giving effect to any grace period
related thereto) the principal of such Indebtedness (a
"Payment Default") or (ii) results in the acceleration of
such Indebtedness prior to its express maturity and (B) in
each case, the principal amount of any such Indebtedness due
to be paid, together with the principal amount of any other
such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated,
aggregates $10.0 million or more;
(vi) failure by the Company or any of its Subsidiaries to pay
non-appealable final judgments (other than any judgment as
to which a reputable insurance company has accepted full
liability) aggregating in excess of $10.0 million, which
judgments are not stayed, bonded, discharged or vacated
within 60 days after their entry;
(vii)except as permitted by this Indenture, if any Subsidiary
Guarantee that is a Significant Subsidiary shall be held in
any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or
any Guarantor that is a Significant Subsidiary, or any
Person acting on behalf of any Guarantor that is a
Significant Subsidiary, shall deny or disaffirm its
obligations under its Subsidiary Guarantee;
(viii) in existence when the Company or any Significant
Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
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(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; and
(ix) in existence when a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of the
property of the Company or any Significant Subsidiary,
or
(C) orders the liquidation of the Company or any
Significant Subsidiary,
and any such order or decree remains unstayed and in effect for 60
days.
The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
(a) If any Event of Default occurs and is continuing (other than an
Event of Default under Section 6.01(a)(viii) or (ix) hereof), the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable by notice in writing to the Company
and the Trustee specifying the respective Event of Default and that it is a
"notice of acceleration" (the "Acceleration Notice"), and the same (i) shall
become immediately due and payable or (ii) if there are any amounts outstanding
under the New Credit Agreement, shall become immediately due and payable upon
the first to occur of an acceleration under the New Credit Agreement or five
Business Days after receipt by the Company and the Representative under the New
Credit Agreement of such Acceleration Notice but only if such Event of Default
is then continuing. Notwithstanding the foregoing, in the case of an Event of
Default arising from Section 6.01(a)(viii) or (ix) hereof, all outstanding Notes
will become due and payable without further action or notice.
(b) In the event of a declaration of acceleration of the Notes because
an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in Section 6.01 (a)(v) hereof, the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of any Indebtedness described in Section 6.01 (a)(v) hereof have
rescinded the declaration of acceleration in respect of such Indebtedness within
30 days of the date of such declaration and if (i) the annulment of the
acceleration of the Notes would not conflict with any judgment or decree of a
court of competent jurisdiction, and (ii) all existing Events of Default, except
nonpayment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes, have been cured or waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of, premium, if
any, or any accrued and unpaid interest on, or Liquidated Damages, if any, with
respect to the Notes or to enforce the performance of any provision of the Notes
or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
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upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of all Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, and interest on, and Liquidated
Damages, if any, with respect to such Notes, which may only be waived with the
consent of each Holder of Notes affected. Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of this Indenture; provided that no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in such Holders' interest.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on it
by this Indenture. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders or would involve the Trustee in
personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the
Notes only if (i) the Holder gives to the Trustee notice of a continuing Event
of Default; (ii) the Holders of at least 25% in principal amount of the then
outstanding Notes make a request to the Trustee to pursue the remedy; (iii) such
Holder or Holders offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, 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 principal amount of the then outstanding Notes do not
give the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Holders of the Notes may not enforce this Indenture, except as
provided herein.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of, premium, if any, and any accrued
and unpaid interest on, and Liquidated Damages, if any, with respect to a Note,
on or after a respective due date expressed in the Note, or to bring suit for
the enforcement of any such payment on or after such respective date, shall not
be impaired or affected without the consent of the Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a)(i) or (ii) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for (i) the
principal, premium and Liquidated Damages, if any, and interest remaining unpaid
on the Notes, (ii) interest on overdue principal and premium, if any, and, to
the extent lawful, interest, and (iii) 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 ("Trustee Expenses").
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
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The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable to have the claims of the Trustee
(including any claim for Trustee Expenses) and the Holders allowed in any
Insolvency or Liquidation Proceeding or other judicial proceeding relative to
the Company (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute to
Holders any money or other property payable or deliverable on any such claims
and each Holder authorizes any Custodian in any such Insolvency or Liquidation
Proceeding or other judicial proceeding to make such payments to the Trustee,
and if the Trustee shall consent to the making of such payments directly to the
Holders any such Custodian is hereby authorized to make such payments directly
to the Holders, and to pay to the Trustee any amount due to it hereunder for
Trustee Expenses, and any other amounts due the Trustee under Section 7.07
hereof. To the extent that the payment of any such Trustee Expenses, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in any
such proceeding, shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders may be
entitled to receive in such proceeding, whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any Insolvency or
Liquidation Proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07 hereof;
Second: to Holders for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default occurs (and has not been cured) the Trustee
shall (i) exercise the rights and powers vested in it by this Indenture, and
(ii) use the same degree of care and skill in exercising such rights and powers
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee's duties shall be determined solely by the
express provisions of this Indenture and the Trustee need
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perform only those duties that are specifically set forth in
this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to
determine whether they conform to this Indenture's
requirements.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of Section 7.01(b)
hereof;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii)the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction it receives pursuant to Section 6.05 hereof.
(d) Whether or not expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (e) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money it
receives except as the Trustee may agree in writing with the Company. Money the
Trustee holds in trust need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document it believes to be genuine and
to have been signed or presented by the proper Person. The Trustee shall not be
obligated to investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may reasonably
require an Officers' Certificate or an Opinion of Counsel, or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and 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.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any Agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take, except to the extent that such action or omission to act constitutes
negligence or wilful misconduct on the part of the Trustee.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
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The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. However, if
the Trustee acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue as Trustee or
resign. Any Agent may do the same with like rights. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or for any
money paid to the Company or upon the Company's direction under any provisions
hereof, it shall not be responsible for the use or application of any money any
Paying Agent other than the Trustee receives, and it shall not be responsible
for any statement or recital herein or any statement in the Notes or any other
document furnished or issued in connection with the sale of the Notes or
pursuant to this Indenture, other than its certificate of authentication.
SECTION 7.05. NOTICE TO HOLDERS OF DEFAULTS AND EVENTS OF DEFAULT.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment on any Note (including any failure
to redeem Notes called for redemption or any failure to purchase Notes tendered
pursuant to an Offer that are required to be purchased by the terms of this
Indenture), the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the Holders' interests.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each August 1 beginning with August 1, 1997, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with section 313(a) of the TIA (but if no event described in
section 313(a) of the TIA has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with section 313(b)(2) of the TIA. The Trustee shall also transmit by mail all
reports as required by section 313(c) of the TIA.
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to Holders shall be filed with
the SEC and each national securities exchange on which the Notes are listed. The
Company shall notify the Trustee when and if the Notes are listed on any
national securities exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee (in its capacities as Trustee,
Paying Agent and/or Registrar) from time to time reasonable compensation for its
services hereunder. The Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Trustee upon request for all reasonable disbursements, advances, fees and
expenses it incurs or makes in addition to the compensation for its services.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee (in its
capacities as Trustee, Paying Agent and/or Registrar) against any and all
losses, liabilities or expenses the Trustee incurs arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, except as set forth below. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its Obligations
hereunder. The Company shall defend the claim and the Trustee shall reasonably
cooperate in the defense. The Trustee may have one separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
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The Company's Obligations under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability the Trustee incurs through negligence or bad faith or willful
misconduct.
To secure the Company's payment of its Obligations in this Section
7.07, the Trustee shall have a Lien prior to the Notes on all money or property
the Trustee holds or collects, except such money or property held in trust to
pay principal of, premium, if any, and any accrued and unpaid interest on, and
Liquidated Damages, if any, with respect to particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(a)(viii) or (ix) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute administrative expenses under any
Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign and be discharged from the trust hereby created
by so notifying the Company. The Holders of a majority in principal amount of
the then outstanding Notes may remove the Trustee by so notifying the Trustee
and the Company. The Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10 hereof;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(iii) a Custodian or public officer takes charge of the Trustee or its
property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee, provided that the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace any successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
appointment to Holders. The retiring Trustee shall promptly transfer all
property it holds as Trustee to the successor Trustee, provided all sums owing
to the retiring Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the retiring Trustee's benefit with respect to
expenses and liabilities it incurred prior to being replaced.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
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If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times (i) be a corporation organized and
doing business under the laws of the United States of America, of any state
thereof, or the District of Columbia authorized under such laws to exercise
corporate trustee power, (ii) be subject to supervision or examination by
federal or state authority, (iii) have a combined capital and surplus of at
least $10,000,000 as set forth in its most recent published annual report of
condition, and (iv) satisfy the requirements of sections 310(a)(1), (2) and (5)
of the TIA. The Trustee is subject to section 310(b) of the TIA.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to section 311(a) of the TIA, excluding any
creditor relationship listed in section 311(b) of the TIA. A Trustee who has
resigned or been removed shall be subject to section 311(a) of the TIA to the
extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes and
Subsidiary Guarantees upon compliance with the conditions set forth below in
this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from its obligations with respect to all
outstanding Notes and Subsidiary Guarantees on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company and each Guarantor shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and Subsidiary Guarantees, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and Subsidiary Guarantees and this Indenture (and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, and interest and Liquidated Damages, if any, on
such Notes when such payments are due or on the redemption date, as the case may
be, from the trust referred to in Section 8.04(a), (b) the Company's obligations
with respect to such Notes under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.10 and 4.12 hereof, (c) the rights, powers, trusts, duties and immunities of
the Trustee including without limitation thereunder Section 7.07, 8.05 and 8.07
hereunder and the Company's obligations in connection therewith, (d) the
Company's rights to redeem Notes under Section 3.07 hereof and (e) the
provisions of this Article 8. Subject to compliance with this Article 8, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from its obligations under the covenants contained in Sections 3.08,
4.02, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.13, 4.14, 4.15, 4.16, 4.17,
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5.01 and 11.01 hereof and any future covenant added to this Indenture with
respect to the outstanding Notes and Subsidiary Guarantees on and after the date
the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes and Subsidiary Guarantees shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes and
Subsidiary Guarantees shall not be deemed outstanding for accounting purposes).
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes and Subsidiary Guarantees, the Company, its Subsidiaries or
any Guarantor may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes and
Subsidiary Guarantees shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(a)(i) through 6.01(a)(vii) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes and Subsidiary Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, (i) cash in United
States dollars, (ii) non-callable Government Securities which
through the scheduled payment of principal, premium, if any,
interest and liquidated damages, if any, in respect thereof in
accordance with their terms will provide, not later than one day
before the due date of payment, cash in United States dollars in
an amount, or (iii) a combination thereof, in such amounts as
shall be 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 the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case
may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since
the date hereof, there has been a change in the applicable
federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the
Holders of the outstanding Notes shall not recognize income, gain
or loss for federal income tax purposes as a result of such Legal
Defeasance and shall be subject to federal income tax on the same
amounts, in the same manner and at the same time as would have
been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming
that the Holders of the outstanding Notes shall not recognize
income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and shall be subject to federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant
Defeasance had not occurred;
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(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Sections
6.01(a)(viii) and (ix) hereof are concerned, at any time in the
period ending on the 91st day after the date of deposit (it being
understood that this condition shall not be deemed satisfied
until the expiration of such period);
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under any
material agreement or instrument including, without limitation,
the New Credit Agreement (other than this Indenture) to which the
Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the
deposit, the trust funds shall not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders of Notes over the other
creditors of the Company with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or
others;
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with;
and
(i) the Trustee shall have received such other documents and
assurances as the Trustee shall have reasonably required.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by applicable law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the written
request of the Company and be relieved of all liability with respect to any
money or non-callable Government Securities held by it as provided in Section
8.04 hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are
in excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
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SECTION 8.06. REPAYMENT TO THE COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
one year after such principal, and premium, if any, or interest or Liquidated
Damages, if any, has become due and payable shall be paid to the Company on its
written 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, may at the expense of the Company cause to be published once, in the
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified 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 shall be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Company and the Guarantors under this
Indenture, the Notes and the Subsidiary Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03
hereof until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03 hereof, as the case may be;
provided, however, that, if the Company or any Guarantor makes any payment of
principal of, premium, if any, interest or Liquidated Damages, if any, on any
Note following the reinstatement of its obligations, the Company or any
Guarantor shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. AMENDMENTS AND SUPPLEMENTS PERMITTED WITHOUT CONSENT OF HOLDERS.
Notwithstanding Section 9.02 hereof, the Company, the Guarantors and
the Trustee may amend or supplement this Indenture or the Notes without the
consent of any Holder (a) to cure any ambiguity, defect or inconsistency; (b) to
provide for uncertificated Notes in addition to or in place of certificated
Notes; (c) to provide for the assumption by a successor corporation of the
Company's Obligations to the Holders in the event of a disposition pursuant to
Article 5; (d) to comply with SEC's requirements to effect or maintain the
qualification of this Indenture under the TIA; (e) to provide for additional
Subsidiary Guarantees with respect to the Notes; (f) to make any change that
does not materially adversely affect any Holder's legal rights under this
Indenture, (g) to evidence and provide for a successor Trustee; (h) to add
additional covenants or Events of Default; or (i) to secure the Notes .
No amendment may be made to any provision of Article 10 that would
adversely affect the rights of any holder of Senior Debt then outstanding unless
the holders of such Senior Debt (or their Representative) consent to such
change.
Upon the Company's request, after receipt by the Trustee of a
resolution of the Board of Directors authorizing the execution of any amended or
supplemental indenture and the documents described in Section 9.06 hereof, the
Trustee shall join with the Company and the Guarantors in the execution of any
amended or supplemental indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be contained in any such amended or supplemental indenture, but the Trustee
shall not be obligated to enter into an amended or supplemental indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
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SECTION 9.02. AMENDMENTS AND SUPPLEMENTS REQUIRING CONSENT OF HOLDERS.
Subject to Section 6.07 hereof and Section 10.13, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
with the consent of the holders of at least a majority in principal amount of
the Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for Notes), and
any existing Default or Event of Default (other than a payment Default) or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Upon the Company's request and after receipt by the Trustee of a
resolution of the Board of Directors authorizing the execution of any
supplemental indenture, evidence of the Holders' consent, and the documents
described in Section 9.06 hereof, the Trustee shall join with the Company and
the Guarantors in the execution of such amended or supplemental indenture unless
such amended or supplemental indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof. After
an amendment or waiver under this Section 9.02 becomes effective, the Company
shall mail to each Holder affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice,
or any defect therein, shall not, however, in any way impair or affect the
validity of any such amended or supplemental indenture or waiver.
Subject to Sections 6.02, 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company or the Guarantors with any
provision of this Indenture, the Notes or the Subsidiary Guarantees. However,
without the consent of each Holder affected, an amendment, supplement or waiver
may not (with respect to any Note or Subsidiary Guarantee held by a
non-consenting Holder): (i) reduce the principal amount of Notes whose holders
must consent to an amendment, supplement or waiver, (ii) reduce the principal of
or change the fixed maturity of any Note or alter the provisions with respect to
the redemption of the Notes (other than provisions relating to Sections 4.13 and
4.14 hereof), in a manner adverse to Holders, (iii) reduce the rate of or change
the time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration), (v) make any Note payable
in money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes, (vii) waive a redemption payment with respect to any Note
(other than a payment required by either of Sections 4.13 or 4.14 hereof) or
(viii) make any change in the foregoing amendment and waiver provisions. In
addition, any amendment to the provisions of Article 10 or Section 11.08 hereof
will require the consent of the holders of at least 75% in aggregate principal
amount of the Notes then outstanding if such amendment would adversely affect
the rights of holders of Notes.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amendment or supplemental indenture that complies with the TIA
as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same
Indebtedness as the consenting Holder's Note, even if notation of the consent is
not made on any Note. However, any such Holder or subsequent Holder may revoke
the consent as to his or her Note or portion of a Note if the Trustee receives
the notice of revocation before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Notes have consented to the amendment or waiver.
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The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders of Notes entitled to consent to any
amendment or waiver. If a record date is fixed, then, notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders of Notes at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to consent to such amendment or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders of Notes after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Holders of the principal amount of Notes required hereunder for such amendment
or waiver to be effective shall have also been given and not revoked within such
90-day period.
After an amendment or waiver becomes effective it shall bind every
Holder, unless it is of the type described in any of clauses (1) through (6) of
Section 9.02 hereof. In such case, the amendment or waiver shall bind each
Holder who has consented to it and every subsequent Holder of a Note that
evidences the same debt as the consenting Holder's Note.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may (at the Company's expense) place an appropriate
notation about an amendment, supplement or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE PROTECTED.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing such amendment or supplemental
indenture, the Trustee shall be entitled to receive and, subject to Section 7.01
hereof, shall be fully protected in relying upon, an Officers' Certificate and
Opinion of Counsel as conclusive evidence that such amendment or supplemental
indenture is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms. The Company may not sign an amendment or supplemental
indenture until the Board of Directors approves it.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company and the Guarantors agree, and each Holder by accepting a
Note agrees, that the payment of principal of, premium, interest and Liquidated
Damages, if any, on the Notes shall be subordinated in right of payment, to the
extent and in the manner provided in this Article 10 and Article 11, to the
prior payment in full in cash or Marketable Securities of all Senior Debt,
whether outstanding on the date hereof or thereafter incurred.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(a) the holders of Senior Debt will be entitled to receive payment in
full in cash or Marketable Securities of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt, whether or not such interest
is allowable as a claim in any such proceeding) before the Holders of Notes will
be entitled to receive any payment with respect to the Notes (except that
Holders of Notes may receive (i) Permitted Junior Securities and any other
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Permitted Junior Securities issued in exchange for any Permitted Junior
Securities and (ii) payments and other distributions made from the defeasance
trust created pursuant to Article 8 hereof); and
(b) until all Obligations with respect to Senior Debt are paid in full
in cash or Marketable Securities, any distribution to which the Holders of Notes
would be entitled shall be made to the holders of Senior Debt (except that
Holders of Notes may receive (i) Permitted Junior Securities and any other
Permitted Junior Securities issued in exchange for any Permitted Junior
Securities and any securities issued in exchange for Senior Debt and (ii)
payments and other distributions made from the defeasance trust created pursuant
to Article 8 hereof).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company also may not make any payment upon or in respect of the
Notes (except that Holders of Notes may receive (i) Permitted Junior Securities
and any other Permitted Junior Securities issued in exchange for any Permitted
Junior Securities and (ii) payments and other distributions made from the
defeasance trust created pursuant to Article 8 hereof) if:
(i) a default in the payment of the principal of, premium, if
any, or interest on Senior Debt occurs and is continuing; or
(ii) any other default occurs and is continuing with respect to
Designated Senior Debt that permits holders of the
Designated Senior Debt as to which such default relates to
accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from a Person who
may give it pursuant to Section 10.11 hereof. If the Trustee
receives any such Payment Blockage Notice, no subsequent
payment blockage period shall be commenced for purposes of
this Section 10.03 unless and until (x) 360 days have
elapsed since the commencement of the immediately prior
payment blockage period and (y) all scheduled payments of
principal, premium, if any, interest and Liquidated Damages,
if any, on the Notes that have come due have been paid in
full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
The Company may and shall resume payments on the Notes:
(a) in the case of a payment default described in clause
(i) above, upon the date on which such default is cured
or waived, and
(b) in case of a nonpayment default described in clause
(ii) above, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after
the date on which the applicable Payment Blockage
Notice is received, unless a payment default on Senior
Debt then exists.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Trustee shall promptly notify the Representative of any Senior Debt of the
acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee has actual
knowledge that such payment is prohibited by Section 10.03 hereof, such payment
shall be held by the Trustee or such Holder, in trust for the benefit of, and
shall be paid forthwith over and delivered, upon written request to, the holders
of Senior Debt as their interest may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their interest may appear, for application to the payment of all
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Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or bad faith of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full in cash or Marketable Securities
and until the Notes are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights of
holders of Senior Debt to receive distributions applicable to Senior Debt to the
extent that distributions otherwise payable to the Holders have been applied to
the payment of Senior Debt. A distribution made under this Article 10 to holders
of Senior Debt that otherwise would have been made to Holders is not, as between
the Company and Holders, a payment by the Company on the Senior Debt.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of the Holders and holders
of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and the Holders, the
obligation of the Company, which is absolute and
unconditional, to pay principal of, premium, if any,
interest and Liquidated Damages, if any, on the Notes in
accordance with their terms;
(ii) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of
Senior Debt; or
(iii)prevent the Trustee or any Holder from exercising its
available remedies upon a Default or an Event of Default,
subject to the rights of holders and owners of Senior Debt
to receive distribu- tions and payments otherwise payable to
Holders.
If the Company fails because of this Article 10 to pay principal of,
premium, if any, interest or Liquidated Damages, if any, on a Note on the due
date, the failure is nevertheless a Default or an Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be prejudiced or impaired by any
act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph,
the holders of the Senior Debt 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 or the obligations hereunder of the
Holders to the holders of Senior Debt, do any one or more of the following: (a)
change the manner, place or terms of payment or extend the time or payment of,
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or renew or alter, Senior Debt or any instrument evidencing the same or any
agreement under which Senior Debt is outstanding; provided, however, that any
such alteration shall not (A) increase the amount of Senior Debt outstanding in
a manner prohibited by this Indenture or (B) otherwise violate Section 4.07
hereof; (b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt; (c) release any Person liable in
any manner for the collection of Senior Debt; provided, however, that any such
sale, exchange, release or other transaction shall not violate Section 4.09
hereof; and (d) exercise or refrain from exercising any rights against the
Company or any other Person; provided, however, that in no event shall any such
actions limit the right of the Holder to take any action to accelerate the
maturity of the Notes in accordance with the provisions set forth in Article 6
or to pursue any rights or remedies against the parties to the Indenture under
the Indenture or under applicable laws if the taking of such action does not
otherwise violate the terms of this Article.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice that the payment of any Obligations with respect to the
Notes would violate this Article 10. Only the Company or a Representative may
give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, a Representative of Designated Senior Debt is hereby authorized to file
an appropriate claim for and on behalf of the Holders of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Notes.
ARTICLE 11
GUARANTEE OF NOTES
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SECTION 11.01. SUBSIDIARY GUARANTEES.
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes and the Obligations of the
Company hereunder and thereunder, that: (a) the principal of, premium, if any,
interest and Liquidated Damages, if any, on the Notes will be promptly paid in
full when due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full and performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other Obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration, redemption or otherwise. Failing payment when so due of any
amount so guaranteed or any performance so guaranteed for whatever reason the
Guarantors will be jointly and severally obligated to pay the same immediately.
An Event of Default under this Indenture or the Notes shall constitute an event
of default under the Subsidiary Guarantees, and shall entitle the Holders to
accelerate the Obligations of the Guarantors hereunder in the same manner and to
the same extent as the Obligations of the Company. The Guarantors hereby agree
that their Obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Subsidiary
Guarantee will not be discharged except by complete performance of the
Obligations contained in the Notes and this Indenture. If any Holder or the
Trustee is required by any court or otherwise to return to the Company, the
Guarantors, or any Note Custodian, Trustee, liquidator or other similar official
acting in relation to either the Company or the Guarantors, any amount paid by
either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor agrees that it shall not be entitled to, and hereby waives, any right
of subrogation in relation to the Holders in respect of any Obligations
guaranteed hereby until payment in full of the Obligations hereunder. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Subsidiary Guarantee. The Guarantors shall have the
right to seek contribution from any non- paying Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantees.
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01
hereof, each Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form of Exhibit D shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor, by manual or
facsimile signature, by an Officer of such Guarantor.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 11.01 hereof shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
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The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee (in
existence on or after the date hereof) set forth in this Indenture on behalf of
the Guarantors.
SECTION 11.03. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained
in this Indenture shall prohibit a merger between a Guarantor and another
Guarantor or a merger between a Guarantor and the Company.
(b) Except as provided in Section 11.03(a) hereof or in a transaction
referred to in Section 11.04 hereof no Guarantor may consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Guarantor
unless (i) the Person formed by or surviving any such consolidation or merger
(if other than such Guarantor) assumes all the obligations of such Guarantor
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, in the Form of Exhibit E hereto, under the Notes
and this Indenture; (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists; (iii) such Guarantor, or any Person formed
by or surviving any such consolidation or merger, would have Consolidated Net
Worth (immediately after giving effect to such transaction), equal to or greater
than the Consolidated Net Worth of such Guarantor immediately preceding the
transaction; and (iv) the Company would be permitted, immediately after giving
effect to such transaction, to incur at least $1.00 of additional Indebtedness
pursuant to the Indebtedness to Cash Flow Ratio test set forth in Section 4.07
hereof. The requirements of subparagraphs (iii) and (iv) of this Section
11.03(b) shall not apply in the case of a consolidation with or merger with or
into the Company or another Guarantor.
(c) In the case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and substantially in the form of Exhibit E
hereto, of the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor; provided that, solely for purposes of computing
Consolidated Cash Flow for purposes of Section 4.05(a)(B) hereof, the
Consolidated Cash Flow of any Person other than the Company and its Restricted
Subsidiaries shall only be included for periods subsequent to the effective time
of such merger, consolidation, combination or transfer of assets. Such successor
Person thereupon may cause to be signed any or all of the Subsidiary Guarantees
to be endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee. All of the
Subsidiary Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Subsidiary Guarantees had been issued at the date of the execution
hereof.
SECTION 11.04. RELEASES.
In the event of a sale or other disposition of all or substantially
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the capital stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Subsidiary
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the Indenture pursuant
to Section 4.14 hereof.
SECTION 11.05. ADDITIONAL GUARANTORS.
Any Person that was not a Guarantor on the date hereof may become a
Guarantor by executing and delivering to the Trustee (a) a supplemental
indenture in substantially the form of Exhibit E hereto, and (b) an Opinion of
Counsel to the effect that such supplemental indenture has been duly authorized
and executed by such Person and constitutes the legal, valid, binding and
enforceable obligation of such Person (subject to such customary exceptions
concerning creditors rights', fraudulent transfers, public policy and equitable
principles as may be acceptable to the Trustee in its discretion).
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SECTION 11.06. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, each Guarantor's liability shall be limited to
the lesser of (i) the aggregate amount of the Obligations of the Company under
the Notes and this Indenture and (ii) the amount, if any, which would not have
(A) rendered such Guarantor "insolvent" (as such term is defined in the United
States Bankruptcy Code and in the Debtor and Creditor Law of the State of New
York) or (B) left such Guarantor with unreasonably small capital at the time its
Subsidiary Guarantee of the Notes was entered into; provided that it will be a
presumption in any lawsuit or other proceeding in which a Guarantor is a party
that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount
set forth in clause (i) above unless any creditor, or representative of
creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of
the Guarantor, otherwise proves in such a lawsuit that the aggregate liability
of the Guarantor is the amount set forth in clause (ii) above. In making any
determination as to solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors, and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
SECTION 11.07. "TRUSTEE" TO INCLUDE PAYING AGENT.
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 11 shall in each case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
SECTION 11.08. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The obligations of each Guarantor under its Subsidiary Guarantee
pursuant to this Article 11 shall be senior in right of payment to the Katz
Notes, but junior and subordinated to the Senior Debt of such Guarantor on the
same basis as the Notes are junior and subordinated to Senior Debt of the
Company. For the purposes of the foregoing sentence, the Trustee and the Holders
of Notes shall have the right to receive and/or retain payments by any of the
Guarantors only at such times as they may receive and/or retain payments in
respect of Notes pursuant to this Indenture, including Article 10 hereof. In the
event that the Trustee or any Holder shall have received any Guarantor payment
that is prohibited by the foregoing sentence, such Guarantor payment shall be
paid over and delivered forthwith to the holders of the Senior Debt remaining
unpaid, to the extent necessary to pay in full all Senior Debt.
Each Holder of a Note by its acceptance thereof (a) agrees to and
shall be bound by the provisions of this Section 11.08, (b) authorizes and
directs the Trustee in its behalf to take such actions as may be necessary and
appropriate to effectuate the subordination so provided and (c) appoints the
Trustee its attorney-in-fact for any and all such purposes.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of section 318(c) of the TIA, the imposed
duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person, mailed by registered or
certified mail, postage prepaid, return receipt requested or delivered by
telecopier or overnight air courier guaranteeing next day delivery to the
other's address:
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If to the Company:
Katz Media Corporation
125 West 55th Street
New York, NY 10019
Attention: Chief Financial Officer
Telecopier No.: (212) 424-6489
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue, 22nd Floor
New York, New York 10022
Attention: Edward D. Sopher, Esq.
Telecopier No.: (212) 872-1002
If to the Trustee:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Corporate Trust Administration Department
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; the date receipt is acknowledged, if mailed by registered
or certified mail; when answered back, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail to his or her address shown on the register kept by the Registrar. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to section 312(b) of the TIA with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and any other Person shall have the
protection of section 312(c) of the TIA.
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action
have been complied with; and
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(b) an Opinion of Counsel (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of
such counsel, all such conditions precedent provided for in this
Indenture relating to the proposed action have been complied
with.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to section 314(a)(4) of the TIA) shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(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 such Person, he has made such
examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in such Person's opinion, such
condition or covenant has been complied with.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. LEGAL HOLIDAYS.
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 12.08. NO RECOURSE AGAINST OTHERS.
No officer, employee, director, incorporator or stockholder of the
Company or a Guarantor shall have any liability for any Obligations of the
Company or a Guarantor under the Notes or this Indenture, or for any claim based
on, in respect of, or by reason of, such Obligations or the creation of any such
Obligation. Each Holder by accepting a Note waives and releases all such
liability, and such waiver and release is part of the consideration for the
issuance of the Notes.
SECTION 12.09. COUNTERPARTS.
This Indenture may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 12.10. VARIABLE PROVISIONS.
The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.
The first compliance certificate to be delivered by the Company to the
Trustee pursuant to Section 4.03 hereof shall be for the fiscal year ending on
December 31, 1997.
SECTION 12.11. GOVERNING LAW.
The internal laws of the State of New York shall govern this Indenture
and the Notes, without regard to the conflict of laws provisions thereof.
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SECTION 12.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries, and no other
indenture, loan or debt agreement may be used to interpret this Indenture.
SECTION 12.13. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
SECTION 12.14. SEVERABILITY.
If any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.15. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
[NEXT PAGE IS THE SIGNATURE PAGE]
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Dated as of December 19, 1996 KATZ MEDIA CORPORATION
By: /S/ RICHARD E. VENDIG
----------------------------------
Name: Richard E. Vendig
Title:Chief Financial Officer and
Treasurer
Dated as of December 19, 1996 KATZ COMMUNICATIONS, INC.
KATZ MILLENNIUM MARKETING INC.
BANNER RADIO SALES, INC.
CHRISTAL RADIO SALES, INC.
EASTMAN RADIO SALES, INC.
SELTEL INC.
KATZ CABLE CORPORATION
THE NATIONAL PAYROLL COMPANY, INC.
By: /S/ RICHARD E. VENDIG
----------------------------------
Name: Richard E. Vendig
Title:Chief Financial Officer and
Treasurer
Dated as of December 19, 1996 AMERICAN STOCK TRANSFER & TRUST COMPANY
as Trustee
By: /S/ HERBERT J. LEMMER
----------------------------------
Name: Herbert J. Lemmer
Title:Vice President
By: /S/ SUSAN SILBER
----------------------------------
Name: Susan Sliber
Title:Assistant Secretary
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EXHIBIT A-1
(Face of Note)
10 1/2% Series [A/B] Senior Subordinated Note due 2007
No. $__________
CUSIP No.
KATZ MEDIA CORPORATION
promises to pay to
or registered assigns,
the principal sum of
Dollars on January 15, 2007.
Interest Payment Dates: July 15 and January 15.
Record Dates: January 1 and July 1.
Dated: December 19, 1996
KATZ MEDIA CORPORATION
By:______________________________
Name:
Title:
Trustee's Certificate of Authentication
Dated: December 19, 1996
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Trustee
By:_____________________________
(Authorized Signatory)
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Registrar. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its
A1-1
<PAGE>
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY Person IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]1
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF
CLAUSE (b), (c) or (d), BASED UPON AN OPINION OF COUNSEL IF THE ISSUER
SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."2
Additional provisions of this Note are set forth on the other side of
this Note.
- --------
1 This paragraph should be included only if the Note is issued in global
form.
2 This paragraph should be removed upon the exchange of Series A Notes
for Series B Notes in the Exchange Offer or upon the registration of
the Series A Notes pursuant to the terms of the Registration Rights
Agreement.
A1-2
<PAGE>
(Back of Note)
10 1/2% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. Katz Media Corporation, a Delaware corporation, (the
"Company") promises to pay interest on the principal amount of the Notes at the
rate and in the manner specified below. Interest on the Notes will accrue at 10
1/2% per annum from the date this Note is issued until maturity. The Company
will pay Liquidated Damages, if any, pursuant to Section 5 of the Registration
Rights Agreement referred to below. Interest and Liquidated Damages, if any,
will be payable semiannually in cash in arrears on January 15 and July 15 of
each year, or if any such day is not a Business Day on the next succeeding
Business Day (each, an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from the date of original issuance; provided that the
first Interest Payment Date shall be July 15, 1997. The Company shall pay
interest on overdue principal and premium, if any, from time to time on demand
at the rate of 1% per annum in excess of the interest rate then in effect and
shall pay interest on overdue installments of interest and Liquidated Damages,
if any, (without regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30 day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered holders of Notes at the close of business on the January 1 or
July 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium, if any, interest
and Liquidated Damages, if any, at the office or agency of the Company
maintained for such purpose within the City and State of New York, or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders at their addresses set forth in the register of Holders; provided that
payment by wire transfer of immediately available funds shall be required with
respect to principal of, and interest, premium and Liquidated Damages, if any,
on, all Global Notes and all other Notes the Holders of which shall have
provided written wire transfer instructions to the Company or the Paying Agent.
