EXHIBIT 4.1
EXECUTION COPY
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K-III COMMUNICATIONS CORPORATION
$300,000,000
8 1/2% Senior Notes due 2006
Series A and Series B
_____________
INDENTURE
Dated as of January 24, 1996
_____________
THE BANK OF NEW YORK
Trustee
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CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- ----------- -----------------
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . 7.08; 7.10;
. . . . . . . . . . . . . . . . . . . . . . . 11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . 11.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . 7.06;11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . 4.03;11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . 7.01(2)
(b) . . . . . . . . . . . . . . . . . . . . . . . 7.05;11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . 7.01(1)
(d) . . . . . . . . . . . . . . . . . . . . . . . . 7.01(3)
(e) . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . 9.04
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Other Definitions . . . . . . . . . . . . . . . . . 14
Section 1.03 Incorporation by Reference of Trust Indenture
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.04 Rules of Construction . . . . . . . . . . . . . . . 15
ARTICLE 2
THE SECURITIES
Section 2.01 Form and Dating . . . . . . . . . . . . . . . . . . 15
Section 2.02 Execution and Authentication . . . . . . . . . . . 16
Section 2.03 Registrar and Paying Agent . . . . . . . . . . . . 16
Section 2.04 Paying Agent to Hold Money in Trust . . . . . . . . 17
Section 2.05 Holder Lists . . . . . . . . . . . . . . . . . . . 17
Section 2.06 Transfer and Exchange . . . . . . . . . . . . . . . 17
Section 2.07 Replacement Securities . . . . . . . . . . . . . . 20
Section 2.08 Outstanding Securities . . . . . . . . . . . . . . 21
Section 2.09 Treasury Securities . . . . . . . . . . . . . . . . 21
Section 2.10 Temporary Securities . . . . . . . . . . . . . . . 21
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . 22
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . 22
ARTICLE 3
OPTIONAL REDEMPTION AND
OPTIONAL REDEMPTION UPON CHANGE OF CONTROL
Section 3.01 Notices to Trustee . . . . . . . . . . . . . . . . 22
Section 3.02 Selection of Securities to Be Redeemed . . . . . . 23
Section 3.03 Notices to Holders . . . . . . . . . . . . . . . . 23
Section 3.04 Effect of Notice of Redemption . . . . . . . . . . 24
Section 3.05 Deposit of Redemption Price or Purchase Price . . . 24
Section 3.06 Securities Redeemed in Part . . . . . . . . . . . . 25
Section 3.07 Optional Redemption . . . . . . . . . . . . . . . . 25
Section 3.08 Optional Redemption Upon Change of Control . . . . 25
Section 3.09 Sinking Fund . . . . . . . . . . . . . . . . . . . 26
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ARTICLE 4
COVENANTS
Section 4.01 Payment of Securities . . . . . . . . . . . . . . . 26
Section 4.02 Maintenance of Office or Agency . . . . . . . . . . 26
Section 4.03 SEC Reports; Financial Statements . . . . . . . . . 27
Section 4.04 Compliance Certificate . . . . . . . . . . . . . . 28
Section 4.05 Compliance With Laws, Taxes . . . . . . . . . . . . 28
Section 4.06 Stay, Extension and Usury Laws . . . . . . . . . . 29
Section 4.07 Limitations on Restricted Payments . . . . . . . . 29
Section 4.08 Dividends and Payment Restrictions Affecting
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . 32
Section 4.09 Incurrence of Indebtedness . . . . . . . . . . . . 33
Section 4.10 Change of Control . . . . . . . . . . . . . . . . . 35
Section 4.11 Limitations on Asset Sales . . . . . . . . . . . . 36
Section 4.12 Transactions With Affiliates . . . . . . . . . . . 38
Section 4.13 Limitations on Liens . . . . . . . . . . . . . . . 39
Section 4.14 Investments in Unrestricted Subsidiaries . . . . . 39
Section 4.15 Payments for Consent . . . . . . . . . . . . . . . 40
Section 4.16 Corporate Existence. . . . . . . . . . . . . . . . 40
Section 4.17 Subsidiary Ownership. . . . . . . . . . . . . . . . 41
Section 4.18 Rule 144A Information Requirement. . . . . . . . . 41
ARTICLE 5
SUCCESSORS
Section 5.01 Merger, Consolidation, or Sale of Assets . . . . . 41
Section 5.02 Successor Corporation Substituted . . . . . . . . . 42
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default . . . . . . . . . . . . . . . . . 42
Section 6.02 Acceleration . . . . . . . . . . . . . . . . . . . 44
Section 6.03 Other Remedies . . . . . . . . . . . . . . . . . . 45
Section 6.04 Waiver of Past Defaults . . . . . . . . . . . . . . 45
Section 6.05 Control by Majority . . . . . . . . . . . . . . . . 45
Section 6.06 Limitations on Suits . . . . . . . . . . . . . . . 46
Section 6.07 Rights of Holders to Receive Payment . . . . . . . 46
Section 6.08 Collection Suit by Trustee . . . . . . . . . . . . 46
Section 6.09 Trustee May File Proofs of Claim . . . . . . . . . 47
Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . 47
Section 6.11 Undertaking for Costs . . . . . . . . . . . . . . . 47
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ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee . . . . . . . . . . . . . . . . . 48
Section 7.02 Rights of Trustee . . . . . . . . . . . . . . . . . 49
Section 7.03 Individual Rights of Trustee . . . . . . . . . . . 49
Section 7.04 Trustee's Disclaimer . . . . . . . . . . . . . . . 50
Section 7.05 Notice of Defaults . . . . . . . . . . . . . . . . 50
Section 7.06 Reports by Trustee to Holders . . . . . . . . . . . 50
Section 7.07 Compensation and Indemnity . . . . . . . . . . . . 50
Section 7.08 Replacement of Trustee . . . . . . . . . . . . . . 51
Section 7.09 Successor Trustee by Merger, etc . . . . . . . . . 52
Section 7.10 Eligibility; Disqualification . . . . . . . . . . . 52
Section 7.11 Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01 Termination of Company's and Guarantors'
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.02 Application of Trust Money . . . . . . . . . . . . 54
Section 8.03 Repayment to Company . . . . . . . . . . . . . . . 54
Section 8.04 Reinstatement . . . . . . . . . . . . . . . . . . . 54
ARTICLE 9
AMENDMENTS
Section 9.01 Without Consent of Holders . . . . . . . . . . . . 55
Section 9.02 With Consent of Holders . . . . . . . . . . . . . . 56
Section 9.03 Compliance with Trust Indenture Act . . . . . . . . 57
Section 9.04 Revocation and Effect of Consents . . . . . . . . . 57
Section 9.05 Notation on or Exchange of Securities . . . . . . . 58
Section 9.06 Trustee to Sign Amendments, etc. . . . . . . . . . 58
ARTICLE 10
GUARANTEE
Section 10.01 Subsidiary Guarantee . . . . . . . . . . . . . . . 58
Section 10.02 Execution and Delivery of Guarantee . . . . . . . 60
Section 10.03 Guarantors May Consolidate, etc., on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.04 Releases Following Sale of Assets . . . . . . . . 61
Section 10.05 "Trustee" to Include Paying Agent . . . . . . . . 61
Section 10.06 Additional Subsidiary Guarantees . . . . . . . . . 62
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ARTICLE 11
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls . . . . . . . . . . . 62
Section 11.02 Notices . . . . . . . . . . . . . . . . . . . . . 62
Section 11.03 Communication by Holders with Other Holders . . . 63
Section 11.04 Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.05 Statements Required in Certificate or
Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.06 Rules by Trustee and Agents . . . . . . . . . . . 64
Section 11.07 Legal Holidays . . . . . . . . . . . . . . . . . . 64
Section 11.08 No Recourse Against Others . . . . . . . . . . . . 65
Section 11.09 Governing Law . . . . . . . . . . . . . . . . . . 65
Section 11.10 No Adverse Interpretation of Other
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 11.11 Successors . . . . . . . . . . . . . . . . . . . . 65
Section 11.12 Severability . . . . . . . . . . . . . . . . . . . 65
Section 11.13 Counterpart Originals . . . . . . . . . . . . . . 65
Section 11.14 Trustee as Paying Agent and Registrar . . . . . . 65
Section 11.15 Table of Contents, Headings, etc. . . . . . . . . 66
Section 11.16 Bank of New York Not Acting in Individual
Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.17 Additional Rights of Holders of Transfer
Restricted Securities . . . . . . . . . . . . . . . . . . . . 66
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67, 68, 69
EXHIBIT A FORM OF SECURITY . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT A-1 FORM OF GUARANTEE . . . . . . . . . . . . . . . . . . . . . A-1-1
EXHIBIT B FROM OF CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . B
iv
INDENTURE dated as of January 24, 1996, among K-III Communications
Corporation, a Delaware corporation, the corporations listed on Schedule I
hereto (each a "Guarantor" and collectively, the "Guarantors") and The Bank of
New York, a New York banking corporation, as Trustee.
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders (as defined below) of
8 1/2% Senior Notes due 2006 (the "Series A Notes") and the 8 1/2% Senior Notes
due 2006 to be issued in exchange for the Series A Notes (the "Series B Notes"
and, together with the Series A Notes, the "Securities") issued by the Company
(as defined below):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS
"Adjusted Consolidated Net Income" means, with respect to any
Person for any period, (i) the Consolidated Net Income of such Person for such
period, plus (ii) in the case of the Company and its Restricted Subsidiaries,
all cash received during such period by the Company or any Restricted Subsidiary
from its Unrestricted Subsidiaries from the payment of dividends or
distributions (including tax sharing payments and loans or advances which are
junior in right of payment to the Securities and have a longer Average Life than
the Securities), but only to the extent such cash payments are not otherwise
included in "Adjusted Consolidated Net Income." Each item of Adjusted
Consolidated Net Income will be determined in conformity with GAAP, except that,
for purposes of the application of Accounting Principles Board Opinions Nos. 16
and 17, such Person may select any amortization practice allowable by GAAP up to
40 years, notwithstanding the use of a different amortization in such Person's
consolidated financial statements. Any designation of a Subsidiary of the
Company as a Restricted Subsidiary or Unrestricted Subsidiary at or prior to the
time of the calculation of Adjusted Consolidated Net Income of a Subsidiary will
be treated as if it had occurred at the beginning of the applicable period.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly the power to direct or cause the direction of
the management or policies, of the controlled person, whether through ownership
of voting securities, by agreement or otherwise.
"Agent" means any Registrar or Paying Agent.
"Applicable Premium" with respect to any Security being redeemed
pursuant to Section 3.08 shall equal the greater of (i) 1.0% of the then
outstanding principal amount of such Security and (ii) the excess of (A) the
present value of the required interest and principal payments due on such
Security, computed using a discount rate equal to the Treasury Rate plus the
Applicable Spread, over (B) the then outstanding principal amount of such
Security.
"Applicable Spread" means one half of one percent.
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by the referent Person of any of its
assets (including by way of a sale-and-leaseback and including the sale or other
transfer of any of the Capital Stock of any Subsidiary of the referent Person);
provided, that notwithstanding the foregoing, the term "Asset Sale" shall not
include the sale, lease, conveyance, disposition or other transfer of (i) with
respect to an Unrestricted Subsidiary, (A) any assets not constituting all or
substantially all of the assets of any Net Cash Flow Unrestricted Subsidiary and
(B) any Capital Stock or any assets of any Restricted Payment Unrestricted
Subsidiary, (ii) all or substantially all of the assets of the Company, as
permitted pursuant to Section 5.01 hereof, (iii) any assets between the Company,
any Restricted Subsidiary or any Unrestricted Subsidiary, (iv) any sale,
conveyance, disposition or other transfer of (A) cash and cash equivalents,
(B) inventory in the ordinary course of business and (C) any other tangible or
intangible asset, in each case in the ordinary course of business, of the
Company or its Restricted Subsidiaries, or (v) the sale or discount, in each
case without recourse, of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof.
"Average Life" means, as of the date of determination, with respect
to any debt security, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment (assuming the exercise by the
obligor of such debt security of all unconditional (other than as to the giving
of notice) extension options of each such scheduled payment date) of such debt
security multiplied by the amount of such principal payment by (ii) the sum of
all such principal payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of the Board of Directors of the Company.
"BONY Credit Agreement" means that certain credit agreement entered
into by and among the Company, certain financial institutions parties thereto,
and The Bank of New York, as agent, providing for a $150 million term loan
facility, as amended, modified, renewed, refunded or refinanced from time to
time, as permitted in clause (i) of the second paragraph of Section 4.09.
"Business Day" means any day other than a Legal Holiday.
2
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
which would at such time be so required to be capitalized on the balance sheet
in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other
than KKR and its Affiliates, becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of more than (A) 35 percent (35%) of the total
voting power of the then outstanding voting stock of the Company and (B) the
total voting power of the then outstanding voting stock of the Company
beneficially owned by KKR and its Affiliates or (ii) during any period of two
consecutive calendar years, individuals who at the beginning of such period
constituted the Company's Board of Directors (together with any new directors
whose election by the Company's Board of Directors or whose nomination for
election by the Company's shareholders was approved by a vote of at least two-
thirds 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) cease for any reason to constitute a majority of the
directors then in office.
"Chase Credit Agreement" means that certain credit agreement
entered into by and among the Company, certain financial institutions parties
thereto, and The Chase Manhattan Bank, N.A., as agent, providing for a $150
million term loan facility, as amended, modified, renewed, refunded or
refinanced from time to time, as permitted in clause (i) of the second paragraph
of Section 4.09.
"Class C Subordinated Debentures" means the 10% Class C
Subordinated Exchange Debentures due 2008 of the Company issuable in exchange
for the Series C Preferred Stock.
"Class D Subordinated Debentures" means the 10% Class D
Subordinated Exchange Debentures due 2008 of the Company issuable in exchange
for the Series D Preferred Stock or, in connection with a Registered Exchange
Offer for the Class C Subordinated Debentures and containing terms identical to
the Class C Subordinated Debentures (except that if issued in connection with a
Registered Exchange Offer, interest thereon shall accrue from the Exchange Offer
Consummation Date and except that such securities shall bear no legend and shall
be free from restrictions on transfer).
"Class C Subordinated Debenture Indenture" means the indenture
between the Company and the Subordinated Debenture Trustee referred to therein
pursuant to which the Class C Subordinated Debentures are issued.
"Class D Subordinated Debenture Indenture" means the indenture
between the Company and the Subordinated Debenture Trustee referred to therein
pursuant to which the Class D Subordinated Debentures are issued.
3
"Common Stock" means the common stock, par value $0.01 per share,
of the Company.
"Company" means (i) K-III Communications Corporation, a Delaware
corporation, and (ii) any successor of K-III Communications Corporation pursuant
to Article 5 hereof.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Adjusted Consolidated Net Income of such Person for such period plus
(a) provision for taxes based on income or profits to the extent such provision
for taxes was included in computing Adjusted Consolidated Net Income, plus
(b) consolidated Interest Expense, whether paid or accrued, to the extent such
expense was deducted in computing Adjusted Consolidated Net Income (including
amortization of original issue discount and non-cash interest payments), plus
(c) depreciation, amortization and other non-cash charges to the extent such
depreciation, amortization and other non-cash charges were deducted in computing
Adjusted Consolidated Net Income (including amortization of goodwill and other
intangibles); provided, with respect to the calculation of any Person's Debt to
Consolidated Cash Flow Ratio, that if, during such period, (i) such Person or
any of its Subsidiaries shall have made any Asset Sales (other than, in the case
of the Company and its Restricted Subsidiaries, sales of the Capital Stock of or
any assets of Unrestricted Subsidiaries which constitute Asset Sales),
Consolidated Cash Flow of such Person for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive), to the extent such
Consolidated Cash Flow was included in computing Consolidated Cash Flow,
directly attributable to the assets or Capital Stock which are the subject of
such Asset Sales for such period or increased by an amount equal to the
Consolidated Cash Flow (if negative), to the extent such Consolidated Cash Flow
was included in computing Consolidated Cash Flow, directly attributable thereto
for such period and (ii) such Person or any of its Subsidiaries (other than in
the case of the Company and its Restricted Subsidiaries, Unrestricted
Subsidiaries) has made any acquisition of assets or Capital Stock (occurring by
merger or otherwise), including, without limitation, any acquisition of assets
or Capital Stock occurring in connection with a transaction causing a
calculation to be made hereunder, Consolidated Cash Flow of such Person shall be
calculated (notwithstanding clause (ii) of the definition of Consolidated Net
Income) as if such acquisition of assets or Capital Stock (including the
incurrence of any Indebtedness in connection with any such acquisition and the
application of the proceeds thereof) took place on the first day of such period.
Consolidated Cash Flow of such Person and its Subsidiaries shall be determined
for any period without regard to changes in Working Capital of such Person and
its Subsidiaries during such period.
"Consolidated Fixed Charges" means, with respect to any Person for
any period, the (a) consolidated Interest Expense, whether paid or accrued, to
the extent such expense was deducted in computing Adjusted Consolidated Net
Income (including amortization of original issue discount and non-cash interest
payments) and (b) the amount of all cash dividend payments on all series of
preferred stock other than cash dividends on preferred stock of Unrestricted
Subsidiaries and cash dividends paid to such Person or its Subsidiaries;
provided that if, during such period, (i) such Person or any of its Subsidiaries
shall have made any Asset Sales (other than in the case of the Company and its
Restricted Subsidiaries, sales of the Capital Stock of or any assets of
Unrestricted Subsidiaries which constitute asset sales), Consolidated Fixed
4
Charges of such Person for such period shall be reduced by an amount equal to
the Consolidated Fixed Charges directly attributable to the assets which are the
subject of such Asset Sales for such period and (ii) such Person or any of its
Subsidiaries (other than in the case of the Company and its Restricted
Subsidiaries, Unrestricted Subsidiaries) has made any acquisition of assets or
Capital Stock (occurring by merger or otherwise), including, without limitation,
any acquisition of assets or Capital Stock occurring in connection with the
transaction causing a calculation to be made hereunder, Consolidated Fixed
Charges of such Person shall be calculated as if such acquisition of assets or
Capital Stock (including the incurrence of any Indebtedness in connection with
any such acquisition and the application of the proceeds thereof) took place on
the first day of such period.
