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
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
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
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
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
THIS CREDIT AGREEMENT, dated as of December 19, 1996 (this
"Agreement"), among KATZ MEDIA CORPORATION, a Delaware corporation ("KMC"), the
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financial institutions that are now or hereafter become parties hereto as
lenders (the "Lenders"), DLJ CAPITAL FUNDING, INC., as syndication agent
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hereunder for the Lenders (in such capacity, the "Syndication Agent"), and THE
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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
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
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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
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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
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
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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
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
"Arranger" means Donaldson, Lufkin & Jenrette Securities Corporation,
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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
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
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(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,
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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
"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
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
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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
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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
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
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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
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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
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
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
"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
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
"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
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
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
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
(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
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
"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
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
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
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
"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
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
"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
"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
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
"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
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
(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
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
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
(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
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
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
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
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
(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
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
(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
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
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
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
(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
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
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
(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
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
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
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
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
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
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
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
55
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
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
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
58
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
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
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
61
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:
62
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
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
64
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
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.
66
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
67
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
--------
69
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
73
(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
74
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
75
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
76
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);
77
(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
78
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
84
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
85
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.
86
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
87
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
88
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
89
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