Such payment shall be in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
3. Paying Agent and Registrar. American Stock Transfer & Trust Company
(the "Trustee") will initially act as the Paying Agent and Registrar. The
Company may appoint additional paying agents or co-registrars, and change the
Paying Agent, any additional paying agent, the Registrar or any co-registrar
without prior notice to any Holder. The Company or any of its Subsidiaries may
act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of December 19, 1996 (the "Indenture"), among the Company, as issuer, Katz
Communications, Inc., Katz Millennium Marketing Inc., Banner Radio Sales, Inc.,
Christal Radio Sales, Inc., Eastman Radio Sales, Inc., Seltel Inc., Katz Cable
Corporation and The National Payroll Company, Inc., as Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of the original issuance
of the Notes (the "Trust Indenture Act"). The Notes are subject to, and
qualified by, all such terms, certain of which are summarized herein, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of such terms (all capitalized terms not defined herein shall have the
meanings assigned them in the Indenture). The Notes are unsecured senior
subordinated obligations of the Company limited to $100,000,000 in aggregate
principal amount.
A1-3
<PAGE>
5. Optional Redemption. (a) Except as described in paragraph 5(b)
below, the Notes may not be redeemed at the option of the Company prior to
January 15, 2002. During the twelve (12) month period beginning January 15 of
the years indicated below, the Notes will be redeemable at the option of the
Company, in whole or in part, on at least 30 but not more than 60 days' notice
to each Holder of Notes to be redeemed, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus any accrued and
unpaid interest and Liquidated Damages, if any, to the applicable date of
redemption:
Year Percentage
2003................................................................105.250%
2003................................................................103.938%
2004................................................................102.625%
2005................................................................101.313%
2006 and thereafter.................................................100.000%
A1-4
<PAGE>
(b) Notwithstanding the foregoing, at any time prior to January 15,
2000, the Company may redeem up to 35% in aggregate principal amount of the
Notes with the net proceeds of (i) one or more offerings of Equity Interests
(other than Disqualified Stock) of the Company or (ii) one or more offerings of
Equity Interests or other securities of KMG or KMSI, to the extent the net
proceeds thereof are contributed or advanced to the Company as a capital
contribution to common equity, in each case, at a redemption price equal to
109.5% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date; provided that at least 65%
in aggregate principal amount of the Notes originally issued remain outstanding
immediately after the occurrence of any such redemption; and provided, further,
that such redemption will occur within 90 days of the date of the closing of
such offering.
6. Mandatory Redemption. Subject to the Company's obligation to make
an offer to purchase Notes under certain circumstances pursuant to Sections 4.13
and 4.14 of the Indenture (as described in paragraph 7 below), the Company is
not required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Notes.
7. Mandatory Offers to Purchase Notes. (a) Upon the occurrence of a
Change of Control, each Holder of Notes shall have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to an offer (a "Change of Control
Offer") at a purchase price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and Liquidated Damages, if any,
to the date of purchase.
(b) If the Company or any Restricted Subsidiary consummates one or
more Asset Sales and does not use all of the Net Proceeds from such Asset Sales
as provided in Section 4.14 of the Indenture, the Company will be required,
under certain circumstances, to utilize the Excess Proceeds from such Asset
Sales to offer (an "Asset Sale Offer") to purchase Notes at a purchase price in
cash equal to 100% of the aggregate principal amount of the Notes plus any
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase. If the Excess Proceeds are insufficient to purchase all Notes tendered
pursuant to any Asset Sale Offer, the Trustee shall select the Notes to be
purchased in accordance with the terms of Article 3 of the Indenture.
(c) Holders may tender all or, subject to paragraph 8 below, any
portion of their Notes in a Change of Control Offer or Asset Sale Offer
(collectively, an "Offer") by completing the form below entitled "OPTION OF
HOLDER TO ELECT PURCHASE."
(d) The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in connection
with an offer required to be made by the Company to repurchase the Notes as a
result of a Change of Control or an Asset Sale. To the extent that the
provisions of any securities laws or regulations conflict with provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Indenture by virtue thereof.
8. Notice of Redemption or Purchase. Notice of an optional redemption
or an Offer will be mailed to each Holder at its registered address at least 30
days but not more than 60 days before the date of redemption or purchase. Notes
may be redeemed or purchased in part, but only in whole multiples of $1,000
unless all Notes held by a Holder are to be redeemed or purchased. On or after
any date on which Notes are redeemed or purchased, interest and Liquidated
Damages, if any, ceases to accrue on the Notes or portions thereof called for
redemption or accepted for purchase on such date.
9. Subordination. The Notes are subordinated in right of payment, to
the extent and in the manner provided in Article 10 of the Indenture, to the
prior payment in full of all Senior Debt, which includes (i) all Obligations
A1-5
<PAGE>
(including without limitation interest accruing after filing of a petition in
bankruptcy whether or not such interest is an allowable claim in such
proceeding) of the Company or its Subsidiaries, including without limitation any
Guarantees of such Obligations pursuant to the New Credit Agreement and (ii) any
other Indebtedness permitted to be incurred by the Company or the Guarantors
under the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (w) any liability for
federal, state, local or other taxes owed or owing by the Company, (x) any
Indebtedness of the Company to any of its Restricted Subsidiaries or other
Affiliates (other than Indebtedness arising under the New Credit Agreement), (y)
any trade payables or (z) any Indebtedness that is incurred in violation of
Section 4.07 of the Indenture. The Company agrees, and each Holder by accepting
a Note consents and agrees, to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
10. Subsidiary Guarantees. The Company's payment obligations under the
Notes are jointly and severally unconditionally guaranteed by the Guarantors.
The Subsidiary Guarantees of each Guarantor will be subordinated to the prior
payment in full of all Senior Debt of such Guarantor and the amounts for which
the Guarantors will be liable under the guarantees issued from time to time with
respect to Senior Debt.
11. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples thereof.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. Holders seeking to transfer or exchange their Notes may be
required, 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 Registrar need not exchange or register the transfer of any Note
or portion of a Note selected for redemption or tendered pursuant to an Offer.
Also, it need not exchange or register the transfer of any Notes for a period of
15 Business Days before a selection of Notes to be redeemed or between a record
date and the next succeeding Interest Payment Date.
12. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
13. Amendment, Supplement and Waiver. Subject to the following
paragraphs, the Indenture, the Notes and the Subsidiary Guarantees may be
amended or supplemented with the consent of the holders of at least a majority
in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for Notes), and any existing Default or Event of Default
(other than a payment Default) or compliance with any provision of the Indenture
or the Notes may be waived with the consent of the holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes).
A1-6
<PAGE>
Without the consent of any Holder, the Indenture or the Notes may be
amended to: cure any ambiguity, defect or inconsistency; provide for
uncertificated Notes in addition to or in place of certificated Notes; provide
for the assumption of the Company's obligations to Holders of Notes in the case
of a merger or consolidation of the Company; following the Exchange Offer, to
comply with the SEC's requirements to effect or maintain the qualification of
the Indenture under the TIA; provide for additional Guarantees with respect to
the Notes; make any change that does not materially adversely affect any
Holder's legal rights under the Indenture; or, evidence and provide for a
successor Trustee, add additional covenants or Events of Default or secure the
Notes. Any amendment to the provisions of Article 10 or Section 11.08 hereof
will require the consent of the holders of at least 75% in aggregate principal
amount of the Notes then outstanding if such amendment would adversely affect
the rights of holders of Notes. Certain amendments require the consent of each
Holder adversely affected.
14. Defaults and Remedies. Events of Default include (in summary
form): default for 30 days in payment when due of interest on, or Liquidated
Damages, if any, with respect to, the Notes; default in payment when due of
principal of, or premium, if any, on the Notes at maturity; failure by the
Company for 30 days after receipt of notice to it to comply with the provisions
of Sections 4.13, 4.14, 4.05, 4.07 or Article 5 of the Indenture; failure by the
Company for 60 days after receipt of notice to it to comply with any of its
other agreements or covenants in, or provisions of, the Indenture or the Notes;
certain defaults under and acceleration prior to maturity of, or failure to pay
at maturity, certain other Indebtedness; failure to pay certain final judgments
that remain undischarged; certain judicial findings of unenforceability or
invalidity as to any guarantee of the Notes or the disaffirmance or denial by
any guarantor of its guarantee of the Notes; and certain events of bankruptcy or
insolvency involving the Company or any Restricted Subsidiary that is a
Significant Subsidiary. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding may declare all the Notes to be immediately due and payable by
notice in writing to the Company and the Trustee specifying the respective Event
of Default and that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same (i) shall become immediately due and payable or (ii) if
there are any amounts outstanding under the New Credit Agreement, shall become
immediately due and payable upon the first to occur of an acceleration under the
New Credit Agreement or five Business Days after receipt by the Company and the
Representative under the New Credit Agreement of such Acceleration Notice but
only if such Event of Default is then continuing. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, all outstanding Notes will become due
and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The holders
of a majority in aggregate principal amount of the Notes then outstanding by
notice to the Trustee may on behalf of all Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under this Indenture,
except a continuing Default or Event of Default in the payment of the principal
of, premium, if any, and interest on, and Liquidated Damages, if any, with
respect to such Notes, which may only be waived with the consent of each Holder
of Notes affected.The Trustee may withhold from Holders notice of any continuing
Default or Event of Default (except a payment Default) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
A1-7
<PAGE>
15. Trustee Dealings with the Company. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or any Affiliate, and may otherwise deal with the
Company or any Affiliate, as if it were not Trustee.
16. No Recourse Against Others. No officer, employee, incorporator
director, stockholder or Subsidiary of the Company or Guarantor shall have any
liability for any Obligations of the Company or Guarantor under the Notes or the
Indenture, or for any claim based on, in respect of, or by reason of, such
Obligations or the creation of any such Obligation, except, in the case of a
Subsidiary, for an express guarantee or an express creation of any Lien by such
Subsidiary of the Company's Obligations under the Notes. Each Holder by
accepting a Note waives and releases all such liability, and such waiver and
release is part of the consideration for the issuance of the Notes.
17. Additional Rights of Holders of Transfer Restricted Notes . In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement, dated as of December 19, 1996, among the Company,
the Guarantors and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Registration Rights Agreement").
18. Successor Corporation Substituted. Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01 of the Indenture, the successor corporation formed
by such consolidation or with which or into the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other 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
has been named as the Company under the Indenture; provided, however, that
neither the Company nor any successor corporation shall be released from its
Obligation to pay the principal of, premium, if any, and accrued and unpaid
interest on, and Liquidated Damages, if any, with respect to the Notes.
19. Governing Law. The internal laws of the state of New York shall
govern this Indenture and the Notes without regard to the conflict of laws
provisions thereof.
20. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
21. 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).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and have directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers printed on the Notes.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Request may be made to:
Katz Media Corporation
125 West 55th Street
New York, NY 10019
Attention: Chief Financial Officer
A1-8
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to
_______________________________________________________________________________
(Insert assignee's Social Security or tax I.D. No.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
_______________________________________________________________________________
Date: ___________________
Your Signature: ______________________________
(Sign exactly as your name appears on the
face of this Security)
Signature Guarantee:***_______________________
- --------
*** Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A1-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 or 4.14 of the Indenture, check the box below:
[_]Section 4.13 [_]Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.13 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:______________________________________
(Sign exactly as your name appears on the Security)
Tax Identification No.: _____________________________
Signature Guarantee:*________________________________
- --------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-10
<PAGE>
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES FOR ANOTHER NOTE2
The following exchanges of a part of this Global Note for Definitive
Notes or another Global Note have been made:
<TABLE>
<CAPTION>
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase following such authorized officer
in Principal Amount in Principal Amount decrease Trustee or Note
Date of Exchange of this Global Note of this Global Note (or increase) Custodian
- ------------------ ------------------- -------------------- ------------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
2. To be included only if the Note is issued in global form.
A1-11
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
10 1/2% Series [A/B] Senior Subordinated Note due 2007
No. $__________
CUSIP No.
KATZ MEDIA CORPORATION
promises to pay to
or registered assigns,
the principal sum of
Dollars on January 15, 2007.
Interest Payment Dates: July 15 and January 15.
Record Dates: January 1 and July 1.
Dated: December 19, 1996
KATZ MEDIA CORPORATION
By:______________________________
Name:
Title:
Trustee's Certificate of Authentication
Dated: December 19, 1996
This is one of the [Global] Notes referred to in the within-mentioned Indenture:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Trustee
By:_____________________________
(Authorized Signatory)
A2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
10 1/2% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. THE DEPOSITORY TRUST COMPANY SHALL ACT AS THE DEPOSITARY UNTIL A
SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE REGISTRAR. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]1
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c) or (d), BASED UPON
AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
- --------
1 This paragraph should be included only if the Note is issued in global
form.
A2-2
<PAGE>
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE."1
Katz Media Corporation, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at the rate of 10
1/2% per annum, which interest shall be payable in cash semi-annually on January
1 and July 1 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"); provided that the
first Interest Payment Date shall be July 1, 1997. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
This Regulation S Temporary Global Note is issued in respect of an
issue of 10 1/2% Senior Subordinated Notes due 2007 (the "Notes") of the
Company, limited to the aggregate principal amount of U.S. $ 100.0 million
issued pursuant to an Indenture (the "Indenture") dated as of December 19, 1996,
between the Company, Katz Communications, Inc., Katz Millennium Marketing Inc.,
Banner Radio Sales, Inc., Christal Radio Sales, Inc., Eastman Radio Sales, Inc.,
Seltel Inc., Katz Cable Corporation and The National Payroll Company, Inc., as
Guarantors (the "Guarantors") and American Stock Transfer & Trust Company, as
trustee (the "Trustee"), and is governed by the terms and conditions of the
Indenture governing the Notes, which terms and conditions are incorporated
herein by reference and, except as otherwise provided herein, shall be binding
on the Company and the Holder hereof as if fully set forth herein. Unless the
context otherwise requires, the terms used herein shall have the meanings
specified in the Indenture.
Until this Regulation S Temporary Global Note is exchanged for
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Notes under the Indenture.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Regulation S Permanent Global Notes or Rule 144A Global
Notes only (i) on or after the termination of the 40-day restricted period (as
defined in Regulation S) and (ii) upon presentation of certificates (accompanied
by an opinion of counsel, if applicable) required by Article 2 of the Indenture.
Upon exchange of this Regulation S Temporary Global Note for one or more
Regulation S Permanent Global Notes or Rule 144A Global Notes, the Trustee shall
cancel this Regulation S Temporary Global Note.
This Regulation S Temporary Global Note shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This Regulation
S Temporary Global Note shall be governed by and construed in accordance with
the laws of the State of the New York. All references to "$," "Dollars,"
"dollars" or "U.S. $" are to 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 therein.
- --------
1 This paragraph should be removed upon the exchange of Series A
Notes for Series B Notes in the Exchange Offer or upon the registration of
the Series A Notes pursuant to the terms of the Registration Rights
Agreement.
A2-3
<PAGE>
SCHEDULE OF EXCHANGES FOR GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for other Global Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase following such authorized officer
in Principal Amount in Principal Amount decrease Trustee or Note
Date of Exchange of this Global Note of this Global Note (or increase) Custodian
- ------------------ ------------------- -------------------- ------------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
A2-4
<PAGE>
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.06(a)(i) of the Indenture)
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Corporate Trust Division
Re: 10 1/2% Notes due 2007 of Katz Media Corporation
Reference is hereby made to the Indenture, dated as of December 19,
1996 (the "Indenture"), between Katz Media Corporation, as issuer (the
"Company"), Katz Communications, Inc., Katz Millennium Marketing Inc., Banner
Radio Sales, Inc., Christal Radio Sales, Inc., Eastman Radio Sales, Inc., Seltel
Inc., Katz Cable Corporation and The National Payroll Company, Inc., as
Guarantors (the "Guarantors") and American Stock Transfer & Trust Company, as
trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Notes which are
evidenced by one or more Rule 144A Global Notes (CUSIP 486107AA3) and held with
the Depositary in the name of ____________________________ (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in the Notes
to a Person who will take delivery thereof in the form of an equal principal
amount of Notes evidenced by one or more Regulation S Global Notes (CUSIP
U24450AA3), which amount, immediately after such transfer, is to be held with
the Depositary through Euroclear or Cedel Bank or both (Common Code 7211783).
In connection with such request and in respect of such Notes, the
Transferor hereby certifies that such transfer has been effected in compliance
with the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with Rule 903 or Rule 904 of Regulation S under the United
States Securities Act of 1933, as amended (the "Securities Act"), and
accordingly the Transferor hereby further certifies that:
(1) The offer of the Notes was not made to a person in the United
States;
(2) either:
(a) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person
acting on its behalf reasonably believed and believes that
the transferee 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 the Transferor nor any person acting on its behalf
knows that the transaction was prearranged with a buyer in
the United States;
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary
through Euroclear or Cedel Bank or both (Common Code 7211783).
Upon giving effect to this request to exchange a beneficial
interest in a Rule 144A Global Note for a beneficial interest in a Regulation S
B1-1
<PAGE>
Global Note, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Regulation S Global Notes pursuant to the
Indenture and the Securities Act and, if such transfer occurs prior to the end
of the 40-day restricted period associated with the initial offering of Notes,
the additional restrictions applicable to transfers of interest in the
Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantors and Donaldson, Lufkin &
Jenrette Securities Corporation (277 Park Avenue, New York, NY 10172), the
initial purchaser of such Notes being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
__________________________
[Insert Name of Transferor]
By: ______________________
Name:
Title:
Dated: _______________________
cc: Katz Media Corporation
Donaldson, Lufkin & Jenrette Securities Corporation
B1-2
<PAGE>
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.06(a)(ii) of the Indenture)
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Corporate Trust Division
Re: 10 1/2% Notes due 2007 of Katz Media Corporation
Reference is hereby made to the Indenture, dated as of December 19,
1996 (the "Indenture"), between Katz Media Corporation, as issuer (the
"Company"), Katz Communications, Inc., Katz Millennium Marketing Inc., Banner
Radio Sales, Inc., Christal Radio Sales, Inc., Eastman Radio Sales, Inc., Seltel
Inc., Katz Cable Corporation and The National Payroll Company, Inc., as
Guarantors (the "Guarantors") and American Stock Transfer & Trust Company, as
trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Notes which are
evidenced by one or more Regulation S Global Notes (CUSIP U24450AA3) and held
with the Depositary through Euroclear or Cedel Bank (Common Code 7211783) in the
name of ____________________________ (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Notes to a Person who
will take delivery thereof in the form of an equal principal amount of Notes
evidenced by one or more Rule 144A Global Notes (CUSIP 486107AA3), to be held
with the Depositary.
In connection with such request and in respect of such Notes, the
Transferor hereby certifies that:
[CHECK ONE]
[_] such transfer is being effected pursuant to and in accordance with
Rule 144A under the United States Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Notes are being transferred to a Person
that the Transferor reasonably believes is purchasing the Notes for
its own account, or for one or more accounts with respect to which
such Person exercises sole investment discretion, and such Person and
each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule
144A;
or
[_] such transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
[_] such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
[_] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
B2-1
<PAGE>
supported by an opinion of counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and such Notes are being transferred in compliance with any applicable blue sky
securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest
in Regulation S Global Notes for a beneficial interest in Rule 144A Global
Notes, the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Rule 144A Global Notes pursuant to the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantors and Donaldson, Lufkin &
Jenrette Securities Corporation (277 Park Avenue, New York, NY 10172), the
initial purchaser of such Notes being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
____________________________________
[Insert Name of Transferor]
By: _________________________________
Name:
Title:
Dated: _____________, _____
cc: Katz Media Corporation
Donaldson, Lufkin & Jenrette Securities Corporation
B2-2
<PAGE>
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE NOTES
(Pursuant to Section 2.06(b) of the Indenture)
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Corporate Trust Division
Re: 10 1/2% Notes due 2007 of Katz Media Corporation
Reference is hereby made to the Indenture, dated as of December 19,
1996 (the "Indenture"), between Katz Media Corporation, as issuer (the
"Company"), Katz Communications, Inc., Katz Millennium Marketing Inc., Banner
Radio Sales, Inc., Christal Radio Sales, Inc., Eastman Radio Sales, Inc., Seltel
Inc., Katz Cable Corporation and The National Payroll Company, Inc., as
Guarantors (the "Guarantors") and American Stock Transfer & Trust Company, as
trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Notes which are
evidenced by one or more Definitive Notes (CUSIP __________) in the name of
________________ (the "Transferor"). The Transferor has requested an exchange or
transfer of such Definitive Note(s) in the form of an equal principal amount of
Notes evidenced by one or more Definitive Notes (CUSIP _________), to be
delivered to the Transferor or, in the case of a transfer of such Notes, to such
Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange or transfer (the "Surrendered
Notes"), the Transferor hereby certifies that:
[CHECK ONE]
[_] the Surrendered Notes are being acquired for the Transferor's own
account, without transfer;
or
[_] the Surrendered Notes are being transferred to the Company;
or
[_] the Surrendered Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Notes are
being transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
[_] the Surrendered Notes are being transferred in a transaction permitted
by Rule 144 under the Securities Act;
B3-1
<PAGE>
or
[_] the Surrendered Notes are being transferred pursuant to an effective
registration statement under the Securities Act;
or
[_] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
supported by an opinion of counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantors and Donaldson, Lufkin &
Jenrette Securities Corporation (277 Park Avenue, New York, NY 10172), the
initial purchaser of such Notes being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
--------------------------
[Insert Name of Transferor]
By: ____________________________________
Name:
Title:
Dated: _____________, _____
cc: Katz Media Corporation
Donaldson, Lufkin & Jenrette Securities Corporation
B3-2
<PAGE>
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S PERMANENT GLOBAL
NOTE TO DEFINITIVE NOTE
(Pursuant to Section 2.06(c) of the Indenture)
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Corporate Trust Division
Re: 10 1/2% Notes due 2007 of Katz Media Corporation
Reference is hereby made to the Indenture, dated as of December 19,
1996 (the "Indenture"), between Katz Media Corporation, as issuer (the
"Company"), Katz Communications, Inc., Katz Millennium Marketing Inc., Banner
Radio Sales, Inc., Christal Radio Sales, Inc., Eastman Radio Sales, Inc., Seltel
Inc., Katz Cable Corporation and The National Payroll Company, Inc., as
Guarantors (the "Guarantors") and American Stock Transfer & Trust Company, as
trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Notes which are
evidenced by a beneficial interest in one or more Rule 144A Global Notes or
Regulation S Permanent Global Notes (CUSIP __________) in the name of
______________________ (the "Transferor"). The Transferor has requested an
exchange or transfer of such beneficial interest in the form of an equal
principal amount of Notes evidenced by one or more Definitive Notes (CUSIP
_________), to be delivered to the Transferor or, in the case of a transfer of
such Notes, to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange or transfer (the "Surrendered
Notes"), the Transferor hereby certifies that:
[CHECK ONE]
[_] the Surrendered Notes are being transferred to the beneficial owner of
such Notes;
or
[_] the Surrendered Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Notes are
being transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
[_] the Surrendered Notes are being transferred in a transaction permitted
by Rule 144 under the Securities Act;
or
B4-1
<PAGE>
the Surrendered Notes are being transferred pursuant to an effective
registration statement under the Securities Act;
or
such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
supported by an opinion of counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Guarantors and Donaldson, Lufkin &
Jenrette Securities Corporation (277 Park Avenue, New York, NY 10172), the
initial purchaser of such Notes being transferred. Terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S under the Securities Act.
--------------------------
[Insert Name of Transferor]
By: ____________________________
Name:
Title:
Dated: _____________, _____
cc: Katz Media Corporation
Donaldson, Lufkin & Jenrette Securities Corporation
B4-2
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS
----------------, -----
American Stock Transfer & Trust Department, as Registrar
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed purchase of certain 10 1/2% Series
[A/B] Senior Subordinated Notes due 2007 (the "Notes") of Katz Media
Corporation, a Delaware corporation (the "Company"), we represent that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act (an "Institutional Accredited Investor");
(ii) any purchase of Notes will be for our own account or for the
account of one or more other Institutional Accredited Investors;
(iii) in the event that we purchase any Notes, we will acquire such
Notes having a minimum purchase price of at least $100,000 for our own
account and for each separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing Notes;
(v) we are not acquiring Notes with a view to any distribution thereof
in a transaction that would violate the Securities Act or the securities
laws of any State of the United States or any other applicable
jurisdiction; provided that the disposition of our property and the
property of any accounts for which we are acting as fiduciary shall remain
at all times within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
necessary in connection with our decision to purchase Notes.
We understand that the Notes are being offered in a transaction not
involving any public offering within the meaning of the Securities Act and that
the Notes have not been registered under the Securities Act, and we agree, on
our own behalf and on behalf of each account for which we acquire any Notes,
that such Notes may be offered, resold, pledged or otherwise transferred only
(i) to a person whom we reasonably believe to be a qualified institutional buyer
(as defined in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A, in a transaction meeting the requirements of Rule 144
under the Securities Act, outside the United States in a transaction meeting the
requirements of Rule 904 under the Securities Act or in accordance with another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel if the Company so requests), (ii) to the Company or
(iii) pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any State of the United States
or any other applicable jurisdiction. We understand that the registrar will not
be required to accept for registration of transfer any Notes, except upon
presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with. We further understand that the
Notes purchased by us will be in the form of definitive physical certificates
and that such certificates will bear a legend reflecting the substance of this
paragraph.
We acknowledge that you, the Company and others will rely upon our
confirmations, acknowledgements and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
B4-3
<PAGE>
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
_____________________________________
[Name of Transferor]
By:_______________________
Name:
Title:
Address:
B4-4
<PAGE>
EXHIBIT D
FORM OF SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of a 10 1/2 Senior Subordinated Note due 2007 of Katz
Media Corporation, a Delaware corporation (the "Company") authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Notes and
the Obligations of the Company hereunder and thereunder, that: (a) the principal
of, premium, if any, interest and Liquidated Damages, if any, on the Notes will
be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration, redemption or otherwise, and interest on
the overdue principal, premium, if any (to the extent permitted by law),
interest on any interest, if any, and Liquidated Damages, if any, on the Notes,
and all other payment Obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full and performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other Obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration, redemption or otherwise. Failing
payment when so due of any amount so guaranteed or any performance so guaranteed
for whatever reason the Guarantors will be jointly and severally obligated to
pay the same immediately.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. THE TERMS OF
ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. In the case of
any discrepancy between this writing and Article 11 of the Indenture, Article 11
of the Indenture shall control.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Guarantor and its successors and
assigns until full, final and indefeasible payment of all of the Company's
obligations under the Notes and the Indenture (subject to Section 11.04 of the
Indenture) and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or assignment
of rights by any Holder of Notes or the Trustee, the rights and privileges
herein conferred upon the party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Subsidiary Guarantee of payment and not a guarantee of collection.
For purposes hereof, each Guarantor's liability shall be limited to
the lesser of (i) the aggregate amount of the Obligations of the Company under
the Notes and the Indenture and (ii) the amount, if any, which would not have
(A) rendered such Guarantor "insolvent" (as such term is defined in the United
States Bankruptcy Code and in the Debtor and Creditor Law of the State of New
York) or (B) left such Guarantor with unreasonably small capital at the time its
Subsidiary Guarantee of the Notes was entered into; provided that it will be a
presumption in any lawsuit or other proceeding in which a Guarantor is a party
that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount
set forth in clause (i) above unless any creditor, or representative of
creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of
the Guarantor, otherwise proves in such a lawsuit that the aggregate liability
of the Guarantor is the amount set forth in clause (ii) above. The Indenture
provides that, in making any determination as to solvency or sufficiency of
capital of a Guarantor in accordance with the previous sentence, the right of
such Guarantor to contribution from other Guarantors, and any other rights such
Guarantor may have, contractual or otherwise, shall be taken into account.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
D-1
<PAGE>
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
[GUARANTOR]
By:_______________________
Name
Title
D-2
<PAGE>
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of ,
____, between (the "Guarantor"), a subsidiary of Katz Media Corporation, a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company, as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of December 19, 1996, providing
for the issuance of an aggregate principal amount of $100,000,000 of 10 1/2%
Series [A/B] Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, Section 4.15 of the Indenture provides that under certain
circumstances the Company is required to cause the Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the Guarantor
shall unconditionally guarantee all of the Company's obligations under the Notes
pursuant to a Guarantee on the terms and conditions set forth in Article 11 of
the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees, jointly and
severally with all other Guarantors, to guarantee the Company's Obligations
under the Notes on the terms and subject to the conditions set forth in Article
11 of the Indenture and to be bound by all other applicable provisions of the
Indenture.
3. NO RECOURSE AGAINST OTHERS. No officer, employee, director,
incorporator or stockholder of the Company or a Guarantor shall have any
liability for any Obligations of the Company or a Guarantor under the Notes or
this Indenture, or for any claim based on, in respect of, or by reason of, such
Obligations or the creation of any such Obligation. Each Holder by accepting a
Note waives and releases all such liability, and such waiver and release is part
of the consideration for the issuance of the Notes.
4. GOVERNING LAW. The internal laws of the State of New York shall
govern this Supplemental Indenture, without regard to the conflict of laws
provisions thereof.
5. COUNTERPARTS. This Indenture may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
E-1
<PAGE>
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
E-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: __________________, ______
[GUARANTOR]
By:_____________________________
Name:
Title:
Attest:
- --------------------------------
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Trustee
By:_____________________________
Name:
Title:
Attest:
- --------------------------------
Name:
Title:
E-3
U.S. $180,000,000
CREDIT AGREEMENT
Dated as of December 19, 1996
among
KATZ MEDIA CORPORATION,
as Borrower,
THE LENDERS PARTY HERETO,
and
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent,
and
THE FIRST NATIONAL BANK OF BOSTON,
as Administrative Agent
ARRANGED BY:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS..................................... 2
1.1. Defined Terms........................................................ 2
1.2. Computation of Time Periods.......................................... 29
1.3. Accounting Terms..................................................... 29
1.4. Certain Terms........................................................ 30
ARTICLE II
AMOUNTS AND TERMS OF THE COMMITMENTS AND LOANS....................... 30
2.1. The Loans............................................................ 30
2.2. Making the Loans..................................................... 31
2.3. Fees ................................................................ 33
2.4. Reduction and Termination of the Commitments;
Scheduled Payments of Term Loans................................... 33
2.5. Repayment............................................................ 36
2.6. Prepayments.......................................................... 36
2.7. Conversion/Continuation Option....................................... 39
2.8. Interest............................................................. 40
2.9. Interest Rate Determination.......................................... 40
2.10. Increased Costs...................................................... 41
2.11. Illegality........................................................... 42
2.12. Capital Adequacy..................................................... 42
2.13. Payments and Computations............................................ 43
2.14. Taxes................................................................ 44
2.15. Sharing Payments, Etc................................................ 46
2.16. Removal of a Lender.................................................. 46
ARTICLE III
CONDITIONS OF LENDING................................................ 47
3.1. Conditions Precedent to Effectiveness................................ 47
3.2. Additional Conditions Precedent to Effectiveness..................... 50
3.3. Conditions Precedent to Each Loan.................................... 51
ARTICLE IV
REPRESENTATIONS AND WARRANTIES....................................... 51
4.1. Corporate Existence; Compliance with Law............................. 51
4.2. Corporate Power; Authorization; Enforceable
Obligations......................................................... 52
4.3. Taxes................................................................ 53
4.4. Full Disclosure................................................ ......54
4.5. Financial Matters.................................................... 54
4.6. Litigation........................................................... 55
4.7. Margin Regulations................................................... 55
4.8. Capitalization; Subsidiaries......................................... 55
4.9. ERISA................................................................ 56
i
<PAGE>
4.10. Liens............................................................... 56
4.11. Related Documents................................................... 56
4.12. No Burdensome Restrictions; No Defaults............................. 56
4.13. No Other Ventures................................................... 57
4.14. Investment Company Act.............................................. 57
4.15. Insurance........................................................... 57
4.16. Labor Matters....................................................... 57
4.17. Environmental Protection............................................ 58
4.18. Real Estate......................................................... 58
4.19. Restricted Payments................................................. 59
4.20. Conduct of Business................................................. 60
4.21. Representation Agreements........................................... 60
4.22. Force Majeure....................................................... 60
ARTICLE V
FINANCIAL COVENANTS.................................................. 60
5.1. Fixed Charge Coverage Ratio.......................................... 60
5.2. Total Interest Coverage Ratio........................................ 61
5.3. Total Debt to EBITDA Ratio........................................... 61
5.4. Capital Expenditures................................................. 62
ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS..................................... 62
6.1. Compliance with Laws, Etc............................................ 63
6.2. Conduct of Business.................................................. 63
6.3. Payment of Taxes, Etc................................................ 63
6.4. Maintenance of Insurance............................................. 63
6.5. Preservation of Corporate Existence, Etc............................. 64
6.6. Access............................................................... 64
6.7. Keeping of Books..................................................... 64
6.8. Maintenance of Properties, Etc....................................... 64
6.9. Application of Proceeds.............................................. 64
6.10. Financial Statements................................................. 65
6.11. Reporting Requirements............................................... 67
6.12. Leases............................................................... 68
6.13. New Real Estate...................................................... 69
6.14. Broker's Fee......................................................... 69
6.15. Fiscal Year.......................................................... 69
6.16. Separate Corporate Existence......................................... 69
ARTICLE VII
NEGATIVE COVENANTS................................................... 70
7.1. Liens, Etc........................................................... 70
7.2. Indebtedness......................................................... 72
7.3. Sale-Leaseback Transactions.......................................... 73
7.4. Restricted Payments.................................................. 73
7.5. Mergers, Stock Issuances, Sale of Assets, Etc........................ 74
7.6. Investments in Other Persons......................................... 76
7.7. Maintenance of Ownership of Subsidiaries............................. 78
7.8. Change in Nature of Business......................................... 78
7.9. Designated Senior Debt............................................... 79
ii
<PAGE>
7.10. Modification of Related Documents................................... 79
7.11. Modification of Material Agreements................................. 79
7.12. Contingent Obligations.............................................. 79
7.13. Transactions with Affiliates........................................ 80
7.14. Cancellation of Indebtedness........................................ 80
7.15. Capital Stock; No New Subsidiaries.................................. 81
7.16. Capital Structure................................................... 81
7.17. Adverse Transactions................................................ 81
7.18. No Further Negative Pledges......................................... 81
ARTICLE VIII
EVENTS OF DEFAULT.................................................... 82
8.1. Events of Default.................................................... 82
8.2. Remedies............................................................. 84
ARTICLE IX
THE AGENTS........................................................... 85
9.1. Authorization and Action............................................. 85
9.2. Reliance, Etc........................................................ 85
9.3. The Agents and their Affiliates...................................... 86
9.4. Lender Credit Decision............................................... 86
9.5. Indemnification...................................................... 87
9.6. Successor Agents..................................................... 87
ARTICLE X
MISCELLANEOUS........................................................ 88
10.1. Amendments, Etc...................................................... 88
10.2. Notices, Etc......................................................... 89
10.3. No Waiver; Remedies.................................................. 89
10.4. Costs; Expenses; Indemnities......................................... 90
10.5. Right of Set-off..................................................... 91
10.6. Binding Effect....................................................... 92
10.7. Assignments and Participations....................................... 92
10.8. GOVERNING LAW; SEVERABILITY.......................................... 96
10.9. SUBMISSION TO JURISDICTION; JURY TRIAL............................... 96
10.10 Section Titles....................................................... 97
10.11 Execution in Counterparts............................................ 97
10.12 Entire Agreement..................................................... 97
10.13 Confidentiality...................................................... 97
iii
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I - Commitments
Schedule II - List of Applicable Lending Offices and
Address for Notices
Schedule 4.8 - Subsidiaries
Schedule 4.18 - Material Leases
Schedule 4.19 - Restricted Payments
Schedule 7.1 - Existing Liens
Schedule 7.2 - Existing Indebtedness
Schedule 7.6 - Existing Investments
Schedule 7.13 - Indebtedness to Affiliates
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion or Continuation
Exhibit D - Form of Subsidiary Guaranty
Exhibit E - Form of Borrower Pledge Agreement
Exhibit F - Form of Subsidiary Pledge Agreement
Exhibit G - Form of Borrower Security Agreement
Exhibit H - Form of Subsidiary Security Agreement
Exhibit I - Form of Assignment and Acceptance
Exhibit J - Form of Opinion of Counsel
Exhibit K - Form of Parent Guaranty
Exhibit L - Form of Tranche A Term Note
Exhibit M - Form of Tranche B Term Note
Exhibit N - Form of Parent Pledge Agreement
iv
<PAGE>
THIS CREDIT AGREEMENT, dated as of December 19, 1996 (this
"Agreement"), among KATZ MEDIA CORPORATION, a Delaware corporation ("KMC"), the
---
financial institutions that are now or hereafter become parties hereto as
lenders (the "Lenders"), DLJ CAPITAL FUNDING, INC., as syndication agent
-------
hereunder for the Lenders (in such capacity, the "Syndication Agent"), and THE
------------------
FIRST NATIONAL BANK OF BOSTON, as administrative agent hereunder for the Lenders
(in such capacity, the "Administrative Agent").