"Consolidated Net Cash Flow" means, with respect to any Person for
any period, the aggregate Consolidated Cash Flow of such Person for such period,
minus (a) capital expenditures of such Person and its Subsidiaries (other than,
in the case of the Company and its Restricted Subsidiaries, Unrestricted
Subsidiaries), minus (b) the aggregate amount of all cash dividends paid by such
Person and its Subsidiaries (other than, in the case of the Company and its
Restricted Subsidiaries, Unrestricted Subsidiaries) to holders of its Capital
Stock other than to such Person or its Subsidiaries, minus (c) the aggregate
amount of all taxes based on income or profits paid by such Person and its
Subsidiaries (other than, in the case of the Company and its Restricted
Subsidiaries, Unrestricted Subsidiaries) other than to such Person or its
Subsidiaries, minus (d) cash Interest Expense of such Person and its
Subsidiaries (other than, in the case of the Company and its Restricted
Subsidiaries, Unrestricted Subsidiaries), minus (e) repayments of principal of
Indebtedness by such Person and its Subsidiaries (other than, in the case of the
Company and its Restricted Subsidiaries, Unrestricted Subsidiaries), minus
(f) any increases in Working Capital of such Person and its Subsidiaries (other
than, in the case of the Company and its Restricted Subsidiaries, Unrestricted
Subsidiaries), and plus (g) any decreases in Working Capital of such Person and
its Subsidiaries (other than, in the case of the Company and its Restricted
Subsidiaries, Unrestricted Subsidiaries), in each case, for such period and
determined in accordance with GAAP; provided that in calculating the amount
referred to in clause (f) or (g) above, as the case may be, for any period
during which the Company or any of its Restricted Subsidiaries has consummated
an Asset Sale (other than, in the case of the Company and its Restricted
Subsidiaries, sales of Capital Stock of, cash or any assets of Unrestricted
Subsidiaries which constitute Asset Sales), the portion of the change in Working
Capital for such period attributable to the entity or business sold or purchased
shall be based (x) in the case of such an Asset Sale, on the change in Working
Capital attributable to the entity or business sold from the first day of such
period to the date of the consummation of such sale and (y) in the case of an
acquisition, on the change in Working Capital attributable to the entity or
business acquired from the date of consummation of such acquisition to the last
day of such period.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
(other than, in the case of the Company and its Restricted Subsidiaries,
Unrestricted Subsidiaries) for such period, on a consolidated basis, determined
in accordance with GAAP, provided that (i) the net income (or loss) of any
Person which is not a Subsidiary or is accounted for by the equity method of
accounting shall be included only to the extent of the amount of cash dividends
or distributions (including tax sharing payments and loans or advances which are
junior in right of payment to
5
the Securities and have a longer Average Life than the Securities) paid to the
referent Person or a Subsidiary of the referent Person, (ii) except to the
extent includable pursuant to the foregoing clause (i), the income (or loss) of
any Person accrued prior to the date it becomes a Subsidiary of such Person or
is merged into or consolidated with such Person or any of its Subsidiaries or
that Person's assets are acquired by such Person or any of its Subsidiaries
shall be excluded, and (iii) any gains or losses attributable to Asset Sales net
of related tax costs or tax benefits, as the case may be, shall be excluded.
"Consolidated Net Worth" means, for purposes of this Indenture, at
any date of determination, the sum of the Capital Stock and additional paid-in
capital plus retained earnings (or minus accumulated deficit) of the referent
Person and its Subsidiaries on a consolidated basis, less amounts attributable
to Redeemable Stock, each item to be determined in conformity with GAAP
(excluding the effects of foreign currency exchange adjustments under Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 52),
except that all effects of the application of Accounting Principles Board
Opinions Nos. 16 and 17 and related interpretations shall be disregarded.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust and
Agency Group.
"Credit Agreements" means, collectively, the Chase Credit
Agreement, the BONY Credit Agreement, the Revolving Credit Agreement and the New
Chase Facility, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, in each case as
amended, modified, renewed, refunded or refinanced from time to time, as
permitted in clause (i) of the second paragraph of Section 4.09 hereof.
"Currency Agreement" means the obligations of any Person pursuant
to any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect such Person or any of its
subsidiaries against fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Debt to Consolidated Cash Flow Ratio" means the ratio of all
Indebtedness of the Company and its Restricted Subsidiaries to Consolidated Cash
Flow.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Equity Interests" means Capital Stock, warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
6
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Debentures" means the 11 1/2% Subordinated Debentures due
2004 of the Company issuable upon exchange of the Senior Preferred Stock.
"Exchange Offer" means the offer which may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series A Notes for the
Series B Notes and Series C Preferred Stock for Series D Preferred Stock.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than the Credit Agreements and the Outstanding Notes) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charge Coverage Ratio" means the ratio of Consolidated Cash
Flow to Consolidated Fixed Charges.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of this Indenture.
"Guarantee" means, individually and collectively, the guarantees
given by the Guarantors pursuant to Article 10 hereof, including a notation in
the Securities substantially in the form attached hereto as Exhibit A-1.
"Guarantor" means any Subsidiary (or successor of such Subsidiary)
of the Company which executes a Guarantee.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" of any Person means any indebtedness, contingent or
otherwise, in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement obligations with respect thereto) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to financing leases), if and to the extent any of
the foregoing indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP (except that any such balance that
constitutes a trade payable and/or an accrued liability arising in the ordinary
course of business shall not be considered Indebtedness), and shall also
include, to the extent not otherwise included, any Capital Lease Obligations,
the maximum fixed repurchase price of any Redeemable Stock, indebtedness secured
by a Lien to which the property or assets owned or held by such Person is
subject, whether or not the obligations secured thereby shall have been assumed,
guarantees of items that would be included within this definition to the extent
of such
7
guarantees (exclusive of whether such items would appear upon such balance
sheet), and net liabilities in respect of Currency Agreements and Interest Rate
Agreements. For purposes of the preceding sentence, the maximum fixed
repurchase price of any Redeemable Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Redeemable Stock
as if such Redeemable Stock were repurchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, provided that if
such Redeemable Stock is not then permitted to be repurchased, the repurchase
price shall be the book value of such Redeemable Stock. The amount of
Indebtedness of any Person at any date shall be without duplication (i) the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability of any such contingent obligations at such date
and (ii) in the case of Indebtedness of others secured by a Lien to which the
property or assets owned or held by such Person is subject, the lesser of the
fair market value at such date of any asset subject to a Lien securing the
Indebtedness of others and the amount of the Indebtedness secured. For the
purpose of determining the aggregate Indebtedness of the Company and its
Restricted Subsidiaries, such Indebtedness shall exclude the Indebtedness of any
Unrestricted Subsidiary of the Company or any Unrestricted Subsidiary of a
Restricted Subsidiary.
"Indenture" means this Indenture as amended from time to time.
"Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest in respect of Indebtedness (including
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and the net cost (benefit)
associated with Interest Rate Agreements, and excluding amortization of deferred
finance fees and interest recorded as accretion in the carrying value of
liabilities (other than Indebtedness) recorded at a discounted value) and all
but the principal component of rentals in respect of Capital Lease Obligations,
paid, accrued or scheduled to be paid or accrued by such Person during such
period.
"Interest Payment Date" has the meaning assigned to such term in
the Securities.
"Interest Rate Agreements" means the obligations of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its subsidiaries against fluctuations in interest rates.
"Investment" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other Person. For
the purposes of Sections 4.07 and 4.14 hereof, (i) "Investment" shall include
and be valued at the fair market value of the net assets of any Restricted
Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued
8
at fair market value at the time of such transfer, in each case as determined by
the Board of Directors of the Company in good faith.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
"Lien" means any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give any security interest in and any filing or other
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" means, with respect to any Securities, all
unpaid liquidated damages owing by the Company pursuant to Section 5 of the
Registration Rights Agreement for such Securities.
"Net Cash Flow Unrestricted Subsidiary" means an Unrestricted
Subsidiary which is not a Restricted Payment Unrestricted Subsidiary.
"Net Proceeds" means, with respect to any Asset Sale, the aggregate
cash proceeds (including any cash received by way of deferred payment pursuant
to a note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, and including any
amounts received as disbursement or withdrawals from any escrow or similar
account established in connection with any such Asset Sale, but, in either such
case, only as and when so received) received by the Company or any of its
Subsidiaries in respect of such Asset Sale, net of (i) the cash expenses of such
sale (including, without limitation, the payment of principal, premium, if any,
and interest on Indebtedness required to be paid as a result of such Asset Sale
(other than the Securities and amounts repaid pursuant to the Credit Agreements
and the Outstanding Notes) and legal, accounting and investment banking fees and
sales commissions), (ii) taxes paid or payable as a result thereof, (iii) any
portion of cash proceeds which the Company determines in good faith should be
reserved for post-closing adjustments, it being understood and agreed that on
the day that all such post-closing adjustments have been determined, the amount
(if any) by which the reserved amount in respect of such Asset Sale exceeds the
actual post-closing adjustments payable by the Company or any of its
Subsidiaries shall constitute Net Proceeds on such date and (iv) any relocation
expenses and pension, severance and shutdown costs incurred as a result thereof.
"New Chase Facility" means that certain revolving credit facility
entered into by and among the Company, certain financial institutions parties
thereto, and The Chase Manhattan Bank, N.A., as agent, providing for a $100
million revolving credit facility, as amended, modified, renewed, refunded or
refinanced from time to time, as permitted in clause (i) of the second paragraph
of Section 4.09.
"Non-Compete Notes" means $50 million in principal amount of
promissory notes issuable semi-annually commencing December 17, 1991 in
connection with a Non-Competition Agreement, dated as of June 17, 1991 executed
and delivered by News America Holdings
9
Incorporated, as such promissory notes may be amended, supplemented or modified
in accordance with the terms hereof and thereof; provided that no amendment,
supplement or modification thereto shall (i) increase the principal amount
thereof, (ii) increase the rate or advance the time for payment of interest or
(iii) advance the fixed maturity date or the time for payment of any installment
of principal thereunder.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers" means the President, the Treasurer, any Assistant
Treasurer, Controller, Secretary or any Vice President of the Company or any
Guarantor, as applicable.
"Officers' Certificate" means a certificate signed by two Officers,
one of whom must be the Company's chief executive officer, chief financial
officer or controller financial accounting.
"Opinion of Counsel" means a written opinion prepared in accordance
with Section 11.05 hereof and acceptable in form and substance to the Trustee,
from legal counsel who is acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or any Guarantor, if applicable, or the
Trustee.
"Outstanding Notes" means the 10 5/8% Senior Notes due 2002 and the
10 1/4% Senior Notes due 2004, as each may be amended, supplemented or otherwise
modified from time to time.
"Outstanding Note Indentures" means the Indenture, dated as of May
13, 1992, among the Company, the Guarantors and The Bank of New York, as
trustee, relating to the 10 5/8% Senior Notes due 2002, and the Indenture, dated
as of May 31, 1994, among the Company, the Guarantors and Bankers Trust Company,
as trustee, relating to the 10 1/4% Senior Notes due 2004, as each may be
amended, supplemented or otherwise modified from time to time.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and for
which a reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; (ii) statutory Liens of landlords and
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's,
or other like Liens arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
proceedings, if a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor; (iii) Liens
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material
10
respect with the business of the Company or any of its Subsidiaries incurred in
the ordinary course of business; (vi) Liens (including extensions and renewals
thereof) upon real or tangible personal property acquired after the date of this
Indenture, 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 the cost of construction) of the item of property subject
thereto, (b) the principal amount of the Indebtedness secured by such Lien does
not exceed 100% of such cost, (c) such Lien does not extend to or cover any
other property other than such item of property and any improvements on such
item and (d) the incurrence of such Indebtedness is permitted by Section 4.09
hereof; (vii) Liens securing reimbursement obligations with respect to letters
of credit which encumber documents and other property relating to such letters
of credit and the products and proceeds thereof; (viii) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods; (ix) judgment and
attachment Liens not giving rise to an Event of Default; (x) leases or subleases
granted to others not interfering in any material respect with the business of
the Company or any of its Subsidiaries; (xi) Liens encumbering customary initial
deposits and margin deposits, and other Liens incurred in the ordinary course of
business and which are within the general parameters customary in the industry,
in each case securing Indebtedness under Interest Rate Agreements and Currency
Agreements; (xii) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of the Company
or its Subsidiaries; (xiii) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company or any of its
Subsidiaries in the ordinary course of business of the Company and its
Subsidiaries; (xiv) any interest or title of a lessor in the property subject to
any Capital Lease Obligation or operating lease; (xv) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; (xvi) Liens
permitted by the Credit Agreements as in effect on the date of this Indenture;
(xvii) Liens securing Indebtedness described in clause (xii) of the second
paragraph of Section 4.09 hereof; (xviii) Liens between the Company and any
Restricted Subsidiary or between Restricted Subsidiaries; (xix) Liens securing
letters of credit in an amount not to exceed $50 million in the aggregate at any
one time; and (xx) Liens in an amount not to exceed $25 million in the aggregate
at any one time.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Redeemable Stock" means any Equity Interest which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the Securities), or upon the
happening of any event, matures or is mandatorily redeemable, in whole or in
part, prior to the stated maturity of the Securities, or is, by its terms or
upon the happening of any event, redeemable at the option of the holder thereof,
in whole or in part, at any time prior to the stated maturity of the Securities
except for Equity Interests of the Company issued to present and former members
of management of the Company and its Subsidiaries pursuant to subscription and
option agreements in effect on the date hereof and common stock and options of
the Company issued to future members of management of the Company and its
Subsidiaries pursuant to subscription agreements executed subsequent to the date
hereof containing provisions for the repurchase of such common stock and options
upon death, disability or termination of employment of such persons which are
substantially identical to those contained
11
in the subscription agreements in effect on the date hereof; provided that for
purposes of Section 4.07 hereof and that for purposes of the definition of
Indebtedness, Redeemable Stock does not include the Senior Preferred Stock and
the Series B Preferred Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement dated January 24, 1996, between the Initial Purchasers, the Company
and the subsidiaries of the Company listed on the signature page thereto, as
such agreement may be amended, modified or supplemented from time to time.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the Corporate Trust and Agency Group (or any successor group
thereto) of the Trustee, including any Vice President, Assistant Vice President,
Secretary, Assistant Secretary or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter, any other officer to whom
such matter is referred because of such officer's knowledge and familiarity with
the particular subject.
"Restricted Payment Unrestricted Subsidiary" means an Unrestricted
Subsidiary which was capitalized exclusively with a permitted Restricted Payment
or the proceeds from the issuance of an Equity Interest by the Company or with
the proceeds of the sale of stock or substantially all of the assets of any
other Unrestricted Subsidiary which was capitalized with such funds to the
extent that a liquidating dividend is paid to the Company or any Restricted
Subsidiary from the proceeds of such sale.
"Restricted Subsidiary" means, for the purposes of this Indenture,
a Subsidiary of the Company which at the time of determination is not an
Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that immediately after giving
effect to such designation, the Company could incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 4.09 hereof, on a pro
forma basis taking into account such designation.
"Revolving Credit Agreement" means that certain credit agreement
entered into by and among the Company, certain financial institutions parties
thereto, and The Chase Manhattan Bank, N.A., as agent, providing for a $670
million revolving credit facility, as amended, modified, renewed, refunded or
refinanced from time to time, as permitted in clause (i) of the second paragraph
of Section 4.09.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Preferred Stock" means the Company's $2.875 Senior
Exchangeable Preferred Stock, par value $.01 per share.
12
"Series B Preferred Stock" means the Company's $11.625 Series B
Exchangeable Preferred Stock, par value $.01 per share.
"Series C Preferred Stock" means the Company's $10.00 Series C
Exchangeable Preferred Stock Redeemable 2008, par value $.01 per share.
"Series D Preferred Stock" means the Company's $10.00 Series D
Exchangeable Preferred Stock Redeemable 2008 of the Company, issuable in
connection with the Exchange Offer and containing terms identical to the Series
C Preferred Stock (except that dividends thereon will accrue from the Exchange
Offer Consummation Date (as defined in the Registration Rights Agreement and
except that such securities shall bear no legend and shall be free from
restrictions or transfer).
"Subordinated Debentures" means the 11 5/8% Class B Subordinated
Exchange Debentures due 2005 of the Company issuable upon exchange of the Series
B Preferred Stock and the 10% Class C Subordinated Exchange Debentures due 2008
of the Company issuable upon exchange of the Series C Preferred Stock and the
10% Class D Subordinated Exchange Debentures due 2008 of the Company issuable in
exchange for the Series D Preferred Stock or, in connection with a Registered
Exchange Offer for the Class C Subordinated Debentures and containing terms
identical to the Class C Subordinated Debentures (except that if issued in
connection with a Registered Exchange Offer (as defined in the Registration
Rights Agreement), interest thereon shall accrue from the Exchange Offer
Consummation Date (as defined in the Registration Rights Agreement) and except
that such securities shall bear no legend and shall be free from restrictions on
transfer).
"Subsidiary" of any Person means any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of such Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Sec.Sec. 77aaa-77bbbb).