--------------------
W I T N E S S E T H:
WHEREAS, KMC desires to refinance certain of its existing indebtedness
by (i) offering to purchase for cash all of KMC's approximately $97.8 million in
principal amount of its outstanding 12-3/4% Senior Subordinated Notes Due 2002
(the "Debentures") at a price (including any tender premiums and consent
----------
payments) of approximately 111.5% of the par value thereof plus accrued and
unpaid interest thereon of approximately $1,200,000 and, in connection
therewith, soliciting consents from the holders of the Debentures to certain
amendments to the terms of the indenture governing the Debentures, (ii)
terminating the revolving commitments and repaying approximately $94.5 million
in principal amount of indebtedness and accrued and unpaid interest under its
existing Third Amended and Restated Credit Agreement dated as of September 9,
1994, as amended to the date hereof (the "Existing Credit Agreement") and (iii)
--------------------------
repurchasing a contract from Katz Media Services, Inc., a Delaware corporation
("KMSI"), for approximately $1.3 million and making a loan to KMSI of
approximately $4.5 million, the aggregate proceeds of which will be used by KMSI
to repay approximately $5.8 million of indebtedness and terminate the
commitments under the existing bank credit agreement of KMSI;
WHEREAS, to finance the payments contemplated by the refinancings
described above and the payment of related fees and expenses of approximately
$5.1 million, KMC will issue not less than $100 million of new senior
subordinated debt securities and borrow up to $100 million in term loans and
approximately $15.2 million in revolving credit loans under this Agreement;
WHEREAS, in connection with the refinancings described above it is
contemplated that (i) KMC will merge (the "Merger") with and into its parent,
Katz Capital Corporation ("KCC"), with KCC being the surviving corporation and
assuming all of KMC's obligations, including under this Agreement, the Debenture
Indenture and the Indenture, and KCC being renamed "Katz Media Corporation",
(ii) all of the outstanding shares of KCC will be contributed by KMG to KMSI, a
wholly-owned subsidiary of KMG, and (iii) upon consummation of such corporate
restructuring, the Borrower will be a wholly-owned subsidiary of KMSI and KMSI
will be a wholly-owned subsidiary of KMG;
1
<PAGE>
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. As used in this Agreement, the following terms
-------------
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Accounts" with respect to any Person, has the meaning assigned to
--------
that term in the Security Agreement executed by such Person.
"Administrative Agent" has the meaning specified in the introductory
---------------------
paragraph.
"Affiliate" means, as to any Person, (a) any Subsidiary of such Person
---------
and (b) any other Person which, directly or indirectly, controls, is controlled
by, or is under common control with, such Person and includes, in the case of a
Person other than an individual, each officer or director or general partner of
such Person, and each Person who is the beneficial owner of 10% or more of such
Person's outstanding Stock having ordinary voting power of such Person. Each of
the DLJ Entities shall be deemed to be Affiliates of the Borrower and its
Subsidiaries for all purposes of this Agreement. For the purposes of this
definition, "control" of any Person means the possession of the power to direct
or cause the direction of management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, in no event shall any Lender, the Arranger or any
Agent be deemed to be an Affiliate of any Loan Party for the purposes of any
Loan Document.
"Agents" means, collectively, the Administrative Agent and the
------
Syndication Agent.
"Agreement" means this Credit Agreement, together with all Exhibits
---------
and Schedules hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Applicable Base Rate Margin" means, for any particular period for (A)
---------------------------
any Base Rate Loan which is a Tranche A Term Loan or a Revolving Credit Loan, a
rate per annum equal to the rate set forth below opposite the Total Debt to
EBITDA Ratio which is in effect for such particular period:
2
<PAGE>
Applicable
Total Debt to EBITDA Ratio Margin
-------------------------- -----------
Greater than 5.0 to 1.0 0.875%
Greater than 4.5 to 1.0 but less
than or equal to 5.0 to 1.0 0.625%
Greater than 4.0 to 1.0 but less
than or equal to 4.5 to 1.0 0.375%
Greater than 3.5 to 1.0 but less
than or equal to 4.0 to 1.0 0.125%
Less than or equal to 3.5 to 1.0 0.000%
; and (B) for any Base Rate Loan which is a Tranche B Term Loan a rate per annum
equal to the rate set forth below opposite the Total Debt to EBITDA Ratio which
is in effect for such particular period:
Total Debt to EBITDA Ratio Applicable Margin
-------------------------- ------------------
Greater than 5.0 to 1.0 1.375%
Less than or equal to 5.0 to 1.0 1.000%
Such rate for any particular period will be determined quarterly by the
Administrative Agent upon receipt of a certificate of the Borrower setting forth
the Total Debt to EBITDA Ratio (and its computation) as of the last day of the
most recently ended Fiscal Quarter and signed by a Responsible Officer of the
Borrower and delivered to the Administrative Agent pursuant to Section 6.10(a)
or 6.10(b) together with the financial statements referred to therein or, if the
Administrative Agent shall not have timely received such a certificate or
financial statements with respect to the last day of the most recently ended
Fiscal Quarter, such rate shall be 0.875% in the case of Tranche A Term Loans
and Revolving Credit Loans and 1.375% in the case of Tranche B Term Loans, until
such time as such certificate and financial statements are received. All such
determinations shall be effective on the fifth Business Day following receipt of
such certificate and financial statements or, if no such certificate or
financial statements shall be received in accordance with Section 6.10(a) or
6.10(b), as the case may be, then on the fifth Business Day following expiration
of the period during which delivery could have been timely made pursuant to
Section 6.10(a) or 6.10(b), as the case may be. The rate so determined shall
remain in effect until changed as provided herein.
"Applicable Eurodollar Rate Margin" means, for any particular period
----------------------------------
for (A) any Eurodollar Rate Loan which is a Tranche A Term Loan or a Revolving
Credit Loan, a rate per annum equal to the rate set forth below opposite the
Total Debt to EBITDA Ratio which is in effect for such particular period:
3
<PAGE>
Applicable
Total Debt to EBITDA Ratio Margin
-------------------------- ----------
Greater than 5.0 to 1.0 2.125%
Greater than 4.5 to 1.0 but less
than or equal to 5.0 to 1.0 1.875%
Greater than 4.0 to 1.0 but less
than or equal to 4.5 to 1.0 1.625%
Greater than 3.5 to 1.0 but less
than or equal to 4.0 to 1.0 1.375%
Greater than 3.0 to 1.0 but less
than or equal to 3.5 to 1.0 1.125%
Less than or equal to 3.0 to 1.0 0.875%
; and (B) for any Eurodollar Rate Loan which is a Tranche B Term Loan a rate per
annum equal to the rate set forth below opposite the Total Debt to EBITDA Ratio
which is in effect for such particular period:
Total Debt to EBITDA Ratio Applicable Margin
-------------------------- -----------------
Greater than 5.0 to 1.0 2.625%
Less than or equal to 5.0 to 1.0 2.250%
Such rate for any particular period will be determined quarterly by the
Administrative Agent upon receipt of a certificate of the Borrower setting forth
the Total Debt to EBITDA Ratio (and its computation) as of the last day of the
most recently ended Fiscal Quarter and signed by a Responsible Officer of the
Borrower and delivered to the Administrative Agent pursuant to Section 6.10(a)
or 6.10(b) together with the financial statements referred to therein or, if the
Administrative Agent shall not have timely received such a certificate or
financial statements with respect to the last day of the most recently ended
Fiscal Quarter, such rate shall be 2.125% in the case of Tranche A Term Loans
and Revolving Credit Loans and 2.625% in the case of Tranche B Term Loans until
such time as such certificate and financial statements are received. All such
determinations shall be effective on the fifth Business Day following receipt of
such certificate and financial statements or, if no such certificate or
financial statements shall be received in accordance with Section 6.10(a) or
6.10(b), as the case may be, then on the fifth Business Day following expiration
of the period during which delivery could have been timely made pursuant to
Section 6.10(a) or 6.10(b), as the case may be. The rate so determined shall
remain in effect until changed as provided herein.
"Applicable Lending Office" means, with respect to each Lender, its
--------------------------
Domestic Lending Office in the case of a Base Rate Loan and its Eurodollar
Lending Office in the case of a Eurodollar Rate Loan.
4
<PAGE>
"Arranger" means Donaldson, Lufkin & Jenrette Securities Corporation,
--------
as arranger of the credit facilities described herein.
"Asset Sale" means any sale or other disposition, or series of sales
----------
or other dispositions (including, without limitation, by merger or
consolidation, and whether by operation of law or otherwise, but excluding such
sales or dispositions permitted under Section 7.5(c)(i) through (v) and clause
(vii)), made on or after the Closing Date by the Borrower or any of its
Restricted Subsidiaries to any Person of (i) all or substantially all of the
outstanding Stock of any Subsidiary of the Borrower or (ii) any other asset or
assets of the Borrower or any of its Restricted Subsidiaries, including any
sale/leaseback under Section 7.3.
"Asset Sale Proceeds" means cash payments in Dollars or freely
---------------------
convertible into Dollars received by the Borrower or any of its Restricted
Subsidiaries (including, without limitation, any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received) from any Asset Sale (after repayment
of any Indebtedness other than the Loans, the Subordinated Notes or the
Debentures due by reason of such Asset Sale), in each case net of the amount of
(i) reasonable brokers' and advisors' fees and commissions payable in connection
with such Asset Sale, (ii) all foreign, Federal, state and local taxes payable
as a direct consequence of such Asset Sale, including, without limitation, in
connection with the payment of a dividend or the making of a distribution by a
Restricted Subsidiary of the Borrower of such cash payments to the Borrower or
any Restricted Subsidiary of the Borrower (including, without limitation, taxes
withheld in connection with the repatriation of such proceeds), net of any tax
benefits derived in respect of such dividend or distribution, (iii) the
reasonable fees and expenses attributable to such Asset Sale to the extent not
included in clause (i) above, and (iv) any amount required to be paid to any
Person (other than the Borrower and its Subsidiaries) owning a beneficial
interest in the property or assets sold. For the purposes of this definition,
Asset Sale Proceeds shall be deemed to include, without limitation, any award of
compensation for any asset or property or group thereof taken by condemnation or
eminent domain and insurance proceeds for the loss of or damage to any asset or
property if such award or proceeds equals or exceeds $1,000,000 (per occurrence)
and within 180 days after the receipt thereof replacement or repair of such
asset or property has not commenced, except that in the event that at any time
such replacement or repair is abandoned or is otherwise discontinued or is not
diligently pursued, the remaining award or proceeds, as the case may be, shall
constitute Asset Sale Proceeds at such time.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee of such Lender, and approved by the Borrower
5
<PAGE>
and the Agents, in substantially the form of Exhibit I.
"Available Revolving Commitment" means, with respect to any Lender on
-------------------------------
any date, an amount equal to the Revolving Credit Commitment of such Lender on
such date minus the principal amount of such Lender's Revolving Credit Loans
outstanding on such date.
"Base Rate" means, for any period, a fluctuating interest rate per
---------
annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the higher of:
(a) the rate of interest announced publicly by the Administrative
Agent in Boston, Massachusetts, from time to time, as the Administrative Agent's
base rate; and
(b) the sum of (i) 1/2 of one percent per annum plus (ii) the Federal
Funds Rate.
"Base Rate Loan" means any outstanding principal amount of the Loans
--------------
of any Lender that bears interest with reference to the Base Rate.
"Borrower" means (i) prior to the consummation of the Merger, KMC and
--------
(ii) on and after the consummation of the Merger, KCC as the surviving
corporation in the Merger and the successor corporation to KMC. Upon
consummation of the Merger, KCC will be renamed "Katz Media Corporation".
"Borrower Pledge Agreement" means the Borrower Pledge Agreement, in
--------------------------
the form of Exhibit E hereto, executed by the Borrower in favor of the
Administrative Agent, as such agreement may be amended, supplemented or modified
from time to time.
"Borrower Security Agreement" means the Borrower Security Agreement,
----------------------------
in the form of Exhibit G hereto, executed by the Borrower in favor of the
Administrative Agent, as such agreement may be amended, supplemented or modified
from time to time.
"Borrowing" means a borrowing consisting of Revolving Credit Loans,
---------
Tranche A Term Loans or Tranche B Term Loans made on the same day on which
interest is calculated on the same basis and, if such basis is with reference to
the Eurodollar Rate for the same Interest Period, by the Lenders ratably
according to their respective Revolving Credit Commitments, Tranche A Term Loan
Commitments or Tranche B Term Loan Commitments, as the case may be.
"Business Day" means a day of the year on which banks are not required
------------
or authorized to close in Boston, Massachusetts or New York City, New York and,
if the applicable Business Day relates to a Eurodollar Rate Loan, a day on which
dealings in Dollars are also carried on in the London interbank market.
6
<PAGE>
"Capital Expenditures" means, without duplication, for any period, the
--------------------
aggregate of (i) all expenditures by the Borrower and its Restricted
Subsidiaries, except interest capitalized during construction, during such
period for property, plant or equipment, including, without limitation,
renewals, improvements, replacements and capitalized repairs, which would be
reflected as additions to property, plant or equipment on a consolidated balance
sheet of the Borrower and its Restricted Subsidiaries prepared in conformity
with GAAP, and (ii) the principal amount of all Indebtedness incurred or assumed
in connection with any such additions to property, plant and equipment. For the
purpose of this definition, the purchase price of equipment which is acquired
simultaneously with, or within 30 days following, the trade-in of existing
equipment owned by the Borrower or any of its Restricted 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 being traded in at such time or the amount of such proceeds,
as the case may be.
"Capitalized Lease" means, as to any Person, any lease of property by
------------------
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in conformity with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the
--------------------------------
capitalized amount of all obligations of such Person or any of its consolidated
Subsidiaries under Capitalized Leases, as determined in conformity with GAAP.
"Cash Equivalents" means (i) securities with maturities of one year or
----------------
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (ii) certificates of deposit,
eurodollar time deposits, overnight bank deposits and bankers' acceptances of
any Lender or any other commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 Capital (as defined in such
regulations) of not less than $100,000,000, having maturities of one year or
less from the date of acquisition, (iii) commercial paper of any Lender or
Affiliate thereof or any other issuer rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc., or carrying an equivalent
rating by a nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of investments, (iv) repurchase agreements
with respect to securities described in clause (i) above entered into with an
office of any Lender or any other commercial bank meeting the criteria specified
in clause (ii) above, (v) money market funds investing only in investments
7
<PAGE>
described in clauses (i) through (iv), and (vi) in the case of any Subsidiary
that is not a domestic Subsidiary, investments comparable in credit quality and
tenor to those referred to above and customarily used by corporations located in
such non-domestic Subsidiary's jurisdiction for cash management purposes.
"Cash Flow" means, for any Fiscal Year, an amount (determined as of
---------
the last day of any Fiscal Year with respect to such Fiscal Year then ended)
equal to (x) EBITDA minus (y) the sum, without duplication, of (i) scheduled
principal repayments of Total Debt and voluntary principal repayments,
redemptions or repurchases of Total Debt other than any such voluntary principal
repayments of Indebtedness under this Agreement (but excluding in any event any
voluntary principal repayments of Revolving Credit Loans except to the extent
Revolving Credit Commitments are permanently reduced in connection with such
repayments), (ii) Capital Expenditures actually paid or payable in cash, (iii)
Cash Interest Expense, (iv) the amount of all income taxes actually paid or
payable in cash by the Borrower and its Restricted Subsidiaries, (v) cash
expenditures for Permitted Acquisitions, (vi) an amount equal to the excess of
Representation Agreement Acquisition Payments over Representation Agreement
Termination Payments, (vii) cash Investments in Unrestricted Subsidiaries and
(viii) cash payments made under Section 7.4(i)(C) and (D).
"Cash Interest Expense" means, for any period, Net Interest Expense
----------------------
for such period, plus (a) interest expense of the Borrower and its Restricted
Subsidiaries capitalized during construction for such period to the extent
deducted in the determination of such Net Interest Expense, less (b) Non-Cash
Interest Expense for such period.
"Change of Control" means an event or series of events (including a
-----------------
merger or consolidation) as a result of which (a) any "person" or "group" within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act (other than the
DLJ Entities, their Affiliates and employees of any of the DLJ Entities or any
of their Affiliates or any other Person party to the Shareholders Agreement
dated as of August 1, 1994), together with their Affiliates (other than any such
Persons who are Affiliates of the DLJ Entities or any such parties to such
Shareholders Agreement), holds or acquires, directly or indirectly, outstanding
Voting Shares of the Borrower, Parent or KMG, such that such person or group,
together with such Affiliates thereof, is or becomes the "beneficial owner"
(within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of
outstanding Voting Shares of the Borrower, Parent or KMG, as the case may be,
entitling such person or group, together with such Affiliates, to exercise more
than 35% of the total voting power of all classes of outstanding Voting Shares
of the Borrower, Parent or KMG, as the case may be, or (b) during any period of
24 consecutive calendar months, individuals who were directors of the Borrower,
8
<PAGE>
Parent or KMG on the first day of such period (and any new director whose
election by the directors of the Borrower, Parent or KMG, as the case may be, or
nomination for election by the stockholders of the Borrower, Parent or KMG, as
the case may be, was approved by a vote of at least 75% of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved) shall
cease to constitute a majority of the directors of the Borrower, Parent or KMG,
as the case may be.
"Class" means each class of Lenders under this Agreement, with there
-----
being two separate classes of Lenders, i.e., (i) Lenders having Tranche A Term
Loan Exposure and/or Revolving Loan Exposure (taken together as a single class)
and (ii) Lenders having Tranche B Term Loan Exposure.
"Closing Date" means the date on which this Agreement becomes
-------------
effective as provided in Article III.
"Code" means the Internal Revenue Code of 1986 (or any successor
----
legislation thereto), as amended from time to time.
"Collateral" means all property and interests in property and proceeds
----------
thereof now owned or hereafter acquired by any Loan Party in or upon which a
Lien is granted under any of the Loan Documents.
"Collateral Documents" means, collectively, the Security Agreements,
--------------------
the Pledge Agreements and any other document, including, without limitation, any
leasehold mortgage or mortgage, executed and delivered by a Loan Party granting
a Lien on any of its property to secure payment of the Obligations, or any of
them.
"Commitments" means the commitments of the Lenders to make Loans as
-----------
set forth in Sections 2.1(a) through (c).
"Commitment Fee Percentage" means, for any particular period, the
--------------------------
percentage per annum equal to the percentage set forth below opposite the Total
Debt to EBITDA Ratio which is in effect for such particular period:
Commitment Fee
Total Debt to EBITDA Ratio Percentage
-------------------------- ----------
Greater than 4.5 to 1.0 0.375%
Greater than 4.0 to 1.0 but less
than or equal to 4.5 to 1.0 0.350%
Greater than 3.5 to 1.0 but less
than or equal to 4.0 to 1.0 0.300%
Less than or equal to 3.5 to 1.0 0.250%
Such percentage for any particular period will be determined quarterly by the
Administrative Agent upon receipt of a certificate of the Borrower setting forth
the Total Debt to EBITDA Ratio (and its computation) as of the last day of the
9
<PAGE>
most recently ended Fiscal Quarter and signed by a Responsible Officer of the
Borrower and delivered to the Administrative Agent pursuant to Section 6.10(a)
or 6.10(b) together with the financial statements referred to therein or, if the
Administrative Agent shall not have timely received such a certificate or
financial statements with respect to the last day of the most recently ended
Fiscal Quarter, such percentage shall be 0.375% until such time as such
certificate and financial statements are received. All such determinations shall
be effective on the fifth Business Day following receipt of such certificate and
financial statements or, if no such certificate or financial statements shall be
received in accordance with Section 6.10(a) or 6.10(b), as the case may be, then
on the fifth Business Day following expiration of the period during which
delivery could have been timely made pursuant to Section 6.10(a) or 6.10(b), as
the case may be. The percentage so determined shall remain in effect until
changed as provided herein.
"Commitment Reduction Date" has the meaning specified in Section
---------------------------
2.4(b).
"Contingent Obligation" means, as applied to any Person, any direct or
---------------------
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or Contractual Obligation of another Person, if the purpose or
intent of such Person of incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or that
any agreement relating thereto will be complied with, or that any holder of such
Indebtedness or Contractual Obligation will be protected (in whole or in part)
against loss in respect thereof. Contingent Obligations of a Person include,
without limitation and without duplication, (a) the direct or indirect
guarantee, endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of the obligation of another Person, (b) any liability of such
Person for the obligations of another Person through any agreement (contingent
or otherwise) (i) to purchase, repurchase or otherwise acquire such obligation
or any security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (iv) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such obligation or to assure
the holder of such obligation against loss or (v) to supply funds to, or in any
other manner invest in, such other Person (including, without limitation, to pay
for property or services irrespective of whether such property is received or
such services are rendered), if in the case of any agreement described under
10
<PAGE>
subclause (i), (ii), (iii), (iv) or (v) of this sentence the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the lesser of the amount of the
obligation so guaranteed or otherwise supported and any limitation on the amount
of such guarantee or support.
"Contractual Obligation" of any Person means any obligation,
------------------------
agreement, undertaking or similar provision of any security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument to which such Person is a party or by which it
or any of its property is bound or to which any of its properties is subject,
including, without limitation, in the case of the Borrower and each of its
Subsidiaries, any Representation Agreement.
"Debenture Indenture" means the Indenture, dated as of December 2,
--------------------
1992, among the Borrower, KCI, Banner Radio Sales, Inc., Christal Radio Sales,
Inc., Eastman Radio Sales, Inc., Seltel and First Fidelity Bank, National
Association, New Jersey, as trustee, pursuant to which the Debentures were
issued, as amended by a First Supplemental Indenture dated as of May 19, 1994
and a Second Supplemental Indenture dated as of August 12, 1994, and as the same
may, to the extent permitted by this Agreement, hereafter be amended,
supplemented or modified from time to time, including pursuant to the Third
Supplemental Indenture and the Fourth Supplemental Indenture, each to become
effective in connection with the transactions contemplated hereunder.
"Debentures" has the meaning specified in the introduction.
----------
"Debenture Tender Offer" means the offer to purchase for cash all of
------------------------
the outstanding Debentures and the solicitation of consents with respect to the
amendment of the Debenture Indenture, as described in the Offer to Purchase and
Consent Solicitation of Borrower dated November 14, 1996.
"Default" means any event which with the passing of time or the giving
-------
of notice or both would become an Event of Default.
"DLJ Entities" means, collectively, DLJ Merchant Banking Partners,
------------
L.P., DLJ International Partners, C.V., DLJ Offshore Partners, C.V., DLJ
Merchant Banking Funding, Inc. and DLJ First ESC L.L.C.
"Dollars" and the sign "$" each mean the lawful money of the United
-------
States of America.
11
<PAGE>
"Domestic Lending Office" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule II or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary that is
------------------------------
organized under the laws of the United States of America, any state thereof or
the District of Columbia.
"EBITDA" means, for any period, Net Income (Loss) for such period
------
taken as a single accounting period, plus (a) the sum, without duplication, of
the following amounts for the Borrower and its Restricted Subsidiaries on a
consolidated basis for such period determined in conformity with GAAP to the
extent included in the determination of such Net Income (Loss): (i) depreciation
expense; (ii) amortization expense; (iii) Net Interest Expense; (iv) total
income tax expense; (v) extraordinary losses (and other losses on Asset Sales
not otherwise included in extraordinary losses as determined in conformity with
GAAP); (vi) the excess, if any, of lease expense over the aggregate cash rental
payments actually made; (vii) any non-cash adjustment required pursuant to
Statement Number 106 of the Financial Accounting Standards Board; and (viii) any
premium payable in connection with, and any related charges, whether cash or
non-cash, resulting from, a redemption or repurchase of Debentures or
Subordinated Notes permitted under Section 7.4(ii)(B) or (C) less (b) the sum,
without duplication, of the following amounts for the Borrower and its
Restricted Subsidiaries on a consolidated basis for such period determined in
conformity with GAAP to the extent included in the determination of such Net
Income (Loss): (i) extraordinary gains (and other gains on Asset Sales not
otherwise included in extraordinary gains as determined in conformity with
GAAP); (ii) the Net Income (Loss) of any other Person that is accounted for by
the equity method of accounting, except to the extent of the amount of dividends
or distributions paid to such Person; (iii) the Net Income (Loss) of any other
Person acquired by the Borrower or a Restricted Subsidiary of the Borrower in a
transaction accounted for as a pooling of interests for any period prior to the
date of such acquisition; and (iv) the excess, if any, of the aggregate cash
rental payments actually made over lease expense.
"Eligible Assignee" means (A) (i) a commercial bank organized under
------------------
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
--------
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
12
<PAGE>
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act of 1933) which extends credit or buys
loans as one of its businesses including, but not limited to, insurance
companies, mutual funds and lease financing companies; and (B) any Lender and
any Affiliate of any Lender.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
-----
any successor legislation thereto), as amended from time to time.
"ERISA Event" means: (i) a Reportable Event; (ii) a withdrawal by any
-----------
member of the ERISA Group from a Pension 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); (iii) a complete or partial withdrawal by any member of
the ERISA Group from a Multiemployer Plan; (iv) the filing of a notice of intent
to terminate, or the treatment of a plan amendment as a termination under
Section 4041 of ERISA with respect to, or the initiation by the PBGC of
proceedings to terminate, a Pension Plan or Multiemployer Plan subject to Title
IV of ERISA; (v) a failure to make contributions or pay amounts due to a Pension
Plan required under Section 412 of the Code or Section 302 of ERISA; (vi) an
event or condition occurs or exists 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, a Pension Plan or Multiemployer Plan;
(vii) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any member of
the ERISA Group; (viii) an application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the Code with respect to any
Pension Plan; (ix) any member of the ERISA Group engaging in or otherwise
becoming liable in a material amount for a non-exempt prohibited transaction
with respect to a Pension Plan; (x) the assertion of a material claim (other
than routine claims for benefits) against any Plan other than a Multiemployer
Plan or the assets thereof, or against Borrower or its Subsidiaries in
connection with any Plan; (xi) receipt from the IRS of notice of the failure of
any Qualified Plan to qualify under Section 401(a) of the Code, or the failure
of any trust forming part of any Qualified Plan to qualify for exemption from
taxation under Section 501(a) of the Code; or (xii) the imposition of a Lien
pursuant to Sections 401(a)(29) or 412(n) of the Code or pursuant to ERISA with
respect to any Pension Plan.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
-----------
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Code.
13
<PAGE>
"Eurocurrency Liabilities" has the meaning assigned to that term in
-------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
---------------------------
office of such Lender specified as its "Eurodollar Lending Office" below its
name on Schedule II (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period, an interest rate per
---------------
annum equal to the rate per annum obtained by dividing (i) the rate of interest
per annum at which deposits in United States dollars are offered by the
principal office of the Administrative Agent in London, England to prime banks
in the London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially equal to
the Eurodollar Rate Loan of the Administrative Agent during such Interest Period
and for a period equal to such Interest Period by (ii) a percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Loan" means any outstanding principal amount of the
---------------------
Loans of any Lender that, for an Interest Period, bear interest at a rate
determined with reference to the Eurodollar Rate for such Interest Period.
"Eurodollar Rate Reserve Percentage" for any Interest Period means the
----------------------------------
reserve percentage applicable two Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined) having a term equal to
such Interest Period.
"Event of Default" has the meaning specified in Section 8.1.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Existing Credit Agreement" has the meaning specified in the
----------------------------
introduction.
"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
14
<PAGE>
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 Bank 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.
"Fiscal Quarter" means a fiscal quarter of the Borrower or KMG, as the
--------------
case may be, which shall be a three-month period ending on the last day of any
of March, June, September or December.
"Fiscal Year" means a fiscal year of the Borrower or KMG, as the case
------------
may be, which shall be the twelve-month period ending on December 31 of each
year.
"Fixed Charges" means, for any period, without duplication, the sum of
-------------
(i) Cash Interest Expense for such period, (ii) all cash payments of principal
on Indebtedness of the Borrower or any of its Restricted Subsidiaries on a
consolidated basis having a scheduled due date during such period, excluding,
specifically, any voluntary or mandatory payment of principal made pursuant to
Sections 2.6(b) or (d) during such period, (iii) all amounts paid by the
Borrower or any of its Restricted Subsidiaries on a consolidated basis on
Capitalized Lease Obligations having a scheduled due date during such period,
(iv) the amount of all income taxes actually paid or payable in cash by the
Borrower and its Restricted Subsidiaries during such period, (v) Capital
Expenditures of the Borrower or any of its Restricted Subsidiaries actually paid
or payable in cash during such period, and (vi) all amounts invested by the
Borrower and its Restricted Subsidiaries in Unrestricted Subsidiaries.
"GAAP" means generally accepted accounting principles in the United
----
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination; except that for purposes of Article V, GAAP shall be determined
------
on the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements referred to in
Section 4.5. In the event that there is a change in GAAP from those in effect on
the date hereof which would, but for the exception to the preceding sentence,
result in a change in the amounts or ratios calculated under the financial
covenants in Article V, then upon notice by the Borrower to the Agents, the
15
<PAGE>
parties agree to negotiate in good faith in order to amend such provisions to
take account of such change while substantially preserving the evaluation of the
Borrower's financial condition effected by such financial covenants prior to
such change.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantor" means the Parent and each Domestic Restricted Subsidiary
---------
of the Borrower.
"Indebtedness" of any Person means, without duplication, (i) all
------------
indebtedness of such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured) or for the deferred
purchase price of property or services, (ii) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property, provided that in any such case the amount of such indebtedness shall
--------
not, at any time, be deemed to exceed the fair market value of such property at
such time) which indebtedness is due more than 180 days from the date of the
incurrence of the obligation in respect thereof, (iv) all Capitalized Lease
Obligations of such Person, (v) all Contingent Obligations of such Person, (vi)
all obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any Stock or Stock Equivalents of such Person, valued at the
greatest of its voluntary or involuntary liquidation preference or purchase,
redemption, retirement or defeasance price, (vii) all obligations of such Person
under Interest Rate Contracts and (viii) all Indebtedness of any other Person
referred to in clause (i), (ii), (iii), (iv), (v), (vi) or (vii) 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 owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness.
"Indemnitees" has the meaning specified in Section 10.4.
-----------
"Indenture" means the Indenture, dated as of December 19, 1996,
---------
between the Borrower, the Borrower's Domestic Restricted Subsidiaries that are
parties thereto, as Guarantors, and American Stock Transfer & Trust Company, as
trustee, pursuant to which the Subordinated Notes are to be issued, as the same
16
<PAGE>
may, to the extent permitted by this Agreement, be amended, supplemented or
modified from time to time.