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.06(b) hereof.
"Transfers" means (i) any payment of interest on Indebtedness,
dividends or repayments of loans or advances and (ii) any other transfers of
assets, in each case from an Unrestricted Subsidiary to the Company or any of
its Restricted Subsidiaries.
"Treasury Rate" means, for the purposes of this Indenture, the
yield to maturity at the time of computation of United States Treasury
securities with a constant maturity (as compiled by and published in the most
recent Federal Reserve Statistical Release H.15 (519) which has become publicly
available at least two Business Days prior to the date fixed for prepayment (or,
if such Statistical Release is no longer published, any publicly available
source of similar market
13
data)) most nearly equal to the then remaining Average Life of the Securities;
provided that if the Average Life of the Securities is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the Average Life of the Securities is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means, for the purposes of this
Indenture, (i) any Subsidiary of the Company which at the time of determination
is an Unrestricted Subsidiary (as designated by the Board of Directors, as
provided below) and (ii) any subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary of the Company (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns, or holds any Lien on,
any property of, any other Subsidiary of the Company which is not a Subsidiary
of the Subsidiary to be so designated; provided that (a) the Company certifies
that such designation complies with Section 4.07 and 4.14 hereof, and (b) the
Subsidiary to be so designated has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or otherwise become
directly
or indirectly liable with respect to any Indebtedness pursuant to which the
lender has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that immediately after giving effect to
such designation, the Company could incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 4.09 hereof, on a pro
forma basis taking into account such designation.
"U.S. Government Obligations" means direct noncallable obligations
of or guaranteed by the United States of America.
"Working Capital" means, with respect to any Person for any period,
the current assets of such Person and its Subsidiaries (other than, in the case
of the Company and its Restricted Subsidiaries, Unrestricted Subsidiaries) on a
consolidated basis, after excluding therefrom cash and cash equivalents and
deferred income taxes, less the current liabilities of such Person and its
Subsidiaries (other than, in the case of the Company and its Restricted
Subsidiaries, Unrestricted Subsidiaries on a consolidated basis, after excluding
therefrom, in each case to the extent otherwise included therein, all short-term
Indebtedness for borrowed money, the current portion of any long-term
Indebtedness, liabilities arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts, which will not be, and will not be deemed to be
inadvertent) drawn against insufficient funds in the ordinary course of
business, provided that such liabilities are extinguished within three Business
Days of this incurrence, and deferred income taxes of such Person and its
Subsidiaries (other than, in the case of the Company and its Restricted
Subsidiaries, Unrestricted Subsidiaries).
14
SECTION 1.02 OTHER DEFINITIONS
Defined in
Term Section
---- -----------
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . 4.12
"Change of Control Offer" . . . . . . . . . . . . . . . . . 4.10
"Change of Control Payment" . . . . . . . . . . . . . . . . 4.10
"Change of Control Payment Date" . . . . . . . . . . . . . . 4.10(2)
"Event of Default" . . . . . . . . . . . . . . . . . . . . . 6.01
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . 11.07
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Refinancing Indebtedness" . . . . . . . . . . . . . . . . . 4.09
"Restricted Payments" . . . . . . . . . . . . . . . . . . . 4.07
"Retired Capital Stock" . . . . . . . . . . . . . . . . . . 4.07
"Refunding Capital Stock" . . . . . . . . . . . . . . . . . 4.07
"Successor" . . . . . . . . . . . . . . . . . . . . . . . . 5.01(i)
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities and the Guarantees.
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company, any other obligor
upon the Securities or any successor obligor upon the Securities or any
Guarantor.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
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SECTION 1.04 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
SECTION 2.01 FORM AND DATING
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A to this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Security shall be dated the date of its
authentication. The Securities shall be in denominations of $1,000 and integral
multiples thereof. The Guaranty shall be substantially in the form of
Exhibit A-1, the terms of which are incorporated herein and made part of this
Indenture.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Securities issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the text referred to in footnotes 1 and
2 thereto). Securities issued in definitive form shall be substantially in the
form of Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto). Each Global Note shall represent such of the
outstanding Securities as shall be specified therein and each shall provide that
it shall represent the aggregate amount of outstanding Securities from time to
time endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
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SECTION 2.02 EXECUTION AND AUTHENTICATION
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities
and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to
the aggregate principal amount stated in paragraph 4 of the Securities, upon a
written order of the Company signed by an Officer to a Responsible Officer of
the Trustee. The aggregate principal amount of Securities outstanding at any
time may not exceed such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. An authenticating agent
may authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
SECTION 2.03 REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Securities may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any co-
registrar and the term "Paying Agent" includes any additional paying agent. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company shall notify the Trustee in writing of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Custodian with respect to the Global Notes.
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SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, Liquidated Damages, if any, or interest on the Securities, and will
notify the Trustee in writing of any default by the Company or any Guarantor in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Guarantor or a Subsidiary) shall have no further liability for the
money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 2.05 HOLDER LISTS
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA Sec. 312(a). If the Trustee is not
the Registrar, the Company and/or the Guarantors shall furnish to the Trustee at
least seven Business Days before each Interest Payment Date and, at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders, and the Company and the Guarantors shall otherwise comply with
TIA Sec. 312(a).
SECTION 2.06 TRANSFER AND EXCHANGE
(a) When Securities are presented to the Registrar with the
request:
(x) to register the transfer of such Securities; or
(y) to exchange such Securities for an equal principal amount
of Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met;
provided, however, that the Securities presented or surrendered for
register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar
and the Trustee, duly executed by the Holder thereof or by his
attorney, duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities, shall be
accompanied by the following additional information and
documents, as applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a
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certification from such Holder to that effect (in
substantially the form of Exhibit B hereto); or
(B) if such Transfer Restricted Security is being
transferred to a qualified institutional buyer (as defined in
Rule 144A under the Securities Act) or institutional
accredited investor within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act, in accordance with
Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rules 144 or
145 or Regulation S under the Securities Act or pursuant to
an effective registration statement under the Securities Act,
a certification to that effect (in substantially the form of
Exhibit B hereto).
(b) Legends.
(i) Except as permitted by the following paragraph (ii), each
Security certificate (and all Securities issued in exchange
therefor or substitution thereof) shall bear a legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN "INSTITUTIONAL ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT
WILL NOT, WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A)
TO THE COMPANY OR MORGAN STANLEY & CO. INCORPORATED, DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION, OR SALOMON BROTHERS
INC, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE COMPANY A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE COMPANY) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES AT THE TIME OF TRANSFER OF
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LESS THAN $1,000,000 AN OPINION OF COUNSEL, ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND IN CONNECTION
WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THE SECURITY. IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER FURNISH TO THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS MAY REASONABLY BE
REQUIRED TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT."
(ii) Upon any sale or transfer of a Transfer Restricted
Security satisfying the conditions set forth in subclause (F) of
the legend set forth in the immediately preceding paragraph (i)
above and in connection with the Exchange Offer, the Registrar
shall permit the Holder thereof to exchange such Transfer
Restricted Security for a Security that does not bear the legend
set forth above and, upon transfer of such Transfer Restricted
Security, the restrictions contained in such legend shall be no
longer applicable.
(c) Obligations with respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Securities at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration or transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer tax or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.07,
3.08 and 9.05 hereof).
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(iii) The Registrar shall not be required to register the
transfer or exchange of any Security selected for redemption in
whole or in part, except the unredeemed portion of any Security
being redeemed in part.
(iv) All Securities issued upon any registration of transfer or
exchange of Securities shall be valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under the Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, register the transfer of or exchange
Securities during a period beginning at the opening of
business 15 days before the day of any selection of
Securities for redemption under Section 3.02 and ending at
the close of business on the day of selection,
(B) to register the transfer of any Security so selected
for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or
(C) to register the transfer of or exchange any Security
during the period between a record date and the corresponding
Interest Payment Date.
(vi) Prior to due presentment for registration of transfer of
any Security, the Trustee, any Agent and the Company may deem
and treat the person in whose name any Security is registered as
the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security, and
neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary.
SECTION 2.07 REPLACEMENT SECURITIES
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon the written order of the Company signed by an Officer, shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss which any of them may suffer if a Security is replaced. The Company may
charge Holders for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
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SECTION 2.08 OUTSTANDING SECURITIES
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Securities payable on that date, then on and after that date
such Securities shall be deemed to be no longer outstanding and shall cease to
accrue interest.
Except as set forth in Section 2.09 hereof, a Security does not
cease to be outstanding because the Company or an Affiliate holds the Security.
SECTION 2.09 TREASURY SECURITIES
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company, any Guarantor or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which a Responsible Officer
of the Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10 TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary securities upon a written
order of the Company signed by an Officer and delivered or caused to be
delivered to a Responsible Officer. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate, upon a written order
of the Company, definitive Securities in exchange for temporary Securities.
Holders of temporary securities shall be entitled to all benefits
of this Indenture.
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SECTION 2.11 CANCELLATION
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Securities surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
the Company shall direct that cancelled Securities be returned to it. The
Company may not issue new Securities to replace Securities that it has paid or
that have been delivered to the Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST
If the Company defaults in a payment of interest on the Securities,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Securities and in Section 4.01 hereof. The Company shall, with the
consent of the Trustee, fix each such special record date and payment date. At
least 15 days before the record date, the Company (or the Trustee, in the name
of and at the expense of the Company) shall mail to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3
OPTIONAL REDEMPTION AND
OPTIONAL REDEMPTION UPON CHANGE OF CONTROL
SECTION 3.01 NOTICES TO TRUSTEE
(a) If the Company elects to redeem Securities pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth that such redemption shall occur pursuant to
Section 3.07 hereof and setting forth the redemption date, the principal amount
of Securities to be redeemed and the redemption price.
(b) If the Company elects to redeem Securities pursuant to the
provisions of Section 3.08 hereof, it shall furnish to the Trustee, at least 45
days but not more than 60 days before the redemption date, an Officers'
Certificate setting forth that a Change of Control has occurred and the date of
such Change of Control and that such redemption shall occur pursuant to Section
3.08 hereof, and further setting forth the principal amount of Securities to be
redeemed, the redemption price of such Securities and the intended redemption
date.
SECTION 3.02 SELECTION OF SECURITIES TO BE REDEEMED
If less than all of the Securities are to be redeemed at any
time, selection of the Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed, or, if the
23
Securities are not listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Security in denominations of $1,000 or less shall be redeemed
in part. The Trustee may select for redemption any portion (equal to $1,000 or
any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. The particular
Securities to be redeemed shall be selected, unless otherwise provided herein,
not less than 30 nor more than 60 days prior to the redemption date by the
Trustee from the outstanding Securities not previously called for redemption.
SECTION 3.03 NOTICES TO HOLDERS
(a) If the Company elects to redeem Securities pursuant to either
of Section 3.07 or 3.08 hereof, notice of redemption shall be mailed by first
class mail at least 30 days but not more than 60 days before the redemption date
to each Holder of Securities to be redeemed at its registered address.
The notice shall identify the Securities to be redeemed (including
CUSIP number) and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and
that, after the redemption date, upon surrender of such
Security, a new Security or Securities in principal amount
equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered
to the Paying Agent at the address specified in such
notice to collect the redemption price;
(6) that interest on Securities or portions of them called for
redemption ceases to accrue on and after the redemption
date;
(7) the paragraph of the Securities pursuant to which the
Securities are being redeemed; and
(8) the aggregate principal amount of Securities that are
being redeemed.
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(b) At the Company's timely request, the Trustee shall give the
notice required in Section 3.03(a) hereof above in the Company's name and at its
expense and setting forth the information to be stated in such notice as
provided in Section 3.03(a) hereof.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed (after the Trustee has received
the notice provided for in Section 3.01 hereof), Securities called for
redemption become due and payable on the redemption date at the redemption price
and shall cease to bear interest from and after the redemption date (unless the
Company shall fail to make payment of the redemption price or accrued interest
on the redemption date). Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price, plus premium and Liquidated Damages, if
any, plus accrued interest, if any, to the redemption date, but interest
installments whose maturity is on or prior to the redemption date and Liquidated
Damages which become payable on or prior to the redemption date will be payable
to the Holder of record at the close of business on the relevant record dates
referred to in the Securities.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE OR PURCHASE PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money (in same-day funds)
sufficient to pay the redemption price of, premium and Liquidated Damages, if
any, and accrued interest on, all Securities to be redeemed on that date other
than Securities or portions thereof called for redemption on that date which
previously have been delivered by the Company to the Trustee for cancellation.
The Trustee or the Paying Agent shall return to the Company any such money not
required for that purpose.
If the Company complies with the preceding paragraph, interest on
the Securities or portions thereof to be redeemed, whether or not such
Securities are presented for payment, will cease to accrue on the applicable
redemption date. If any Security called for redemption shall not be so paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, then interest will be paid on the unpaid principal
from the redemption date until such principal is paid and on any interest not
paid on such unpaid principal, in each case, at the rate provided in the
Securities and in Section 4.01 hereof.
SECTION 3.06 SECURITIES REDEEMED IN PART
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee, upon the written order of the Company, shall
authenticate for the Holder at the expense of the Company a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
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SECTION 3.07 OPTIONAL REDEMPTION
The Company may redeem all or any of the Securities, in whole or in
part, at any time on or after February 1, 2001 at the redemption prices
(expressed as percentages of the principal amount) set forth in the immediately
succeeding paragraph, plus accrued and unpaid interest thereon to the applicable
redemption date.
The redemption price as a percentage of the principal amount shall
be as follows, if the Securities are redeemed during the twelve-month period
beginning February 1 of the year indicated below:
Year Percentage
---- ----------
2001 . . . . . . . . . . 104.250%
2002 . . . . . . . . . . 102.125%
2003 and thereafter . . . 100.000%
Notwithstanding the foregoing, upon the occurrence at any time of a
Change in Control, the Securities will be redeemable, at the option of the
Company, in whole or in part, pursuant to the provisions of Section 3.08 hereof.
Any redemption pursuant to this Section 3.07 shall be made, to the
extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
SECTION 3.08 OPTIONAL REDEMPTION UPON CHANGE OF CONTROL
In addition to any redemption pursuant to Section 3.07 hereof, the
Securities will be redeemable, at the option of the Company, in whole or in
part, at any time within 160 days after a Change of Control upon not less than
30 nor more than 60 days' prior notice to each Holder of Securities to be
redeemed, at a redemption price equal to the sum of (i) the then outstanding
principal amount of the Securities being redeemed plus Liquidated Damages for
such Securities, if any, plus (ii) accrued and unpaid interest, if any, to the
redemption date plus (iii) the Applicable Premium.
Any redemption pursuant to this Section 3.08 shall be made, to the
extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
SECTION 3.09 SINKING FUND
The Securities will not be entitled to any sinking fund payments.
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ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF SECURITIES
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities, and shall
pay Liquidated Damages, if any, on the dates and in the manner provided in the
Registration Rights Agreement. Principal and interest shall be considered paid
on the date due if the Paying Agent, other than the Company or a Subsidiary of
the Company, holds on that date money deposited by the Company in available
funds and designated for and sufficient to pay all principal and interest then
due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, at the same rate per annum on the Securities to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain, in the Borough of Manhattan, The City
of New York, an office or agency (which may be an office of the Trustee or the
Registrar) where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
SECTION 4.03 SEC REPORTS; FINANCIAL STATEMENTS
(a) The Company and the Guarantors shall file with the Trustee,
within 15 days after it files the same with the SEC, copies of the annual
reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company and/or the Guarantors are required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the Company is not
subject to the requirements of such Section 13 or 15(d), the Company shall file
with the Trustee, within 15 days after it would have been required to file the
same with the SEC, financial statements, including any notes thereto (and with
respect to annual reports, an auditors' report by a firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," both comparable to that which the Company would have
been required to include in such annual reports, information, documents or other
reports if the Company had been subject to the requirements of such Section 13
or 15(d). Any Guarantor not required to file with the SEC
27
pursuant to Section 13 or 15(d) of the Exchange Act shall not be required to
file such reports with the SEC or Trustee. The Company and the Guarantors shall
also comply with the other provisions of TIA Sec.314(a).
(b) If the Company is required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause any annual report furnished to its stockholders generally and any
quarterly or other financial reports furnished by it to its stockholders
generally to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Registrar.
If the Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, so long as at least 5% of the
original principal amount of the Securities remain outstanding, the Company
shall cause its financial statements referred to in Section 4.03(a) hereof,
including any notes thereto (and with respect to annual reports, an auditors'
report by a firm of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" to be
so mailed to the Holders within 90 days after the end of each of the Company's
fiscal years and within 60 days after the end of each of the Company's first
three fiscal quarters. The Company will cause to be disclosed in a statement
accompanying any annual report or comparable information as of the date of the
most recent financial statements in each such report or comparable information
the amount available for payments pursuant to Section 4.07 hereof. As of the
date hereof, the Company's fiscal year ends on December 31. Any Guarantor not
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act shall not be required to file such reports with the SEC or Trustee.
SECTION 4.04 COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge and what action the
Company is taking or proposes to take with respect thereto) and that to the best
of his knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest,
28
if any, on the Securities are prohibited or, if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, the year-end
financial statements delivered pursuant to Section 4.03 hereof shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Articles 4 or 5 of this Indenture or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Securities are
outstanding, (i) deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto and (ii) promptly
notify the Trustee of any Change of Control.
SECTION 4.05 COMPLIANCE WITH LAWS, TAXES
The Company shall, and shall cause each of its Subsidiaries to,
comply with all statutes, laws, ordinances, or government rules and regulations
to which it is subject, noncompliance with which would materially adversely
affect the business, earnings, properties, assets or condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole.
The Company shall, and shall cause each of its Subsidiaries to, pay
prior to delinquency all taxes, assessments, and governmental levies except as
contested in good faith and by appropriate proceedings.
SECTION 4.06 STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
Company's obligation to pay the Securities; and the Company (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law insofar as such law applies to the Securities, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 4.07 LIMITATIONS ON RESTRICTED PAYMENTS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Capital Stock or other Equity Interests (other
29
than (A) dividends or distributions payable in Equity Interests (other than
Redeemable Stock) of the Company or such Restricted Subsidiary or (B) dividends
or distributions payable to the Company or any of its Restricted Subsidiaries),
(ii) (A) voluntarily purchase, redeem or otherwise acquire or retire for value
any preferred stock of the Company or any of its Restricted Subsidiaries, which
by its terms, is exchangeable for any Indebtedness that is pari passu with or
subordinated in right of payment to the Securities or (B) purchase, redeem or
otherwise acquire or retire for value any Equity Interests (other than
Exchangeable Preferred Stock) of the Company or any of its Restricted
Subsidiaries (other than any such Equity Interests purchased from the Company or
any of its Restricted Subsidiaries), (iii) voluntarily purchase, repay, redeem,
defease (including, but not limited to, in-substance or legal defeasance) or
otherwise acquire or retire for value any Indebtedness (other than (A) the
Securities, (B) Indebtedness under the Credit Agreements, (C) Indebtedness
permitted under clause (v) or (vi) of the second paragraph of Section 4.09
hereof, and any extension, refinancing, renewal, replacement, substitution or
refunding thereof permitted under clause (vii) of the second paragraph of
Section 4.09 hereof or (D) Indebtedness between and among the Company and the
Restricted Subsidiaries) that is pari passu with or subordinated in right of
payment to the Securities (other than in connection with the refunding or
refinancing of such Indebtedness) or (iv) make Investments in Restricted Payment
Unrestricted Subsidiaries (the foregoing actions set forth in clauses
(i) through (iv) being referred to as "Restricted Payments"), if, at the time of
such Restricted Payment:
(a) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof; or
(b) the Company could not incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 4.09 hereof
(without giving effect to clauses (i) through (xv) of the second
paragraph thereof), which calculation shall be made on a pro forma
basis deducting from Adjusted Consolidated Net Income the amount of
any Investment the Company has made in an Unrestricted Subsidiary
during the relevant period and any Investment the Company intends to
make in an Unrestricted Subsidiary, to the extent that such Investment
is made with amounts included in Adjusted Consolidated Net Income as a
result of Transfers described in clause (c)(x) of this Section 4.07 or
clause (c)(y) of Section 4.14 hereof; or
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made after May 13, 1992 exceeds the sum of
the following: (w) 50% of the amount of the Adjusted Consolidated Net
Income (other than amounts included in the next succeeding clause
(c)(x)) of the Company for the period (taken as one accounting period)
from the beginning of the first quarter commencing immediately after
May 13, 1992 through the end of the Company's fiscal quarter ending
immediately prior to the time of such Restricted Payment (or, if
Adjusted Consolidated Net Income for such period is a deficit, 100% of
such deficit); plus (x) 100% of the amount of all Transfers from a
Restricted Payment Unrestricted Subsidiary up to the aggregate amount
of the Investment (after taking into account all prior Transfers from
such Restricted Payment Unrestricted Subsidiary) in such Restricted
Payment Unrestricted Subsidiary (valued in each case as provided in
the definition of "Investment"); plus (y) in the event of a
designation of a Restricted Payment Unrestricted Subsidiary as a
Restricted Subsidiary, 100% of an amount equal to the
30
Consolidated Net Cash Flow generated by such Subsidiary for the period
(taken as one accounting period) from the beginning of its first
fiscal quarter commencing immediately after the date of its
designation as a Restricted Payment Unrestricted Subsidiary through
such Subsidiary's fiscal quarter ending immediately prior to its
designation as a Restricted Subsidiary (or if such Consolidated Net
Cash Flow for such period is a deficit, 100% of such deficit); plus
(z) 100% of the aggregate net cash proceeds received by the Company
from (i) the issuance or sale of Equity Interests of the Company
(other than such Equity Interests issued or sold to a Restricted
Subsidiary of the Company and other than Redeemable Stock) or (ii) the
sale of the stock of an Unrestricted Subsidiary or the sale of all or
substantially all of the assets of an Unrestricted Subsidiary to the
extent that a liquidating dividend is paid to the Company or any
Restricted Subsidiary from the proceeds of such sale;
provided, however, that for purposes of making Investments in Unrestricted
Subsidiaries, if the amount determined in accordance with clauses (w) or (y)
above is a deficit, such deficit shall be excluded from the computation of this
clause (c); and provided, further, that all such amounts applied pursuant to
this clause (c) shall not be available for application under clause (c) of
Section 4.14 hereof.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) (A) the retirement of any shares of the Company's Capital Stock
(the "Retired Capital Stock") either (1) in exchange for or (2) out of the net
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of other shares of the Company's Capital Stock (the
"Refunding Capital Stock") other than any Redeemable Stock, and (B) if
immediately prior to such retirement of such Retired Capital Stock the
declaration and payment of dividends thereon was permitted under either clause
(iii) or (vii) of this paragraph, the declaration and payment of dividends on
the Refunding Capital Stock in an aggregate amount per year no greater than the
aggregate amount of dividends per year that was declarable and payable on such
Retired Capital Stock immediately prior to such retirement; (iii) the
declaration and payment of dividends to the holders of the Senior Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock; (iv) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company issued to present and former
members of management of the Company and its Subsidiaries pursuant to
subscription and option agreements in effect on the date hereof and Equity
Interests of the Company issued to future members of management pursuant to
subscription agreements executed subsequent to the date hereof, containing
provisions for the repurchase of such Equity Interests upon death, disability or
termination of employment of such persons which are substantially identical to
those contained in the subscription agreements in effect on the date hereof;
(v) the declaration and payment of dividends on the Company's Common Stock, of
up to 6% per annum of the net proceeds received at any time by the Company in
any public offering; (vi) the repurchase, redemption or other acquisition or
retirement for value of Indebtedness of the Company which is subordinated in
right of payment to the Securities either (A) in exchange for or (B) with the
proceeds of the issuance of, Equity Interests (other than Redeemable Stock) of
the Company; (vii) the declaration and payment of dividends to holders of any
class or series of the Company's preferred stock issued after the date hereof
(including, without limitation, the declaration and payment of dividends on
Refunding Capital Stock in
31
excess of the dividends declarable and payable thereon pursuant to clause
(ii) of this paragraph), provided that at the time of such issuance the
Company's Fixed Charge Coverage Ratio, after giving effect to such issuance,
would be greater than 1.25 to 1; (viii) the redemption, repurchase or other
acquisition or retirement for value of any Indebtedness of the Company which is
subordinated in right of payment to the Securities (A) with the proceeds of, or
in exchange for, Indebtedness incurred pursuant to clause (vii) of the second
paragraph of Section 4.09 hereof or (B) if, after giving effect to such
redemption, repurchase or retirement, the Company could incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.09 hereof (without giving
effect to clauses (i) through (xv) of the second paragraph thereof); (ix) the
retirement of the Senior Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock in exchange for the issuance of the
Exchange Debentures, Class B Subordinated Debentures, Class C Subordinated
Debentures and Class D Subordinated Debentures, respectively, pursuant to the
respective Certificates of Designations relating thereto and (x) the purchase of
Exchange Debentures, Class B Subordinated Debentures, Class C Subordinated
Debentures and Class D Subordinated Debentures in accordance with the Change of
Control Covenants in the Exchange Debenture Indenture, Class B Debenture
Indenture, Class C Debenture Indenture and Class D Subordinated Debenture
Indenture, respectively; provided that in determining the aggregate amount
expended for Restricted Payments in accordance with paragraph (c) above, (1) no
amounts expended under clauses (ii)(A)(1), (vi)(A), (viii) and (ix) of this
paragraph shall be included, (2) 100% of the amounts expended under clauses
(ii)(A)(2), (iv), (v), (vi)(B), (vii) and (x) of this paragraph shall be
included, (3) 50% of the amounts expended under clause (iii) of this paragraph
shall be included, (4) amounts expended under clause (ii)(B) of this paragraph
shall be included to the extent previously included for the Retired Capital
Stock and (5) 100% of the amounts expended under clause (i) of this paragraph to
the extent not included under subclauses (1) through (4) of this proviso shall
be included.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officer's Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based on the Company's latest available internal financial statements.
SECTION 4.08 DIVIDENDS AND PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock, or any other interest or participation in, or measured by,
its profits, owned by the Company or any of its Restricted Subsidiaries, or pay
any Indebtedness owed to the Company or any of its Restricted Subsidiaries,
(ii) make loans or advances to the Company or any of its Restricted Subsidiaries
or (iii) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of: (A) the terms (as in effect on the date hereof) of the
Existing Indebtedness, (B) the terms (as in effect on the date hereof) of the
Credit Agreements and the Outstanding Notes and Outstanding Note Indentures
(C) the terms of Indebtedness of the Company incurred in accordance with Section
4.09 hereof; provided that such terms of any such Indebtedness constitute no
greater encumbrance or restriction on the ability of any Restricted
32
Subsidiary to pay dividends or make distributions, make loans or advances or
transfer properties or assets than is permitted by this Section 4.08, (D) the
terms of this Indenture and the Securities, (E) applicable law, (F) customary
non-assignment provisions entered into in the ordinary course of business and
consistent with past practices, (G) the terms of purchase money obligations for
property acquired in the ordinary course of business, but only to the extent
that such purchase money obligations restrict or prohibit the transfer of the
property so acquired, (H) the terms of the Exchange Debentures, Exchange
Debenture Indentures, the Class B Subordinated Debentures, the Class B Debenture
Indenture, Class C Subordinated Debentures, the Class C Debenture Indenture, the
Class D Subordinated Debentures and the Class D Subordinated Debenture Indenture
(I) any encumbrance or restriction with respect to a Subsidiary of the Company
that is not a Subsidiary of the Company on the date of this Indenture, which
encumbrance or restriction is in existence at the time such Person becomes a
Subsidiary of the Company or is created on the date it becomes a Subsidiary of
the Company, (J) any encumbrance or restriction with respect to a Subsidiary of
the Company imposed pursuant to an agreement which has been entered into for the
sale or disposition of all or substantially all the Capital Stock or assets of
such Subsidiary, or (K) any encumbrance or restriction existing under any
agreement which refinances or replaces the agreements described in clauses (A),
(B), (D) and (H), provided that the terms and conditions of any such
encumbrances or restrictions contained in any such agreement constitute no
greater encumbrance or restriction on the ability of any Restricted Subsidiary
to pay dividends or make distributions, make loans or advances or transfer
properties or assets than those under or pursuant to the agreement evidencing
the Indebtedness or obligations refinanced. Nothing contained in this
Section 4.08 shall prevent the Company or a Restricted Subsidiary from entering
into any agreement permitting or providing for the incurrence of Liens otherwise
permitted by Section 4.13 hereof.
SECTION 4.09 INCURRENCE OF INDEBTEDNESS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness unless the Company's Debt to Consolidated Cash Flow Ratio for its
four full fiscal quarters ending immediately prior to the date such additional
Indebtedness is created, incurred, issued, assumed or guaranteed would have been
no greater than 6 to 1, and such Indebtedness is not senior in right of payment
to the Securities; provided that such calculation shall give effect to (A) the
incurrence of any Indebtedness (after giving effect to the application of the
proceeds thereof) in connection with the simultaneous acquisition of any person,
business, property or assets and (B) the Consolidated Cash Flow generated by
such acquired person, business, property or assets, giving effect in each case
to such incurrence of Indebtedness, application of proceeds and Consolidated
Cash Flow as if such acquisition had occurred at the beginning of such four
quarter period. For purposes of the foregoing provision, cash flow generated by
any acquired person, business, property or asset shall be determined on the same
basis as the definition of Consolidated Cash Flow and shall be based on the
actual earnings before interest, taxes, depreciation and amortization of such
acquired person, business, property or asset during the immediately preceding
four full fiscal quarters plus (y) (i) the savings in cost of goods sold that
would have resulted during that period from the effect of using the Company's
actual costs for comparable goods and services during that period and (ii) other
savings in cost of goods sold or eliminations of selling, general and
administrative expenses as determined by the Company in good faith in its
consideration of such acquisitions and consistent with the Company's experiences
in acquisitions of similar businesses minus (z) the incremental expenses that
would be included in cost of goods sold and selling, general and administrative
33
expenses that would have been incurred by the Company in the operation of such
acquired person, business, property or assets during such period.
The foregoing limitations shall not apply to the incurrence of
(i) Indebtedness pursuant to the Credit Agreements (provided that the principal
amount of such Indebtedness shall not exceed $1,250 million, less the amount of
all repayments made in respect of term loans and of all permanent commitment
reductions with respect to revolving loans (except to the extent, and only to
the extent, that any required repayments of principal in connection with such
commitment reduction are not made) made under the Credit Agreements (excluding
such repayments and commitment reductions which occur substantially
contemporaneously with a refinancing or a refunding thereof)), plus any amounts
then available under clause (vi) of this paragraph; (ii) Existing Indebtedness;
(iii) Indebtedness represented by the Outstanding Notes; (iv) Indebtedness
represented by the Exchange Debentures issued upon the exchange for of all
outstanding Senior Preferred Stock, Class B Subordinated Debentures issued in
exchange for all outstanding Series B Preferred Stock, the Class C Subordinated
Debentures issued in exchange for all the Outstanding Series C Preferred Stock
and the Class D Subordinated Debentures issued in exhange for all the
Outstanding Series D Preferred Stock; (v) Capital Lease Obligations at any one
time outstanding not in excess of $75 million; (vi) Indebtedness in an aggregate
principal amount equal to the greater of (A) $150 million in the aggregate at
any one time outstanding for the Company and its Restricted Subsidiaries or
(B) Indebtedness created, incurred, issued, assumed or guaranteed (x) by the
Company at any one time outstanding not in excess of 7% of the Consolidated Net
Worth of the Company at the time of such creation, incurrence, issuance,
assumption or guarantee or (y) by any Restricted Subsidiary of the Company at
any one time outstanding not in excess of 7% of the Consolidated Net Worth of
such Restricted Subsidiary at the time of such creation, incurrence, issuance,
assumption or guarantee; (vii) Indebtedness created, incurred, issued, assumed
or guaranteed in exchange for or the proceeds of which are used to extend,
refinance, renew, replace, substitute or refund Indebtedness referred to in
clauses (i) through (vi) above (the "Refinancing Indebtedness"); provided, that
(A) the principal amount of such Refinancing Indebtedness shall not exceed the
principal amount of Indebtedness (including unused commitments) so extended,
refinanced, renewed, replaced, substituted or refunded plus any amounts then
available under clause (vi) of this paragraph, (B) in the case of Refinancing
Indebtedness for Indebtedness permitted under clauses (ii) and (iv) of this
paragraph, the Refinancing Indebtedness permitted under clauses (ii) and (iv) of
this paragraph shall have an Average Life equal to or greater than the Average
Life of the Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded and (C) the Refinancing Indebtedness for Indebtedness
permitted under clauses (ii) and (iv) of this paragraph shall rank, in right of
payment, no more senior than such Indebtedness being extended, refinanced,
renewed, replaced, substituted or refunded and the Refinancing Indebtedness for
Indebtedness permitted under clauses (i), (iii), (v) and (vi) of this paragraph
shall rank, in right of payment, pari passu with or junior to the Securities;
(viii) intercompany Indebtedness incurred in connection with Investments in
Unrestricted Subsidiaries; provided that such Investments are permitted by
Section 4.07 or Section 4.14 hereof; (ix) Indebtedness under Currency Agreements
and Interest Rate Agreements, provided that in the case of Currency Agreements
which relate to other Indebtedness, such
34
Currency Agreements do not increase the Indebtedness of the Company outstanding
other than as a result of fluctuations in foreign currency exchange rates;
(x) Indebtedness arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from guarantees or
letters of credit, surety bonds or performance bonds securing any obligations of
the Company or any Restricted Subsidiary of the Company pursuant to such
agreements, incurred or assumed by the acquired Subsidiary in connection with
the acquisition or disposition of any business, assets or Restricted Subsidiary
of the Company, other than guarantees or similar credit support by the Company
of Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of all
such Indebtedness in the nature of such guarantees shall at no time exceed the
gross proceeds actually received from the sale of such business, assets or
Restricted Subsidiary; (xi) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts, which will not be, and
will not be deemed to be, inadvertent) drawn against insufficient funds in the
ordinary course of business, provided that such Indebtedness is extinguished
within three Business Days of its incurrence; (xii) Indebtedness of an entity at
the time it is acquired as a Restricted Subsidiary, provided that such
Indebtedness was not incurred or assumed by such entity in connection with or in
anticipation of such acquisition; (xiii) Indebtedness between the Company and
any Restricted Subsidiary; (xiv) Non-Compete Notes, not to exceed $50 million in
aggregate principal amount less the amount of all principal repayments made in
respect thereof; and (xv) the Company's Obligations arising from the repurchase,
redemption or other acquisitions of Capital Stock from management investors to
the extent permitted by Section 4.07 hereof. For the purposes of determining
the aggregate Indebtedness of any referent Person, Indebtedness shall not
include guarantees by any other Person of such Indebtedness.