"Interest Period" means, in the case of any Eurodollar Rate Loan, (i)
----------------
initially, the period commencing on the date such Eurodollar Rate Loan is made
or on the date of conversion of a Base Rate Loan to such Eurodollar Rate Loan
and ending one, two, three or six months (or such other duration as is available
to each Lender) thereafter, as selected by the Borrower in its Notice of
Borrowing or Notice of Conversion or Continuation given to the Administrative
Agent pursuant to Section 2.2 or 2.7 and (ii) thereafter, if such Loan is
continued, in whole or in part, as a Eurodollar Rate Loan pursuant to Section
2.7, a period commencing on the last day of the immediately preceding Interest
Period therefor and ending one, two, three or six months (or such other duration
as is available to each Lender) thereafter, as selected by the Borrower in its
Notice of Conversion or Continuation given to the Administrative Agent pursuant
to Section 2.7; provided, however, that all of the foregoing provisions relating
-------- -------
to Interest Periods in respect of Eurodollar Rate Loans are subject to the
following:
(A) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension for any
Eurodollar Rate Loan would be to extend 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 for any Eurodollar Rate Loan 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 a
calendar month;
(C) the Borrower may not select any Interest Period which ends
after a Commitment Reduction Date in the case of the Revolving Credit
Loans or the date of a scheduled principal payment in the case of the
Term Loans, in either case as set forth in Article II, unless, after
giving effect to such selection, the aggregate unpaid principal amount
of the Revolving Credit Loans or the Term Loans, as the case may be,
for which Interest Periods end after such scheduled principal payment
shall be equal to or less than the principal amount to which the
Revolving Credit Loans or Revolving Credit Commitments or the Term
Loans, as the case may be, are required to be reduced after such
Commitment Reduction Date or after such scheduled principal payment is
made; and
17
<PAGE>
(D) the Borrower may not select any Interest Period in respect of
Loans having an aggregate amount less than $1,000,000.
"Interest Rate Contracts" means interest rate swap agreements,
-------------------------
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates.
"Investments" has the meaning specified in Section 7.6.
-----------
"IRS" means the Internal Revenue Service, or any successor thereto.
---
"Katz International" means Katz International Limited, a company
-------------------
organized under the laws of England.
"KCC" has the meaning specified in the introduction.
---
"KCI" means Katz Communications, Inc., a Delaware corporation and a
---
wholly-owned subsidiary of the Borrower.
"KMC" has the meaning specified in the introductory paragraph.
---
"KMG" means Katz Media Group, Inc., a Delaware corporation.
---
"KMS Credit Agreement" means the Credit Agreement dated as of
----------------------
September 6, 1996, among KMSI, the lenders party thereto, and The First National
Bank of Boston, as agent for such lenders.
"KMSI" has the meaning specified in the introduction.
----
"Leases" means, with respect to the Borrower or any of its Restricted
------
Subsidiaries, all of those leasehold estates in real property now owned by the
Borrower or such Restricted Subsidiary as lessee or sublessee or hereafter
acquired by the Borrower or such Restricted Subsidiary, as lessee or sublessee,
as such may be amended, supplemented or otherwise modified from time to time.
"Lenders" has the meaning specified in the introductory paragraph.
-------
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, the
interest of a lessor under a Capitalized Lease Obligation, any financing lease
having substantially the same economic effect as any of the foregoing, and the
18
<PAGE>
filing, under the Uniform Commercial Code or comparable law of any jurisdiction,
of any financing statement naming the owner of the asset to which such Lien
relates as debtor.
"Loan" or "Loans" means one or more of the Tranche A Term Loans, the
---- -----
Tranche B Term Loans or the Revolving Credit Loans or any combination thereof.
"Loan Documents" means, collectively, this Agreement, the Notes, the
--------------
Subsidiary Guaranty, the Parent Guaranty, the Collateral Documents and each
certificate, agreement or document executed by a Loan Party and delivered to the
Agents or any Lender in connection with or pursuant to any of the foregoing.
"Loan Party" means each of the Borrower, the Parent and each
-----------
Subsidiary of the Borrower which executes and delivers a Loan Document.
"Majority Lenders" means, at any time, Lenders having or holding at
-----------------
least 51% of the sum of (i) the then aggregate Tranche A Term Loan Exposure of
all Term Loan Lenders plus (ii) the then aggregate Tranche B Term Loan Exposure
of all Term Loan Lenders plus (iii) the aggregate Revolving Loan Exposure of all
Revolving Lenders.
"Majority Class Lenders" means, at any time, (i) for the Class of
------------------------
Lenders having Tranche A Term Loan Exposure and/or Revolving Loan Exposure,
Lenders having or holding 51% of the sum of the aggregate Tranche A Term Loan
Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all
Lenders, and (ii) for the Class of Lenders having Tranche B Term Loan Exposure,
Lenders having or holding 51% of the aggregate Tranche B Term Loan Exposure of
all Lenders.
"Material Adverse Change" means a material adverse change in any of
-------------------------
(i) the condition (financial or otherwise), business, performance, prospects,
operations or properties of the Borrower and its Restricted Subsidiaries taken
as a whole, (ii) the legality, validity or enforceability of any Loan Document,
(iii) the fully perfected first priority status of the Liens granted pursuant to
the Collateral Documents, (iv) the ability of the Borrower to repay the
Obligations or of any Loan Party to perform its obligations hereunder or under
any other Loan Document or (v) the rights and remedies of the Lenders or the
Agents under any of the Loan Documents.
"Material Adverse Effect" means an effect that results in or causes a
------------------------
Material Adverse Change.
"Material Lease" means any Lease pursuant to which the Borrower or any
--------------
of its Restricted Subsidiaries has incurred obligations in excess of $2,000,000
payable in any period of 12 consecutive months.
19
<PAGE>
"Material Plan" means any Pension Plan with Unfunded Liabilities in
--------------
excess of $5,000,000.
"Material Subsidiary" means a Subsidiary of the Borrower which (i) had
-------------------
more than $1,000,000 in revenue for the period of the four consecutive Fiscal
Quarters ending on the last day of the most recently ended Fiscal Quarter, or
(ii) at such time, owned more than $1,000,000 in assets.
"Merger" has the meaning specified in the introduction.
------
"Multiemployer Plan" means, at any time, an employee pension benefit
-------------------
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"NCC" means National Cable Communications, L.P., a Delaware limited
---
partnership.
"NCC Guaranty" means the guaranty dated January 20, 1995, executed by
------------
KCC in favor of the limited partners of NCC, with respect to the obligations of
Katz Cable Corporation, as general partner of NCC.
"Net Income (Loss)" means, for any period, the following amount
------------------
determined on a consolidated basis for such period in conformity with GAAP: the
aggregate of net income (or loss) from continuing operations of the Borrower and
its Restricted Subsidiaries; provided that the net income (or loss) from
--------
continuing operations of any Restricted Subsidiary acquired by the Borrower
during such period, including, without limitation, the net income (or loss)
attributable to any business or Representation Agreement acquired by the
Borrower or any of its Restricted Subsidiaries, shall only be included from the
date so acquired.
"Net Interest Expense" means, for any period, gross interest expense
---------------------
of the Borrower and its Restricted Subsidiaries, on a consolidated basis, for
such period determined in conformity with GAAP, less the following for the
----
Borrower and its Restricted Subsidiaries on a consolidated basis determined in
conformity with GAAP: the sum of (i) interest capitalized during construction
for such period, (ii) interest income for such period, and (iii) gains for such
period on Interest Rate Contracts (to the extent not included in interest income
above and to the extent not deducted in the calculation of such gross interest
expense) plus the following for the Borrower and its Restricted Subsidiaries on
----
a consolidated basis determined in conformity with GAAP: the sum of (i) losses
for such period on Interest Rate Contracts (to the extent not included in such
gross interest expense), and (ii) the expensing of upfront costs or fees for
20
<PAGE>
such period associated with Interest Rate Contracts (to the extent not included
in such gross interest expense).
"Net Representation Agreement Payments" has the meaning specified in
---------------------------------------
Section 7.5(c)(vi).
"Non-Cash Interest Expense" means, for any period, the sum of the
---------------------------
following amounts for the Borrower and its Restricted Subsidiaries on a
consolidated basis determined in conformity with GAAP to the extent included in
Net Interest Expense for such period: (i) the amount of amortized debt discount
for such period, including, without limitation, the amortization of any discount
or premium on the Debentures or the Subordinated Notes, (ii) the amount of
amortized financing costs which are capitalized in connection with or as a
result of the Existing Credit Agreement, this Agreement or the issuance of the
Debentures or the Subordinated Notes for such period and (iii) charges relating
to writeups or write-downs in the book carrying value of existing Indebtedness
of the Borrower or any of its Restricted Subsidiaries for such period.
"Notes" means one or more of the Tranche A Term Notes, the Tranche B
-----
Term Notes, or the Revolving Credit Notes.
"Notice of Conversion or Continuation" has the meaning specified in
-------------------------------------
Section 2.7.
"Notice of Borrowing" has the meaning specified in Section 2.2(a).
-------------------
"Obligations" means the Loans and all other advances, debts,
-----------
liabilities, obligations, covenants and duties owing by the Borrower or any of
the Restricted Subsidiaries to any Agent, any Lender or any Indemnitee, of every
type and description, present or future, arising under this Agreement, under any
other Loan Document or any Interest Rate Contract with a Lender, whether or not
evidenced by any note, guaranty or other instrument, whether or not for the
payment of money, whether arising by reason of an extension of credit, loan,
guaranty, Interest Rate Contract or indemnification, whether direct or indirect
(including, without limitation, those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term "Obligations" includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and disbursements and any other amounts
chargeable to the Borrower or any of the Restricted Subsidiaries under this
Agreement, any other Loan Document or any Interest Rate Contract with a Lender.
"Other Taxes" has the meaning specified in Section 2.14(b).
-----------
"Parent" means (i) prior to the consummation of the Merger, KCC and
------
(ii) upon the consummation of the Merger and the contribution of all of the
21
<PAGE>
outstanding shares of KCC by KMG to KMSI, KMSI.
"Parent Guaranty" means the Guaranty, in the form of Exhibit K hereto,
--------------- ---------
executed by each of KMSI and KCC in favor of the Administrative Agent, as such
guaranty may be amended, supplemented or otherwise modified from time to time.
"Parent Pledge Agreement" means the Parent Pledge Agreement, in the
------------------------
form of Exhibit N hereto, executed by each of KMSI and KCC in favor of the
----------
Administrative Agent, as such agreement may be amended, supplemented or modified
from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
----
thereto.
"Pension Plan" means a Plan that is covered by Title IV of ERISA or
-------------
subject to the minimum funding standards under Section 412 of the Code.
"Permit" means any permit, approval, authorization, license, variance
------
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Acquisition" means any transaction pursuant to which the
----------------------
Borrower or any of its Restricted Subsidiaries acquires, whether by means of a
purchase, capital contribution, assumption of liabilities, merger, consolidation
or otherwise, (i) an equity interest in any Person which has the effect of
making such Person a direct or indirect wholly-owned Subsidiary of the Borrower
or (ii) all or a substantial portion of the business or assets of another Person
or a business or line of business of another Person; provided that in each case
--------
(a) the aggregate consideration provided by the Borrower and any of its
Subsidiaries, including but not limited to the fair market value of any cash,
property, stock or services so provided, and the amount of any Indebtedness or
other liabilities assumed, does not exceed $25,000,000 in the aggregate for any
such transaction or series of related transactions; (b) no Default or Event of
Default has occurred and is continuing or would occur as a result of such
transaction; (c) the Borrower and its Subsidiaries otherwise comply with the
provisions of this Agreement relating to such transaction, including without
limitation the provisions of Section 7.15 with respect to the pledging of the
Stock or Stock Equivalents of such Person to the Administrative Agent and the
execution of a Subsidiary Guaranty, Subsidiary Pledge Agreement and Subsidiary
Security Agreement to the same extent as if such Person were a newly-organized
Subsidiary; (d) the Person so acquired is engaged, or the business or assets so
acquired are of a type utilized, in a line of business substantially similar to
that engaged in by Borrower and its Subsidiaries; (e) the Borrower and its
Restricted Subsidiaries will be in pro forma compliance with the provisions of
22
<PAGE>
Article V as if such transaction had occurred on the first day of the relevant
calculation period, in the case of income statement elements of such covenants,
or on the date of determination, in the case of balance sheet elements of such
covenants, in each case after giving effect to all Indebtedness incurred or
repaid in connection therewith, including assumed liabilities, and (f) the
Borrower shall have provided a certificate of a Responsible Officer to the
foregoing effect, including copies of such financial covenant calculations, to
the Agents not less than five Business Days prior to the consummation of such
transaction.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a Governmental Authority.
"Plan" means, at any time, an employee pension benefit plan or
----
employee welfare benefit plan (other than a Multiemployer Plan) which is covered
by ERISA and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or contributed to, by any
Person which was at such time a member of the ERISA Group for employees of any
Person which was at such time a member of the ERISA Group.
"Pledge Agreements" means, collectively, the Borrower Pledge
-------------------
Agreement, the Parent Pledge Agreement and the Subsidiary Pledge Agreement.
"Pledged Collateral" means, collectively, the Pledged Collateral as
-------------------
defined in each of the Pledge Agreements.
"Pledged Shares" means, collectively, the Pledged Shares as defined in
--------------
each of the Pledge Agreements.
"Pro Forma Total Debt to EBITDA Ratio" means for the Borrower, the
-------------------------------------
ratio of Total Debt as of the date of determination to EBITDA for the four
Fiscal Quarters ending on the last day of the most recently ended Fiscal
Quarter; provided that to the extent that during such period the Borrower or any
of its Restricted Subsidiaries has made an acquisition of a Restricted
Subsidiary or of all or a substantial portion of the business or assets of
another Person or a business or line of business of another Person, such
calculations shall be made with respect to the business or assets so acquired or
with respect to the acquired operations of any Restricted Subsidiary so acquired
as if such acquisition took place on the first day of such period on a pro forma
basis for the portion of such period prior to the date of such acquisition and
on an actual basis for the portion of such period after the date of such
acquisition; and provided further that such calculations shall be made after
- -------- ------- giving effect to any borrowings made in connection with the
event for which the determination is being made, and the application of the
proceeds of such borrowings to prepay, redeem or repurchase indebtedness and to
the application of the proceeds of any equity issued by KMG in connection with
any determinations being made pursuant to Section 2.6(d)(ii).
23
<PAGE>
"Qualified Plan" means a Plan that is or was intended to be qualified
--------------
under Section 401(a) of the Code.
"Ratable Portion" or "ratably" means, on any date of
----------------- -------
determination, (i) with respect to all payments, computations and other matters
relating to the Tranche A Term Loan Commitment or the Tranche A Term Loans of
any Lender, the percentage obtained by dividing (x) the Tranche A Term Loan
--------
Exposure of that Lender on such date by (y) the aggregate Tranche A Term Loan
Exposure of all Lenders on such date, (ii) with respect to all payments,
computations and other matters relating to the Tranche B Term Loan Commitment or
the Tranche B Term Loans of any Lender, the percentage obtained by dividing (x)
the Tranche B Term Loan Exposure of that Lender on such date by (y) the
aggregate Tranche B Term Loan Exposure of all Lenders on such date, and (iii)
with respect to all payments, computations and other matters relating to the
Revolving Loan Commitment or the Revolving Credit Loans of any Lender the
percentage obtained by dividing (x) the Revolving Loan Exposure of that Lender
--------
on such date by (y) the aggregate Revolving Loan Exposure of all Lenders on such
date, and (iv) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Tranche A Term Loan Exposure
--------
of that Lender on such date plus the Tranche B Term Loan Exposure of that Lender
----
on such date plus the Revolving Loan Exposure of that Lender on such date by (y)
---- --
the sum of the aggregate Tranche A Term Loan Exposure of all Lenders on such
date plus the aggregate Tranche B Term Loan Exposure of all Lenders on such date
----
plus the aggregate Revolving Loan Exposure of all Lenders on such date, in any
such case as the applicable percentage may be adjusted by assignments permitted
pursuant to Section 10.7.
"Related Documents" means the Debenture Indenture, the
-------------------
Debentures, the Indenture, the Subordinated Notes and all other instruments and
documents executed and delivered in connection with any of the foregoing.
"Reportable Event" means a "reportable event" within the meaning
-----------------
of Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice to
the PBGC has been waived by regulation).
"Representation Agreement" means any agreement now in effect or
-------------------------
hereafter entered into between the Borrower or any of its Restricted
Subsidiaries and owners and operators of electronic media (including, without
limitation, radio and television stations, cable systems, interactive television
projects, Internet and other on-line services) pursuant to which the Borrower or
24
<PAGE>
such Restricted Subsidiary sells advertising on such media, as such agreements
may be amended, supplemented or otherwise modified from time to time.
"Representation Agreement Acquisition Payments" means, for any
------------------------------------------------
period, the aggregate of all cash payments which would be reflected as "Payment
made on purchase of station representation contracts" on a consolidated
statement of cash flows of the Borrower and its Restricted Subsidiaries prepared
in conformity with GAAP.
"Representation Agreement Termination Payments" means, for any
------------------------------------------------
period, the aggregate of all cash payments received which would be reflected as
"Payment received on sale of station representation contracts" on a consolidated
statement of cash flows of the Borrower and its Restricted Subsidiaries prepared
in conformity with GAAP.
"Requirement of Law" means, as to any Person, the charter and
-------------------
bylaws or other organizational or governing documents of such Person, and all
Federal, state and local laws, rules and regulations, including, without
limitation, all disclosure requirements of ERISA and all orders, judgments,
decrees or other determinations of an arbitrator, court or other Governmental
Authority or arbitrator, applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Responsible Officer" means, with respect to any Person, any of
--------------------
the principal executive officers of such Person.
"Restricted Subsidiary" means a Subsidiary of the Borrower other
----------------------
than an Unrestricted Subsidiary and includes all of the Subsidiaries of the
Borrower existing as of the date hereof other than NCC.
"Revolving Credit Commitment" has the meaning specified in
-----------------------------
Section 2.1(a).
"Revolving Credit Loan" has the meaning specified in Section
-----------------------
2.1(a).
"Revolving Credit Note" means a promissory note of the Borrower
----------------------
payable to the order of any Lender in a principal amount equal to the amount of
such Lender's Revolving Credit Commitment as originally in effect, in
substantially the form of Exhibit A, evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from the Revolving Credit Loans made by
such Lender.
"Revolving Lender" means a Lender having a Revolving Credit
-----------------
Commitment or having Revolving Credit Loans outstanding.
25
<PAGE>
"Revolving Loan Exposure" means, with respect to any Lender as of
-----------------------
any date of determination, (i) prior to the termination of the Revolving Credit
Commitments, that Lender's Revolving Credit Commitment, and (ii) after the
termination of the Revolving Credit Commitments, the aggregate outstanding
principal amount of the Revolving Credit Loans of that Lender.
"Secured Parties" means the Lenders, the Syndication Agent and
----------------
the Administrative Agent.
"Security Agreements" means, collectively, the Borrower Security
-------------------
Agreement and the Subsidiary Security Agreement.
"Solvent" means, with respect to any Person, that the value of
-------
the assets of such Person (both at fair value and present fair saleable value)
is, on the date of determination, greater than the total amount of liabilities
(including, without limitation, contingent and unliquidated liabilities) of such
Person as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and does not have
unreasonably small capital. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Stock" means shares of capital stock, beneficial or partnership
-----
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities convertible into or
------------------
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any stock, whether or not presently convertible, exchangeable or
exercisable.
"Subordinated Notes" means the up to $100 million in aggregate
-------------------
principal amount of 10-1/2% Senior Subordinated Notes due 2007 of the Borrower,
as such notes may be amended from time to time to the extent permitted pursuant
to Section 7.10.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership or other business entity of which an aggregate of 50% or more of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors, managers, trustees or other controlling Persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned or controlled by such Person and/or one or more Subsidiaries
of such Person (irrespective of whether, at the time, Stock of any other class
or classes of such entity shall have or might have voting power by reason of the
happening of any contingency).
26
<PAGE>
"Subsidiary Guaranty" means a Guaranty, in the form of Exhibit D
--------------------
hereto, executed by one or more Domestic Restricted Subsidiaries of the Borrower
in favor of the Administrative Agent, as such guaranty may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means a Pledge Agreement, in the
----------------------------
form of Exhibit F hereto, executed by one or more Domestic Restricted
Subsidiaries of the Borrower in favor of the Administrative Agent, as such
agreement may be amended, supplemented or modified from time to time.
"Subsidiary Security Agreement" means a Security Agreement, in
------------------------------
the form of Exhibit H hereto, executed by one or more Domestic Restricted
Subsidiaries of the Borrower in favor of the Administrative Agent, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"Syndication Agent" has the meaning specified in the introductory
-----------------
paragraph.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary of
-------------
such Person, and (ii) any Affiliate of such Person with which such Person files
or is eligible to file consolidated, combined or unitary tax returns.
"Taxes" has the meaning specified in Section 2.14(a).
-----
"Tax Return" has the meaning specified in Section 4.3.
----------
"Termination Date" means the date on or before September 30, 2003
----------------
on which the Revolving Credit Commitments terminate in whole pursuant to Section
2.4 or 8.2.
"Term Loan Lender" means a Lender having a Term Loan Commitment
----------------
or having Term Loans outstanding.
"Term Loan Commitment" means, collectively, the Tranche A Term
--------------------
Loan Commitment and the Tranche B Term Loan Commitment of any Lender.
"Term Loans" means, collectively, the Tranche A Term Loans and
----------
the Tranche B Term Loans made by any Lender to the Borrower pursuant to Sections
2.1(b) and (c).
"Total Debt" means, at any date, the aggregate Indebtedness
-----------
(other than (i) Indebtedness within the meaning of clause (vii) of the
definition of Indebtedness, (ii) Indebtedness consisting of contingent
reimbursement obligations with respect to surety bonds, letters of credit and
bankers acceptances, (iii) Indebtedness consisting of Contingent Obligations in
respect of obligations which are not themselves Indebtedness or (iv)
Indebtedness consisting of deferred payment obligations in respect of the
acquisition of Representation Agreements) of the Borrower and its Restricted
27
<PAGE>
Subsidiaries on a consolidated basis at such date.
"Total Debt to EBITDA Ratio" means, for the Borrower for any
---------------------------
Fiscal Quarter, the ratio of Total Debt on the last day of such Fiscal Quarter
to EBITDA for the four Fiscal Quarters ending on the last day of such Fiscal
Quarter; provided that until the delivery to the Administrative Agent of a
--------
certificate of the Borrower setting forth the Total Debt to EBITDA Ratio as of
the last day of the first Fiscal Quarter ending after the Closing Date, the
Applicable Base Rate Margin, the Applicable Eurodollar Rate Margin and the
Commitment Fee Percentage shall be determined based upon the certificate of the
Borrower delivered on the Closing Date pursuant to Section 3.1(v).
"Total Interest Coverage Ratio" means, for the Borrower for any
------------------------------
period, the ratio of EBITDA for such period to Cash Interest Expense during such
period.
"Tranche A Term Loan" has the meaning specified in Section
---------------------
2.1(b).
"Tranche A Term Loan Commitment" has the meaning specified in
-------------------------------
Section 2.1(b).
"Tranche A Term Loan Exposure" means, with respect to a Lender of
----------------------------
a Tranche A Term Loan as of any date of determination, (i) prior to the
termination of a Lender's Tranche A Term Loan Commitment, that Lender's Tranche
A Term Loan Commitment, and (ii) after the termination of all of a Lender's
Tranche A Term Loan Commitment, the outstanding principal amount of the Tranche
A Term Loans of that Lender.
"Tranche A Term Note" means a promissory note of the Borrower
-------------------
payable to the order of any Lender in a principal amount equal to the amount of
such Lender's Tranche A Term Loan Commitment as originally in effect, in
substantially the form of Exhibit L, evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from the Tranche A Term Loans made by such
Lender.
"Tranche B Term Loan" has the meaning specified in Section
---------------------
2.1(c).
"Tranche B Term Loan Commitment" has the meaning specified in
-------------------------------
Section 2.1(c).
"Tranche B Term Loan Exposure" means, with respect to a Lender of
----------------------------
a Tranche B Term Loan as of any date of determination, (i) prior to the
termination of a Lender's Tranche B Term Loan Commitment, that Lender's Tranche
B Term Loan Commitment, and (ii) after the termination of all of a Lender's
Tranche B Term Loan Commitment, the outstanding principal amount of the Tranche
B Term Loans of that Lender.
28
<PAGE>
"Tranche B Term Note" means a promissory note of the Borrower
-------------------
payable to the order of any Lender in a principal amount equal to the amount of
such Lender's Tranche B Term Loan Commitment as originally in effect, in
substantially the form of Exhibit M, evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from the Tranche B Term Loans made by such
Lender.
"Unfunded Liabilities" means, with respect to any Plan at any
---------------------
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan exceeds (ii) the fair market value of all Plan assets allocable
to such liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan using actuarial assumptions then in effect under such Plan, but only
to the extent that such excess represents a potential liability of a member of
the ERISA Group to the PBGC or any other Person under Title IV of ERISA.
"Unrestricted Subsidiary" means NCC and any other Subsidiary of
------------------------
the Borrower not in existence on the date hereof that is designated by the
Borrower by notice to the Administrative Agent as an Unrestricted Subsidiary and
in each case (other than, upon consummation of the Merger, NCC with respect to
the NCC Guaranty) as to which each of the following conditions is satisfied: (a)
neither the Borrower nor any of its Restricted Subsidiaries (i) provides credit
support for any Indebtedness of such Subsidiary (including any undertaking,
agreement or instrument evidencing such Indebtedness) or (ii) is directly or
indirectly liable for any Indebtedness of such Subsidiary or has any obligation
to make any capital contribution to, or any payment on behalf of, such
Subsidiary; and (b) no default with respect to any Indebtedness of such
Subsidiary (including any right which the holders thereof may have to take
enforcement action against such Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any Indebtedness of the Borrower or any of its
Restricted Subsidiaries to declare a default on such Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity.
"Voting Shares" means, for any Person, Stock of such Person which
-------------
under ordinary circumstances has the voting power entitling the holders of such
Stock to elect the board of directors or other governing body of such Person.
1.2. Computation of Time Periods. In this Agreement, in the
-----------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including".
1.3. Accounting Terms. All accounting terms not specifically
-----------------
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
29
<PAGE>
1.4. Certain Terms. (a) The words "herein," "hereof" and
--------------
"hereunder" and other words of similar import refer to this Agreement as a
whole, and not to any particular Article, Section, subsection or clause in this
Agreement. References herein to an Exhibit, Schedule, Article, Section,
subsection or clause shall refer to the appropriate Exhibit or Schedule to, or
Article, Section, subsection or clause in, this Agreement.
(b) The terms Lender, Syndication Agent and Administrative Agent
include their respective successors and the term Lender includes each assignee
of such Lender who becomes a party hereto pursuant to Section 10.7.
(c) References to any agreement, instrument or other document
refer to such agreement, instrument or other document as originally executed or,
if subsequently amended, replaced or supplemented from time to time, as so
amended, replaced or supplemented and in effect at the relevant time of
reference.
ARTICLE II
AMOUNTS AND TERMS OF THE COMMITMENTS AND LOANS
2.1. The Loans. (a) On the terms and subject to the conditions
---------
contained in this Agreement, each Lender severally agrees to make loans (each a
"Revolving Credit Loan") to the Borrower from time to time on any Business Day
-----------------------
during the period from the Closing Date until the Termination Date in an
aggregate amount not to exceed at any time outstanding the amount set forth
opposite such Lender's name on Schedule I as its Revolving Credit Commitment
(such Lender's "Revolving Credit Commitment"). Within the limits of each
-----------------------------
Lender's Revolving Credit Commitment, amounts prepaid pursuant to Section 2.6(b)
may be reborrowed under this Section 2.1(a). The Revolving Credit Loans of each
Lender shall be evidenced by a Revolving Credit Note.
(b) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make loans (each a "Tranche A Term
--------------
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
- ----
set forth opposite such Lender's name on Schedule I as its Tranche A Term Loan
----------
Commitment (such Lender's "Tranche A Term Loan Commitment"). Each Lender's
-------------------------------
Tranche A Term Loan Commitment shall expire immediately and without further
action on the earlier of (i) the making of the Tranche A Term Loans on the
Closing Date or (ii) January 31, 1997 if the initial Tranche A Term Loans are
not made on or before that date. Amounts borrowed under this Section 2.1(b) and
subsequently repaid or prepaid may not be reborrowed. The Tranche A Term Loans
of each Lender shall be evidenced by a Tranche A Term Note.
30
<PAGE>
(c) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make loans (each a "Tranche B Term
--------------
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
- ----
set forth opposite such Lender's name on Schedule I as its Tranche B Term Loan
----------
Commitment (such Lender's "Tranche B Term Loan Commitment"). Each Lender's
-------------------------------
Tranche B Term Loan Commitment shall expire immediately and without further
action on the earlier of (i) the making of the Tranche B Term Loans on the
Closing Date or (ii) January 31, 1997 if the initial Tranche B Term Loans are
not made on or before that date. Amounts borrowed under this Section 2.1(c) and
subsequently repaid or prepaid may not be reborrowed. The Tranche B Term Loans
of each Lender shall be evidenced by a Tranche B Term Note.
(d) At any time that no Default or Event of Default has occurred
and is continuing the Borrower may notify the Agents that the Borrower is
requesting that, on the terms and subject to the conditions contained in this
Agreement, Lenders and/or other lenders not then a party to this Agreement
provide up to an aggregate amount of $75,000,000 in additional Revolving Credit
Commitments, additional Tranche A Term Loan Commitments and/or additional
Tranche B Term Loan Commitments. Any increase in the Revolving Credit
Commitments, Tranche A Term Loan Commitments and/or Tranche B Term Loan
Commitments pursuant to this Section 2.1(d) shall constitute an amendment of
this Agreement and be subject to the provisions of Section 10.1 hereof. Upon
receipt of such notice, the Syndication Agent shall use its best efforts to
arrange for the Lenders or for other banks, financial institutions or other
accredited investors (as defined in the regulations of the Securities and
Exchange Commission) to provide such additional Revolving Credit Commitments,
additional Tranche A Term Loan Commitments and/or additional Tranche B Term Loan
Commitments. Nothing contained in this Section 2.1(d) or otherwise in this
Agreement is intended to commit any Lender or any Agent to provide any portion
of any such additional Revolving Credit Commitments, additional Tranche A Term
Loan Commitments and/or additional Tranche B Term Loan Commitments.
2.2. Making the Loans. (a) Each Borrowing shall be made upon
-----------------
receipt of a notice, in substantially the form of Exhibit B (the "Notice of
---------
Borrowing"), given by the Borrower to the Administrative Agent not later than
- ---------
11:00 A.M. (Boston time) on the third (or, in the case of a Borrowing consisting
only of Base Rate Loans, the first) Business Day prior to the date of the
proposed Borrowing. Each Notice of Borrowing shall be by telecopy, telex or
cable, confirmed promptly by a manually signed writing, specifying therein (i)
the date of the proposed Borrowing, (ii) the aggregate amount of such proposed
Borrowing, (iii) the amount thereof, if any, requested to be Eurodollar Rate
Loans and (iv) the initial Interest Period or Periods for any such Eurodollar
Rate Loans. Each Loan shall be made as a Base Rate Loan unless (subject to
Section 2.11) the Notice of Borrowing specifies that all or a pro rata portion
--- ----
31
<PAGE>
thereof shall be Eurodollar Rate Loans; provided, however, that the aggregate of
-------- -------
the Eurodollar Rate Loans for each Interest Period must be in an amount of not
less than $1,000,000 or an integral multiple of $100,000 in excess thereof.
Notwithstanding the foregoing, unless otherwise agreed to by the Agents, until
the earlier to occur of (i) the date that is 30 days after the Closing Date and
(ii) the date the Borrower is advised by the Syndication Agent that the
Syndication Agent's primary syndication period has been concluded, the Borrower
may only request Base Rate Loans.
(b) The Administrative Agent shall give to each Lender prompt
notice of the Administrative Agent's receipt of a Notice of Borrowing and, if
Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the
applicable interest rate under Section 2.8(b). Each Lender shall, before 11:00
A.M. (Boston time) on the date of the proposed Borrowing, make available for the
account of its Applicable Lending Office to the Administrative Agent at its
address referred to in Section 10.2, in immediately available funds, such
Lender's Ratable Portion of such proposed Borrowing. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower at the Administrative Agent's aforesaid address.
(c) Each Notice of Borrowing shall be irrevocable and binding on
the Borrower. In the case of a proposed Borrowing which the Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Loans, the Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such proposed Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss (including,
without limitation, loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund any Eurodollar Rate Loan to be made by such Lender as part
of such proposed Borrowing when such Eurodollar Rate Loan, as a result of such
failure, is not made on the date so specified.
(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any proposed Borrowing that such Lender will
not make available to the Administrative Agent such Lender's Ratable Portion of
such Borrowing, the Administrative Agent may assume that such Lender has made
such Ratable Portion available to the Administrative Agent on the date of such
proposed Borrowing in accordance with this Section 2.2 and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If and to the extent that such Lender shall not have so
made such Ratable Portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay to the Administrative Agent forthwith on
32
<PAGE>
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Loan as part of such Borrowing
for purposes of this Agreement. If the Borrower shall repay to the
Administrative Agent such corresponding amount, such payment shall not relieve
such Lender of any obligation it may have to the Borrower hereunder.
(e) The failure of any Lender to make the Loan to be made by it
as part of a Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Loan on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on the date of any such Borrowing.
(f) Each Borrowing consisting solely of Base Rate Loans shall be
in an aggregate amount of not less than $500,000 or an integral multiple of
$100,000 in excess thereof.
2.3. Fees. (a) The Borrower has agreed to pay to the
----
Administrative Agent an annual administrative agent's fee, the amount and dates
of payment of which are embodied in a separate agreement between the Borrower
and the Administrative Agent.