SECTION 4.10 CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall have
the right to require the repurchase of such Holder's Securities pursuant to the
offer described below (the "Change of Control Offer") at a purchase price equal
to 101% of the aggregate principal amount of such Securities plus accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"). Within 40 days following any Change of Control, the Company shall
mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.10 and that all Securities tendered will be accepted for
payment;
(2) the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 40 days from the date such notice
is mailed (the "Change of Control Payment Date");
(3) that any Security not tendered will continue to accrue
interest;
35
(4) that, unless the Company defaults in the payment of the
Change of Control Payment, all Securities accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders electing to have any Securities purchased
pursuant to a Change of Control Offer will be required to surrender
the Securities, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying
Agent at the address specified in the notice prior to the close of
business on the Business Day preceding the Change of Control Payment
Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities delivered
for purchase, and a statement that such Holder is withdrawing his
election to have such Securities purchased; and
(7) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; provided that each
Holder shall tender Securities, and each Security purchased and each
such new Security issued by the Company shall be in a principal amount
of $1,000 or integral multiples thereof.
The Change of Control Offer shall be deemed to have commenced upon
mailing of notice described in this paragraph and shall terminate 20 Business
Days after its commencement, unless a longer offering period is required by law.
If the Change of Control Payment Date is on or after an interest payment record
date and on or before the related interest payment date, any accrued interest
will be paid to the person in whose name a Security is registered at the close
of business on such record date, and no additional interest will be payable to
Holders who tender Securities pursuant to the Change of Control Offer.
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Securities or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee, the Securities so accepted together with an Officers' Certificate
stating the Securities or portions thereof were tendered to the Company. The
Paying Agent shall promptly mail to each Holder of Securities so accepted,
payment in an amount equal to the purchase price for such Securities, and the
Trustee shall promptly authenticate and mail to such Holder a new Security equal
in principal amount to any unpurchased portion of the Securities surrendered;
provided that each such new Security shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
36
SECTION 4.11 LIMITATIONS ON ASSET SALES
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, consummate an Asset Sale (including the
sale of any of the stock of any Subsidiary) unless at least 100% of the Net
Proceeds from such Asset Sale are applied first to repay Obligations or reduce
commitments under the Credit Agreements in accordance with the terms thereof,
second to offer to redeem at par the Outstanding Notes and third to offer to
redeem at par the Securities. The foregoing application of Net Proceeds from
Asset Sales is not required in the case of (i) sales or dispositions generating
cash proceeds of less than, with respect to the Company and Restricted
Subsidiaries, $2.5 million and (ii) sales and dispositions as to which the
Company delivers a reinvestment notice and the proceeds are so reinvested in one
or more communications, publishing, information, education or media assets or
businesses within twelve months of the date the relevant Asset Sale is
consummated. Notwithstanding the foregoing provisions of this Section 4.11,
neither the Company nor its Subsidiaries shall be required to apply the Net
Proceeds from any Asset Sale (i) to the extent that the aggregate Net Proceeds
from such Asset Sale, together with the Net Proceeds, if any, of any other Asset
Sale which have not been previously applied, are less than $25 million or
(ii) to the extent that, and for so long as, such Net Proceeds cannot be so
applied as a result of an encumbrance or restriction permitted pursuant to
Section 4.13 hereof.
(b) At least 15 days prior to the Company's mailing of a notice of
a Net Proceeds Offer, the Company shall notify the Trustee of the Company's
obligation to make such Net Proceeds Offer. Notice of a Net Proceeds Offer
shall be mailed by the Company not less than 30 Business Days nor more than 40
days before the Net Proceeds Payment Date to the Holders of the Securities at
their last registered addresses with a copy to the Trustee and the Paying Agent.
The Net Proceeds Offer shall remain open from the time of mailing until the
close of business on the Business Day prior to the Net Proceeds Payment Date.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Net Proceeds Offer. The notice,
which shall govern the terms of the Net Proceeds Offer, shall state:
(1) that the Net Proceeds Offer is being made pursuant to this
Section 4.11 and that the Securities will be accepted for payment
on a pro rata basis (rounded down to the nearest $1,000), if
necessary;
(2) the Purchase Price and the Net Proceeds Payment Date;
(3) that any Security not tendered or accepted for payment
will continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net
Proceeds Payment Date;
(5) that each Holder of a Security electing to have such
Security purchased pursuant to a Net Proceeds Offer will be
required to surrender the Security, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Security
37
completed, to the Trustee at the address specified in the notice
prior to the close of business on the Business Day prior to the Net
Proceeds Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Trustee receives, not later than the close of business on
the fifth Business Day next preceding the Net Proceeds Payment
Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Securities
the Holder delivered for purchase and a statement that such Holder
is withdrawing his election to have such Securities purchased; and
(7) that Holders whose Securities are purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
The Trustee shall notify the Company at the opening of business on
the Net Proceeds Payment Date as to the principal amount of each of the
Securities or portions thereof which have been surrendered to the Trustee in
connection with the Net Proceeds Offer. On the Net Proceeds Payment Date, the
Company shall (i) accept for payment on a pro rata basis (if necessary)
Securities or portions thereof tendered pursuant to the Net Proceeds Offer,
(ii) deposit with the Paying Agent money sufficient to pay the purchase price of
all Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee all Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company and any other information that the Trustee may reasonably request in
order to make the payments required to be made on the Net Proceeds Payment Date.
The Paying Agent shall promptly mail to Holders of Securities so accepted,
payment in an amount equal to the Purchase Price, and the Trustee shall promptly
authenticate and mail to such Holders a new Security equal in principal amount
to any unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed by the Trustee to the Holder thereof. The
Company will publicly announce the results of the Net Proceeds Offer on or as
soon as practicable after the Net Proceeds Payment Date. For purposes of this
Section 4.11, the Trustee shall act as the Paying Agent.
SECTION 4.12 TRANSACTIONS WITH AFFILIATES
Neither the Company nor any of its Restricted Subsidiaries shall
make any loan, advance, guarantee or capital contribution to, or for the benefit
of, or sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or for the benefit of, or purchase or lease any property or assets
from, or enter into or amend any contract, agreement or understanding with, or
for the benefit of, (i) any Person (or any Affiliate of such Person) holding 10%
or more of any class of Capital Stock of the Company or any of its Restricted
Subsidiaries or (ii) any Affiliate of the Company or any of its Restricted
Subsidiaries (each an "Affiliate Transaction"), except on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary, as the case may
be, than those that could have been obtained in a comparable transaction on an
arm's length basis from a Person that is not such a holder or Affiliate;
provided that a transaction with any such holder (or Affiliate thereof) or any
Affiliate of the Company or any of its Restricted Subsidiaries shall be deemed
to be on terms that are no less favorable to the Company or such
38
Restricted Subsidiary than those obtainable at the time of the transaction from
a Person who is not such a holder or Affiliate if (a) the Company or such
Restricted Subsidiary delivers to the Trustee a written opinion of a nationally
recognized investment banking firm stating that the transaction is fair to the
Company or such Restricted Subsidiary from a financial point of view or (b) a
disinterested majority of the Board of Directors of the Company or such
Restricted Subsidiary approves the transaction; and provided, further, that, the
foregoing restriction shall not apply to (i) the payment of an annual fee to KKR
for the rendering of management consulting and financial services to the Company
and its Restricted Subsidiaries in an aggregate amount which is reasonable in
relation thereto, (ii) the payment of transaction fees to KKR in amounts which
are in accordance with past practices for the rendering of financial advice and
services in connection with acquisitions, dispositions and financings by the
Company and its Subsidiaries, (iii) the payment of reasonable and customary
regular fees to directors of the Company and its Subsidiaries who are not
employees of the Company or its Restricted Subsidiaries, (iv) loans to officers,
directors and employees of the Company and its Subsidiaries for business or
personal purposes and other loans and advances to such officers, directors and
employees for travel, entertainment, moving and other relocation expenses made
in the ordinary course of business of the Company and its Subsidiaries, (v) any
Restricted Payments not prohibited by Section 4.07 hereof or any Investment not
prohibited by Section 4.14 hereof, (vi) transactions between or among any of the
Company and its Restricted Subsidiaries or (vii) allocation of corporate
overhead to Unrestricted Subsidiaries on a basis no less favorable to the
Company than such allocations to Restricted Subsidiaries.
SECTION 4.13 LIMITATIONS ON LIENS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) on any of its assets or any income
or profits therefrom or assign or convey any right to receive income therefrom
unless the Securities are equally and ratably secured.
SECTION 4.14 INVESTMENTS IN UNRESTRICTED SUBSIDIARIES
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any Investment in any Unrestricted
Subsidiary, if at the time of such Investment:
(a) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof; or
(b) immediately before such Investment, the Company would not be
permitted to incur at least $1.00 of Indebtedness pursuant to the
first paragraph of Section 4.09 (without giving effect to clauses (i)
through (xv) of the second paragraph thereof), which calculation shall
be made on a pro forma basis deducting from Adjusted Consolidated Net
Income the amount of any Investment the Company has made in an
Unrestricted Subsidiary during the relevant period and any Investment
the Company intends to make in an Unrestricted Subsidiary, to the
extent that such Investment is made with amounts included in Adjusted
Consolidated Net Income as a result of Transfers described in clause
(c)(x) of Section 4.07 hereof or clause (c)(y) of this Section 4.14;
or
39
(c) such Investment, together with the aggregate of all other
Investments in Unrestricted Subsidiaries made after May 13, 1992,
exceeds (w) the aggregate Consolidated Net Cash Flow of the Company
for the period (taken as one accounting period) from the beginning of
the first quarter immediately after May 13, 1992 to the end of the
Company's most recently ended fiscal quarter at the time of such
Investment; plus (x) 100% of the aggregate net cash proceeds received
by the Company from (i) the issue or sale of Equity Interests of the
Company (other than such Equity Interests issued or sold to a
Restricted Subsidiary of the Company and other than Redeemable Stock)
or (ii) the sale of the stock of an Unrestricted Subsidiary or the
sale of all or substantially all of the assets of an Unrestricted
Subsidiary to the extent that a liquidating dividend is paid to the
Company or any Restricted Subsidiary from the proceeds of such sale;
plus (y) 100% of the amount of all Transfers from a Net Cash Flow
Unrestricted Subsidiary up to the aggregate Investment (after taking
into account all prior Transfers from such Net Cash Flow Unrestricted
Subsidiary) in such Net Cash Flow Unrestricted Subsidiary resulting
from such payments or transfers of assets (valued in each case as
provided in the definition of "Investment"); plus (z) in the event of
a designation of an Unrestricted Subsidiary as a Restricted
Subsidiary, 100% of an amount equal to the Consolidated Net Cash Flow
generated by such Subsidiary for the period (taken as one accounting
period) from the beginning of its first fiscal quarter commencing
immediately after the date of its designation as an Unrestricted
Subsidiary through such Subsidiary's fiscal quarter ending immediately
prior to its designation as a Restricted Subsidiary (or if such
Consolidated Net Cash Flow for such period is a deficit, 100% of such
deficit);
provided, that all such amounts applied pursuant to this clause (c) shall not be
available for application under clause (c) of Section 4.07 hereof.
The foregoing limitations shall not apply to an Investment to the
extent that it is (i) to capitalize a Restricted Payment Unrestricted Subsidiary
permitted pursuant to Section 4.07 hereof.
Not later than the date of making any Investment described above,
the Company shall deliver to the Trustee an Officer's Certificate stating that
such Investment is permitted (including, without limitation, whether such
Investment is capitalizing a Net Cash Flow Unrestricted Subsidiary or a
Restricted Payment Unrestricted Subsidiary) and setting forth the basis upon
which the calculations required by this Section 4.14 were computed, which
calculations may be based on the Company's latest available internal financial
statements.
SECTION 4.15 PAYMENTS FOR CONSENT
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Securities which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
40
SECTION 4.16 CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Restricted Subsidiary in accordance with the respective organizational documents
of each Restricted Subsidiary and the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Restricted Subsidiary,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Restricted Subsidiaries taken as a whole and that the loss thereof is not
adverse in any material respect to the Holders.
SECTION 4.17 SUBSIDIARY OWNERSHIP.
All Restricted Subsidiaries and all Net Cash Flow Unrestricted
Subsidiaries shall at all times remain wholly-owned, directly or indirectly, by
the Company or a Restricted Subsidiary except if sold, leased, conveyed,
disposed of or transferred in accordance with Section 4.11 hereof.
SECTION 4.18 RULE 144A INFORMATION REQUIREMENT.
The Company will furnish to the Holders or beneficial holders of
the Securities and prospective purchasers of the Securities designated by the
holders of Transfer Restricted Securities, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act
until such time as the Company consummates the Exchange Offer or has registered
the Securities for resale under the Securities Act.
ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Company may not consolidate with, merge with or into, or
transfer all or substantially all of its assets (as an entirety or substantially
as an entirety in one transaction or a series of related transactions), to any
Person (except a Restricted Subsidiary with a positive Consolidated Net Worth,
provided that in connection with any merger of the Company with a Restricted
Subsidiary of the Company, no consideration (other than common stock in the
surviving corporation or the Company) shall be issued or distributed to the
shareholders of the Company) or permit any person to merge with or into it
unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or to which the properties and assets of the Company are transferred
(collectively, the "Successor") shall be a corporation organized and existing
under the laws of the United States or any State thereof or the
41
District of Columbia and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
of the obligations of the Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction, no
Default and no Event of Default under this Indenture shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of the surviving entity is at least
equal to the Consolidated Net Worth of the Company immediately prior to such
transaction; and
(iv) immediately after giving effect to such transaction on a pro
forma basis, the Fixed Charge Coverage Ratio of the surviving entity is at least
1:1; provided that if the Fixed Charge Coverage Ratio of the Company before
giving effect to such transaction is within the range set forth in column
(A) below, then the pro forma Fixed Charge Coverage Ratio of the surviving
entity shall be at least equal to the lesser of (x) the ratio determined by
multiplying the percentage set forth in Column B by the Fixed Charge Coverage
Ratio of the Company prior to such transaction, and (y) the ratio set forth in
Column C below:
(A) (B) (C)
--- --- -----
1.11:1 to 1.99:1 . . . . . . . . . . . . . . 90% 1.5:1
2.00:1 to 2.99:1 . . . . . . . . . . . . . . 80% 2.1:1
3.00:1 to 3.99:1 . . . . . . . . . . . . . . 70% 2.4:1
4.00:1 or more . . . . . . . . . . . . . . . 60% 2.5:1
and provided, further, that if the pro forma fixed Charge Coverage Ratio of the
surviving entity is 3:1 or more, the calculation in the preceding provisio shall
be inapplicable and such transaction shall be deemed to have complied with the
requirements of clause (iv) of this Section 5.01.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company or
any assignment of its obligations under this Indenture or the Securities in
accordance with Section 5.01 hereof, the Successor formed by such consolidation
or into or with which the Company is merged or to which such sale, lease,
conveyance or other disposition or assignment is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such Successor has been named as the
Company herein and the predecessor Company, in the case of a sale, lease,
conveyance or other disposition or assignment, shall be released from all
obligations under this Indenture and the Securities.
42
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT
Each of the following constitutes an "Event of Default":
(1) the Company fails to make any payment of interest on any
Security when the same shall become due and payable and the Default
continues for a period of 30 days;
(2) the Company fails to make any payment of the principal or
premium of any Security when the same shall become due and payable at
maturity, or upon acceleration, redemption or otherwise;
(3) the Company fails to comply with any of its other agreements
or covenants in, or provisions of, the Securities or this Indenture
and such failure continues for the period and after the notice
specified below;
(4) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of
its Restricted Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee is now existing or thereafter created in the
future, if either (A) such default is the failure to pay the final
scheduled principal installment in an amount of at least $10 million
in respect of any such Indebtedness on the stated maturity date
thereof (after giving effect to any extension of such maturity date by
the holder of such Indebtedness and after the expiration of any grace
period in respect of such final scheduled principal installment
contained in the instrument under which such Indebtedness is
outstanding) or (B) as a result of such default the maturity of such
Indebtedness has been accelerated prior to its express maturity and
the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness the maturity of which has been
accelerated, aggregates $20 million or more; provided that an Event of
Default shall not be deemed to occur with respect to any accelerated
Indebtedness which is repaid or prepaid within 20 days after such
declaration;
(5) a final judgment that exceeds $15 million individually, or
final judgments that exceed $25 million in the aggregate, for the
payment of money are entered by a court or courts of competent
jurisdiction against the Company, or any of its Restricted
Subsidiaries and such judgment or judgments shall not be discharged,
satisfied, stayed, annulled or rescinded within 60 days of being
entered;
(6) the Company or any of the Restricted Subsidiaries pursuant to
or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
43
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(d) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company, or any of its
Restricted Subsidiaries as debtor in an involuntary case,
(b) appoints a Custodian of the Company, or any of its
Restricted Subsidiaries or a Custodian for all or
substantially all of the property of the Company, or any
of its Restricted Subsidiaries, or
(c) orders the liquidation of the Company, or any of its
Restricted Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days.
(8) except as permitted by this Indenture and the Securities, the
Guarantees shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full
force and effect with respect to any Guarantor or any Guarantor shall
deny or disaffirm its obligations under its Guarantee.
The Company is required, pursuant to Section 4.04(a) hereof, to
deliver to the Trustee annually a statement regarding compliance with this
Indenture, and the Company is required, pursuant to Section 4.04(c) hereof, upon
becoming aware of any Default or Event of Default to deliver a statement to the
Trustee specifying such Default or Event of Default. The Trustee shall not be
deemed to know of a Default unless a Responsible Officer has actual knowledge of
such Default or receives written notice of such Default with specific reference
to such Default.
In the case of any Event of Default pursuant to the provisions of
this Section 6.01 occurring by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium, if any, which the Company would have had to pay if the
Company then had elected to redeem the Securities pursuant to Section 3.07
hereof, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law, anything in this Indenture or in the
Securities contained to the contrary notwithstanding.