(b) The Borrower agrees to pay to each Revolving Lender a fee
from the date hereof until the Termination Date equal to the average daily
Available Revolving Commitment of such Lender multiplied by the Commitment Fee
----------
Percentage then in effect, payable in arrears on the last day of each March,
June, September, and December, commencing March 31, 1997, during the term of
such Lender's Revolving Credit Commitment, and on the Termination Date.
(c) The Borrower agrees to pay to the Syndication Agent and the
Arranger on the Closing Date such fees, the amount of each of which is embodied
in a separate agreement between the Borrower and the Syndication Agent and the
Arranger.
2.4. Reduction and Termination of the Commitments; Scheduled
-----------------------------------------------------------
Payments of Term Loans. (a) The Borrower shall have the right, upon at least
- ----------------------
three Business Days' prior notice to the Administrative Agent, to terminate in
whole or permanently reduce ratably in part the unused portions of the
respective Revolving Credit Commitments of the Lenders; provided, however, that
-------- -------
each partial reduction shall be in the aggregate amount of not less than
$1,000,000 or an integral multiple of $1,000,000 in excess thereof.
33
<PAGE>
(b) The aggregate Revolving Credit Commitments of the Lenders
shall be reduced on each of the following dates (each, a "Commitment Reduction
Date") by the amount, expressed as a percentage of the Lenders' aggregate
original Revolving Credit Commitments, set forth opposite such date in the table
below and, in each case, the Revolving Credit Commitment of each Lender shall be
reduced by its Ratable Portion of such amount:
Commitment Commitment
Reduction Date Reduction
-------------- -----------
March 31, 2000 2.50%
June 30, 2000 2.50%
September 30, 2000 2.50%
December 31, 2000 2.50%
March 31, 2001 3.75%
June 30, 2001 3.75%
September 30, 2001 3.75%
December 31, 2001 3.75%
March 31, 2002 6.25%
June 30, 2002 6.25%
September 30, 2002 6.25%
December 31, 2002 6.25%
March 31, 2003 16.66%
June 30, 2003 16.66%
September 30, 2003 16.68%
; provided that the scheduled reductions of the Revolving Credit Commitments set
--------
forth above shall be reduced on a pro rata basis in connection with any
--- ----
voluntary or mandatory reductions of Revolving Credit Commitments in accordance
with Sections 2.4(a), 2.4(c) or 2.6(d); and provided further that the Revolving
-------- -------
Credit Commitments shall be reduced to zero no later than September 30, 2003.
(c) The then current Revolving Credit Commitments shall be
reduced on each date on which a prepayment of Revolving Credit Loans is made
pursuant to Section 2.6(d) in the amount of such prepayment (and the Revolving
Credit Commitment of each Lender shall be reduced by its Ratable Portion of such
amount).
(d) The Borrower shall make principal payments on the Tranche A
Term Loans on each of the following dates in the aggregate amount, expressed as
a percentage of the Lenders' aggregate original Tranche A Term Loan Commitments,
set forth opposite such date in the table below and, in each case, the Tranche A
Term Loans of each Lender shall be prepaid by its Ratable Portion of such
amount:
34
<PAGE>
Scheduled Scheduled
Repayment Dates Repayment
--------------- ---------
March 31, 1999 2.50%
June 30, 1999 2.50%
September 30, 1999 2.50%
December 31, 1999 2.50%
March 31, 2000 2.50%
June 30, 2000 2.50%
September 30, 2000 2.50%
December 31, 2000 2.50%
March 31, 2001 5.00%
June 30, 2001 5.00%
September 30, 2001 5.00%
December 31, 2001 5.00%
March 31, 2002 7.50%
June 30, 2002 7.50%
September 30, 2002 7.50%
December 31, 2002 7.50%
March 31, 2003 7.50%
June 30, 2003 7.50%
September 30, 2003 15.00%
; provided that the scheduled installments of principal of the Tranche A Term
--------
Loans set forth above shall be reduced on a pro rata basis in connection with
--- ----
any voluntary or mandatory prepayments of the Tranche A Term Loans in accordance
with Section 2.6; and provided further that the aggregate unpaid principal
-------- -------
amount of the Tranche A Term Loans shall be paid in full no later than September
30, 2003.
(e) The Borrower shall make principal payments on the Tranche B
Term Loans on each of the following dates in the aggregate amount, expressed as
a percentage of the Lenders' aggregate original Tranche B Term Loan Commitments,
set forth opposite such date in the table below and, in each case, the Tranche B
Term Loans of each Lender shall be prepaid by its Ratable Portion of such
amount:
Scheduled Scheduled
Repayment Dates Repayment
--------------- ---------
March 31, 1997 0.25%
June 30, 1997 0.25%
September 30, 1997 0.25%
December 31, 1997 0.25%
35
<PAGE>
March 31, 1998 0.25%
June 30, 1998 0.25%
September 30, 1998 0.25%
December 31, 1998 0.25%
March 31, 1999 0.25%
June 30, 1999 0.25%
September 30, 1999 0.25%
December 31, 1999 0.25%
March 31, 2000 0.25%
June 30, 2000 0.25%
September 30, 2000 0.25%
December 31, 2000 0.25%
March 31, 2001 0.25%
June 30, 2001 0.25%
September 30, 2001 0.25%
December 31, 2001 0.25%
March 31, 2002 0.25%
June 30, 2002 0.25%
September 30, 2002 0.25%
December 31, 2002 0.25%
March 31, 2003 0.25%
June 30, 2003 0.25%
September 30, 2003 0.25%
December 31, 2003 13.25%
March 31, 2004 13.25%
June 30, 2004 13.25%
September 30, 2004 13.25%
December 31, 2004 40.25%
; provided that the scheduled installments of principal of the Tranche B Term
--------
Loans set forth above shall be reduced on a pro rata basis in connection with
any voluntary or mandatory prepayments of the Tranche B Term Loans in accordance
with Section 2.6; and provided further that the aggregate unpaid principal
-------- -------
amount of the Tranche B Term Loans shall be paid in full no later than December
31, 2004.
2.5. Repayment. The Borrower shall repay the aggregate unpaid
---------
principal amount of the Revolving Credit Loans on the Termination Date.
2.6. Prepayments. (a) The Borrower shall have no right to prepay
-----------
the principal amount of any Loan other than as provided in this Section 2.6.
(b) The Borrower may, upon at least three, or in the case of Base
Rate Loans one, Business Days' prior notice to the Administrative Agent stating
the proposed date and aggregate principal amount of the prepayment, and if such
36
<PAGE>
notice is given, the Borrower shall, prepay the outstanding principal amount of
the Loans so designated by the Borrower, without penalty, together with accrued
interest to the date of such prepayment on the principal amount prepaid;
provided, however, that no prepayment of any Eurodollar Rate Loan may be made on
- -------- -------
any day other than the last day of an Interest Period for such Loan, unless the
Borrower compensates each Lender in full for all losses, costs or expenses
incurred by such Lender as a result of such prepayment including without
limitation any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund or maintain such Loan; and provided, further,
-------- -------
that each partial prepayment pursuant to this Section 2.6(b) shall be in an
aggregate amount not less than $1,000,000 or integral multiples of $1,000,000 in
excess thereof. Any voluntary prepayment of the Term Loans pursuant to this
Section 2.6(b) shall be applied to the Tranche A Term Loans and the Tranche B
Term Loans on a pro rata basis.
--- ----
(c) If, at any time, including, without limitation, on a
Commitment Reduction Date, the outstanding principal amount of the Revolving
Credit Loans exceeds the aggregate Revolving Credit Commitments as reduced on
such date, the Borrower shall forthwith prepay the outstanding principal amount
of the Revolving Credit Loans by the amount of such excess, together with
accrued interest to the date of such prepayment on the principal amount prepaid.
(d) (i) The Borrower shall forthwith prepay the Term Loans upon
receipt (or in the case of Net Representation Agreement Payments as
described in the succeeding proviso, upon the Repayment Date) by the
Borrower and its Restricted Subsidiaries on a consolidated basis of
Asset Sale Proceeds in excess of $6,000,000 in any Fiscal Year in an
amount equal to such excess Asset Sale Proceeds, together with accrued
interest to the date of such prepayment on the principal amount
prepaid, to the extent required by Section 7.5(c) and to the extent
such excess Asset Sale Proceeds exceed the aggregate outstanding
principal amount of Term Loans, the Borrower shall prepay the
Revolving Credit Loans in an amount equal to the amount of such excess
and the Revolving Credit Commitments shall be permanently reduced in
an amount equal to such excess; provided that Net Representation
--------
Agreement Payments shall be deemed to be Asset Sale Proceeds for the
purpose of calculating the aggregate amount of Asset Sale Proceeds
received in any Fiscal Year on the date (the "Repayment Date") that is
the 360th day after the last day of such Fiscal Year in an amount (the
"Repayment Amount") which is equal to the excess, if any, of (x) the
amount of such Net Representation Agreement Payments over (y) the
excess, if any, for the period from the end of such Fiscal Year to the
Repayment Date of Representation Agreement Acquisition Payments for
37
<PAGE>
such period over the Representation Agreement Termination Payments for
such period. If, following the receipt by the Borrower or any of its
Restricted Subsidiaries of any Asset Sale Proceeds, the Borrower is
required to apply or cause to be applied any portion of such Asset
Sale Proceeds to prepay any Indebtedness evidenced by any of the
Subordinated Notes pursuant to the Indenture, then, notwithstanding
anything contained in this Section 2.6(d), the Borrower shall prepay
the Loans and/or reduce the Revolving Loan Commitments in the order
set forth in this Section 2.6(d) so as to eliminate any obligation to
prepay such Indebtedness.
(ii) On the date of receipt by KMG or any of its Subsidiaries of
any proceeds (net of underwriting discounts and commissions,
reasonable legal fees and other reasonable costs and expenses
associated therewith) from the issuance of any equity securities of
such Person, if the Pro Forma Ratio of Total Debt to EBITDA is greater
than 3.5 to 1.0, the Borrower shall deliver a certificate to the
Agents setting forth the calculation of such net proceeds and, to the
extent that KMG intends to apply such net proceeds to effect
acquisitions of all or substantially all of the stock or assets of
another Person within the succeeding 270 days, certifying as to such
intent, and to the extent that KMG does not intend to effect such
acquisitions, the Borrower shall forthwith prepay the Term Loans in an
aggregate amount equal to 50% of such proceeds, together with accrued
interest to the date of such prepayment on the principal amount
prepaid, and to the extent such proceeds exceed the aggregate
outstanding principal amount of Term Loans, the Borrower shall prepay
in an amount equal to such excess the Revolving Credit Loans, and the
Revolving Credit Commitments shall be permanently reduced in an amount
equal to such excess. On the 180th day following the receipt of the
proceeds of any such equity securities issued by KMG which are not
used within 180 days of such issuance to effect acquisitions by KMG of
all or substantially all of the stock or assets of another Person, the
Borrower shall forthwith deposit cash in an amount equal to such
unused proceeds into an account to be pledged to the Lenders and the
other Secured Parties or to be held in escrow pending such use or
distribution in accordance with the next sentence. On the 270th day
following the receipt of the proceeds of any such equity securities
issued by KMG which are not used within 270 days of such issuance to
effect acquisitions by KMG of all or substantially all of the stock or
assets of another Person, the Borrower shall forthwith prepay the
Loans in accordance with the provisions of the first sentence of this
clause (ii).
(iii) Any mandatory prepayments of the Term Loans pursuant to
this Section 2.6(d) shall be applied to the Tranche A Term Loans and
the Tranche B Term Loans on a pro rata basis.
38
<PAGE>
(e) Any prepayment of Loans pursuant to this Section 2.6 made on
a day other than the last day of an Interest Period for any Eurodollar Loans
shall be applied first to Base Rate Loans, if any, then outstanding and second
----- ------
to Eurodollar Rate Loans elected by the Borrower by notice to the Administrative
Agent or, in the absence of such notice, 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 requirements, the Borrower 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 an
interest-bearing cash collateral account, pledged to the Administrative Agent
and under the sole dominion and control of the Administrative Agent, until the
end of such Interest Period, at which time such pledged amounts will be applied
to prepay such Eurodollar Rate Loans. Such cash collateral account shall be
maintained in the name of the Administrative Agent at such place as shall be
designated by the Administrative Agent and shall be established pursuant to
documentation in form and substance satisfactory to the Administrative Agent.
2.7. Conversion/Continuation Option. The Borrower may elect (i)
-------------------------------
at any time to convert Base Rate Loans or any portion thereof to Eurodollar Rate
Loans or (ii) at the end of any Interest Period with respect thereto, to convert
Eurodollar Rate Loans or any portion thereof into Base Rate Loans, or to
continue such Eurodollar Rate Loans or any portion thereof for an additional
Interest Period; provided, however, that the Eurodollar Rate Loans for each
-------- -------
Interest Period therefor must be in the aggregate principal amount of $1,000,000
or an integral multiple of $100,000 in excess thereof. Notwithstanding the
foregoing, unless otherwise agreed to by the Agents, until the earlier to occur
of (i) the date that is 30 days after the Closing Date or (ii) the date the
Borrower is advised by the Syndication Agent that the Syndication Agent's
primary syndication period has been concluded, the Borrower may not convert Base
Rate Loans to Eurodollar Rate Loans. Each conversion or continuation shall be
allocated among the Loans of the Lenders so converted or continued in accordance
with each Lender's Ratable Portion of the amount so converted or continued. Each
such election shall be in substantially the form of Exhibit C (a "Notice of
---------
Conversion or Continuation") and shall be made by giving the Administrative
- ----------------------------
Agent at least three Business Days' prior written notice thereof specifying (A)
the amount and type of conversion or continuation, (B) in the case of a
conversion to or a continuation of Eurodollar Rate Loans, the Interest Period
therefor and (C) in the case of a conversion, the date of conversion (which date
shall be a Business Day and, if a conversion from Eurodollar Rate Loans, shall
also be the last day of the Interest Period therefor). The Administrative Agent
shall promptly notify each Lender of its receipt of a Notice of Conversion or
Continuation and of the contents thereof. Notwithstanding the foregoing, no
conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans, and
39
<PAGE>
no continuation in whole or in part of Eurodollar Rate Loans upon the expiration
of any Interest Period therefor shall be permitted at any time at which a
Default (other than a Default under Section 8.1(c)(ii) with respect to a failure
to comply with Sections 6.4, 6.6, 6.10, 6.11, 6.12 or 6.14) or an Event of
Default shall have occurred and be continuing. If, within the time period
required under the terms of this Section 2.7, the Administrative Agent does not
receive a Notice of Conversion or Continuation from the Borrower containing a
permitted election to continue any Eurodollar Rate Loans for an additional
Interest Period or to convert any such Loans, then, upon the expiration of the
Interest Period therefor, such Loans will be automatically converted to Base
Rate Loans. Each Notice of Conversion or Continuation shall be irrevocable.
2.8. Interest. The Borrower shall pay interest on the unpaid principal
--------
amount of each Loan from and including the date thereof until the principal
amount thereof shall be paid in full, at the following rates per annum:
(a) Base Rate Loans. For Base Rate Loans, at a rate per annum equal at
---------------
all times to the Applicable Base Rate Margin plus the Base Rate in effect from
time to time, payable quarterly in arrears on the last day of each March, June,
September and December, commencing March 31, 1997, and on the date any Base Rate
Loan is converted or paid in full; provided, however, that during the
-------- -------
continuance of an Event of Default, all Base Rate Loans shall bear interest,
payable on demand, at a rate per annum equal at all times to 2.00% above the
Base Rate plus the Applicable Base Rate Margin in effect from time to time.
(b) Eurodollar Rate Loans. For Eurodollar Rate Loans, at a rate per
annum equal at all times during the applicable Interest Period for each
Eurodollar Rate Loan to the sum of the Eurodollar Rate for such Interest Period
plus the Applicable Eurodollar Rate Margin in effect on the first day of such
Interest Period, payable in arrears on the last day of such Interest Period, on
the Termination Date and on the date any Eurodollar Rate Loan is converted or
paid in full and, if such Interest Period has a duration of more than three
months, on each day during such Interest Period which occurs every three months
from the first day of such Interest Period; provided, however, that during the
-------- -------
continuance of an Event of Default, all Eurodollar Rate Loans shall bear
interest, payable on demand, at a rate per annum equal at all times to 2.00%
above the Eurodollar Rate plus the Applicable Eurodollar Rate Margin in effect
from time to time until the maturity of the Loans or the end of the Interest
Period, whichever occurs first, and thereafter at 2.00% per annum above the Base
Rate plus the Applicable Base Rate Margin in effect from time to time.
2.9. Interest Rate Determination. (a) The Eurodollar Rate for each
----------------------------
Interest Period for Eurodollar Rate Loans shall be determined by the
Administrative Agent two Business Days before the first day of such Interest
Period in the case of Eurodollar Rate Loans.
40
<PAGE>
(b) The Administrative Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section 2.8.
(c) If, with respect to Eurodollar Rate Loans, the Majority Lenders
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
therefor will not adequately reflect the cost to the Majority Lenders of making
such Loans or funding or maintaining their respective Eurodollar Rate Loans for
such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Lenders, whereupon
(i) each Eurodollar Loan will automatically, on the last day of
the then existing Interest Period therefor, convert into a Base Rate
Loan; and
(ii) the obligation of the Lenders to make, and the right of the
Borrower to select, Eurodollar Rate Loans or to continue Loans as, or
convert Loans into, Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower that the Majority
Lenders have determined that the circumstances causing such suspension
no longer exist.
2.10. Increased Costs. If, due to either (i) the introduction of, or
----------------
any change (other than any change by way of, imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) in the
interpretation of, or compliance with, 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) after the date
hereof (or, in the case of any such change or other event which does not affect
the Lenders generally, with respect to any Person that becomes a Lender after
the date hereof, after the date such Person becomes a Lender), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any Eurodollar Rate Loans (other than any increased cost resulting
from the imposition or an increase in the rate of any Taxes or Other Taxes
unless such Taxes or Other Taxes are payable by the Borrower under Section
2.14), then the Borrower shall from time to time, upon demand by such Lender
(with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost setting forth in reasonable detail the
basis for computing the amount payable to such Lender pursuant to this Section
2.10 shall be submitted to the Borrower and the Administrative Agent by such
Lender and such certificate shall be conclusive and binding for all purposes,
absent manifest error. If the Borrower so notifies the Administrative Agent
41
<PAGE>
within five Business Days after any Lender notifies the Borrower of any
increased cost pursuant to the foregoing provisions of this Section 2.10, the
Borrower may either (A) replace such Lender in accordance with Section 2.16 and,
additionally, reimburse such Lender for such increased cost in accordance with
this Section 2.10 or (B) convert the Eurodollar Rate Loans of such Lender then
outstanding into Base Rate Loans in accordance with Section 2.7 and,
additionally, reimburse such Lender for such increased cost in accordance with
this Section 2.10.
2.11. Illegality. Notwithstanding any other provision of this
----------
Agreement, if the introduction of, or any change in or in the interpretation of,
any law or regulation shall make it unlawful after the date hereof (or, in the
case of any such change or other event which does not affect the Lenders
generally, with respect to any Person that becomes a Lender after the date
hereof, after the date such Person becomes a Lender), or any central bank or
other Governmental Authority shall assert after the date hereof (or, in the case
of any such change or other event which does not affect the Lenders generally,
with respect to any Person that becomes a Lender after the date hereof, after
the date such Person becomes a Lender) that it is unlawful, for any Lender or
its Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to
fund or maintain Eurodollar Rate Loans, then, on notice thereof and demand
therefor by such Lender to the Borrower through the Administrative Agent, the
obligation of such Lender to make or to continue Eurodollar Rate Loans and to
convert Base Rate Loans into Eurodollar Rate Loans shall terminate and the
Borrower shall either (A) replace such Lender in accordance with Section 2.16 or
(B) convert the Eurodollar Rate Loans of such Lender then outstanding into Base
Rate Loans in accordance with Section 2.7.
2.12. Capital Adequacy. If either (i) the introduction of, or any
-----------------
change in or in the interpretation of, or compliance with, any law or regulation
or (ii) compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) after the date
hereof, affects or would affect the amount of capital required or expected to be
maintained by any Lender or any corporation controlling any Lender and such
Lender reasonably determines that such amount is based upon the existence of
such Lender's Commitments or Loans and other commitments or loans of this type,
then, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to the Administrative Agent for
the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's
Commitments or Loans. A certificate as to such amounts setting forth in
reasonable detail the basis for computing the amount payable to such Lender
pursuant to this Section 2.12 shall be submitted to the Borrower and the
42
<PAGE>
Administrative Agent by such Lender and such certificate shall be conclusive and
binding for all purposes absent manifest error.
2.13. Payments and Computations. (a) The Borrower shall make each
--------------------------
payment hereunder and under the Notes not later than 11:00 A.M. (Boston time) on
the day when due, in Dollars, to the Administrative Agent at its address
referred to in Section 10.2 in immediately available funds without set-off or
counterclaim. The Administrative Agent will promptly thereafter cause to be
distributed immediately available funds relating to the payment of principal or
interest or fees to the Lenders, in accordance with their respective Ratable
Portions (other than amounts payable pursuant to Section 2.10, 2.12, 2.14 or
10.4(c)), for the account of their respective Applicable Lending Offices, and
like funds relating to the payment of any other amount payable to any Lender to
such Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Payment received by the
Administrative Agent after 11:00 A.M. (Boston time) shall be deemed to be
received on the next Business Day.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder as provided in the
first sentence of Section 2.13(a), to charge from time to time against any or
all of the Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate (other than
computations based on the Federal Funds Rate) shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, and all computations of interest based on the Eurodollar Rate or the Federal
Funds Rate and of fees shall be made by the Administrative Agent on the basis of
a year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest and fees are payable. Each determination by the Administrative Agent of
an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(d) Whenever any payment hereunder or under the Notes 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 payment of interest or fee, as the case may be;
provided, however, that if such extension would cause payment of interest on or
- -------- -------
principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the next preceding Business Day.
(e) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due hereunder to the
Lenders that the Borrower will not make such payment in full, the Administrative
43
<PAGE>
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, 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
Borrower shall not have so made such payment in full to the Administrative
Agent, each Lender shall repay to the Administrative Agent forthwith 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.
2.14. Taxes. (a) Any and all payments by the Borrower hereunder or
-----
under the Notes shall, except to the extent required by applicable law, be made,
in accordance with Section 2.13, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, (i) in the
case of each Lender and each Agent, taxes imposed on its net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender or such Agent, as the case may be, is organized or any political
subdivision thereof, (ii) in the case of each Lender, taxes measured by its net
income, and franchise taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof and (iii) in the
case of each Lender and each Agent, United States withholding tax payable with
respect to payments by the Borrower hereunder under laws (including, without
limitation, any statute, treaty, ruling, determination or regulation) in effect
on the Initial Date for such Lender or such Agent, as the case may be, but not
excluding withholding tax payable as a result of any change in such laws
occurring after the Initial Date (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). For the purpose of this Section 2.14, the term "Initial Date" shall
----- ------------
mean, with respect to the Agents and each Lender that is a Lender on the Closing
Date, the Closing Date and, with respect to each assignee of any Lender, the
effective date specified in the Assignment and Acceptance pursuant to which such
assignee becomes a party to this Agreement. If the Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to any
Lender or any Agent, (A) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.14) such Lender or such Agent, as
the case may be, receives an amount equal to the sum it would have received had
no such deductions been made, (B) the Borrower shall make such deductions, (C)
the Borrower shall pay the full amount deducted to the relevant taxing authority
or other authority in accordance with applicable law and (D) the Borrower shall
deliver to the Administrative Agent evidence of such payment to the relevant
taxation or other authority.
44
<PAGE>
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or the Notes (hereinafter referred to as "Other
-----
Taxes"); provided, however, that the Borrower shall not be required to pay any
- ----- -------- -------
amount of Other Taxes to the extent arising from the sale, assignment or other
transfer of, or sale of participations in, any Loan by any Lender.
(c) The Borrower will indemnify each Lender and each Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.14) paid by such Lender or such Agent, as the case may be, and any liability
(including, without limitation, for penalties, interest and expenses, except to
the extent that such penalties, interest or expenses are caused by the gross
negligence, bad faith or willful misconduct of such Lender) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Lender or such Agent, as the case may be, makes written demand
therefor.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower will furnish to the Administrative Agent, at
its address referred to in Section 10.2, the original or a certified copy of a
receipt evidencing payment thereof by the Borrower.
(e) Prior to the Closing Date in the case of each Lender that is a
signatory hereto, and on the date of the Assignment and Acceptance pursuant to
which it becomes a Lender in the case of each other Lender and from time to time
thereafter if reasonably requested by the Borrower or the Administrative Agent,
each Lender organized under the laws of a jurisdiction outside the United States
that is entitled to an exemption from United States withholding tax, or that is
subject to such tax at a reduced rate under an applicable tax treaty, shall
provide the Administrative Agent and the Borrower with an IRS Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the IRS
certifying as to such Lender's entitlement to such exemption or reduced rate
with respect to all payments to be made to such Lender hereunder and under the
Notes. Unless the Borrower and the Administrative Agent have received forms or
other documents satisfactory to them indicating that payments hereunder or under
any Note are not subject to United States withholding tax or are subject to such
tax at a rate reduced by an applicable tax treaty, the Borrower or the
Administrative Agent shall withhold taxes from such payments at the applicable
statutory rate in the case of payments to or for any Lender organized under the
45
<PAGE>
laws of a jurisdiction outside the United States.
2.15. Sharing Payments, Etc. If any Lender shall obtain any payment
-----------------------
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans made by it (other than pursuant to Section
2.10, 2.12, 2.14 or 10.4(c)) in excess of its Ratable Portion of payments on
account of the Loans obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in their Loans as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
-------- -------
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i) the
amount of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.15 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
2.16. Removal of a Lender. In the event that any Lender shall give
------------------
notice to the Borrower that such Lender is entitled to receive payments under
Sections 2.10, 2.12 or 2.14 or that such Lender has been suspended from making
or maintaining Eurodollar Rate Loans under Section 2.11, the Borrower may, so
long as (i) the circumstances which entitle such Lender to receive such payments
or cause such Lender to be so suspended are still in effect and (ii) the
Borrower has obtained a commitment from another Lender or a Person eligible as
an assignee under Section 10.7 to purchase at par such Lender's Loans and
Commitments and to assume all obligations of the Lender to be replaced, upon 30
days prior written notice to such Lender and the Agents, require such Lender
giving such notice to assign all of its Loans and Commitments to such other
Lender or eligible assignee pursuant to the provisions of Section 10.7; provided
--------
that, prior to or concurrently with such replacement (i) the Borrower has paid
to such Lender giving such notice all amounts due under subsections 2.10, 2.12
or 2.14 through such date of replacement, (ii) the Borrower or the applicable
assignee has paid to the Administrative Agent the processing and recordation fee
required to be paid by Section 10.7 and (iii) all of the requirements for such
assignment contained in Section 10.7, including, without limitation, the consent
of the Agents (if required) and the receipt by the Agents of an executed
Assignment and Acceptance and other supporting documents, have been fulfilled.
46
<PAGE>
ARTICLE III
CONDITIONS OF LENDING
3.1. Conditions Precedent to Effectiveness. The effectiveness of this
-------------------------------------
Agreement and the obligations of each Lender hereunder are subject to the prior
or concurrent satisfaction of the conditions described in clauses (l)-(p) and
(s)-(t) below and to the receipt by the Agents and the Arranger of the documents
described in clauses (a)-(k), (q)-(r) and (u)-(w) below, each dated the Closing
Date unless otherwise indicated, in form and substance satisfactory to each of
the Agents, the Arranger and the Lenders, in their sole judgment exercised
reasonably, and (except for the Notes) in sufficient copies for each Lender:
(a) A fully executed counterpart of this Agreement and a Revolving
Credit Note, a Tranche A Term Note and a Tranche B Term Note payable to the
order of each Lender;
(b) Certified copies of (i) the resolutions of the Board of Directors
and the stockholders, where required, of each Loan Party approving each Loan
Document to which it is a party and (ii) all documents evidencing other
necessary corporate action and required governmental and material third party
approvals, licenses and consents with respect to each Loan Document and the
transactions contemplated thereby;
(c) A copy of the certificate of incorporation of each Loan Party
certified as of a recent date by the Secretary of State of the state of
incorporation of such Loan Party, together with certificates of such official
attesting to the good standing of each such Loan Party, and a copy of the bylaws
of each Loan Party certified as of a recent date by the Secretary or an
Assistant Secretary of such Loan Party;
(d) A certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying the names and true signatures of other officers of such
Loan Party who have been authorized to execute and deliver any Loan Document or
other document required hereunder to be executed and delivered by or on behalf
of such Loan Party;
(e) A copy of each Related Document, fully executed or conformed, and
certified as being complete and correct by a Responsible Officer of the
Borrower;
(f) The Subsidiary Guaranty, duly executed by each Domestic Restricted
Subsidiary and the Parent Guaranty, duly executed by each of KMSI and KCC;
47
<PAGE>
(g) The Pledge Agreements, duly executed by each Loan Party party
thereto, together with (i) delivery to the Administrative Agent of certificates
representing the Pledged Shares and undated stock powers for such certificates
executed in blank and (ii) evidence that all action necessary or, in the opinion
of the Agents and the Arranger, desirable to perfect and protect the Liens
created by the Pledge Agreements has been taken;
(h) The Borrower Security Agreement, duly executed by the Borrower,
and the Subsidiary Security Agreement, duly executed by each Domestic Restricted
Subsidiary, together with (i) duly executed financing statements (Form UCC-1) in
proper form for filing under the Uniform Commercial Code in all jurisdictions as
may be necessary or, in the opinion of the Agents and the Arranger, desirable to
perfect and protect the Liens created by the Security Agreement and the
Subsidiary Security Agreement, and (ii) evidence satisfactory to the Agents and
the Arranger of the release of all Liens over the property of the Borrower or
any of its Subsidiaries other than Liens permitted by Section 7.1;
(i) An opinion of Davis, Polk & Wardwell, counsel to the Loan Parties,
in the form of Exhibit J hereto;
(j) A certificate of the chief financial officer of the Borrower,
stating that KCC, and KCC and its Subsidiaries, on a consolidated basis, are
Solvent after giving effect to the transactions contemplated by this Agreement;
(k) A certificate, signed by a Responsible Officer of the Borrower,
stating that the conditions specified in Sections 3.2(a), 3.2(b) and 3.3(a) have
been met;
(l) The capital, organizational and ownership structure of KMG and its
Subsidiaries, both before and after giving effect to the Merger, shall be as
described in Offering Memorandum dated December 13, 1996 relating to the
Subordinated Notes or as is otherwise in form and substance satisfactory to the
Agents, the Arranger and the Lenders;
(m) All of the outstanding shares of KCC shall have been contributed
by KMG to KMSI;
(n) Not less than 75% of the Debentures outstanding on the date of
consummation of the Debenture Tender Offer shall have been purchased for cash
pursuant to the Debenture Tender Offer at a maximum aggregate price (including
any tender premium and consent payment) of 115% of the par value thereof plus
accrued and unpaid interest thereon of a maximum aggregate amount of $2,000,000.
The Borrower shall have obtained all such consents and amendments to the
Debenture Indenture as may be required to permit the Borrower to borrow the
Loans and to consummate the other transactions described herein. The terms and
48
<PAGE>
conditions of such consents and amendments shall be as described in the
Debenture Tender Offer or as is otherwise in form and substance satisfactory to
the Agents, the Arranger and the Majority Lenders. The Borrower shall otherwise
be in compliance with its obligations under the Debenture Indenture;
(o) The Borrower shall have issued the Subordinated Notes in an
aggregate principal amount of not less than $100,000,000. The terms and
conditions of the Subordinated Notes, including, without limitation, with
respect to the interest rates, covenants, defaults, remedies and subordination
provisions shall be in form and substance satisfactory to the Agents, the
Arranger and the Majority Lenders;
(p) All existing bank indebtedness of the Borrower under the Existing
Credit Agreement and of KMSI under the KMS Credit Agreement, shall have been
repaid in full (or arrangements satisfactory to the Agents for the repayment
thereof from the proceeds of the Subordinated Notes and the Loans hereunder
shall have been made), all commitments thereunder shall have been terminated and
all liens securing all such Indebtedness shall have been released (or
arrangements satisfactory to the Agents for the release thereof shall have been
made). No other existing Indebtedness of the Borrower and its Subsidiaries shall
remain outstanding after the application on the Closing Date of the proceeds of
the Subordinated Notes and the Loans made on the Closing Date hereunder other
than (i) Debentures not tendered in the Debenture Tender Offer, (ii)
Indebtedness outstanding hereunder, (iii) the Subordinated Notes, (iv) Interest
Rate Contracts permitted hereunder, (v) other Indebtedness described on Schedule
7.2 not exceeding $3,000,000 in aggregate principal amount and (vi) Indebtedness
permitted under Section 7.2(iv);
(q) Copies of all legal opinions issued by counsel to any Loan Party
or issued to any Loan Party relating to any transactions occurring on or about
the Closing Date pursuant to any of the Related Documents, each of which
opinions shall be accompanied by a written authorization from counsel issuing
such opinion stating that the Agents and the Arranger and the Lenders may rely
on such opinions as though such opinions (other than any opinion or any portion
of an opinion in the nature of a "disclosure" opinion) were addressed to the
Agents, the Arranger and the Lenders;
(r) (i) Audited financial statements of the Borrower and its
Subsidiaries for the Fiscal Years ended December 31, 1994 and 1995, (ii)
unaudited financial statements of the Borrower and its Subsidiaries for the
fiscal period ending on September 30, 1996, (iii) a pro forma balance sheet as
of the Closing Date for the Borrower and its Subsidiaries after giving effect to
49
<PAGE>
the transactions contemplated hereby and (iv) projected financial statements
(including balance sheets and statements of operations and cash flows) of the
Borrower and its Subsidiaries for the eight year period after the Closing Date
after giving effect to the transactions contemplated hereby, all prepared and
otherwise consistent with the Borrower's historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions;
(s) Receipt of evidence in form and substance satisfactory to the
Agents and the Arranger that any contract management agreement between KMSI and
the Borrower or any of its Subsidiaries has been terminated and all
Representation Agreements held by KMSI shall have been validly assigned to the
Borrower or its Restricted Subsidiaries;
(t) Receipt of evidence that the fees and expenses incurred in
connection with the Debenture Tender Offer and the related financings
contemplated hereby will not exceed $6.0 million in the aggregate;
(u) A certificate executed by the chief financial officer of the
Borrower stating that the Borrower will proceed to consummate the Merger
immediately upon the making of the Loans;
(v) A certificate executed by the chief financial officer of the
Borrower setting forth the Total Debt to EBITDA Ratio (and its computation) as
of the last day of the most recently ended Fiscal Quarter; provided that Total
--------
Debt shall be determined as of the Closing Date and EBITDA shall be determined
as of such last day of the most recently ended Fiscal Quarter; and
(w) Such additional documents, information and materials as any
Lender, through the Agents, may reasonably request.
3.2. Additional Conditions Precedent to Effectiveness. The
--------------------------------------------------------
effectiveness of this Agreement and the obligation of each Lender hereunder to
make its initial Loans on the Closing Date is subject to the further conditions
precedent that:
(a) On the Closing Date, the following statements shall be true:
(i) All necessary governmental and material third party approvals
required to be obtained by any Loan Party in connection with the
transactions contemplated hereby and by the Related Documents have been
obtained and remain in effect;
(ii) There exists no judgment, order, injunction or other restraint
prohibiting or imposing materially adverse conditions upon the consummation
of the transactions contemplated hereby; and
(iii) There exists no claim, action, suit, investigation, litigation
or proceeding (including, without limitation, stockholder or derivative
50
<PAGE>
litigation) pending or, to the knowledge of the Borrower, threatened in any
court or before any arbitrator or Governmental Authority which relates to
the financing hereunder or which has a reasonable likelihood of having a
Material Adverse Effect.
(b) All costs and accrued and unpaid fees and expenses (including,
without limitation, legal fees and expenses) required to be paid to the Lenders
on or before the Closing Date, including, without limitation, those referred to
in Sections 2.3 and 10.4, to the extent then due and payable, shall have been
paid.
(c) There shall have been no Material Adverse Change since December
31, 1995 and nothing shall have occurred since December 31, 1995, which has had
or has a reasonable likelihood of having a Material Adverse Effect.
3.3. Conditions Precedent to Each Loan. The obligation of each Lender
----------------------------------
to make any Loan shall be subject to the further conditions precedent that:
(a) The following statements shall be true and correct on the date of
request of such Loans, before and after giving effect thereto and to the
application of the proceeds therefrom (and the acceptance by the Borrower of the
proceeds of such Loans shall constitute a representation and warranty by the
Borrower that on the date of such Loans such statements are true):
(i) The representations and warranties of the Borrower contained in
Article IV and of each Loan Party in the other Loan Documents (other than
those representations and warranties which specifically relate to an
earlier date) are correct on and as of such date as though made on and as
of such date; and
(ii) No Default or Event of Default will result from the Loans being
made on such date.
(b) The making of the Loans on such date does not violate any
Requirement of Law and is not enjoined, temporarily, preliminarily or
permanently.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Agents to enter into this Agreement and
to make the Loans, the Borrower represents and warrants to the Lenders and the
Agents as follows:
4.1. Corporate Existence; Compliance with Law. Each Loan Party (other
-----------------------------------------
than KMC after the consummation of the Merger) and each of its Subsidiaries is a
51
<PAGE>
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each Loan Party and each of its
Subsidiaries (i) is duly qualified to transact business as a foreign corporation
and in good standing as a foreign corporation under the laws of each
jurisdiction in which the nature of its business or the location of its property
requires it to be so qualified, except where the failure to be so qualified has
no reasonable likelihood of having a Material Adverse Effect; (ii) has all
requisite corporate power and authority and the legal right to own, pledge,
mortgage and operate its properties, to lease the property it operates under
lease and to conduct its business as now or currently proposed to be conducted;
(iii) is in compliance with its certificate of incorporation and by-laws; (iv)
is in compliance with all applicable Requirements of Law, except for such
non-compliances that, individually or in the aggregate, have no reasonable
likelihood of having a Material Adverse Effect; and (v) has all necessary
licenses, permits, consents or approvals from or by, has made all necessary
filings with, and has given all necessary notices to, each Governmental
Authority having jurisdiction, to the extent required for such ownership,
operation and conduct, except for licenses, permits, consents or approvals which
can be obtained by the taking of ministerial action to secure the grant or
transfer thereof or which the failure to have, individually or in the aggregate,
would have no reasonable likelihood of having a Material Adverse Effect.
4.2. Corporate Power; Authorization; Enforceable Obligations. (a) The
--------------------------------------------------------
execution, delivery and performance by each Loan Party of the Loan Documents and
the Related Documents to which it is a party and the consummation of the
transactions related to the financing contemplated hereby and thereby:
(i) are within such Loan Party's corporate powers;
(ii) have been duly authorized by all necessary corporate action;
(iii) do not and will not (A) contravene any Loan Party's certificate
of incorporation or by-laws or other comparable governing documents, (B)
violate any Requirement of Law (including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System), or
any order or decree of any Governmental Authority or arbitrator binding on
or affecting such Loan Party, (C) conflict with or result in the breach of,
or constitute a default under, or result in the termination of, any
Contractual Obligation of any Loan Party, except such as would,
individually or in the aggregate, have no reasonable likelihood of having a
Material Adverse Effect, or (D) require or permit the acceleration of any
Indebtedness of any Loan Party or (E) result in the creation or imposition
of any Lien upon any of the property of any Loan Party, other than those in
52
<PAGE>
favor of the Administrative Agent on behalf of and for the ratable benefit
of the Secured Parties; and
(iv) do not require the consent of, authorization by, approval of,
notice to, or filing or registration with, any Governmental Authority or
any other Person, other than (A) those which have been or will be, prior to
the Closing Date, obtained or made and copies of which are required to be
delivered to the Agents and the Arranger pursuant to Section 3.1, each of
which is or on the Closing Date will be in full force and effect and (B)
the consent of, authorization by, or approval of, any lessor of the
Borrower or any of its Subsidiaries which, if not obtained, would,
individually or in the aggregate, have no reasonable likelihood of having a
Material Adverse Effect and the absence of which would not, individually or
in the aggregate, affect the Borrower's or any of its Subsidiaries' ability
to consummate the transactions contemplated by the Loan Documents and
Related Documents.
(b) This Agreement and each of the other Loan Documents and Related
Documents has been duly executed and delivered by each Loan Party party thereto.
This Agreement and each of the other Loan Documents and Related Documents is the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
equitable principles.
4.3. Taxes. All Federal, state, local and foreign tax returns, reports
----
and statements (collectively, the "Tax Returns") required to be filed by the
------------
Borrower or any of its Tax Affiliates have been filed with the appropriate
Governmental Authorities in all jurisdictions in which such Tax Returns are
required to be filed, except where the failure to file such returns, reports and
statements would have no reasonable likelihood of having a Material Adverse
Effect, all such Tax Returns are true and correct in all material respects, and
all taxes, charges and other impositions due and payable have been timely paid
or reserved for prior to the date on which any fine, penalty, interest, late
charge or loss may be added thereto for nonpayment thereof, except where
contested in good faith and by appropriate proceedings if adequate reserves
therefor have been established on the books of the Borrower or such Tax
Affiliate, as the case may be, in conformity with GAAP or such nonpayment would
have no reasonable likelihood of having a Material Adverse Effect. The Borrower
and each of its Tax Affiliates have complied with all applicable laws, rules and
regulations relating to the withholding and payment of taxes and have timely
withheld from employee wages and paid over to the proper Governmental
Authorities all amounts required to be so withheld and paid over for all periods
in full and complete compliance with the tax, social security and unemployment
withholding provisions of applicable Federal, state, local and foreign law,
53
<PAGE>
except where such nonpayment would have no reasonable likelihood of having a
Material Adverse Effect.
4.4. Full Disclosure. No written statement prepared or furnished by or
---------------
on behalf of any Loan Party or any of its Affiliates in connection with any of
the Loan Documents or the Subordinated Notes or the consummation of the
transactions contemplated thereby, and no financial statement delivered pursuant
hereto or thereto, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. All facts known to the Borrower which are material to an
understanding of the financial condition, business, properties or prospects of
the Borrower and its Subsidiaries taken as one enterprise have been disclosed to
the Lenders.
4.5. Financial Matters. (a) The consolidated balance sheet of the
------------------
Borrower and its Subsidiaries as at December 31, 1995, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the Fiscal Year then ended, certified by
Arthur Andersen & Co., and the consolidated balance sheet of the Borrower and
its Subsidiaries as at September 30, 1996 and the related consolidated
statements of income, retained earnings and cash flow of the Borrower and its
Subsidiaries for the period then ended, certified by the chief financial officer
of the Borrower, copies of which have been furnished to the Agents and the
Arranger, fairly present, subject, in the case of said balance sheet as at
September 30, 1996, and said statement of income, retained earnings and cash
flow for the period then ended, to year-end audit adjustments, the consolidated
financial condition of the Borrower and its Subsidiaries as at such dates and
the consolidated results of the operations of the Borrower and its Subsidiaries
for the period ended on such dates, all in conformity with GAAP.
(b) Since December 31, 1995, there has been no Material Adverse Change
and no event or development that has had a reasonable likelihood of having a
Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries had at December
31, 1995 any material obligation, contingent liability or liability for taxes,
long-term leases or unusual forward or long-term commitment which is not
reflected on the balance sheet at such date referred to in subsection (a) above
or in the notes thereto and which would have a reasonable likelihood of having a
Material Adverse Effect.
(d) On the Closing Date, the Borrower, and the Borrower and its
Restricted Subsidiaries, on a consolidated basis, are Solvent.
54
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4.6. Litigation. There are no pending or, to the knowledge of the
----------
Borrower, threatened actions, investigations or proceedings affecting any Loan
Party before any Governmental Authority or arbitrator, other than those that,
individually or in the aggregate, have no reasonable likelihood of having a
Material Adverse Effect. To the knowledge of the Borrower, the performance of
any action by any Loan Party required or contemplated by any of the Loan
Documents or Related Documents is not restrained or enjoined (either
temporarily, preliminarily or permanently), and no material adverse condition
has been imposed by any Governmental Authority or arbitrator upon any of the
foregoing transactions.
4.7. Margin Regulations. The Borrower and its Subsidiaries are not
-------------------
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Borrowing will
be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock, in contravention of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
4.8. Capitalization; Subsidiaries. (a) As of the Closing Date, the
-----------------------------
authorized Stock of the Borrower consists of 100 shares of Common Stock, $1.00
par value, of which 100 shares are issued and outstanding. All of the
outstanding capital stock of the Borrower has been validly issued, is fully paid
and non-assessable and is owned by Parent free and clear of all Liens. There are
no agreements or understandings with respect to the voting of any Stock of the
Borrower or, to the best knowledge of the Borrower, any agreement restricting
the transfer or hypothecation of any such shares other than the Loan Documents.
(b) Set forth on Schedule 4.8 is a complete and accurate list showing,
as of the date hereof, all Subsidiaries of the Borrower and, as to each such
Subsidiary, the jurisdiction of its incorporation, the number of shares of each
class of Stock authorized, and the number outstanding and the percentage of the
outstanding shares of each such class owned (directly or indirectly) by the
Borrower and whether such Subsidiary is a Restricted Subsidiary or an
Unrestricted Subsidiary. No Stock of any Subsidiary of the Borrower is subject
to any outstanding option, warrant, right of conversion, exchange or purchase or
any similar right. All of the outstanding Stock of each such Subsidiary has been
validly issued, is fully paid and non-assessable and is owned by the Borrower or
by a Subsidiary of the Borrower, as set forth on such Schedule 4.8, free and
clear of all Liens other than the Liens securing the Existing Credit Agreement
which will be released upon the Closing Date and the Liens granted to the
Administrative Agent under the Pledge Agreements. Neither the Borrower nor any
such Subsidiary is a party to any agreement restricting the transfer or
hypothecation of any shares of any such Subsidiary's capital stock, other than
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the Loan Documents. The Borrower does not own or hold, directly or indirectly,
any capital stock or equity security of, or any equity interest in, any Person
other than such Subsidiaries, as are set forth in Schedule 7.6 or as are
permitted to be acquired under Section 7.6.
4.9. ERISA. Each member of the ERISA Group is in compliance in all
-----
material respects with the presently applicable provisions of ERISA, the Code
and Plan documents with respect to each Plan. No member of the ERISA Group has
made any amendment to any Plan which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code or incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA. No ERISA Event
has occurred or is reasonably likely to occur that could reasonably be expected
to result in a material liability to the Borrower or its Subsidiaries. There are
no Material Plans.
4.10. Liens. There are no Liens of any nature whatsoever on any
-----
properties of any Loan Party other than those permitted by Section 7.1. The
Liens granted by the Loan Parties to the Administrative Agent on behalf and for
the ratable benefit of the Secured Parties pursuant to the Collateral Documents
are fully perfected first priority Liens in and to the Collateral described
therein, subject to no other Liens except those permitted by Section 7.1.
4.11. Related Documents. All amounts borrowed pursuant to this
------------------
Agreement constitute (i) Indebtedness permitted under the Indenture and,
following the effectiveness of the consents and amendments referred to in
Section 3.1(n), the Debenture Indenture and (ii) "Senior Debt" under the
Indenture and, following the effectiveness of the consents and amendments
referred to in Section 3.1(n), the Debenture Indenture.
4.12. No Burdensome Restrictions; No Defaults. (a) No Loan Party is
-----------------------------------------
(i) a party to any Contractual Obligation which has a reasonable likelihood of
having a Material Adverse Effect or the performance of which by any thereof,
either unconditionally or upon the happening of an event, will result in the
creation of a Lien on the property or assets of any thereof or (ii) subject to
any charter or corporate restriction which has a reasonable likelihood of having
a Material Adverse Effect.
(b) No Loan Party nor, to the knowledge of the Borrower, any other
party is in default under or with respect to any Contractual Obligation which
default, individually or in the aggregate for all such defaults, has a
reasonable likelihood of having a Material Adverse Effect.
(c) There is no Requirement of Law the compliance with which by any
Loan Party would have a reasonable likelihood of having a Material Adverse
56
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Effect other than those that affect the industry generally.
(d) None of the Borrower's Subsidiaries is subject to any restriction
or limitation (other than Requirements of Law) on its ability to declare or make
any dividend payment or other distribution on account of any shares of any class
of its Stock or on its ability to purchase, redeem, defease, or otherwise
acquire for value or make any payment in respect of any such shares or any
shareholder rights, except pursuant to the Loan Documents, the Indenture or the
Debenture Indenture.
4.13. No Other Ventures. Except as set forth in Schedule 7.6 and as
------------------
permitted under Section 7.6, no Loan Party is engaged in any joint venture or
partnership with any other Person.
4.14. Investment Company Act. The Borrower is not an "investment
------------------------
company", as such term is defined in the Investment Company Act of 1940, as
amended. The making of the Loans by the Lenders, the application of the proceeds
and repayment thereof by the Borrower and the consummation of the transactions
contemplated by the Loan Documents will not violate any provision of such Act or
any rule, regulation or order issued by the Securities and Exchange Commission
thereunder.
4.15. Insurance. All policies of insurance of any kind or nature owned
---------
by or issued to the Borrower or any of its Subsidiaries, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
employee health and welfare, title, property and liability insurance, are in
full force and effect and are of a nature and provide such coverage which the
Borrower believes is sufficient and which is usually carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Borrower and its Subsidiaries operate, except for such
non-compliance that, individually or in the aggregate, have no reasonable
likelihood of having a Material Adverse Effect.
4.16. Labor Matters. (a) There are no strikes, work stoppages, slow
-------------
downs, lockouts, other labor disputes or grievances pending against the Borrower
or any of its Subsidiaries, except for such strikes, work stoppages, slow downs,
lockouts, other labor disputes or grievances that, individually or in the
aggregate, have no reasonable likelihood of having a Material Adverse Effect.
(b) There are no arbitrations, unfair labor practice charges or
grievances pending or in process or threatened by or on behalf of any employee
or group of employees of the Borrower or any of its Subsidiaries, and no written
complaints received by the Borrower or any of its Subsidiaries, or threatened,
57
<PAGE>
or, with respect to unresolved complaints, on file with any Federal, state or
local governmental agency, alleging employment discrimination by the Borrower or
any of its Subsidiaries which has a reasonable likelihood of having a Material
Adverse Effect. Neither the Borrower nor any of its Subsidiaries is a party to
any collective bargaining agreement which has a reasonable likelihood of having
a Material Adverse Effect.
4.17. Environmental Protection. (i) To the knowledge of the Borrower,
------------------------
none of the facilities of the Borrower nor those of any of its Subsidiaries or
of any tenants of the Borrower or any of its Subsidiaries contain any
asbestos-containing materials, (ii) neither the Borrower nor any of its
Subsidiaries nor, to the knowledge of the Borrower, any of such tenants is
subject to any order or directive of any Governmental Authority relating to
asbestos-containing materials, and (iii) the operations of the Borrower and each
of its Subsidiaries and each of such tenants comply with all applicable
Requirements of Law relating to environmental matters, except in the case of the
foregoing clauses (i), (ii) and (iii) for such non-compliance that, individually
or in the aggregate, have no reasonable likelihood of having a Material Adverse
Effect.
4.18. Real Estate. (a) As of the Closing Date, neither the Borrower
-----------
nor any of its Subsidiaries owns any real property. The Borrower and each of its
Subsidiaries hold valid, binding and enforceable leasehold interests in all
properties and assets purported to be leased by the Borrower or such Subsidiary,
including, without limitation, valid leasehold interests of the Borrower or such
Subsidiary pursuant to the Leases and all property reflected in the balance
sheets referred to in Section 4.5 (except to the extent that the failure of the
Borrower to hold any such leasehold interests would, individually or in the
aggregate, have no reasonable likelihood of having a Material Adverse Effect).
The Borrower and each of its Subsidiaries have received all deeds, assignments,
waivers, consents, non-disturbance and recognition or similar agreements, bills
of sale and other documents concerning property owned or leased by the Borrower
or any of its Subsidiaries, except for such instruments which the failure to
obtain would, individually or in the aggregate, have no reasonable likelihood of
having a Material Adverse Effect.
(b) Schedule 4.18 sets forth all Material Leases of the Borrower or
any of its Subsidiaries in effect on the date hereof along with the applicable
commencement date, termination date, renewal options (if any) and annual base
rents for the year 1997. Each of such Material Leases is valid and enforceable
in accordance with its terms and is in full force and effect (except to the
extent that the failure of any such Material Lease to be valid and enforceable
and in full force and effect has no reasonable likelihood of having a Material
Adverse Effect). Except as disclosed on Schedule 4.18, the Borrower has
delivered to the Administrative Agent true and complete copies of each such
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Material Lease and all documents affecting the rights or obligations of the
Borrower or any of its Subsidiaries which is a party thereto, including, without
limitation, any non-disturbance and recognition agreements, subordination
agreements, attornment agreements and agreements regarding the term or rental of
any such Material Lease. Neither the Borrower nor any of its Subsidiaries nor,
to the knowledge of the Borrower, any other party to any such Material Lease is
in default of its obligations thereunder or has delivered or received any notice
of default under any such Material Lease, nor has any event occurred which, with
the giving of notice, the passage of time or both, would constitute a default
under any such Material Lease, except for defaults the consequence of which,
individually or in the aggregate, would have no reasonable likelihood of having
a Material Adverse Effect.
(c) As of the Closing Date, neither the Borrower nor any of its
Subsidiaries owns or holds, or is obligated under or a party to, any option,
right of first refusal or other contractual right to purchase, acquire, sell,
assign or dispose of any real property leased by the Borrower or any of its
Subsidiaries except as set forth on Schedule 4.18.
(d) The properties owned, operated or leased by the Borrower or any of
its Subsidiaries are in good repair and operating condition (reasonable wear and
tear excepted) and suitable for the uses presently made thereof, except for such
non-compliance that, individually or in the aggregate, have no reasonable
likelihood of having a Material Adverse Effect.
(e) Neither the Borrower nor any of its Subsidiaries has received any
notice of any pending, threatened or contemplated condemnation proceeding
affecting any real property leased by the Borrower or any of its Subsidiaries or
any material part thereof, except for such condemnation proceedings that,
individually or in the aggregate, have no reasonable likelihood of having a
Material Adverse Effect.
(f) No portion of any real property leased by the Borrower or any of
its Subsidiaries has suffered any material damage by fire or other casualty loss
which has not heretofore been completely repaired and restored to its original
condition, except for such damages or losses that, individually or in the
aggregate, have no reasonable likelihood of having a Material Adverse Effect.
4.19. Restricted Payments. Except as set forth in Schedule 4.19, since
-------------------
September 30, 1996, the Borrower has not (a) declared or made any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any Stock except dividends declared and paid on or
------
after the Closing Date that are permitted under Section 7.4, (b) except on or
after the Closing Date, as permitted by Section 7.4, purchased, redeemed or
otherwise acquired for value or made any payment in respect of any shares of any
59
<PAGE>
class of its Stock or Stock Equivalents, or (c) in the case of clause (b) above,
permitted any of its Subsidiaries to do so.
4.20. Conduct of Business. The Borrower and its Subsidiaries are
--------------------
principally engaged in only the business of representing radio and television
stations, cable systems, interactive Internet service providers and other
broadcasters, publishers, or purveyors of publicly accessible media in the sale
of spot advertising time and programming.
4.21. Representation Agreements. Each Representation Agreement is in
--------------------------
full force and effect, and is enforceable in accordance with its terms, except
such Representation Agreements the termination or enforceability of which,
individually or in the aggregate, would have no reasonable likelihood of having
a Material Adverse Effect. No default or event of default, to the best of the
Borrower's knowledge, has occurred under any of the Representation Agreements
and no party to any of such Representation Agreements has given notice of
termination of, or notice of its intention to terminate, any such agreement,
except such as, individually or in the aggregate, would have no reasonable
likelihood of having a Material Adverse Effect.
4.22. Force Majeure. Neither the business nor the properties of the
--------------
Borrower or any of its Subsidiaries are currently suffering from the effects of
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), other than those the
consequences of which, individually or in the aggregate, would have no
reasonable likelihood of having a Material Adverse Effect.
ARTICLE V
FINANCIAL COVENANTS
From and after the Closing Date and as long as any of the Obligations
hereunder or the Commitments remain outstanding, unless the Majority Lenders
otherwise consent in writing, the Borrower agrees with the Lenders and the
Agents that:
5.1. Fixed Charge Coverage Ratio. The Borrower shall maintain, at the
---------------------------
end of each Fiscal Quarter ending during any of the periods set forth below, a
ratio of EBITDA for the four Fiscal Quarters ending on the last day of such
Fiscal Quarter to Fixed Charges for the four Fiscal Quarters ending on the last
day of such Fiscal Quarter, of not less than the correlative ratio set forth
below:
60
<PAGE>
Fixed Charge
Period Coverage Ratio
------ ---------------
Closing Date -
September 30, 2000 1.20:1.0
October 1, 2000 and
thereafter 1.15:1.0
5.2. Total Interest Coverage Ratio. The Borrower shall maintain, at
------------------------------
the end of each Fiscal Quarter ending during any of the periods set forth below,
a Total Interest Coverage Ratio for the four Fiscal Quarters ending on the last
day of such Fiscal Quarter of not less than the correlative ratio set forth
below:
Total Interest
Period Coverage Ratio
------ --------------
Closing Date -
September 30, 1997 1.90:1.0
October 1, 1997 -
September 30, 1998 2.00:1.0
October 1, 1998 -
September 30, 1999 2.10:1.0
October 1, 1999 -
September 30, 2000 2.25:1.0
October 1, 2000 -
September 30, 2001 2.50:1.0
October 1, 2001 -
September 30, 2002 2.75:1.0
October 1, 2002 -
September 30, 2003 3.00:1.0
October 1, 2003 and
thereafter 3.50:1.0
5.3. Total Debt to EBITDA Ratio. The Borrower shall maintain, at the
--------------------------
end of each Fiscal Quarter ending during any of the periods set forth below, a
Total Debt to EBITDA Ratio of not more than the correlative ratio set forth
below; provided that to the extent that during such period the Borrower or any
--------
of its Restricted Subsidiaries has made an acquisition of a Restricted
Subsidiary or of all or a substantial portion of the business or assets of
another Person or a business or line of business of another Person, such
calculations shall be made with respect to the business or assets so acquired or
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<PAGE>
with respect to the acquired operations of any Restricted Subsidiary so acquired
as if such acquisition took place on the first day of such period on a pro forma
basis for the portion of such period prior to the date of such acquisition and
on an actual basis for the portion of such period after the date of such
acquisition:
Total Debt to
Period EBITDA Ratio
------ --------------
Closing Date through
September 30, 1998 5.50:1.0
October 1, 1998 -
September 30, 1999 5.00:1.0
October 1, 1999 -
September 30, 2000 4.50:1.0
October 1, 2000 -
September 30, 2001 4.00:1.0
October 1, 2001 -
September 30, 2002 3.75:1.0
October 1, 2002 and
thereafter 3.50:1.0
5.4. Capital Expenditures. The Borrower shall not, and shall not
---------------------
permit any of its Restricted Subsidiaries to, make or incur Capital Expenditures
in an aggregate amount in excess of $9,000,000 (the "Maximum Consolidated
Capital Expenditures Amount") in any Fiscal Year; provided that the Maximum
--------
Consolidated Capital Expenditures Amount for any Fiscal Year shall be increased
by an amount equal to 50% of the excess, if any, (but in no event more than
$4,500,000) of the Maximum Consolidated Capital Expenditures Amount for the
previous Fiscal Year (as adjusted in accordance with this proviso) over the
actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year.
ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS
As long as any of the Obligations hereunder or the Commitments remain
outstanding, unless the Majority Lenders otherwise consent in writing, the
Borrower agrees with the Lenders and the Agents that:
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<PAGE>
6.1. Compliance with Laws, Etc. The Borrower shall comply, and shall
-------------------------
cause each of its Subsidiaries to comply, in all material respects, with all
Requirements of Law, Contractual Obligations, commitments, instruments,
licenses, permits and franchises, including, without limitation, all Permits,
except for such non-compliance the consequence of which, individually or in the
aggregate, has no reasonable likelihood of having a Material Adverse Effect.
6.2. Conduct of Business. The Borrower shall (a) conduct, and shall
-------------------
cause each of its Subsidiaries to conduct, its business in a regular manner; (b)
use, and cause each of its Subsidiaries to use, its reasonable efforts, in the
ordinary course and in a manner consistent with past practice, to (i) preserve
its business and the goodwill and business of the customers, advertisers,
suppliers and others having business relations with the Borrower or any of its
Subsidiaries, and (ii) keep available the services and goodwill of its present
employees generally; and (c) perform and observe, and cause each of its
Subsidiaries to perform and observe, all the terms, covenants and conditions
required to be performed and observed by the Borrower or such Subsidiary under
its Contractual Obligations (including, without limitation, to pay all rent and
other charges payable under any lease and all debts and other obligations as the
same become due) and do, and cause each of its Subsidiaries to do, all things
necessary to preserve and to keep unimpaired its rights under such Contractual
Obligations, in each case, except such failures the consequence of which have no
reasonable likelihood of having a Material Adverse Effect.
6.3. Payment of Taxes, Etc. The Borrower shall pay and discharge, and
---------------------
shall cause each of its Subsidiaries to pay and discharge, before the same shall
become delinquent, all lawful claims, taxes, assessments and governmental
charges or levies, except where contested in good faith, by proper proceedings,
where adequate reserves therefor have been established on the books of the
Borrower or the appropriate Subsidiary in conformity with GAAP, and the
consequence of all such non-payments has no reasonable likelihood of having a
Material Adverse Effect.
6.4. Maintenance of Insurance. The Borrower shall maintain, and shall
------------------------
cause each of its Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower or
such Subsidiary operates and in any event, all insurance required by any
Collateral Document. All such insurance shall name the Administrative Agent on
behalf of the Lenders as additional insured or loss payee, as the Administrative
Agent shall determine. The Borrower shall furnish to the Lenders through the
Administrative Agent from time to time such information as may be reasonably
63
<PAGE>
requested as to such insurance.
6.5. Preservation of Corporate Existence, Etc. The Borrower shall
-------------------------------------------
preserve and maintain, and shall cause each of its Subsidiaries to preserve and
maintain, its corporate existence, rights (charter and statutory) and
franchises, except as permitted under Section 6.16 or 7.5.
6.6. Access. The Borrower shall, at any reasonable time and from time
------
to time, and upon reasonable notice to the Borrower, unless a Default has
occurred and is continuing, in which case no more than one day's notice shall be
necessary, or an Event of Default has occurred and is continuing, in which case
no notice shall be necessary, permit (a) any Agent or any of the Lenders, or any
agents or representatives thereof, to (i) examine and make copies of and
abstracts from the records and books of account of the Borrower and each of its
Subsidiaries, (ii) visit the properties of the Borrower and each of its
Subsidiaries and (iii) discuss the affairs, finances and accounts of the
Borrower and each of its Subsidiaries with any of their respective executive
officers or directors and (b) any Agent individually or on behalf of any Lender,
to communicate directly with the Borrower's independent certified public
accountants. The Borrower shall authorize its independent certified public
accountants to disclose to any Agent, individually or on behalf of any Lender,
any and all financial statements and other information of any kind relating to
the Borrower or any of its Subsidiaries, including, without limitation, copies
of any management letter.
6.7. Keeping of Books. The Borrower shall keep, and shall cause each
----------------
of its Subsidiaries to keep, proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the assets
and business of the Borrower and each such Subsidiary.
6.8. Maintenance of Properties, Etc. The Borrower shall maintain and
-------------------------------
preserve, and shall cause each of its Subsidiaries to maintain and preserve, (i)
all of its properties which are used or useful or necessary in the conduct of
its business in good working order and condition and (ii) all rights, permits,
licenses, approvals and privileges (including, without limitation, all Permits)
which are used or useful or necessary in the conduct of its business, except for
such non-compliance that, individually or in the aggregate, have no reasonable
likelihood of having a Material Adverse Effect.
6.9. Application of Proceeds. (a) The proceeds of the Revolving Credit
-----------------------
Loans shall be used by the Borrower solely as follows: (i) on or after the
Closing Date, to make payments of up to $20 million to be used for the purposes
for which the proceeds of the Term Loans may be used as provided for in Section
6.9(b), (ii) for Investments permitted under Section 7.6 (including, without
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<PAGE>
limitation, Representation Agreement Acquisition Payments) and the making of
restricted payments to the Parent or KMG permitted under Section 7.4, and (iii)
for other general corporate purposes not otherwise prohibited by this Agreement
or the other Loan Documents.
(b) The proceeds of the Term Loans shall be used by the Borrower
solely as follows: (i) to repay the Borrower's Indebtedness under the Existing
Credit Agreement and to repurchase a contract from, and make a loan to, KMSI,
which amounts will be used by KMSI to repay KMSI's Indebtedness under the KMS
Credit Agreement; (ii) to pay principal, accrued interest, premiums and consent
payments on the Debentures redeemed or repurchased in connection with the
Debenture Tender Offer to the extent such amounts are in excess of the proceeds
from the issuance of the Subordinated Notes; and (iii) to pay transaction costs,
fees and expenses related to the execution, delivery and performance of the Loan
Documents and the Related Documents in a maximum aggregate amount of
approximately $6.0 million.
6.10. Financial Statements. The Borrower shall furnish to each Agent
---------------------
and each Lender:
(a) as soon as available and in any event within 45 days after the end
of the first three Fiscal Quarters of each Fiscal Year, a consolidated balance
sheet of each of (i) KMG and its Subsidiaries and (ii) the Borrower and its
Subsidiaries, each as of the end of such quarter and consolidated statements of
income (by operating division), retained earnings, cash flow and operations of
each of (x) KMG and its Subsidiaries and (y) the Borrower and its Subsidiaries,
each for the period commencing at the end of the previous Fiscal Year and ending
with the end of such Fiscal Quarter, all prepared in conformity with GAAP and
certified by the chief financial officer of KMG or the Borrower, as the case may
be, as fairly presenting the financial condition and results of operations of
KMG and its Subsidiaries or the Borrower and its Subsidiaries, as the case may
be, at such date and for such period, together with (i) a certificate of the
chief financial officer of Borrower stating that no Default or Event of Default
has occurred and is continuing or, if a Default or an Event of Default has
occurred and is continuing, a statement as to the nature thereof and the action
which the Borrower proposes to take with respect thereto and (ii) a schedule in
form satisfactory to the Agents of the computations used by the Borrower in
determining compliance with all financial covenants contained in Article V
herein;
(b) as soon as available and in any event within 100 days after the
end of each Fiscal Year, a consolidated balance sheet of each of (i) KMG and its
Subsidiaries and (ii) the Borrower and its Subsidiaries, each as of the end of
such year and consolidated statements of income (by operating division),
retained earnings, cash flow and operations of each of (x) KMG and its
65
<PAGE>
Subsidiaries and (y) the Borrower and its Subsidiaries, each for such Fiscal
Year, and all prepared in conformity with GAAP and accompanied by an audit
report without qualification as to the scope of the audit by Arthur Andersen &
Co., Price Waterhouse or other independent public accountants constituting one
of the "Big Six" accounting firms, together with (i) a certificate of such
accounting firm stating that, in the course of the regular audit of the business
of the Borrower and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge that a Default or an Event of Default
has occurred and is continuing, or, if in the opinion of such accounting firm, a
Default or an Event of Default has occurred and is continuing, a statement as to
the nature thereof together with a certificate of the chief financial officer of
the Borrower as to the nature thereof and the action which the Borrower proposes
to take with respect thereto and (ii) a schedule in form satisfactory to the
Agents of the computations used by such accountants in determining, as of the
end of such Fiscal Year, compliance with all financial covenants contained in
Article V herein;
(c) simultaneously with the delivery of the financial statements
referred to in paragraphs (a) and (b) of this Section 6.10, a report in form,
scope and detail reasonably satisfactory to the Agents, as to the Representation
Agreements terminated (including a statement of payments received in connection
therewith) and Representation Agreements entered into with new clients
(including a statement of payments made in connection therewith), by the
Borrower or any of its Restricted Subsidiaries during the most recently
completed Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter, certified
by the chief financial officer of the Borrower;
(d) in the event the Borrower makes a change in accounting treatment
or reporting practices, simultaneously with the delivery of the financial
statements referred to in paragraphs (a) and (b) of this Section 6.10, a
statement showing the computations used in determining compliance with all
financial covenants contained herein and how the same are derived from such
financial statements; and
(e) promptly after the same are received by the Borrower or KMG, a
copy of each management letter provided to the Borrower or KMG, as the case may
be, by its independent certified public accountants which refers in whole or in
part to any inadequacy, defect, problem, qualification or other lack of fully
satisfactory accounting controls utilized by the Borrower or any of its
Subsidiaries or KMG and its Subsidiaries, as the case may be.