A Default under clause (3) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the then outstanding Securities notify the Company and the Trustee, in
writing, of the Default and the Company does not cure the Default within 30 days
after receipt of the notice. The notice must specify the Default, demand that
it be remedied and state that the notice is a "Notice of Default."
44
SECTION 6.02 ACCELERATION
If an Event of Default (other than an Event of Default with respect
to the Company specified in clauses (6) or (7) of Section 6.01 hereof) occurs
and is continuing, the Trustee by written notice to the Company, or the Holders
of at least 25% in principal amount of the then outstanding Securities by
written notice to the Company and the Trustee, may and the Trustee at the
request of such Holders shall, declare all unpaid principal of, premium and
Liquidated Damages, if any, and accrued interest on the Securities to be due and
payable immediately. Upon such declaration of acceleration such principal of,
premium and Liquidated Damages, if any, and accrued interest, due and payable on
the Securities, as determined in the next succeeding paragraph, shall be due and
payable immediately. If an Event of Default with respect to the Company
specified in clause (6) or (7) of Section 6.01 hereof occurs, all unpaid
principal of, premium and Liquidated Damages, if any, and accrued interest on
the Securities then outstanding shall ipso facto become and be immediately due
and payable without any declaration, notice or other act on the part of the
Trustee or any Holder. The Holders of at least 51% in aggregate principal
amount of the then outstanding Securities by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, premium and Liquidated Damages, if any, or
interest on the Securities that has become due solely as a result of such
acceleration) have been cured or waived.
In the event that the maturity of the Securities is accelerated
pursuant to this Section 6.02, 100% of the principal amount thereof and premium
or Liquidated Damages, if any, plus accrued interest to the date of payment
shall become due and payable.
SECTION 6.03 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium and
Liquidated Damages, if any, or interest then due on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS
The Holders of at least 51% in principal amount of the then
outstanding Securities by notice to the Trustee may waive an existing Default or
Event of Default and its consequences (including waivers obtained in connection
with a tender offer or exchange offer for Securities), except a continuing
Default or Event of Default (i) in the payment of the principal of, premium or
Liquidated Damages, if any, or interest on any Security (including, without
limitation, pursuant to any mandatory or optional redemption obligation
hereunder) or (ii) that resulted from the
45
failure to comply with Section 4.10 or 4.11 hereof. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY
The Holders of a majority in principal amount of the then
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Holders, or that may involve the
Trustee in personal liability.
SECTION 6.06 LIMITATIONS ON SUITS
A Holder may not pursue a remedy with respect to this Indenture,
the Securities or any Guarantee unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense
(including, without limitation, fees and expenses of counsel);
(4) the Trustee does not comply with the request within 30 days
after receipt of the request and the offer of indemnity; and
(5) during such 30-day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction which is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of principal of, premium and
Liquidated Damages, if any, and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
46
SECTION 6.08 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01(1) or (2) or
(3) (with respect to the Company's obligations under Section 4.10 or 4.11
hereof) hereof occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against the Company
or any Guarantor for the amount of principal, premium, if any, and interest
remaining unpaid on the Securities, determined in accordance with Section 6.02
hereof and interest on overdue principal, premium and Liquidated Damages, if
any, and, to the extent lawful, interest, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the Holders of the Securities may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07 hereof;
Second: to Holders for amounts due and unpaid on the Securities
for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any
47
kind, according to the amounts due and payable on the Securities for
principal, premium, if any, and interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment
to Holders pursuant to this Article 6.
SECTION 6.11 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.
ARTICLE 7
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE
(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in such exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(2) Except during the continuance of an Event of Default:
(a) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee pursuant to and conforming to the
requirements of this Indenture. However, the Trustee shall examine
the certificates and opinions to determine whether or not, on their
face, they appear to conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
48
(a) this paragraph does not limit the effect of paragraph (2)
of this Section 7.01;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or other officer,
unless it is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 6.02 or 6.05 hereof.
(4) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (1), (2), (3) and (5) of this Section 7.01.
(5) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee is not
obligated to perform any duty or exercise any right or power under this
Indenture at the request of the Holders of the Securities unless it receives an
offer from such Holders of security and indemnity satisfactory to it against any
loss, liability or expense (including, without limitation, fees of counsel).
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02 RIGHTS OF TRUSTEE
(1) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require receipt of an Officers' Certificate or an Opinion of Counsel or both.
The Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the advice of such counsel (to be promptly
confirmed in writing) or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder and in reliance thereon.
(3) The Trustee may act through agents, attorneys, custodians and
nominees and shall not be responsible for the misconduct or negligence of any
such agent, attorney, custodian or nominee appointed with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
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(5) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any of
its Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11 hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities or any money paid to the
Company or upon the Company's direction under any provision hereof, it shall not
be responsible for the use or application of any money received by any Paying
Agent other than the Trustee and it shall not be responsible for any statement
or recital herein or any statement in the Securities other than its certificate
of authentication.
SECTION 7.05 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it
is actually known to a Responsible Officer of the Trustee, the Trustee shall
mail to each Holder a notice of the Default or Event of Default within 90 days
after it occurs or, if later, within ten days after such Default or Event of
Default becomes so known to the Trustee unless such Default or Event of Default
has been cured. Except in the case of a Default or Event of Default in payment
of principal of, premium and Liquidated Damages, if any, or interest on any
Security or that resulted from a failure to comply with Section 4.10 or 4.11
hereof, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers determines in good faith that withholding the notice is in
the interests of the Holders.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS
Within 60 days after each June 1 beginning with June 1, 1996, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with TIA Sec. 313(a) (but if no event described in TIA Sec. 313(a)
has occurred within the twelve months preceding the reporting date, no report
need be transmitted). The Trustee also shall comply with TIA Sec. 313(b).
The Trustee also shall transmit by mail all reports as required by TIA Sec.
313(c).
A copy of each report at the time of its mailing to Holders shall
be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
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SECTION 7.07 COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law relating to compensation
of a trustee of an express trust. The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and expenses
incurred by it. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee and its
directors, officers, employees and agents against any loss, liability or expense
(including without limitation fees and expenses of counsel) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture including, without limitation, costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of its powers and duties hereunder, except as set forth in the
next paragraph. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal of,
premium and Liquidated Damages, if any, and interest on particular Securities.
Such Lien shall survive the satisfaction and discharge of the Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08 REPLACEMENT OF TRUSTEE
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company. The Holders of a majority in principal
amount of the then outstanding Securities may remove the Trustee by so notifying
the Trustee and the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under
any Bankruptcy Law;
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(3) a Custodian or public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
The foregoing notwithstanding, a resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in this Section 7.08,
and thereafter the Trustee shall have no liability for any acts or omissions of
any successor Trustee.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
Subject to Section 7.10 hereof, if the Trustee consolidates, merges
or converts into, or transfers all or substantially all of its corporate trust
business to, another corporation or national banking association, the successor
entity without any further act shall be the successor Trustee. In case any
Securities have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation of such
authenticating trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor trustee had itself
authenticated such Securities.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia authorized under such
laws to exercise corporate trust powers, shall be subject to supervision or
examination by Federal or state (or the District of Columbia) authority
52
and shall have a combined capital and surplus of at least $50 million as set
forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sec. 310(a)(1). The Trustee is subject to TIA Sec. 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee is subject to TIA Sec. 311(a), excluding any creditor
relationship listed in TIA Sec. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Sec. 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01 TERMINATION OF COMPANY'S AND GUARANTORS' OBLIGATIONS
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.07 hereof and the Trustee's and Paying
Agent's obligations under Section 8.03 hereof shall survive) when all
outstanding Securities theretofore authenticated and issued have been delivered
(other than destroyed, lost or stolen Securities that have been replaced or
paid) to the Trustee for cancellation and the Company has paid all sums payable
hereunder. In addition, the Company may terminate all of its obligations under
this Indenture if:
(1) the Company irrevocably deposits, or causes to be deposited,
in trust with the Trustee or the Paying Agent, or, at the option of
the Trustee, with a trustee satisfactory to the Trustee and the
Company under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, money or U.S. Government
Obligations in an amount sufficient (without reinvestment thereof) to
pay principal and interest on the Securities to maturity or
redemption, as the case may be, as such amounts become due, and to pay
all other sums payable by it hereunder; provided that (i) the trustee
of the irrevocable trust shall have been irrevocably instructed to pay
such money or the proceeds of such U.S. Government Obligations to the
Trustee and (ii) the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations
to the payment of said principal, premium and Liquidated Damages, if
any, and interest with respect to the Securities;
(2) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to satisfaction and discharge of
this Indenture have been complied with, and an Opinion of Counsel to
the same effect;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit; and
53
(4) the Company shall have delivered to the Trustee an Opinion of
Counsel from nationally recognized counsel acceptable to the Trustee
or a tax ruling from the Internal Revenue Service to the effect that
the Holders of the Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of the Company's exercise
of its option under this Section 8.01 and will be subject to Federal
income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been
exercised.
In such event, this Indenture shall cease to be of further effect (except as
provided in the next succeeding paragraph), and the Trustee, on demand of the
Company, shall execute proper instruments acknowledging confirmation of and
discharge under this Indenture.
However, the Company's and the Guarantors' obligations in Sections
2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.06, 7.07, 7.08 and 8.04 hereof and the
Company's, the Guarantors', the Trustee's and Paying Agent's obligations in
Section 8.03 hereof, and the Trustee's rights under Article 7 hereof, shall
survive until the Securities are no longer outstanding. Thereafter, only the
Company's obligations in Section 7.07 hereof and the Trustee's and Paying
Agent's obligations in Section 8.03 hereof shall survive.
After such irrevocable deposit made pursuant to this Section 8.01
and satisfaction of the other conditions set forth herein, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal
or interest on the Securities, the U.S. Government Obligations shall be payable
as to principal or interest on or before such payment date in such amounts as
will provide the necessary money. U.S. Government Obligations shall not be
callable at the issuer's option.
SECTION 8.02 APPLICATION OF TRUST MONEY
The Trustee or a trustee satisfactory to the Trustee and the
Company shall hold in trust money or U.S. Government Obligations deposited with
it pursuant to Section 8.01 hereof. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on
the Securities.
SECTION 8.03 REPAYMENT TO COMPANY
The Trustee and the Paying Agent shall promptly pay to the Company
upon written request any excess money or securities held by them at any time,
provided that nothing remains owed to the Trustee pursuant to this Indenture.
The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal or interest
that remains unclaimed for two years after the date upon which such payment
shall have become due; provided that the Company shall
54
have either caused notice of such payment to be mailed to each Holder entitled
thereto no less than 30 days prior to such repayment or within such period shall
have published such notice in a financial newspaper of widespread circulation
published in The City of New York. After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
SECTION 8.04 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.01 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 hereof until such time as the Trustee or Paying Agent is permitted
to apply all such money or U.S. Government Obligations in accordance with
Section 8.01 hereof; provided, that if the Company has made any payment of
interest on or principal of any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01 WITHOUT CONSENT OF HOLDERS
The Company and the Trustee may amend this Indenture, the
Securities or the Guarantee or waive any provision hereof or thereof without the
consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(3) to comply with Section 5.01 hereof;
(4) to make any change that would provide any additional rights
or benefits to the Holders or that does not adversely affect
the rights hereunder of any Holder; or
(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors authorizing the execution of any such supplemental indenture,
and upon receipt by the Trustee of the documents described in Section 9.06
hereof, the Trustee shall join with the
55
Company in the execution of any supplemental indenture authorized or permitted
by the terms of this Indenture and make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into any supplemental indenture that, in its reasonable
discretion, affects its own rights, duties or immunities under this Indenture or
otherwise. After an amendment or waiver under this Section 9.01 becomes
effective, the Company shall mail to the Holders of each Security affected
thereby a notice briefly describing the amendment or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 9.02 WITH CONSENT OF HOLDERS
Except as provided below in this Section 9.02, this Indenture, the
Securities or the Guarantee may be amended or supplemented, with the written
consent of the Holders of at least 51% in principal amount of the then
outstanding Securities (including consents obtained in connection with a tender
offer or exchange offer for Securities).
Upon the request of the Company, accompanied by a resolution of the
Board of Directors authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence of the consent of the Holders
as aforesaid, and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company in the execution of
such supplemental indenture unless, in the Trustee's reasonable discretion, such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
The Holders of at least 51% in principal amount of the Securities
then outstanding may waive compliance in a particular instance by the Company
with any provision of this Indenture or the Securities (including waivers
obtained in connection with a tender offer for Securities) or any existing
default. However, without the consent of each Holder affected, an amendment or
waiver under this Section may not (with respect to any Securities held by a non-
consenting Holder):
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any
Security or alter the provisions with respect to the
redemption or purchase price in connection with repurchases
under Sections 3.07, 3.08, 4.10 or 4.11 hereof;
(3) reduce the rate of or change the time for payment of interest
on any Security;
56
(4) waive a Default or Event of Default in the payment of
principal of or premium and Liquidated Damages, if any, or
interest on the Securities or that resulted from a failure to
comply with Sections 4.10 or 4.11 hereof (except a rescission
of acceleration of the Securities by the Holders of at least
51% in aggregate principal amount of the Securities as
provided in Section 6.02 hereof);
(5) make any Securities payable in money other than that stated
in the Securities;
(6) make any change in Section 6.04 or 6.07 hereof or in this
sentence of this Section 9.02; or
(7) waive a redemption payment with respect to any Security.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of this Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which such consent is required or sought as of
a date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of this Indenture.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment to this Indenture or the Securities shall comply in
form and substance with the TIA as then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS
Until an amendment (which includes any supplement) or waiver
becomes effective, a consent to it by a Holder of a Security is a continuing
consent by the Holder and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. However, any such
Holder or subsequent Holder may revoke the consent as to his or her Security or
portion of a Security if the Trustee receives written notice of revocation
before the date the amendment or waiver becomes effective. An amendment or
waiver becomes effective in accordance with its terms and thereafter binds every
Holder.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment
or waiver. If the Company elects to fix a record date for such purpose, the
record date shall be fixed at (i) the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation pursuant to Section 2.05
hereof, or (ii) such other date as the Company shall designate. If a record
date is fixed, then notwithstanding the provisions of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
such amendment or waiver or to revoke any consent previously given, whether or
not such Persons continue to be Holders after such record date. No consent
shall be valid or effective for
57
more than 90 days after such record date unless consents from Holders of the
principal amount of Securities required hereunder for such amendment or waiver
to be effective shall have also been given and not revoked within such 90-day
period.
After an amendment or waiver becomes effective it shall bind every
Holder, unless it is of the type described in any of clauses (1) through (7) of
Section 9.02 hereof. In such case, the amendment or waiver shall bind each
Holder of a Security who has consented to it and every subsequent Holder of a
Security that evidences the same debt as the consenting Holder's Security.
SECTION 9.05 NOTATION ON OR EXCHANGE OF SECURITIES
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation about the changed
terms and return it to the Holder and the Trustee may place an appropriate
notation on any Security thereafter authenticated. Alternatively, if the
Company or Trustee so determines, the Company in exchange for all Securities
shall issue and the Trustee shall authenticate new Securities that reflect the
changed terms.
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not, in the
Trustee's reasonable discretion, adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive and, subject to Section 7.01
hereof, shall be fully protected in relying upon, an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that such amendment or supplemental
indenture is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms.
ARTICLE 10
GUARANTEE
SECTION 10.01 SUBSIDIARY GUARANTEE
Each of the Guarantors hereby, jointly and severally,
unconditionally guaranty to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company hereunder or thereunder, that:
(a) the principal of, and premium and Liquidated Damages, if any, and interest
on the Securities will be promptly paid in full when due, whether at maturity,
by acceleration, redemption or otherwise, and interest on the overdue principal
of, premium and Liquidated Damages, if any, and interest on the Securities, if
any, if lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal
58
of any Securities or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise; provided,
however, that the maximum liability of a Guarantor pursuant to this Guarantee
shall in no event exceed the Maximum Guaranteed Amount (as defined below).
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors will be jointly and severally
obligated to pay the same immediately. The Guarantors hereby agree that their
obligations hereunder shall be absolute and unconditional, irrespective of the
validity, regularity or enforceability of the Securities or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Securities with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor other than the defense that payment has been made or that
the other relevant obligations have been paid or performed. Each Guarantor
hereby waives diligence, presentment, demand of payment, claim of fraud, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenant that this Guarantee will not be discharged
except by complete performance of the obligations contained in the Securities
and this Indenture. If any Holder or the Trustee is required by any court or
otherwise to return to the Company or Guarantors, or any Custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6, such obligations (whether or not due
and payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Guarantee.
The "Maximum Guaranteed Amount" means, with respect to any
Guarantor, the greater of:
(i) the amount received by such Guarantor in respect of all loans,
advances or capital contributions made to such Guarantor with proceeds
from the Securities ("Security Proceeds"); all debt and/or equity
securities of such Guarantor acquired with Security Proceeds; the fair
market value of all property acquired with Security Proceeds and
transferred to such Guarantor; and, to the extent not included in the
foregoing, the fair market value of all contributions made to such
Guarantor net of any liabilities transferred to such Guarantor; and
59
(ii) ninety-five percent (95%) of the Adjusted Net Worth of such
Guarantor as of the date of the execution and delivery of this
Guarantee (the "Guarantee Date").
The "Adjusted Net Worth" of a Guarantor as of the Guarantee Date
shall mean the excess of (a) the amount of the fair saleable value of the assets
of such Guarantor as of such date determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors
over (b) the amount of all liabilities of such Guarantor, contingent or
otherwise, as of the Guarantee Date, determined on the basis provided in clause
(a) above (excluding all liabilities under this Guarantee).