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6.11. Reporting Requirements. The Borrower shall furnish to each Agent
----------------------
and each Lender:
(a) to the extent practicable prior to any termination of a
Representation Agreement anticipated to generate in excess of $6,000,000 in
Representation Agreement Termination Payments or any Asset Sale anticipated to
generate in excess of $1,000,000 in Asset Sales Proceeds, a notice (i)
identifying such Representation Agreement or describing the assets being sold
and (ii) stating the estimated Representation Agreement Termination Payments or
Asset Sales Proceeds in respect thereof;
(b) as soon as available and in any event within 45 days after the end
of each Fiscal Year, an annual budget of the Borrower and its Subsidiaries
prepared on a quarterly basis for the succeeding Fiscal Year (other than for
Capital Expenditures and Representation Agreement Acquisition Payments which
need to be on an annual basis only), displaying forecasted revenues, net income
and EBITDA, Capital Expenditures and the difference between Representation
Agreement Termination Payments and Representation Agreement Acquisition
Payments, in the case of forecasted revenues, net income and EBITDA on a
consolidated and consolidating (by operating division) basis and in the case of
Capital Expenditures and Representation Agreement Acquisition Payments on a
consolidated basis and, within ten days of the preparation thereof, any
revisions thereto;
(c) promptly and in any event within 30 days after any member of the
ERISA Group knows or has reason to know that any ERISA Event has occurred, a
written statement of the chief financial officer or other appropriate officer of
the Borrower describing such ERISA Event or waiver request and the action, if
any, which the ERISA Group proposes to take with respect thereto and a copy of
any notice filed with the PBGC or the IRS pertaining thereto;
(d) upon request by any Lender through the Administrative Agent,
promptly and in any event within 30 days after the filing thereof by any member
of the ERISA Group, a copy of each annual report (Form 5500 Series, including
Schedule B thereto) filed with respect to each Pension Plan;
(e) promptly after the commencement thereof, notice of any action,
suit and proceeding before any domestic or foreign Governmental Authority or
arbitrator affecting any Loan Party, except for such actions, suits or
proceedings, which if adversely determined, would, in the aggregate, have no
reasonable likelihood of having a Material Adverse Effect;
(f) promptly and in any event (i) within three Business Days or, with
respect to Defaults or Events of Default arising under Section 8.1(d) or (e),
one Business Day after the Borrower becomes aware of the existence of (A) any
Event of Default or any Default, (B) any termination, breach or non-performance
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of, or any default under, any Related Document or any Contractual Obligation
which is material to the business, prospects, operations or financial condition
of the Borrower and its Subsidiaries taken as one enterprise, or (C) any
Material Adverse Effect or any Material Adverse Change, or any event,
development or other circumstance which has a reasonable likelihood of resulting
in a Material Adverse Change, telephonic or facsimile notice in reasonable
detail specifying the nature of such Event of Default, Default, termination,
breach, default, Material Adverse Effect, Material Adverse Change, event,
circumstance, development or information, including, without limitation, the
anticipated effect thereof, which notice shall be promptly confirmed in writing
within five days;
(g) promptly after the sending or filing thereof, copies of all
notices, financial statements, certificates or reports delivered pursuant to any
Related Document;
(h) promptly after the sending or filing thereof, copies of all
reports which KMG or the Borrower sends to their respective security holders
generally, and copies of all reports and registration statements which KMG or
the Borrower or any of their respective Subsidiaries files with (i) the
Securities and Exchange Commission, (ii) any national securities exchange or
(iii) the National Association of Securities Dealers, Inc.;
(i) promptly after any change in accounting treatment or reporting
practices of KMG and its Subsidiaries or the Borrower and its Subsidiaries,
notice disclosing the nature of the change and the reasons therefor; and
(j) such other information respecting the business, properties or the
condition or operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Agents may from time to time reasonably
request.
6.12. Leases. The Borrower shall provide the Administrative Agent with
------
a copy of each Material Lease and each lease to which the Borrower or any of its
Restricted Subsidiaries is a party as lessor. The Borrower shall, and shall
cause each of its Subsidiaries to, (i) comply, in all material respects, with
all of its obligations under each Lease now or hereafter held by the Borrower or
such Subsidiary, as the case may be, except for such non-compliances,
individually or in the aggregate, that have no reasonable likelihood of having a
Material Adverse Effect, (ii) provide the Administrative Agent with a copy of
each notice of default under any Material Lease received by the Borrower or any
of its Restricted Subsidiaries immediately upon receipt thereof and deliver to
the Administrative Agent a copy of each notice of default sent by the Borrower
or any of its Restricted Subsidiaries under any Material Lease simultaneously
with its delivery of such notice under such Material Lease, (iii) notify the
Administrative Agent at least 14 days prior to the date the Borrower or any of
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its Restricted Subsidiaries takes possession of, or becomes liable under, any
new Material Lease, whichever is earlier, and (iv) upon the Administrative
Agent's request, promptly execute, deliver and record a first priority leasehold
mortgage in favor of the Administrative Agent for the ratable benefit of the
Secured Parties should the Borrower or any of its Restricted Subsidiaries
hereafter enter into a Material Lease, which Material Lease shall expressly
permit the mortgaging thereof to the Administrative Agent, contain
non-disturbance provisions satisfactory to the Agents and such other customary
lender protections as may be required by the Agents, together with, if
reasonably requested by the Agents, at the Borrower's sole cost and expense, a
title insurance policy in an amount reasonably requested by the Agents and a
current ALTA survey and surveyor's certificate, in each case, in form and
substance satisfactory to the Agents.
6.13. New Real Estate. If, at any time, the Borrower or any of its
----------------
Restricted Subsidiaries acquires any real property having a value in excess of
$2,000,000, the Borrower shall, or shall cause such Restricted Subsidiary to,
promptly execute, deliver and record a first priority mortgage in favor of the
Administrative Agent for the ratable benefit of the Secured Parties covering
such real property (subordinate to no other mortgages other than such permitted
mortgages as are necessary to allow the Borrower or such Subsidiary to acquire
such real property and to such Liens as are permitted hereunder), in form and
substance satisfactory to the Agents, and provide the Agents, at the Borrower's
sole cost and expense, with a title insurance policy covering such real property
in an amount equal to the purchase price of such real property, and a current
ALTA survey thereof, and a surveyor's certificate, in each case, in form and
substance satisfactory to the Agents.
6.14. Broker's Fee. The Borrower shall indemnify each Agent, the
-------------
Arranger and each Lender for, and hold each Agent, the Arranger and each Lender
harmless from and against, any and all claims for brokerage commissions, fees
and other compensation made against any Agent, the Arranger or any of the
Lenders for any broker, finder or consultant with respect to any agreement,
arrangement or understanding made by or on behalf of any Loan Party in
connection with the transactions contemplated by this Agreement.
6.15. Fiscal Year. The Borrower shall maintain as its Fiscal Year the
-----------
twelve month period ending on December 31 of each year.
6.16. Separate Corporate Existence. The Borrower will and will cause
-----------------------------
each of its Subsidiaries to take all reasonable steps to maintain its identity
as a separate legal entity and to make it apparent to third parties that it is a
corporation with properties and liabilities distinct from those of any Affiliate
(other than the Borrower and its Subsidiaries); provided that the Borrower may
--------
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merge with KCC pursuant to the Merger and the Borrower and its Subsidiaries may
merge with the Borrower or the Borrower's Subsidiaries, as the case may be, to
the extent permitted by Section 7.5 and provided further that the corporate
-------- -------
existence of any of the Borrower's Subsidiaries may be terminated and its assets
transferred to the Borrower or any Restricted Subsidiary if the Borrower's Board
of Directors determines that such termination is in the Borrower's best
interests and such termination is not materially disadvantageous to the Lenders.
Without limiting the generality of the foregoing, the Borrower will and will
cause each of its Subsidiaries to use its best efforts to: (a) maintain its
books and records complete and separate from those of any Affiliate (other than
the Borrower and its Subsidiaries); (b) not maintain bank accounts or other
depository accounts to which any Affiliate is an account party, into which any
Affiliate (other than the Borrower and its Subsidiaries) makes deposits or from
which any Affiliate (other than the Borrower and its Subsidiaries) has the power
to make withdrawals; and (c) refrain from filing or otherwise initiating or
supporting the filing of a motion in any bankruptcy or insolvency proceeding to
substantively consolidate the Borrower with any Affiliate of the Borrower.
ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations or Commitments remain outstanding,
without the written consent of the Majority Lenders, the Borrower agrees with
the Lenders and the Agents that:
7.1. Liens, Etc. The Borrower shall not create or suffer to exist, and
----------
shall not permit any of its Restricted Subsidiaries to create or suffer to
exist, any Lien upon or with respect to any of its properties, whether now owned
or hereafter acquired, or assign, or permit any of its Restricted Subsidiaries
to assign, any right to receive income, except:
(a) Purchase money Liens or purchase money security interests upon or
in any property acquired or held by the Borrower or any of its Subsidiaries in
the ordinary course of business to secure the purchase price of such property or
to secure Indebtedness incurred solely for the purpose of financing the
acquisition of such property, and Liens existing on such property at the time of
its acquisition (other than any such Lien created in contemplation of such
acquisition); provided, however, that the aggregate principal amount of the
-------- -------
Indebtedness secured by the Liens referred to in this clause (a) shall not
exceed $3,000,000 at any time outstanding;
(b) Liens created pursuant to the Loan Documents;
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(c) Liens securing the renewal, extension or refunding of any
Indebtedness or other obligation secured by any Lien permitted by subsection
(a), (i), (j) or (k) of this Section 7.1 without any increase in the amount
secured thereby or in the assets subject to such Liens;
(d) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons incurred by
the Borrower or any of its Subsidiaries in the ordinary course of business which
secure its obligations to such Person; provided, however, that (i) the Borrower
-------- -------
or such Subsidiary is not in default with respect to such payment obligation to
such Person or is in good faith and by appropriate proceedings diligently
contesting such obligation and adequate provision is made for the payment
thereof and (ii) all such failures, in the aggregate, would have no reasonable
likelihood of having a Material Adverse Effect;
(e) Liens securing taxes, assessments or governmental charges or
levies; provided, however, that (i) neither the Borrower nor any of its
-------- -------
Subsidiaries is in default in respect of any payment obligation with respect
thereto unless the Borrower or such Subsidiary is in good faith and by
appropriate proceedings diligently contesting such obligation and adequate
provision is made for the payment thereof and (ii) all such failures, in the
aggregate, would have no reasonable likelihood of having a Material Adverse
Effect;
(f) Liens incurred or pledges and deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance,
old-age pensions and other social security benefits;
(g) Liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations, letters
of credit, surety, security, performance and appeal bonds and other obligations
of like nature, incurred as an incident to and in the ordinary course of
business, and judgment Liens; provided, however, that all such Liens have no
-------- -------
reasonable likelihood of having a Material Adverse Effect; and provided,
--------
further, that any Liens securing letters of credit, surety, security,
- -------
performance and appeal bonds do not secure more than $3,000,000 in the aggregate
at any one time;
(h) Zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or use
of the property or assets of the Borrower or any of its Subsidiaries, or which
with respect to all other properties do not in the aggregate materially detract
from the value or use of the property or assets of the Borrower and its
Subsidiaries taken as a whole, or impair, in any material manner, the use of
such property for the purposes for which such property is held by the Borrower
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or any such Subsidiary;
(i) Liens in favor of landlords securing operating leases permitted by
Section 7.3;
(j) Liens existing on the date hereof and disclosed on Schedule 7.1;
(k) Liens to secure Capitalized Lease Obligations if the incurrence of
such Indebtedness is permitted by Section 7.2(vi); provided that (A) any such
--------
Lien is created solely for the purpose of securing Indebtedness representing, or
incurred to finance, refinance or refund, the cost (including, without
limitation, the cost of construction) of the property subject thereto, (B) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such cost and (C) such Lien does not extend to or cover any other property
other than such item of property and any improvements on such item;
(l) Other Liens securing Indebtedness in an aggregate amount not to
exceed $500,000; and
(m) Prior to the Closing Date, Liens under the Loan Documents securing
the Obligations (as such terms are defined in the Existing Credit Agreement).
7.2. Indebtedness. The Borrower shall not create or suffer to exist,
------------
or permit any of its Restricted Subsidiaries to create or suffer to exist, any
Indebtedness, except:
------
(i) the Obligations;
(ii) Indebtedness of the Borrower evidenced by Debentures;
provided that the aggregate principal amount of all such Debentures does
not exceed $24,500,000 at any time after consummation of the Debenture
Tender Offer; and Indebtedness of the Borrower evidenced by the
Subordinated Notes in an aggregate principal amount not to exceed
$100,000,000;
(iii) liabilities in respect of Contingent Obligations to the
extent such Contingent Obligations are permitted under Section 7.12;
(iv) Indebtedness owing to any wholly-owned Domestic Restricted
Subsidiary of the Borrower by the Borrower or any other Restricted
Subsidiary of the Borrower and Indebtedness owing to the Borrower by any
Restricted Subsidiary of the Borrower;
(v) subject to clause (vi) below, Indebtedness secured by Liens
permitted under Section 7.1(a);
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(vi) Indebtedness of the Borrower or any of its Subsidiaries
under Capitalized Lease Obligations; provided, however, that the aggregate
-------- -------
amount of Indebtedness incurred under clause (v) above and under this
clause (vi) shall not exceed $4,000,000 at any time outstanding;
(vii) Indebtedness of the Borrower or any of its Subsidiaries
consisting of Contingent Obligations secured by Liens permitted under
Section 7.1(f) and (g); provided, however, that the aggregate amount of all
-------- -------
such Indebtedness shall not exceed $4,000,000 at any time outstanding;
(viii) Indebtedness existing on the date hereof and described in
Schedule 7.2;
(ix) Indebtedness consisting of deferred payment obligations in
respect of Representation Agreement Acquisition Payments; and
(x) upon consummation of the Merger, the NCC Guaranty, and other
Indebtedness of the Borrower or any of its Subsidiaries in an aggregate
principal amount not to exceed $3,000,000 at any time outstanding.
7.3. Sale-Leaseback Transactions. The Borrower shall not, and shall
----------------------------
not permit any of its Restricted Subsidiaries to, become or remain liable as
lessee or guarantor or other surety with respect to any lease, whether an
operating lease or a Capitalized Lease, of any property (whether real or
personal or mixed), whether now owned or hereafter acquired, which (a) the
Borrower or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than the Borrower or any of its Domestic
Restricted Subsidiaries) or (b) the Borrower or any of its Subsidiaries intends
to use for substantially the same purposes as any other property which has been
or is to be sold or transferred by that entity to any other Person (other than
the Borrower or any of its Domestic Restricted Subsidiaries) in connection with
such lease; provided, however, that the Borrower or any of its Restricted
-------- -------
Subsidiaries may become and remain so liable if the Asset Sales Proceeds from
such a sale or transfer or series of related sales or transfers are applied as
if they were proceeds of an Asset Sale.
7.4. Restricted Payments. The Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, (i) declare or make any dividend payment,
loan or other distribution of assets, properties, cash, rights, obligations or
securities on account or in respect of any of its Stock or Stock Equivalents,
except, so long as no Default or Event of Default is continuing or would result
therefrom, (A) cash dividends paid or loans made by the Borrower to be used by
KMG, or to be used by the Parent to pay a dividend or make a loan to KMG, to
repurchase shares of KMG's publicly-held common stock (1) of up to $20,000,000
in the aggregate and (2) of an aggregate additional amount equal to the least of
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(a) the amount permitted under the Indenture, (b) 35% of the Borrower's
aggregate Cash Flow for all Fiscal Years ended after the Closing Date and on or
prior to the date of such repurchase and (c) $20,000,000, if, with respect to
dividends or loans to be made pursuant to this clause (2), the Pro Forma Ratio
of Total Debt to EBITDA is not greater than 5.0 to 1.0, (B) dividends paid or
distributions made by any Restricted Subsidiary to the Borrower or to any
Domestic Restricted Subsidiary, (C) cash dividends paid by the Borrower to allow
KMG and the Parent to pay their administrative expenses in an aggregate amount
not to exceed $500,000 in any Fiscal Year, (D) cash dividends paid by the
Borrower to allow KMG to pay cash taxes actually due and attributable to the
operations, income or activities of the Borrower and its Subsidiaries, and (E) a
loan in a principal amount not exceeding $4,511,000 made by the Borrower to KMSI
on the Closing Date for the purposes of repaying the indebtedness of KMSI under
the KMS Credit Agreement, or (ii) purchase, redeem, prepay, defease or acquire
for value or make any payment on account or in respect of any principal amount
of Indebtedness for borrowed money that by its terms is subordinated in right of
payment to the Obligations, now or hereafter outstanding, except, so long as no
Default or Event of Default is continuing or would result therefrom, (A)
payments in respect of any Indebtedness owing to the Borrower or, in the case of
any Restricted Subsidiary, to any other Restricted Subsidiary, (B) redemption or
repurchase of Debentures not tendered in the Debenture Tender Offer, or (C)
redemption or repurchase of the Subordinated Notes in an aggregate principal
amount not to exceed $30,000,000 for all such redemptions or repurchases
provided that either such redemption or repurchase is made after December 31,
- --------
1998, or the Pro Forma Ratio of Total Debt to EBITDA is not greater than 3.75 to
1.0.
7.5. Mergers, Stock Issuances, Sale of Assets, Etc. (a) The Borrower
-----------------------------------------------
shall not, and shall not permit any of its Restricted Subsidiaries to, (i) merge
with any Person, (ii) consolidate with any Person, (iii) except for Permitted
Acquisitions, acquire all or substantially all of the Stock or Stock Equivalents
of any Person, (iv) except for Permitted Acquisitions, acquire all or
substantially all of the assets of any Person or all or substantially all of the
assets constituting the business of a division, branch or other unit operation
of any Person, or (v) enter into any joint venture or partnership with any
Person other than as set forth in Section 7.6(x), except (A) for the Merger, (B)
as permitted pursuant to subsection (c) below and (C) except the merger of a
Restricted Subsidiary of the Borrower with and into the Borrower or with another
Restricted Subsidiary of the Borrower as long as at all times there are no less
than two separate operating entities, one of which shall consist of the
Borrower's television business unit and the other of which shall consist of the
Borrower's radio business unit, in each case as such businesses are conducted by
the Borrower or by such Subsidiary on the date hereof; provided that nothing
--------
herein contained shall prohibit the Borrower from dissolving or otherwise
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terminating the corporate existence of any of the Borrower's Subsidiaries and
transferring its assets to the Borrower or a Domestic Restricted Subsidiary of
the Borrower if the Borrower's Board of Directors determines that such
termination is in the Borrower's best interests and such dissolution or
termination is not materially disadvantageous to the Lenders; and provided
--------
further that nothing herein contained shall prohibit the Borrower or any
- -------
Restricted Subsidiary from making a Permitted Acquisition or an Investment
permitted under Section 7.6(x).
(b) The Borrower shall not and shall not permit any of its Restricted
Subsidiaries to (i) issue or transfer any Stock or Stock Equivalents, other than
any such issuance or transfer (x) by a Restricted Subsidiary of the Borrower to
a wholly-owned Restricted Subsidiary of the Borrower or (y) by a wholly-owned
Restricted Subsidiary of the Borrower to the Borrower, or (ii) sell, convey,
transfer or otherwise dispose of, or permit any of its Restricted Subsidiaries
to sell, convey, transfer or otherwise dispose of, any Stock or Stock
Equivalents of any of the Borrower's Restricted Subsidiaries unless, in any such
case, (x) such capital stock constitutes all of the Stock or Stock Equivalents
of such Subsidiary and (y) such issuance, sale, conveyance, transfer or
disposition is permitted by subsection (c) of this Section 7.5.
(c) The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, convey, transfer, lease or otherwise dispose of any of
its assets or any interest therein to any Person, or permit or suffer any other
Person to acquire any interest in any of the assets of the Borrower or any such
Subsidiary, except (i) the sale or disposition of assets in the ordinary course
of business or of used equipment or leased motor vehicles which have become
obsolete or are replaced in the ordinary course of business, (ii) leases of
personal property by the Borrower or by any wholly-owned Restricted Subsidiary
of the Borrower to the Borrower or to any other wholly-owned Restricted
Subsidiary of the Borrower, (iii) the lease or sublease of real property not
constituting a sale and leaseback, to the extent not otherwise prohibited by
this Agreement, (iv) any such sale, conveyance, transfer, lease or other
disposition by the Borrower or by any Restricted Subsidiary to the Borrower or
to any wholly-owned Domestic Restricted Subsidiary to the extent not otherwise
prohibited by this Agreement, (v) subject to Section 7.15, any sale, assignment
or other transfer of Representation Agreements by the Borrower to any
wholly-owned Restricted Subsidiary of the Borrower or by any Restricted
Subsidiary of the Borrower to the Borrower or to any other wholly-owned Domestic
Restricted Subsidiary of the Borrower, in any such case, in the ordinary course
of business and in a manner consistent with the past practice of the Borrower
and its Restricted Subsidiaries; provided that each Subsidiary of the Borrower
--------
is maintained as a discrete operating unit, (vi) the termination of any
Representation Agreement by the Borrower or any such Restricted Subsidiary in
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the ordinary course of business and in a manner consistent with the past
practice of the Borrower and its Subsidiaries; provided however that to the
-------- -------
extent that Representation Agreement Termination Payments in any Fiscal Year
exceed Representation Agreement Acquisition Payments in such Fiscal Year (the
"Net Representation Agreement Payments"), the amount of such Net Representation
Agreement Payments shall constitute Asset Sale Proceeds and shall be applied to
prepay the Loans to the extent required pursuant to Section 2.6(d)(i), (vii) in
the case of the Borrower and subject to Section 7.15, any sale, conveyance or
other disposition of all or substantially all of its assets constituting the
business of a division or other operating unit to a wholly-owned Domestic
Restricted Subsidiary of the Borrower, (viii) transfers of assets that
constitute Investments permitted under Section 7.6 or payments or distributions
permitted under Section 7.4, (ix) as long as no Default or Event of Default has
occurred and is continuing or would result therefrom, any sale or sales of any
assets for not less than the fair market value thereof, payable in cash upon
such sale so long as the aggregate proceeds of such asset sale or sales do not
exceed $6,000,000 in any Fiscal Year, and (x) as long as no Default or Event of
Default has occurred and is continuing or would result therefrom, with the
consent of the Majority Lenders, any sale of any assets for not less than the
fair market value thereof, payable in cash upon sale; provided, however, that
-------- -------
(A) all Asset Sale Proceeds of any such sale are applied to prepay Loans to the
extent required pursuant to Section 2.6(d)(i) and (B) after giving effect to
such Asset Sale, the Borrower would be in compliance with Article V on a pro
forma basis as if the Asset Sale had occurred at the beginning of each relevant
computation period provided for therein, in the case of income statement
elements of such compliance, and on the date of such determination, in the case
of balance sheet elements of such compliance.
(d) The Borrower shall not sell or otherwise dispose of, or factor at
maturity or collection, or permit any of its Restricted Subsidiaries to sell or
otherwise dispose of, or factor at maturity or collection, any Accounts, except
(i) as provided in clause (v) or (vii) of paragraph (c) above or (ii)
assignments or factoring of delinquent accounts outstanding for more than 120
days or in an aggregate amount not in excess of $1,000,000 during any Fiscal
Year.
7.6. Investments in Other Persons. The Borrower shall not, directly or
----------------------------
indirectly, make or maintain, or permit any of its Restricted Subsidiaries to
make or maintain, any loan or advance to any Person or own, purchase or
otherwise acquire, or permit any of its Restricted Subsidiaries to own, purchase
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or otherwise acquire (including without limitation by incorporating or
organizing a Subsidiary), any Stock or Stock Equivalents, other equity interest,
obligations or other securities of, or any assets constituting the purchase of a
business or line of business, or make or maintain, or permit any of its
Restricted Subsidiaries to make or maintain, any capital contribution to, or
otherwise invest in, any Person (any such transaction being an "Investment"),
except:
(i) Investments in accounts, contract rights and chattel paper
(as defined in the Uniform Commercial Code), notes receivable and similar
items, arising or acquired in the ordinary course of business consistent
with the past practice of the Borrower and its Subsidiaries;
(ii) Investments in wholly-owned Domestic Restricted Subsidiaries
of the Borrower;
(iii) loans or advances to employees of the Borrower or employees
of any of its Restricted Subsidiaries, which loans and advances in the
aggregate shall not exceed $2,000,000 outstanding at any time;
(iv) Investments in Cash Equivalents;
(v) Investments set forth on Schedule 7.6 and existing on the
date hereof;
(vi) Investments in Representation Agreements acquired by the
Borrower or any of its Restricted Subsidiaries provided that unless the Pro
--------
Forma Ratio of Total Debt to EBITDA is equal to or less than 4.0 to 1.0,
the aggregate amount of all such Investments in Representation Agreements
in any Fiscal Year in excess of the aggregate amount of all payments
received by Borrower or any Restricted Subsidiary in connection with the
termination of any Representation Agreement in such Fiscal Year shall not
exceed $25,000,000;
(vii) Subject to clauses (B), (C) and (D) of the proviso in
Section 7.6(x), Investments not otherwise permitted hereby not to exceed
$8,000,000 in the aggregate for all such Investments since the Closing Date
(including Investments in Restricted Subsidiaries not permitted under
clause (ii) above or clause (xi) below and in Unrestricted Subsidiaries);
provided that any Investments made after the Closing Date in Unrestricted
--------
Subsidiaries shall not exceed $2,500,000 in the aggregate for all such
Investments;
(viii) Permitted Acquisitions;
(ix) Investments consisting of (A) a loan in a principal amount
of not in excess of $4,511,000 made by the Borrower to KMSI on the Closing
Date for the purposes of repaying the indebtedness of KMSI under the KMS
Credit Agreement and (B) loans by the Borrower to the Parent or KMG to the
extent a dividend in the amount of such loan would have been permitted
pursuant to Section 7.4(i)(A);
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(x) Investments made by the Borrower or any Restricted Subsidiary
(through a Subsidiary, partnership, joint venture or otherwise) in Persons
organized for the purpose of acquiring Representation Agreements or
expanding the Borrower's current operations and business; provided that (A)
--------
following the consummation of any such Investment, the Borrower shall
directly or indirectly own at least a 50% equity interest in such Persons;
(B) no Default or Event of Default shall have occurred and be continuing or
arise as a result of such Investment; (C) the aggregate amount of all
Investments made pursuant to clause (vii) above and this clause (x)
(including without limitation those Investments described in the succeeding
clause (D)) does not exceed $15,000,000 in any Fiscal Year and $40,000,000
in the aggregate for all such Investments made since the Closing Date; and
(D) the aggregate amount of all Investments made pursuant to clause (vii)
above and this clause (x) in Persons which do not execute a Subsidiary
Guaranty and a Subsidiary Security Agreement does not exceed $25,000,000 in
the aggregate for all such Investments made since the Closing Date;
(xi) Investments in Restricted Subsidiaries of the Borrower which
are not Domestic Restricted Subsidiaries in an amount not to exceed
$5,000,000 in any Fiscal Year or $15,000,000 in the aggregate for all such
Investments made after the Closing Date; and
(xii) Investments consisting of Indebtedness owing to the
Borrower or any of its Restricted Subsidiaries in connection with
Representation Agreements Termination Payments.
7.7. Maintenance of Ownership of Subsidiaries. The Borrower shall not
----------------------------------------
sell or otherwise dispose of any shares of Stock or any Stock Equivalent of any
Restricted Subsidiary or permit any Restricted Subsidiary to issue, sell or
otherwise dispose of any shares of its Stock or any Stock Equivalent or the
Stock or any Stock Equivalent of any other Restricted Subsidiary, except (i) as
permitted under Section 7.5(b) or 7.6(x) and (ii) to the Borrower or to a
wholly-owned Restricted Subsidiary of the Borrower and then, unless such
Restricted Subsidiary is not a Domestic Restricted Subsidiary, only if a
percentage of such shares of Stock or Stock Equivalents equal to (x) 100% in the
case of any such Stock or Stock Equivalents issued by a Domestic Restricted
Subsidiary and (y) 65% in the case of any such Stock or Stock Equivalents issued
by a Restricted Subsidiary which is not a Domestic Restricted Subsidiary, is or
are pledged to the Administrative Agent pursuant to the Pledge Agreements.
7.8. Change in Nature of Business. The Borrower shall not, directly or
----------------------------
indirectly, make, or permit any of its Restricted Subsidiaries to make, any
material change in the nature or conduct of its business as carried on at the
date hereof, except that the Borrower or any of its Subsidiaries may engage in
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the representation of business, media or marketing entities in the sale of
advertising or programming.
7.9. Designated Senior Debt. The Borrower shall not designate any
-----------------------
other Indebtedness as "Designated Senior Debt" (as defined in the Indenture) for
purposes of the Indenture without the prior written consent of the Majority
Lenders.
7.10. Modification of Related Documents. The Borrower shall not, and
---------------------------------
shall not permit any of its Restricted Subsidiaries, to (i) amend, supplement or
otherwise modify any provision of any Related Document or take or fail to take
any action thereunder if to do so has a reasonable likelihood of having a
Material Adverse Effect, (ii) amend, modify or change, or consent or agree to
any amendment, modification or change to, any of the terms of the Debentures,
the Debenture Indenture, the Subordinated Notes or the Indenture relating to the
principal amount of, the rate of any interest or premium payable with respect to
or the date for payment of any of the foregoing (other than any such amendment,
modification or change which would extend the maturity or reduce the amount of
any payment of principal thereof or which would reduce the rate or extend the
date for payment of interest thereon provided that no fee is payable in
--------
connection therewith), or (iii) agree to the modification or amendment of any
terms of the subordination provisions, or of the covenants or events of default
contained in the Debenture Indenture or the Indenture to make the provisions
thereof more restrictive than those in effect on the Closing Date.
7.11. Modification of Material Agreements. The Borrower shall not, and
-----------------------------------
shall not permit any of its Restricted Subsidiaries to, (i) alter, amend,
modify, rescind, terminate or waive any of its rights under, or permit any
breach or event of default to exist on the part of the Borrower or any of its
Subsidiaries under, any of its material Contractual Obligations (including
without limitation the NCC Guaranty), except to the extent such alterations,
amendments, modifications, rescissions, terminations, defaults or waivers (other
than those arising under the Loan Documents, the NCC Guaranty and Related
Documents) would, in the aggregate, have no reasonable likelihood of having a
Material Adverse Effect or (ii) modify, amend, cancel, extend or otherwise
change any of the terms, covenants or conditions of any of the Leases, if any
such modification, amendment, cancellation, extension or other change,
individually or in the aggregate, has a reasonable likelihood of having a
Material Adverse Effect.
7.12. Contingent Obligations. The Borrower shall not, and shall not
-----------------------
permit any of its Restricted Subsidiaries to, incur, assume, endorse, be or
become liable for, or guarantee, directly or indirectly, any Contingent
Obligation, except for:
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(i) Contingent Obligations expressly permitted hereunder;
(ii) guarantees by the Borrower or any of its Restricted
Subsidiaries of Indebtedness or other obligations of the Borrower or any of
its Restricted Subsidiaries, to the extent such underlying Indebtedness or
other obligations are permitted hereunder;
(iii) indemnities entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business and consistent with the
past practice of the Borrower and its Subsidiaries in connection with
Representation Agreement Acquisition Payments; and
(iv) Contingent Obligations of the Borrower in respect of
Interest Rate Contracts in an aggregate amount not in excess of the
outstanding principal amount of the Loans which Interest Rate Contracts are
in form and substance satisfactory to the Agents.
7.13. Transactions with Affiliates. The Borrower shall not, and shall
----------------------------
not permit any of its Restricted Subsidiaries to, do any of the following: (i)
make any Investment in any Affiliate which is not a Restricted Subsidiary; (ii)
transfer, sell, lease, assign or otherwise dispose of any assets to any
Affiliate which is not a Restricted Subsidiary; (iii) merge into or consolidate
with or purchase or acquire assets from any Affiliate which is not a Restricted
Subsidiary; (iv) repay any Indebtedness to any such Affiliate which is not a
Restricted Subsidiary other than Indebtedness described on Schedule 7.13; or (v)
enter into any other transaction directly or indirectly with or for the benefit
of any such Affiliate which is not a Restricted Subsidiary (including, without
limitation, guaranties and assumptions of obligations of any such Affiliate),
except, in each case, for (A) transactions in the ordinary course of business
that are on terms that are fair and reasonable and no less favorable to the
Borrower and its Subsidiaries than those that would be obtained in an arm's
length transaction at the time from Persons who are not Affiliates, (B) any
transaction contemplated by any of the Related Documents and not otherwise
prohibited by this Agreement, (C) the payment of reasonable and customary fees
and expenses in connection with the issuance of the Subordinated Notes, provided
that the Indebtedness thereunder is permitted by Section 7.2 hereof, (D) any
transaction required by this Agreement, (E) the payment to the DLJ Entities or
any of their Affiliates of fees for the provision of financial, investment
banking, management, consulting or underwriting services in amounts not in
excess of the fees customarily charged by such entities for such services, (F)
customary compensation arrangements with officers and directors of the Borrower
or any of its Restricted Subsidiaries, or (G) Investments in NCC permitted
hereunder.
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7.14. Cancellation of Indebtedness. The Borrower shall not, and shall
----------------------------
not permit any of its Restricted Subsidiaries to, cancel any claim or
Indebtedness owed to it or to any Restricted Subsidiary except for adequate
consideration or in the ordinary course of business and in a manner consistent
with the past practice of the Borrower and its Subsidiaries.
7.15. Capital Stock; No New Subsidiaries. The Borrower shall not, and
----------------------------------
shall not permit any of its Restricted Subsidiaries to, incorporate or otherwise
organize any new Subsidiary (other than an Unrestricted Subsidiary) which was
not in existence on the date of this Agreement, except that the Borrower may
incorporate or otherwise organize a new Subsidiary as otherwise permitted under
this Agreement; provided that (A) in the case of a non-wholly-owned Subsidiary,
--------
the Investments made in such Subsidiaries do not exceed the limits set forth in
Sections 7.6(vii), (x) or (xi), (B) all (or, in the case of a Subsidiary that is
not a Domestic Restricted Subsidiary, 65%) of the outstanding Stock and Stock
Equivalents of each such Subsidiary owned by the Borrower or any wholly-owned
Domestic Restricted Subsidiary are pledged to the Administrative Agent pursuant
to the Pledge Agreements and (C) each such Subsidiary (other than any
non-wholly-owned Domestic Restricted Subsidiary or any Subsidiary that is not a
Domestic Restricted Subsidiary (whether or not wholly owned) permitted pursuant
to Section 7.6(vii) or clause (D) of Section 7.6(x) or any Subsidiary permitted
under Section 7.6(xi)) executes and delivers a Subsidiary Guaranty, a Subsidiary
Pledge Agreement and a Subsidiary Security Agreement. Nothing contained herein
shall prohibit any transaction specifically permitted under Section 7.6.
7.16. Capital Structure. The Borrower shall not, and shall not permit
-----------------
any of its Restricted Subsidiaries to, make any change in its capital structure
(including, without limitation, in the terms of its outstanding Stock but
excluding the refinancing, in whole or in part, of the Debentures with the
proceeds of the Subordinated Notes), amend its certificate of incorporation or
by-laws, or make any change in any of its business objectives, purposes or
operations, in any such case, which might reasonably be expected to adversely
affect the repayment of the Obligations or which has a reasonable likelihood of
having a Material Adverse Effect.
7.17. Adverse Transactions. The Borrower shall not enter into or be a
--------------------
party to, or permit any of its Restricted Subsidiaries to enter into or be a
party to, any transaction the performance of which in the future would be
inconsistent with or has a reasonable likelihood of resulting in a breach of any
covenant contained herein or give rise to a Default or Event of Default.
7.18. No Further Negative Pledges. Except with respect to Indebtedness
---------------------------
permitted pursuant to Section 7.2(v) or 7.2(vi)and except as provided in the
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Indenture (or any permitted refinancing thereof provided that any such
restrictions contained in such permitted refinancing are in the aggregate no
more restrictive than those in effect in the Indenture on the date hereof), the
Borrower shall not, and shall not permit any of its Restricted Subsidiaries to,
enter into any agreement prohibiting the creation or assumption of any Lien upon
any of its properties or assets, whether now owned or hereafter acquired.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Events of Default. Each of the following events shall be an Event
-----------------
of Default:
(a) The Borrower shall (i) fail to pay any principal (including,
without limitation, mandatory prepayments of principal) of any Loan when
the same becomes due and payable; or (ii) fail to pay any interest on any
Loan or any fee or any other amount due hereunder or under the other Loan
Documents or any of the other Obligations within five days after the same
shall become due and payable; or
(b) Any representation or warranty made or deemed made by any Loan
Party in any Loan Document or by or on behalf of any Loan Party in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or
(c) Any Loan Party or any of its Subsidiaries shall fail to perform or
observe (i) any term, covenant or agreement contained in Article V or VII,
or (ii) any other term, covenant or agreement contained in this Agreement
or in any other Loan Document if such failure under this clause (ii) shall
remain unremedied for 30 days after the earlier of the date on which (A) a
Responsible Officer of the Borrower becomes aware that such an event is a
Default or (B) written notice thereof shall have been given to the Borrower
by any Agent or any Lender; or
(d) Any Loan Party or any of such Loan Party's Subsidiaries shall fail
to make any payment in respect of principal of or premium or interest on
any Indebtedness of such Loan Party or Subsidiary, as the case may be,
(excluding the Obligations) in the aggregate principal amount in excess of
$2,000,000, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) after
expiration of any applicable grace period; or any other event shall occur
or condition shall exist under any agreement or instrument relating to any
such Indebtedness, if the effect of such event or condition is to
accelerate, or to permit the acceleration (upon the giving or receiving of
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notice, the lapse of time, both, or otherwise) of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; or
(e) Any Loan Party, any of its Subsidiaries or KMG shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors, or any proceeding shall be instituted by or
against any Loan Party, any of such Loan Party's Subsidiaries or KMG
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a custodian, receiver, trustee or
other similar official for it or for any substantial part of its property,
and, in the case of any such proceedings instituted against any Loan Party,
any of such Loan Party's Subsidiaries or KMG (but not instituted by it),
either such proceedings shall remain undismissed or unstayed for a period
of 60 days or any of the actions sought in such proceedings shall occur; or
any Loan Party, any of such Loan Party's Subsidiaries or KMG shall take any
corporate action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$2,000,000 shall be rendered against any Loan Party or any of such Loan
Party's Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order, or (ii) there shall
be any period of ten consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(g) One or more ERISA Events shall have occurred for which the
liability of the Borrower and its Subsidiaries, whether or not assessed,
exceeds $2,000,000 in the aggregate for all ERISA Events and remains
unsatisfied for ten days following the occurrence of such ERISA Event or
Events; or
(h) The amount of Unfunded Liabilities with respect to all Pension
Plans (excluding Pension Plans with no Unfunded Liabilities) exceeds
$2,000,000; or
(i) Any provision of any Collateral Document or of the Subsidiary
Guaranty or the Parent Guaranty shall for any reason cease to be valid and
binding on any Loan Party, or any Loan Party shall so state in writing,
other than provisions which, individually or in the aggregate, do not
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materially and adversely affect the practical realization of the rights and
benefits afforded to the Lenders and the Agents by any such Collateral
Document or guaranty; or
(j) Any Collateral Document shall, for any reason, cease to create a
valid Lien on any of the Collateral purported to be covered thereby, which
Collateral has a value, individually or in the aggregate for all
Collateral, in excess of $1,000,000, or such Lien shall cease to be a
perfected and first priority Lien other than solely as a result of action
or inaction by any Agent or any Lender; or
(k) There shall occur any default or event which but for the
requirement that notice be given or time elapse or both would be an event
of default under the Indenture or the Subordinated Notes; or
(l) There shall occur a Change of Control; or there shall occur any
event which constitutes a "change of control" under any indenture (other
than the Debenture Indenture) or other agreement governing Indebtedness of
any Loan Party; or
(m) Either (i) the Parent shall no longer own all of the outstanding
Stock of the Borrower free and clear of any and all Liens or (ii) KMG shall
no longer own all of the outstanding Stock of the Parent free and clear of
any Liens; or
(n) The Merger shall fail to become effective in accordance with the
terms of the related merger agreement within one day of the making of the
initial Loans; or
(o) KMG shall fail to make any payment in respect of principal of, or
premium or interest on, any Indebtedness of KMG in the aggregate principal
amount of $20,000,000 or more, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) after expiration of any applicable grace period.
8.2. Remedies. If there shall occur and be continuing an Event of
--------
Default, the Administrative Agent (i) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Loans to be terminated, whereupon the same
shall forthwith terminate and (ii) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrower, declare the Loans,
the Notes, all interest thereon and all other amounts and Obligations payable
under this Agreement to be forthwith due and payable, whereupon the Loans, the
Notes, all such interest and all such amounts and all such Obligations shall
become and be forthwith due and payable, without presentment, demand, protest or
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further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that, upon the occurrence of any Event of Default
-------- -------
specified in subparagraph (e) above with respect to any Loan Party or any of
such Loan Party's Material Subsidiaries, (A) the obligation of each Lender to
make Loans shall automatically be terminated and (B) the Loans, the Notes, all
such interest and all such amounts and all Obligations shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower. In
addition to the remedies set forth above, the Administrative Agent may exercise
any remedies provided for by the Collateral Documents in accordance with the
terms thereof or any other remedies provided by applicable law, including,
without limitation, the power to foreclose on any leasehold mortgage or mortgage
executed and delivered by the Borrower or any of its Subsidiaries pursuant to
Section 6.12 or 6.13 upon the occurrence and during the continuance of an Event
of Default.
ARTICLE IX
THE AGENTS
9.1. Authorization and Action.
(a) Each Lender hereby appoints and authorizes the Syndication Agent
and the Administrative Agent to take such action as agents on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Administrative Agent and the Syndication Agent, as the case may
be, by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Without limitation of the foregoing, each Lender hereby
authorizes each of the Syndication Agent and the Administrative Agent to execute
and deliver, and to perform its obligations under, each of the Loan Documents to
which either of the Syndication Agent or the Administrative Agent is a party,
and to exercise all rights, powers and remedies that the Syndication Agent
and/or the Administrative Agent may have under such Loan Documents.
(b) As to any matters not expressly provided for by this Agreement and
the other Loan Documents (including, without limitation, enforcement or
collection of the Notes and the Obligations), the Agents shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of the Notes;
provided, however, that any Agent shall not be required to take any action which
- -------- -------
such Agent in good faith believes exposes such Agent to personal liability or
which is contrary to this Agreement or applicable law. Each Agent agrees to give
to each Lender prompt notice of each notice given to it by any Loan Party
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pursuant to the terms of this Agreement or the other Loan Documents.
9.2. Reliance, Etc. None of the Syndication Agent, the Administrative
--------------
Agent, the Arranger, their respective Affiliates or any of their respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
the other Loan Documents, except for its or their own gross negligence, bad
faith or willful misconduct. Without limitation of the generality of the
foregoing, each Agent and the Arranger (i) may treat the payee of any Note as
the holder thereof until such Note has been assigned in accordance with Section
10.7; (ii) may consult with legal counsel (including, without limitation,
counsel to the Borrower or any other Loan Party), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or representation to
any Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with this Agreement or
the other Loan Documents; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of the
Borrower or any other Loan Party or to inspect the property (including the books
and records) of the Borrower or any other Loan Party; (v) shall not be
responsible to any Lender or any other Agent for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall incur no liability under or in respect of this
Agreement or any of the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper party or
parties.
9.3. The Agents and their Affiliates. With respect to its Commitments
-------------------------------
and its Loans and each Note issued to it, each of the Syndication Agent and the
Administrative 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 term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include each of the Syndication Agent and the Administrative Agent in their
individual capacities. The Agents and their respective Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower or any other Loan Party and
any Person who may do business with or own securities of the Borrower or any
other Loan Party, all as if such Agent were not an Agent and without any duty to
account therefor to the Lenders.
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9.4. Lender Credit Decision. Each Lender acknowledges that it has,
-----------------------
independently and without reliance upon the Syndication Agent, the
Administrative Agent, the Arranger or any other Lender and based on the
financial statements referred to in Article IV and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Syndication Agent, the
Administrative Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and other Loan Documents.
9.5. Indemnification. The Lenders agree to indemnify the Syndication
---------------
Agent, the Administrative Agent, the Arranger and their respective Affiliates,
directors, officers, employees, agents and advisors (to the extent not
reimbursed by the Borrower or other Loan Parties), ratably according to the
respective then outstanding principal amounts of the Notes then held by each of
them (or if no Notes are at the time outstanding, ratably according to the
respective amounts of the aggregate of the Lenders' Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements (including, without
limitation, fees and disbursements of legal counsel) of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against, the
Syndication Agent, the Administrative Agent or the Arranger in any way relating
to or arising out of this Agreement or the other Loan Documents or any action
taken or omitted by the Syndication Agent, the Administrative Agent or the
Arranger under this Agreement or the other Loan Documents; provided, however,
-------- -------
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Syndication Agent's, the Administrative Agent's
or the Arranger's gross negligence, bad faith or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Syndication
Agent, the Administrative Agent and the Arranger promptly upon demand for its
ratable share of any out-of-pocket expenses (including fees and disbursements of
legal counsel) incurred by the Syndication Agent, the Administrative Agent or
the Arranger 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 or the other Loan Documents, to
the extent that the Syndication Agent, the Administrative Agent or the Arranger
are not reimbursed for such expenses by the Borrower or another Loan Party.
9.6. Successor Agents. The Syndication Agent may resign at any time
-----------------
upon one Business Day's notice to the Borrower and the Administrative Agent. The
Administrative Agent may resign at any time by giving 30 days' prior written
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notice thereof to the Syndication Agent and the Lenders and the Borrower and may
be removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Administrative Agent. If no successor Administrative Agent
shall have been so appointed by the Majority Lenders, and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent's
giving of notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Article IX 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 and the
other Loan Documents.
ARTICLE X
MISCELLANEOUS
10.1. Amendments, Etc. No amendment or waiver of any provision of this
--------------
Agreement or the other Loan Documents, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing, approved by the Majority Lenders and signed by the Administrative
Agent, and then (x) any such amendment other than an amendment not affecting the
rights or duties of the Borrower under this Agreement or the other Loan
Documents shall be effective only if signed by the Borrower, and (y) any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
-------- -------
or consent shall, unless in writing and signed by all the Lenders do any of the
following: (i) waive any of the conditions specified in Sections 3.1 or 3.2;
(ii) subject the Lenders to any additional obligations; (iii) reduce the
principal of, or interest on, the Loans or any fees or other amounts payable
hereunder; (iv) change the percentage of Revolving Credit Commitments required
to be reduced on, or postpone the date of, any required Commitment Reduction
Date under Section 2.4(b), or change the percentage of Term Loan Commitments
required to be prepaid on, or postpone any date fixed for, any scheduled payment
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of principal of the Term Loans under Section 2.4(d) or (e), or postpone the date
fixed for the payment of interest on the Loans or any fees or other amounts
payable hereunder; (v) decrease the principal amount to be paid to any Lender on
any scheduled repayment date pursuant to Section 2.4(d) or 2.4(e) or decrease
the reduction in the Revolving Credit Commitment of any Lender on any Commitment
Reduction Date; (vi) change the percentage of the Commitments, the aggregate
unpaid principal amount of the Notes, or the number of Lenders which shall be
required for the Lenders or any of them to take any action hereunder; (vii)
release all or any substantial portion of the Collateral or any Guarantor except
as shall otherwise be provided in Section 7.5 or in the Collateral Documents;
(viii) amend the definitions of "Majority Lenders", "Class" or "Majority Class
Lenders"; or (ix) amend this Section 10.1; and provided, further, that no
-------- -------
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Syndication Agent or the
Administrative Agent under this Agreement or any other Loan Document. In
addition, (i) no such amendment or waiver shall increase the Commitment of any
Lender over the amount then in effect without the consent of such Lender; and
(ii) no such amendment or waiver of Section 2.6(d) or which changes the
application of mandatory or voluntary prepayments as between the two Classes of
Lenders or which changes the application of voluntary or mandatory prepayments
to the remaining scheduled principal installments on the Term Loans shall be
effective without the written concurrence of the Majority Class Lenders.
10.2. Notices, Etc. All notices and other communications provided for
------------
hereunder shall be in writing (including, without limitation, telegraphic,
telex, telecopy or cable communication) and mailed by certified or registered
mail, return receipt requested, telegraphed, telexed, telecopied, cabled or
delivered by hand or overnight courier, if to the Borrower, at its address at
125 West 55th Street, New York, New York 10019, Attention: Chief Financial
Officer and Chief Operating Officer; if to any Lender, at its Domestic Lending
Office specified opposite its name on Schedule II; if to the Administrative
Agent, at its address at 100 Federal Street, Boston, Massachusetts 02110; if to
the Syndication Agent, at its address at 277 Park Avenue, New York, New York
10172; or, as to the Borrower, the Administrative Agent or the Syndication
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when
telegraphed, telexed, telecopied, cabled or delivered, be effective when
deposited in the mails, delivered to the telegraph company, confirmed by telex
answerback, telecopied with confirmation of receipt, delivered to the cable
company or delivered by hand to the addressee or its agent, respectively, and
when mailed as aforesaid, be effective three days after being deposited in the
mails, except that notices and communications to the Administrative Agent
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pursuant to Article II or IX shall not be effective until received by the
Administrative Agent.
10.3. No Waiver; Remedies. No failure on the part of any Lender or any
-------------------
Agent to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
10.4. Costs; Expenses; Indemnities. (a) The Borrower agrees to pay on
-----------------------------
demand (i) all costs and out-of pocket expenses of the Syndication Agent, the
Administrative Agent and the Arranger in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement, each of the other Loan Documents and each of the other documents to
be delivered hereunder and thereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel, accountants, appraisers,
consultants or industry experts retained by any Agent with respect thereto and
of counsel to any Agent with respect to advising such Agent as to its rights and
responsibilities under this Agreement and the other Loan Documents and the other
documents to be delivered hereunder or thereunder and (ii) all costs and
out-of-pocket expenses of the Syndication Agent, the Administrative Agent, the
Arranger or the Lenders (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel, accountants, appraisers, consultants or
industry experts retained by any of the Syndication Agent, the Administrative
Agent, the Arranger or any Lender) in connection with the restructuring of,
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or protection of legal rights under, this Agreement, the other Loan Documents
and the other documents to be delivered hereunder and thereunder.
(b) The Borrower agrees to defend, protect, indemnify and hold
harmless the Administrative Agent, the Syndication Agent, the Arranger and each
Lender and their respective Affiliates, and the directors, officers, employees,
agents, attorneys, consultants and advisors of or to any of the foregoing
(including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth
herein) (each of the foregoing being an "Indemnitee") from and against any and
----------
all claims, damages, liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, disbursements and expenses of any kind or nature
(including, without limitation, fees and disbursements of counsel to any such
Indemnitee) which may be imposed on, incurred by or asserted against any such
Indemnitee in connection with or arising out of any investigation, litigation or
proceeding, whether or not any such Indemnitee is a party thereto, whether
direct, indirect or consequential in any manner relating to or arising out of
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this Agreement, any other Loan Document or any Related Document, or any act,
event or transaction related or attendant thereto, including, without
limitation, (i) the making of any assignments of or participations in the Loans
and the management of the Loans or (ii) the use or intended use of the proceeds
of the Loans or in connection with any investigation of any potential matter
covered hereby or by reason of Section 502(1) of ERISA (collectively, the
"Indemnified Matters"); provided, however, that the Borrower shall not have any
------------------- -------- -------
obligation hereunder to an Indemnitee with respect to any Indemnified Matter
caused by or resulting from the gross negligence, bad faith or willful
misconduct of that Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order; provided, further,
-------- -------
that the Borrower shall have no obligation to any Indemnitee hereunder with
respect to any Indemnified Matter to the extent (i) such Indemnified Matter
arises out of a dispute among the Lenders or between the Administrative Agent
and the Lenders or (ii) the manner of the making of any assignment or
participation by such Indemnitee violates the registration provisions of the
Securities Act of 1933, as amended.
(c) If any Lender receives any payment of principal of, or is subject
to a conversion of, any Eurodollar Rate Loan other than on the last day of an
Interest Period relating to such Loan, as a result of any payment or conversion
made by the Borrower or acceleration of the maturity of the Notes pursuant to
Section 8.2 or for any other reason, the Borrower shall, upon demand by such
Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender all amounts required to
compensate such Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment or conversion, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund or maintain such Loan. A certificate as to such
amounts setting forth in reasonable detail the basis for computing the amount
payable to such Lender pursuant to this Section 10.4(c) shall be submitted to
the Borrower and the Administrative Agent by such Lender and such certificate
shall be conclusive and binding for all purposes, absent manifest error.
(d) The Borrower agrees that any indemnification or other protection
provided to any Indemnitee pursuant to this Agreement (including, without
limitation, pursuant to this Section 10.4) or any other Loan Document shall also
inure to the benefit of any Person who was at any time an Indemnitee under this
Agreement or any other Loan Document.
10.5. Right of Set-off. Upon the occurrence and during the continuance
----------------
of any Event of Default, each Lender is hereby authorized at any time and from
time to time, 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
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any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any and all of the Obligations
now or hereafter existing irrespective of whether or not such Lender shall have
made any demand under this Agreement or any Note or any other Loan Document and
although such Obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower 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 are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
10.6. Binding Effect. (a) This Agreement shall become effective when
it shall have been executed by the Borrower and the Syndication Agent and the
Administrative Agent and when the Syndication Agent shall have been notified by
each Lender that such Lender has executed it and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Syndication Agent, the
Administrative Agent and the Arranger and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lenders.
(b) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.14 and 10.4 shall survive the payment in full of principal and
interest hereunder and under the Notes.
10.7. Assignments and Participations. (a) Each Lender may sell,
transfer, negotiate or assign to one or more Eligible Assignees (consented to by
the Agents, and so long as no Event of Default has occurred and is continuing,
the Borrower, such consent not to be unreasonably withheld; provided that in
--------
connection with assignments entered into by either of the Agents and their
respective Affiliates, no consent of the other Agent shall be required) all or a
portion of its Commitments, the Loans owing to it and the Notes held by it and a
commensurate portion of its rights and obligations hereunder; provided, however,
-------- -------
that the aggregate amount of the Commitments, Loans and Notes being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$5,000,000 without the consent of the Agents and, so long as no Event of Default
has occurred and is continuing, the Borrower (provided that in connection with
--------
such assignments entered into by either of the Agents and their respective
Affiliates, no consent of the other Agent shall be required) (except that such
minimum amount shall not apply in the case of assignments between or among the
Lenders and their Affiliates and in the case of an assignment of all of a
Lender's Commitments, Loans owing to it or Notes held by it). The parties to
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each assignment shall execute and deliver to the Agents for their approval
(provided that no such approval shall be necessary in connection with such
--------
assignments entered into by the Administrative Agent and its Affiliates or the
Syndication Agent and its Affiliates), an Assignment and Acceptance, which shall
be recorded by the Administrative Agent, and shall deliver to the Administrative
Agent the Notes (or an affidavit of loss and indemnity with respect to such
Notes satisfactory to the Administrative Agent) subject to such assignment and a
processing and recordation fee of $3,000; provided that no such fee shall be due
--------
in connection with such assignments to which either of the Agents is a party.
Upon such execution, delivery, approval and recording, from and after the
effective date specified in each Assignment and Acceptance, (A) the Eligible
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations under this Agreement and the other Loan Documents have been assigned
to such Eligible Assignee pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (B) the assignor thereunder
shall, to the extent that rights and obligations under this Agreement have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except those which survive the payment in full of the Obligations) and be
released from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement and
the other Loan Documents, such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the Eligible Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any of
the statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished pursuant hereto or
thereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any other Loan Party or the performance or observance by the
Borrower or any other Loan Party of any of its obligations under this Agreement
or any other Loan Document or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assigning Lender confirms that it has
delivered to the Eligible Assignee and the Eligible Assignee confirms that it
has received a copy of this Agreement and each of the Loan Documents, together
with copies of the financial statements referred to in Section 4.5 and/or
Section 6.10 of this Agreement and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
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into such Assignment and Acceptance; (iv) such Eligible Assignee agrees that it
will, independently and without reliance upon such assigning Lender or any other
Lender or any Agent and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decision in taking or
not taking action under this Agreement; (v) such Eligible Assignee appoints and
authorizes each Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to such Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; (vi)
such Eligible Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender; (vii) such Eligible Assignee specifies as its
Domestic Lending Office (and address for notices) and Eurodollar Lending Office
the offices provided in such Assignment and Acceptance; and (viii) such Eligible
Assignee attaches the forms prescribed by the IRS certifying as to such Eligible
Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Eligible
Assignee under this Agreement or such other documents as are necessary to
indicate that all such payments are subject to such rates at a rate reduced by
an applicable tax treaty.
(c) The Administrative Agent shall maintain at its address referred to
in Section 10.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitments of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
--------
shall be conclusive and binding for all purposes, absent manifest error, and the
Loan Parties, the Agents and the Lenders may treat each Person whose name is
recorded in the Register as a Lender for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower at a reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Eligible Assignee, together with the Notes subject to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower. Within five Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for such surrendered Notes, new Notes to the
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order of such Eligible Assignee in an amount equal to the Commitments assumed by
it pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained Commitments hereunder, new Notes to the order of the assigning Lender
in an amount equal to the Commitments retained by it hereunder. Such new Notes
shall be dated the same date as the surrendered Notes and be in substantially
the form of Exhibit A, Exhibit L or Exhibit M, as the case may be.
(e) In addition to the other assignment rights provided in this
Section 10.7, each Lender may assign, as collateral or otherwise, any of its
rights under this Agreement (including, without limitation, rights to payments
of principal or interest on the Notes) to any Federal Reserve Bank without
notice to or consent of the Borrower or the Agents; provided, however, that no
-------- -------
such assignment shall release the assigning Lender from any of its obligations
hereunder. The terms and conditions of any such assignment and the documentation
evidencing such assignment shall be in form and substance satisfactory to the
assigning Lender and the assignee Federal Reserve Bank.
(f) Each Lender may sell participations to one or more Lenders,
commercial banks, insurance companies, mutual funds or other financial
institutions or entities in or to all or a portion of its rights and obligations
under the Loan Documents (including, without limitation, all or a portion of its
Commitments or the Loans owing to it and the Notes held by it). The terms of
such participation shall not, in any event, require the participant's consent to
any amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights which such Lender
may have under or in respect of the Loan Documents (including, without
limitation, the right to enforce the obligations of the Loan Parties), except if
any such amendment, waiver or other modification or consent would (i) reduce the
amount of, or postpone any date fixed for, the scheduled payment of principal
of, or interest on, the Loans or any fees or other amounts payable hereunder or
postpone any Commitment Reduction Date, to which such participant would
otherwise be entitled under such participation or (ii) result in the release of
all or any substantial portion of the Collateral or any Guarantor other than in
accordance with the Collateral Documents or Section 7.5. In the event of the
sale of any participation by any Lender, (i) such Lender's obligations under the
Loan Documents (including, without limitation, its Commitments to the Borrower
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of such Notes and Obligations for all
purposes of this Agreement, and (iv) the Borrower, the Agents and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.
(g) Anything herein to the contrary notwithstanding, the Borrower
shall not, at any time, be obligated to pay to any participant of any interest
of any Lender, under Section 2.10, 2.12 or 2.14, any sum in excess of the sum
which the Borrower would have been obligated to pay to such Lender in respect of
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such interest had such participation not been sold.
(h) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.7, disclose
to the Eligible Assignee or participant or proposed Eligible Assignee or
participant any information relating to the Borrower and any of its Subsidiaries
furnished to such Lender by or on behalf of the Borrower; provided, however,
-------- -------
that, prior to any such disclosure, the Eligible Assignee or participant or
proposed Eligible Assignee or participant shall agree to preserve the
confidentiality of any confidential information relating to the Borrower and any
such Subsidiary received by it from such Lender in accordance with Section
10.13.
10.8. GOVERNING LAW; SEVERABILITY. This Agreement and the Notes and
----------------------------
the rights and obligations of the parties hereto shall be governed by, and
construed in accordance with, the law of the State of New York. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
agreement.
10.9. SUBMISSION TO JURISDICTION; JURY TRIAL. (a) The Borrower hereby
---------------------------------------
consents to the bringing of any legal action or proceeding with respect to this
Agreement or the Notes or any document related hereto in the courts of the State
of New York located in New York City or of the United States of America for
Southern District of New York, and, by execution and delivery of this agreement,
the Borrower hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The parties
hereto hereby irrevocably waive any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
----------
conveniens, which any of them may now or hereafter have to the bringing of any
- ----------
such action or proceeding in such respective jurisdictions.
(b) The Borrower irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at its address provided herein, such service to become effective 30 days after
such mailing.
(c) Nothing contained in this Section 10.9 shall affect the right of
any Agent, any Lender or any holder of a Note to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
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(d) EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, ORAL OR WRITTEN STATEMENTS OR ACTIONS OF ANY PARTY
HERETO.
10.10. Section Titles. The Section titles contained in this Agreement
--------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
10.11. Execution in Counterparts. This Agreement may be executed in
--------------------------
any number of counterparts and by different 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.
10.12. Entire Agreement. This Agreement, together with all of the
-----------------
other Loan Documents and all certificates and documents delivered hereunder or
thereunder embody the entire agreement of the parties and supersedes all prior
agreements and understandings relating to the subject matter herein.
10.13. Confidentiality. Each of the Lenders, the Agents and the
---------------
Arranger agrees to keep information obtained by it pursuant hereto and the other
Loan Documents confidential in accordance with its customary practices and
agrees that it will only use such information in connection with the
transactions contemplated by this Agreement and not disclose any of such
information other than (i) to its employees, representatives and agents who are
or are expected to be involved in the evaluation of such information in
connection with the transactions contemplated by this Agreement and who are
advised of the confidential nature of such information, (ii) to the extent such
information presently is or hereafter becomes available to such Lender, such
Agent or the Arranger, as the case may be, on a non-confidential basis from a
source other than the Borrower, (iii) to the extent such disclosure is required
by law, regulation or judicial order (which requirement or order shall be
promptly notified to the Borrower) or requested or required by bank regulators
and auditors, or (iv) to assignees or participants or potential assignees or
participants who agree to be bound by the provisions of this sentence.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
KATZ MEDIA CORPORATION
By: /S/ RICHARD E. VENDIG
----------------------------------
Name: Richard E. Vendig
Title:Chief Financial Officer and
Treasurer
DLJ CAPITAL FUNDING, INC.,
Individually and as the
Syndication Agent
By: /S/ ERIC S. SWANSON
---------------------------------
Name: Eric S. Swanson
Title: Managing Director
THE FIRST NATIONAL BANK OF BOSTON,
Individually and as the
Administrative Agent
By: /S/ ROBERT F. MILORDI
---------------------------------
Name: Robert F. Milordi
Title: Managing Director
S-1
FOR IMMEDIATE RELEASE Contact:
Ellen Strahs Fader
(212) 424-6863
KATZ MEDIA GROUP, INC. AND KATZ MEDIA CORPORATION
ANNOUNCE COMPLETION OF REFINANCING
---------------
NEW YORK, NY, December 19, 1996 -- Katz Media Group, Inc., (AMEX:KTZ), the only
full- service media representation firm in the United States serving all types
of broadcast media, and its wholly-owned subsidiary, Katz Media Corporation,
today announced the successful completion of the previously announced
refinancing, designed to increase the availability of funds for working capital
purposes and enhance the Company's financial and operating flexibility.
Katz Media Corporation has today accepted for payment $97.7 million
principal amount of its 12 3/4% Senior Subordinated Notes due 2002 (the
"Notes"), representing substantially all of the outstanding Notes. Each holder
who validly tendered Notes on or prior to December 12, 1996 will receive a cash
payment equal to $1,125.01 for each $1,000 principal amount of Notes (based on
the price determination date in the repurchase offer of December 16, 1996),
which includes the $10 consent fee and $12.01 of accrued and unpaid interest.
Holders who tendered Notes after December 12, 1996 will not receive the $10
consent fee.
The Company has also completed a private offering under Rule 144A of
the Securities Act of 1933 of a new issue of fixed rate notes, consisting of
$100 million principal amount of 10 1/2% Senior Subordinated Notes due 2007,
which were priced at par, and has refinance its existing credit facility with a
new revolving credit and term loan facility providing for loans of up to $180
million.
As a result of the refinancing, the Company has available an aggregate
of approximately $63.3 million under the new credit facility for working capital
purposes, including the purchase of representation contracts, potential
acquisitions and other general corporate purposes, and the possible repurchase
by the Company of its common stock from time to time in the open market. Of the
aggregate available amount, approximately $44.4 million is immediately available
and the remainder will become available in the future, subject to the
achievement of certain financial ratios and compliance with certain other
conditions.
The new notes were sold in a private offering through Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"). DLJ also acted as the arranger
for the new credit facility, with DLJ Capital Funding, Inc., an affiliate of
<PAGE>
DLJ, as the syndication agent and The First National Bank of Boston as the
administrative agent for the new credit facility.
The new notes have not been registered under the Securities Act of
1933, and may not be offered or sold in the United States absent registration or
an applicable exemption from registration requirements.
Katz Media Group, Inc., headquartered in New York City, is the only
full-service media representation firm in the United States, serving multiple
types of electronic media, with leading market shares in the representation of
radio and television stations, cable television systems and interactive,
internet media outlets. The company is exclusively retained by more than 2,000
radio stations, 340 television stations, 1,390 cable television systems with an
aggregate of approximately 36.8 million subscribers and a growing number of
Internet Web sites and other interactive media providers to sell national
advertising time throughout the United States and through its Katz International
subsidiary in the United Kingdom. The company's stock is traded on the American
Stock Exchange under the ticker symbol "KTZ".
Additional information about the company can be obtained via the World
Wide Web at http://www.katz-media.com.