Each Guarantor shall be subrogated to all rights of each Holder of
any Securities against the Company in respect of any amounts paid to the Holders
by such Guarantor pursuant to the provisions of this Guarantee; provided that
the Guarantors shall not be entitled to enforce, or to receive, any payments
arising out of or based upon, such right of subrogation until the principal of,
premium and Liquidated Damages, if any, and interest on all the Securities shall
have been paid in full and nothing remains owed to the Trustee pursuant to this
Indenture.
The Guarantee set forth in this Section 10.01 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 10.02 EXECUTION AND DELIVERY OF GUARANTEE
To evidence its Guarantee set forth in Section 10.01 hereof, each
Guarantor hereby agrees that a notation of such Guarantee substantially in the
form of Exhibit A-1 shall be endorsed by an officer of such Guarantor on each
Security authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Chairmen or Vice Presidents and attested to by an Officer.
Each Guarantor hereby agrees that its Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an officer or Officer whose signature is on this Indenture or on
the Guarantee no longer holds that office at the time the Trustee authenticates
the Security on which a Guarantee is endorsed, the Guarantee shall be valid,
binding and enforceable nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Guarantors.
SECTION 10.03 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5 hereof, nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a
60
Guarantor as an entirety or substantially as an entirety, to the Company or
another Guarantor. Upon any such consolidation, merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have any force or effect.
(b) Except as set forth in Articles 4 and 5 hereof, nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of a Guarantor with or into a corporation or
corporations other than the Company or another Guarantor (whether or not
affiliated with the Guarantor), or successive consolidations or mergers in which
a Guarantor or its successor or successors shall be a party or parties, or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety, to a corporation other than the Company or another
Guarantor (whether or not affiliated with the Guarantor) authorized to acquire
and operate the same; provided that each such Guarantor is sold or disposed of
for fair market value, evidenced by a resolution of the Board of Directors set
forth in an Officer's Certificate delivered to the Trustee; and provided,
further, that the foregoing proviso shall not apply to the sale or disposition
of a Guarantor in a foreclosure proceeding to the extent that such proviso would
be inconsistent with the Uniform Commercial Code. Upon any such consolidation,
merger, sale or conveyance, the Guarantee given by such Guarantor shall no
longer have any force or effect.
SECTION 10.04 RELEASES FOLLOWING SALE OF ASSETS
Concurrently with any sale of assets (including, if applicable, all
of the capital stock of any Guarantor), any Liens in favor of the Trustee in the
assets sold thereby shall be released; provided that any such assets are sold or
disposed of for fair market value, evidenced by a resolution of the Board of
Directors set forth in an Officer's Certificate delivered to the Trustee and,
provided, further, that, the foregoing proviso shall not apply to the sale or
disposition of a Guarantor in a foreclosure proceeding to the extent that such
proviso would be inconsistent with the Uniform Commercial Code. If the assets
sold in such sale or other disposition include all or substantially all of the
assets of any Guarantor or all of the capital stock of any Guarantor, then such
Guarantor (in the event of a sale or other disposition of all of the capital
stock of such Guarantor) or the corporation acquiring the property and such
Guarantor (in the event of a sale or other disposition of all or substantially
all of the assets of a Guarantor) shall automatically be released and relieved
of its obligations under this Article 10, provided that any such sale or
disposition of all or substantially all of the assets of a Guarantor is sold or
disposed of for fair market value, evidenced by a resolution of the Board of
Directors set forth in an Officer's Certificate delivered to the Trustee and,
provided, further, that the foregoing proviso shall not apply to the sale or
disposition of a Guarantor in a foreclosure proceeding to the extent that such
proviso would be inconsistent with the Uniform Commercial Code. Upon delivery
by the Company to the Trustee of an Officers' Certificate and an Opinion of
Counsel to the effect that such sale or other disposition was made by the
Company in accordance with the provisions of this Indenture, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Guarantee. Any Guarantor not
released from its obligations under its Guarantee shall remain liable for the
full amount of principal of and interest on the Securities and for the other
obligations of any Guarantor under the Indenture as provided in this Article 10.
61
SECTION 10.05 "TRUSTEE" TO INCLUDE PAYING AGENT
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 10 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 10 in place of the Trustee.
SECTION 10.06 ADDITIONAL SUBSIDIARY GUARANTEES
The Company shall (a) cause each Subsidiary which, after the date
of this Indenture (if not then a Guarantor), becomes a Restricted Subsidiary to
execute a Guarantee of the Obligations of the Company hereunder in the form set
forth in this Article 10 hereof and Exhibit A-1 hereto, provided that no
Subsidiary organized outside of the United States of America and no Unrestricted
Subsidiary shall be required to be a Guarantor, and (b) deliver to the Trustee
an Opinion of Counsel, in form reasonably satisfactory to the Trustee, that such
Subsidiary Guarantee is a valid, binding and enforceable obligation of such
Restricted Subsidiary, subject to customary exceptions for bankruptcy,
fraudulent conveyance and equitable principles and the implied covenant of good
faith and fair dealing.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included herein by any of
Sections 310 to 317 inclusive of the TIA, such required provisions shall
control.
SECTION 11.02 NOTICES
Any notice or communication by the Company, the Guarantors or the
Trustee to the other is duly given if in writing and delivered in person or
mailed by first-class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the other's address:
If to the Company or the Guarantors:
K-III Communications Corporation
745 Fifth Avenue
New York, New York 10151
Attention: General Counsel
Telecopier No.: (212) 745-0199
62
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Gary I. Horowitz, Esq.
Telecopier No.: (212) 455-2502
If to the Trustee:
The Bank of New York
101 Barclay Street -- 21W
New York, New York 10286
Attention: Corporate Trust Administration
Telecopier No.: (212) 815-5915/5917
The Company, the Guarantors or the Trustee by notice to the other
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, to the
Holder's address shown on the register kept by the Registrar. Failure to mail a
notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS
Holders may communicate pursuant to TIA Sec. 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Guarantors, the Trustee, the Registrar and anyone else shall
have the protection of TIA Sec. 312(c).
63
SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company and/or any
Guarantors to the Trustee to take any action under this Indenture, the Company
and/or such Guarantor as the case may be shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 11.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
complied with.
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Sec. 314(a)(4)) shall include:
(1) a statement that the Person making such certificate or
opinion has read and understands such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with; provided
that with respect to matters of fact Opinions of Counsel may rely on
an Officers' Certificate or certificates of public officials.
SECTION 11.06 RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07 LEGAL HOLIDAYS
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment,
64
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 11.08 NO RECOURSE AGAINST OTHERS
No director, officer, employee, incorporator or shareholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Securities, this Indenture or the Guarantees or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Securities by accepting the Securities waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Securities.
SECTION 11.09 GOVERNING LAW
This Indenture, the Securities and the Guarantee shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law.
SECTION 11.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.11 SUCCESSORS
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 11.12 SEVERABILITY
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 11.13 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.14 TRUSTEE AS PAYING AGENT AND REGISTRAR
The Company initially appoints the Trustee as Paying Agent and
Registrar. The provisions regarding the indemnification of the Trustee set
forth in Section 7.07 shall also apply to the Trustee in its capacity as Paying
Agent and Registrar hereunder.
65
SECTION 11.15 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 11.16 BANK OF NEW YORK NOT ACTING IN INDIVIDUAL CAPACITY
Notwithstanding anything to the contrary contained herein, this
Indenture has been accepted by The Bank of New York not in its individual
capacity but solely as Trustee and in no event shall The Bank of New York have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Company herein or in any of the certificates, notices
or agreements delivered by the Company pursuant hereto, as to all of which
recourse shall be had solely to the assets of the Company, and under no
circumstances shall The Bank of New York be personally liable for the payment of
any indebtedness or expenses of the Company.
SECTION 11.17 ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES
In addition to the rights provided to Holders of Securities under
the Indenture, Holders of Transfer Restricted Securities shall have all the
rights set forth in the Registration Rights Agreement.
[Signatures on Following Pages]
66
SIGNATURES
K-III COMMUNICATIONS CORPORATION
Dated as of January 24, 1996 By: /s/ Beverly C. Chell
---------------------------------
Name: Beverly C. Chell
Title: Vice Chairman and
Secretary
ARGUS PUBLISHERS CORPORATION
AUTOSTAR PRODUCTIONS, INC.
BACON'S INFORMATION, INC.
CHANNEL ONE COMMUNICATIONS
CORPORATION
DAILY RACING FORM, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
FUNK & WAGNALLS YEARBOOK CORP.
HAAS PUBLISHING COMPANIES, INC.
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
THE KATHARINE GIBBS SCHOOLS, INC.
THE KATHARINE GIBBS SCHOOLS OF
MONTCLAIR, INC.
THE KATHARINE GIBBS SCHOOLS OF
NORWALK, INC.
THE KATHARINE GIBBS SCHOOLS OF
PISCATAWAY, INC.
THE KATHARINE GIBBS SCHOOLS OF
PROVIDENCE, INC.
K-III KG - MASSACHUSETTS
K-III KG CORPORATION - NEW YORK I
K-III KG CORPORATION - NEW YORK II
K-III DIRECTORY CORPORATION
K-III HOLDINGS CORPORATION III
K-III HPC, INC.
K-III MAGAZINE CORPORATION
K-III MAGAZINE FINANCE CORPORATION
K-III PRIME CORPORATION
K-III REFERENCE CORPORATION
KRAMES COMMUNICATIONS INCORPORATED
LIFETIME LEARNING SYSTEMS, INC.
67
MCMULLEN ARGUS PUBLISHING
MH WEST, INC.
MUSICAL AMERICA PUBLISHING, INC.
NELSON PUBLICATIONS, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARAMOUNT PUBLISHING INC.
PJS PUBLICATIONS INC.
R.E.R. PUBLISHING CORPORATION
STAGEBILL, INC.
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
WEEKLY READER CORPORATION,
AS GUARANTORS
Dated as of January 24, 1996 By: /s/ Beverly C. Chell
---------------------------------
Name: Beverly C. Chell
Title: Secretary
68
THE BANK OF NEW YORK,
as Trustee
Dated as of January 24, 1996 By: /s/ Mary Jane Morrissey
---------------------------------
Name: Mary Jane Morrissey
Title: Assistant Vice President
69
EXHIBIT A
8 1/2% SENIOR NOTES DUE 2006
CUSIP 482727AC8
No. $__________
K-III COMMUNICATIONS CORPORATION, a Delaware corporation (herein called the
"Company"), for value received hereby promises to pay to
or registered assigns,
the principal sum of
Dollars on February 1, 2006.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Reference is hereby made to the further provisions of this Senior Note due 2006
set forth on the reverse side hereof and such further provisions shall for all
purposes have the same effect as if set forth on the front side hereof.
IN WITNESS WHEREOF, the Company has caused this certificate to be signed
manually or by facsimile and its corporate seal to be affixed hereto or
imprinted hereon.
Dated:
-----------------------
CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred
to in the within mentioned Indenture.
THE BANK OF NEW YORK, K-III COMMUNICATIONS CORPORATION
as Trustee
By By:
---------------------- ------------------------------------------
Authorized Signatory (President)
(SEAL)
By:
---------------------------------------
(Secretary)
8 1/2% SENIOR NOTES DUE 2006
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as may be requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or such other entity as may be requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]1/
-
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
"INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT, WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
COMPANY OR MORGAN STANLEY & CO. INCORPORATED, DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION, OR SALOMON BROTHERS INC, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE COMPANY A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE COMPANY) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF SECURITIES AT THE TIME OF TRANSFER OF LESS THAN
$1,000,000 AN OPINION OF COUNSEL, ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN
--------------------
1/ This paragraph should be included only if the Note is issued
-
in global form.
A-2
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER
THE ORIGINAL ISSUANCE OF THE SECURITY. IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER FURNISH TO THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS MAY REASONABLY BE REQUIRED TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.2/
-
Capitalized terms used herein have the meaning assigned to them in
the Indenture unless otherwise indicated.
1. INTEREST; LIQUIDATED DAMAGES. The Company promises to pay
interest on the principal amount of this Security at 8 1/2% per annum from the
date of issuance until maturity and shall pay the Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement. The Company will
pay interest and Liquidated Damages, if any, semi-annually on February 1 and
August 1 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the
Securities will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the date of issuance; provided
that if there is no existing Default in the payment of interest, and if this
Security is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided, further, that the first
Interest Payment Date shall be August 1, 1996. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at the
same rate per annum on the Securities to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
--------------------
2/ This legend applies only to Series A Notes, not Series B
-
Notes.
A-3
2. METHOD OF PAYMENT. The Company will pay interest on the
Securities (except defaulted interest) and premium and Liquidated Damages, if
any, to the Persons who are registered Holders of Securities at the close of
business on the January 15 or July 15 next preceding the Interest Payment Date,
even if such Securities are cancelled after such record date and on or before
such Interest Payment Date. The Securities will be payable as to principal,
premium, interest and Liquidated Damages at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest, premium and Liquidated
Damages may be made by check mailed to the Holders of the Securities at their
addresses set forth in the register of Holders of Securities.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-registrar without notice to
any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Securities under an
Indenture dated as of January 24, 1996 (the "Indenture") among the Company, the
Guarantors and the Trustee. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the TIA (15
U.S. Code Sec.Sec. 77aaa-77bbbb). The Securities are subject to all such terms,
and Holders are referred to the Indenture and such Act for a statement of such
terms. The Securities are senior obligations of the Company limited to $300
million in aggregate principal amount, plus premiums and Liquidated Damages, if
any, plus amounts, if any, sufficient to pay interest on outstanding Securities
as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) The Company may redeem all or any of the Securities in whole
or in part, at any time on or after February 1, 2001, at a redemption price
equal to the percentage of the principal amount thereof plus accrued and unpaid
interest to the redemption date as indicated in Section 3.07 of the Indenture.
(b) The Company may redeem all or any of the Securities, in whole
or in part, at any time within 160 days after a Change of Control, upon not less
than 30 nor more than 60 days' prior notice to each Holder of Securities to be
redeemed at a redemption price equal to the sum of (i) the then outstanding
principal amount thereof plus Liquidated Damages, if any, plus (ii) accrued and
unpaid interest, if any, to the redemption date plus (iii) the Applicable
Premium.
6. MANDATORY OFFERS TO REPURCHASE; ASSET SALES.
(a) Upon the occurrence of a Change of Control, the Company will
be required to offer (a "Change of Control Offer") to purchase all outstanding
Securities at a purchase price equal to 101% of the aggregate principal amount
of such Securities, plus premium, Liquidated damages and accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Payment").
The Change of Control Offer shall remain open for a period of 20 Business Days
after its commencement unless a longer offering period is required by law. No
earlier than 30 days nor later than 40 days after the notice of the Change of
Control Offer has been mailed (the
A-4
"Change of Control Payment Date"), the Company shall deposit, to the extent
lawful, with the Paying Agent an amount equal to the Change of Control Payment
in respect of all Securities or portions thereof tendered by Holders. The
Paying Agent shall promptly mail or deliver payment for all Securities tendered
in the Change of Control Offer.
A Holder of Securities may tender or refrain from tendering all or
any portion of his Securities at his discretion by completing the form entitled
"OPTION OF HOLDER TO ELECT PURCHASE" appearing on this Security. Any portion of
Securities tendered must be in integral multiples of $1,000.
(b) The Company is required to apply 100% of the Net Proceeds of
any Asset Sale (including the sale of stock of any Subsidiary) first to repay
Obligations or reduce commitments under the Credit Agreements, second to offer
to redeem at par the Outstanding Notes and third to offer to redeem at par the
Securities.
7. NOTICE OF REDEMPTION. Notice of any redemption pursuant to
Section 3.07 or 3.08 of the Indenture will be mailed by first class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Securities are to be redeemed at its registered address.
Securities in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the Securities held by a Holder are
to be redeemed. On and after the redemption date interest ceases to accrue on
Securities or portions thereof called for redemption.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company
need not exchange or register the transfer of any Security or portion of a
Security selected for redemption, except the unredeemed portion of any Security
being redeemed in part. Also, it need not exchange or register the transfer of
any Securities for a period of 15 days before a selection of Securities to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
9. PERSONS DEEMED OWNERS. The registered Holder of a Security may
be treated as its owner for all purposes.
10. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture, the Securities or the Guarantee may be amended or supplemented and
any existing Default under, or compliance with any provision of, the Indenture
may be waived with the consent of the Holders of at least 51% in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange offer for Securities). Without the
consent of any Holder, the Company and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency; to
provide for uncertificated Securities in addition to or in place of certificated
Securities; to comply with Section 5.01 of the Indenture; to make any change
that would provide any additional rights or benefits to the Holders of the
A-5
Securities or that does not adversely affect the legal rights under the
Indenture of any such Holder; or to comply with requirements of the SEC in order
to effect or maintain the qualification of the Indenture under the TIA.
Without the consent of each Holder affected, an amendment or waiver
may not (with respect to any Securities held by a non-consenting Holder of
Securities) (i) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver, (ii) reduce the principal of or
change the fixed maturity of any Security or alter the provisions with respect
to the redemption or purchase price in connection with repurchases under
Sections 3.07, 3.08, 4.10 or 4.11 of the Indenture, (iii) reduce the rate of or
change the time for payment of interest on any Security, (iv) waive a Default or
Event of Default in the payment of principal of or premium or Liquidated
Damages, if any, or interest on the Securities or that resulted from a failure
to comply with Sections 4.10 or 4.11 of the Indenture (except a rescission of
acceleration of the Securities by the Holders of at least 51% in aggregate
principal amount of the Securities as provided in Section 6.02 of the
Indenture), (v) make any Securities payable in money other than that stated in
the Securities, (vi) make any change in Section 6.04 or 6.07 of the Indenture or
this sentence, and or (vii) waive a redemption payment with respect to any
Security.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture or this Security (and the
obligation of the Company to obtain any such consent otherwise required from
such Holder) may be subject to the requirement that such Holder shall have been
the Holder of record of any Securities with respect to which such consent is
required or sought as of a date identified by the Trustee in a notice furnished
to Holders in accordance with the terms of the Indenture.
11. DEFAULTS AND REMEDIES. Events of Default include: default in
payment of interest or Liquidated Damages on the Securities for 30 days; default
in payment of the principal or premium of any Security at maturity, or upon
acceleration, redemption or otherwise; failure by the Company for 30 days after
written notice to it from the Trustee, or after written notice to it and the
Trustee from Holders of at least 25% in principal amount of the then outstanding
Securities, to comply with any of its other agreements in the Indenture or the
Securities; certain defaults under other Indebtedness; certain final judgments
that remain undischarged for 60 days after being entered; certain events of
bankruptcy or insolvency; and, except as permitted by the Indenture and the
Securities, the Guarantees are held in any judicial proceeding to be
unenforceable or invalid or otherwise cease for any reason to be in full force
and effect with respect to any Guarantor or any Guarantor denies or disaffirms
its obligations under its Guarantee. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Securities may declare all the Securities to be immediately
due and payable for an amount equal to 100% of the principal amount of the
Securities plus premium and Liquidated Damages, if any, and accrued interest to
the date of payment, except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Securities become
due and payable immediately without further action or notice. Holders may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in principal
A-6
amount of the then outstanding Securities may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders notice of any
continuing Default or Event of Default (except a Default or an Event of Default
in payment of principal, premium or Liquidated Damages, if any, or interest or
that resulted from a failure to comply with Section 4.10 or 4.11 of the
Indenture) if and so long as a committee of its Responsible Officers determines
in good faith that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
12. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
13. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or shareholder of the Company, as such, shall have any liability
for any obligations of the Company under the Securities, this Indenture or the
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of the Securities by accepting the
Securities waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Securities.
14. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
15. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
16. GUARANTORS. Payment of principal, premium and Liquidated
Damages, if any, and interest (including interest on overdue principal of,
premium, if any, and interest, if lawful) is unconditionally guaranteed by each
of the Guarantors.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
K-III COMMUNICATIONS CORPORATION
745 Fifth Avenue
New York, New York 10151
Attention: Treasurer
A-7
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
----------------
Your Signature:
----------------------
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee.
A-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section or 4.10 or 4.11 of the Indenture, check the appropriate box:
________ Section 4.10 ________ Section 4.11
If you want to elect to have only part of the Security purchased by
the Company pursuant to Section 4.10 or 4.11 of the Indenture, state the amount
you elect to have purchased: $___________
Date: Your Signature:
----------------- ----------------------------
(Sign exactly as your name appears on the Security)
Signature Guarantee.
A-9
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES3/
-
The following exchanges of a part of this Global Note for
definitive Notes have been made:
Amount of Principal Amount of this Signature of
Amount of decrease in increase in Global Note authorize officer of
Date of Principal Amount of Principal Amount of following such decrease Trustee or Note
Exchange this Global Note this Global Note (or increase) Custodian
-------- --------------------- ------------------ ------------------------ ---------------------
--------------------
3/ This should be included only if the Note is issued in global
-
form.
A-10
EXHIBIT A-1
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
Each of the corporations listed below (hereinafter referred to as
the "Guarantors", which term includes any successor or additional Guarantor
under the Indenture (the "Indenture") referred to in the Security upon which
this notation is endorsed) (i) has jointly and severally, unconditionally
guaranteed that (a) the principal of, and premium, if any, and interest on the
Securities will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of,
premium, if any, and interest on the Securities, if any, if lawful, and all
other obligations of the Company to the Holders or the Trustee will be promptly
paid in full or performed, all in accordance with the terms hereof and as set
forth in the Indenture; and (b) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration, or otherwise;
provided, however, that the maximum liability of a Guarantor pursuant to this
Guarantee shall in no event exceed the Maximum Guaranteed Amount (as defined
below). Capitalized terms used herein have the meanings assigned to them in the
Indenture unless otherwise indicated.
The "Maximum Guaranteed Amount" means, with respect to any
Guarantor, the greater of:
(i) the amount received by such Guarantor in respect of all loans,
advances or capital contributions made to such Guarantor with proceeds
from the Securities ("Security Proceeds"); all debt and/or equity
securities of such Guarantor acquired with Security Proceeds; the fair
market value of all property acquired with Security Proceeds and
transferred to such Guarantor; and, to the extent not included in the
foregoing, the fair market value of all contributions made to such
Guarantor net of any liabilities transferred to such Guarantor; and
(ii) ninety-five percent (95%) of the Adjusted Net Worth of such
Guarantor as of the date of the execution and delivery of this
Guarantee (the "Guarantee Date").
The Adjusted Net Worth of a Guarantor as of the Guarantee Date
shall mean the excess of (a) the amount of the fair saleable value of the assets
of such Guarantor as of such date determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors
over (b) the amount of all liabilities of such Guarantor, contingent or
otherwise, as of the Guarantee Date, determined on the basis provided in clause
(a) above (excluding all liabilities under this Guarantee).
A-1-1
No stockholder, officer, director, employer or incorporator, past,
present or future, of the Guarantors, as such, shall have any personal liability
under this Guarantee by reason of his or its status as such stockholder,
officer, director, employer or incorporator.
This Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This Guarantee shall not be valid or obligatory for any purpose
with respect to a Security until the certificate of authentication on the
Security upon which this Guarantee is noted shall have been executed by or on
behalf of the Trustee under the Indenture by the manual signature of one of its
authorized signatories.
A-1-2
ARGUS PUBLISHERS CORPORATION
AUTOSTAR PRODUCTIONS, INC.
BACON'S INFORMATION, INC.
CHANNEL ONE COMMUNICATIONS
CORPORATION
DAILY RACING FORM, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
FUNK & WAGNALLS YEARBOOK CORP.
HAAS PUBLISHING COMPANIES, INC.
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
THE KATHARINE GIBBS SCHOOLS, INC.
THE KATHARINE GIBBS SCHOOLS OF
MONTCLAIR, INC.
THE KATHARINE GIBBS SCHOOLS OF
NORWALK, INC.
THE KATHARINE GIBBS SCHOOLS OF
PISCATAWAY, INC.
THE KATHARINE GIBBS SCHOOLS OF
PROVIDENCE, INC.
K-III KG - MASSACHUSETTS
K-III KG CORPORATION - NEW YORK
K-III KG CORPORATION - NEW YORK II
K-III DIRECTORY CORPORATION
K-III HOLDINGS CORPORATION III
K-III HPC, INC.
K-III MAGAZINE CORPORATION
K-III MAGAZINE FINANCE CORPORATION
K-III PRIME CORPORATION
K-III REFERENCE CORPORATION
KRAMES COMMUNICATIONS INCORPORATED
LIFETIME LEARNING SYSTEMS, INC.
MADRIGAL PUBLISHING COMPANY, INC.
MCMULLEN ARGUS PUBLISHING
MH WEST, INC.
MUSICAL AMERICA PUBLISHING, INC.
NELSON PUBLICATIONS, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARAMOUNT PUBLISHING INC.
PJS PUBLICATIONS INC.
R.E.R. PUBLISHING CORPORATION
STAGEBILL, INC.
A-1-3
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
WEEKLY READER CORPORATION,
AS GUARANTORS
By:
------------------------------------
Name:
Title:
A-1-4
SCHEDULE I
State or other
Exact Name of Jurisdiction of
Guarantor as specified Incorporation or
in its Charter Organization
-------------------------------- ------------------
Argus Publishers Corporation California
Autostar Productions, Inc. California
Bacon's Information, Inc. Delaware
Channel One Communications Corporation Delaware
Daily Racing Form, Inc. Delaware
DRF Finance, Inc. Delaware
The Electronics Source Book, Inc. Delaware
Funk & Wagnalls Yearbook Corp. Delaware
Haas Publishing Companies, Inc. Delaware
Intermodal Publishing Company, Ltd. New York
Intertec Market Reports, Inc. Delaware
Intertec Presentations, Inc. Colorado
Intertec Publishing Corporation Delaware
The Katharine Gibbs Schools, Inc. Delaware
The Katharine Gibbs Schools of
Montclair, Inc New Jersey
The Katharine Gibbs Schools of
Norwalk, Inc. Connecticut
The Katharine Gibbs Schools of
Piscataway, Inc. New Jersey
The Katharine Gibbs Schools of
Providence, Inc. Rhode Island
K-III Directory Corporation Delaware
K-III Holdings Corporation III Delaware
K-III HPC, Inc. Delaware
K-III KG Corporation--Massachusetts Massachusetts
K-III KG Corporation--New York I New York
K-III KG Corporation--New York II New York
K-III Magazine Corporation Delaware
K-III Magazine Finance Corporation Delaware
K-III Prime Corporation Delaware
K-III Reference Corporation Delaware
Krames Communications Incorporated Delaware
Lifetime Learning Systems, Inc. Delaware
McMullen Argus Publishing California
MH West, Inc. California
Musical America Publishing, Inc. Delaware
Nelson Publications, Inc. Delaware
A-1-1
Newbridge Communications, Inc. Delaware
Paramount Publishing, Inc. California
PJS Publications, Inc. Delaware
R.E.R. Publishing Corporation New York
Stagebill, Inc. Delaware
Symbol of Excellence Publishers, Inc. Alabama
Weekly Reader Corporation Delaware
A-I-2
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES
Re: 8 1/2% Senior Notes due 2006 of K-III Communications Corporation (the
"Securities").
This Certificate relates to $_____ principal amount of
Securities held by ______ (the "Transferor").
The Transferor has requested the Trustee by written order to
exchange or register the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above captioned Securities and as provided in
Section 2.06 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:*
_________ Such Security is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.06(a)(ii)(A) of the
Indenture).
_________ Such Security is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) or an institutional accredited investor
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act,
in reliance on Rule 144A (in satisfaction of Section 2.06(a)(ii)(B) of the
Indenture).
_________ Such Security is being transferred in accordance with Rule
144 or Rule 145 or Regulation S under the Securities Act, or pursuant to an
effective registration statement under the Securities Act (in satisfaction of
Section 2.06(a)(ii)(B) of the Indenture).
-----------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------------
Date:
-----------------------------------------------
*Check applicable box.
B-1
EXECUTION COPY
=====================================================================
K-III COMMUNICATIONS CORPORATION
$300,000,000
8 1/2% Senior Notes due 2006
Series A and Series B
---------------
FIRST SUPPLEMENTAL
INDENTURE
Dated as of July 22, 1996
---------------
THE BANK OF NEW YORK
Trustee
=====================================================================
FIRST SUPPLEMENTAL INDENTURE, dated as of July 22, 1996 between K-III
Communications Corporation, a Delaware corporation (hereinafter called the
"Company"), the other corporations listed on the signature page hereto (each a
"Guarantor" and collectively, the "Guarantors") and The Bank of New York, a New
York banking corporation, as trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has heretofore executed and delivered to the
Trustee a certain indenture, dated as of January 24, 1996 (herein called the
"Indenture"), pursuant to which a series of its 8 1/2% Senior Notes due 2006 has
been issued. All terms used in this First Supplemental Indenture which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture;
WHEREAS, Section 9.01 of the Indenture provides that without the
consent of any Holders, the Company, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may enter into an indenture
supplemental to the Indenture in form satisfactory to the Trustee to make any
change that does not adversely affect the rights of any Holder;
WHEREAS, the Company pursuant to the foregoing authority, proposes in
and by this First Supplemental Indenture to amend the Indenture in certain
respects with respect to the Securities and has requested that the Trustee join
in the execution of this First Supplemental Indenture; and
WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement of the Company and the Trustee and a valid amendment
of and supplement to the Indenture have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, with respect to the
Securities as follows:
2
ARTICLE ONE
GUARANTEE
SECTION 1.1 Subsidiary Guarantee. Section 10.01 of the Indenture
--------------------
is hereby amended by deleting paragraphs two and three thereof and inserting:
The "Maximum Guaranteed Amount" means, with respect to any Guarantor,
the amount which allows this Guarantee to be enforceable to the fullest extent
permitted by law, limited only to the extent necessary for this Guarantee to not
constitute a fraudulent conveyance.
SECTION 1.2 Guarantee. Exhibit A-1 to the Indenture is hereby
---------
amended by deleting paragraphs two and three thereof and inserting:
The "Maximum Guaranteed Amount" means, with respect to any Guarantor,
the amount which allows this Guarantee to be enforceable to the fullest extent
permitted by law, limited only to the extent necessary for this Guarantee to not
constitute a fraudulent conveyance.
ARTICLE TWO
MISCELLANEOUS
SECTION 2.1 Incorporation of Indenture. All the provisions of this
--------------------------
First Supplemental Indenture shall be deemed to be incorporated in, and made a
part of, the Indenture; and the Indenture, as supplemented and amended by this
First Supplemental Indenture, shall be read, taken and construed as one and the
same instrument.
SECTION 2.2 Application of First Supplemental Indenture. The
-------------------------------------------
provisions and benefit of this First Supplemental Indenture shall be effective
with respect to the Securities.
SECTION 2.3 Headings. The headings of the Articles and Sections of
--------
this First Supplemental Indenture are inserted for convenience of reference and
shall not be deemed to be a part thereof.
SECTION 2.4 Counterparts. This First Supplemental Indenture may be
------------
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
SECTION 2.5 Conflict with Trust Indenture Act. If any provision
---------------------------------
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this First Supplemental Indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.
3
SECTION 2.6 Successors and Assigns. All covenants and agreements
----------------------
in this First Supplemental Indenture by the Company shall bind its successors
and assigns, whether so expressed or not.
SECTION 2.7 Separability Clause. In case any provision in this
-------------------
First Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 2.8 Benefits of First Supplemental Indenture. Nothing in
----------------------------------------
this First Supplemental Indenture, express or implied, shall give to any person,
other than the parties hereto and their successors hereunder and the Holders,
any benefit or any legal or equitable right, remedy or claim under this First
Supplemental Indenture.
SECTION 2.9 Regarding the Trustee. The Trustee shall not be
---------------------
responsible for the correctness of the recitals herein, and makes no
representation as to the validity or the sufficiency of this First Supplemental
Indenture. The Trustee shall, in connection with this First Supplemental
Indenture, be entitled to all of the benefits of all of the rights, privileges,
immunities and indemnities of the Trustee provided for in the Indenture.
SECTION 2.10 Governing Law. This First Supplemental Indenture, the
-------------
Securities and the Guarantee shall be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflicts of law.
4
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
K-III COMMUNICATIONS CORPORATION
By: /s/ Beverly C. Chell
__________________________
Name: Beverly C. Chell
Title: Vice Chairman
ARGUS PUBLISHERS CORPORATION
BACON'S INFORMATION, INC.
CHANNEL ONE COMMUNICATIONS
CORPORATION
DAILY RACING FORM, INC.
DRF FINANCE, INC.
THE ELECTRONICS SOURCE BOOK, INC.
FUNK & WAGNALLS YEARBOOK CORPORATION
HAAS PUBLISHING COMPANIES, INC.
INTERMODAL PUBLISHING COMPANY, LTD.
INTERTEC MARKET REPORTS, INC.
INTERTEC PRESENTATIONS, INC.
INTERTEC PUBLISHING CORPORATION
THE KATHARINE GIBBS SCHOOLS, INC.
THE KATHARINE GIBBS SCHOOLS OF
MONTCLAIR, INC.
THE KATHARINE GIBBS SCHOOLS OF NORWALK,
INC.
THE KATHARINE GIBBS SCHOOLS OF
PISCATAWAY, INC.
THE KATHARINE GIBBS SCHOOLS OF
PROVIDENCE, INC.
KRAMES COMMUNICATIONS INCORPORATED
K-III DIRECTORY CORPORATION, INC.
K-III HOLDINGS CORPORATION III
K-III HPC, INC.
K-III KG CORPORATION-MASSACHUSETTS
K-III KG CORPORATION-NEW YORK I
K-III KG CORPORATION-NEW YORK II
K-III MAGAZINE CORPORATION
K-III MAGAZINE FINANCE CORPORATION
K-III REFERENCE CORPORATION
LIFETIME LEARNING SYSTEMS, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MH WEST, INC.
MUSICAL AMERICA PUBLISHING, INC.
NELSON PUBLICATIONS, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARAMOUNT PUBLISHING, INC.
PJS PUBLICATIONS, INC.
R.E.R. PUBLISHING CORPORATION
STAGEBILL, INC.
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
TUNNELL PUBLICATIONS, INC.
K-III PRIME CORPORATION
5
K-III REFERENCE CORPORATION
LIFETIME LEARNING SYSTEMS, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MH WEST, INC.
MUSICAL AMERICA PUBLISHING, INC.
NELSON PUBLICATIONS, INC.
NEWBRIDGE COMMUNICATIONS, INC.
PARAMOUNT PUBLISHING, INC.
PJS PUBLICATIONS, INC.
R.E.R. PUBLISHING CORPORATION
STAGEBILL, INC.
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
TUNNELL PUBLICATIONS, INC.
WEEKLY READER CORPORATION
WESTCOTT COMMUNICATIONS, INC.
By: /s/ Beverly C. Chell
__________________________
Name: Beverly C. Chell
Title: Vice Chairman
6
THE BANK OF NEW YORK, as Trustee
By: /s/ Mary Jane Morrissey
__________________________
Name: Mary Jane Morrissey
Title: Vice President