-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Q5JHdcUy3A0dWpqhF417dqF9588JiU4RI7Kr86GMwS46PRxug9QwcWQrgWaEd28+ C1W47tTptsZ6N1NEOyIUcg== 0000771950-95-000008.txt : 19950414 0000771950-95-000008.hdr.sgml : 19950414 ACCESSION NUMBER: 0000771950-95-000008 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950331 DATE AS OF CHANGE: 19950405 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTWOOD ONE INC /DE/ CENTRAL INDEX KEY: 0000771950 STANDARD INDUSTRIAL CLASSIFICATION: 7900 IRS NUMBER: 953980449 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13020 FILM NUMBER: 95526572 BUSINESS ADDRESS: STREET 1: 9540 WASHINGTON BLVD CITY: CULVER CITY STATE: CA ZIP: 90232 BUSINESS PHONE: 3012045000 MAIL ADDRESS: STREET 1: 9540 WASHINGTON BLVD CITY: CULVER CITY STATE: CA ZIP: 90232 FORMER COMPANY: FORMER CONFORMED NAME: WESTWOOD ONE DELAWARE INC /CA/ DATE OF NAME CHANGE: 19860408 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- FORM 10-K Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 ------------- For the fiscal year ended Commission File number: 0 - 13020 December 31, 1994 WESTWOOD ONE, INC. (Exact name of registrant as specified in its charter) Delaware 95-3980449 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 9540 Washington Boulevard, Culver City, CA 90232 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (310) 204-5000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange ____________________ on which registered _____________________ None None Securities registered pursuant to Section 12(g) of the Act: Common Stock (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No - Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. The aggregate market value of Common Stock held by non-affiliates as of March 1, 1995 was approximately $285 million. As of March 1, 1995, 30,935,152 shares of Common Stock were outstanding and 351,733 shares of Class B Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's definitive proxy statement for its annual meeting of shareholders (which will be filed with the Commission within 120 days of the registrant's last fiscal year end) are incorporated in Part III of this Form 10-K. PART I Item 1. Business General Westwood One, Inc. (the "Company" or "Westwood One") is the leading producer and distributor of nationally sponsored radio programs and is the nation's second largest radio network. The Company's principal source of revenue is selling radio time to advertisers through one of its two operating divisions: Westwood One Radio Networks and Westwood One Entertainment (the "Divisions"). The Company generates revenue principally by its Divisions entering into radio station affiliation agreements to obtain audience and commercial spots and then selling the spots to national advertisers. The Company is strategically positioned to provide a broad range of programming and services which both deliver audience to advertisers and news, talk, sports, and entertainment programs to radio stations. Westwood One Radio Networks offers radio stations three traditional news services, CNN Radio, NBC Radio Network and the Mutual Broadcasting System, plus youth-oriented network news and entertainment programming from The Source, in addition to eight 24-hour satellite-delivered continuous play music formats and weekday and weekend news and entertainment features and programs. Westwood One Entertainment produces music, sports, talk and special event programming. These programs include: countdown shows; music and interview programs; live concert broadcasts; major sporting events (principally covering the NFL, Notre Dame football and other college football and basketball games); live, personality intensive talk shows; and exclusive satellite simulcasts with HBO and other cable networks. 1 The Company's programs are broadcast in every radio market in the United States measured by The Arbitron Ratings Company ("Arbitron"), the leading rating service, as well as being broadcast internationally. Westwood One, through its Divisions, enables national advertisers to purchase advertising time and to have their commercial messages broadcast on radio stations throughout the United States, reaching demographically defined listening audiences. The Company delivers both of the major demographic groups targeted by national advertisers: the 25 to 54-year old adult market and the 12 to 34-year-old youth market. The Company currently sells advertising time to over 300 national advertisers, including each of the 25 largest network radio advertisers. Radio stations are able to obtain quality programming from Westwood One to meet their objective of attracting larger listening audiences and increasing local advertising revenue. Westwood One, through the development of internal programming as well as through acquisitions, has developed an extensive tape library of previously aired programs, interviews, live concert performances, news and special events. The Company uses its library as a major source of new programming, enhancing the Company's future programming and revenue generating capabilities. Industry Background Radio Broadcasting As of January 1, 1995, there were approximately 9,750 commercial radio stations in the United States. The radio broadcast industry, however, remains highly fragmented with no broadcaster permitted to own more than 40 radio stations. This fragmentation is due primarily to FCC limitations on multiple station ownership. A radio station selects a style of programming ("format") to attract a target listening audience and thereby attract commercial advertising directed at that audience. There are many formats from which a station may select, including news, talk, sports and various types of music and entertainment programming. The diversity in program formats has intensified competition among stations for local advertising revenue. A radio station has two principal ways of effectively competing for these revenues. First, it can differentiate itself in its local market by selecting and successfully executing a format targeted at a particular audience thus enabling advertisers to place their commercial messages on stations aimed at audiences with certain demographic characteristics. A station can also broadcast special programming, sporting events or national news product, such as supplied by Westwood One, not available to its competitors within its format. National programming broadcast on an 2 exclusive geographic basis can help differentiate a station within its market, and thereby enable a station to increase its audience and local advertising revenue. Radio Advertising Radio advertising time can be purchased on a local, regional or national basis. Local purchases allow an advertiser to select specific radio stations in chosen geographic markets for the broadcast of commercial messages. However, this process can be expensive and time-consuming, and may not permit the advertiser to select the specific program in which its advertisements will be broadcast. Local and regional purchases are typically best suited for an advertiser whose business or ad campaign is in a specific geographic area. Advertising purchased from a radio network is one method by which an advertiser targets its commercial messages to a specific demographic audience. A national advertising purchase can enable an advertiser to achieve its objective with one purchase, at a lower cost per listener, and to select a particular program environment in which its advertisements will be broadcast. In recent years the increase in the number of program formats has led to more demographically specific listening audiences, making radio an attractive, alternative medium for national advertisers. In addition, nationally broadcast news, concerts and special event programming have made radio an effective medium of reach (size of listening audiences) as well as frequency (number of exposures to the target audience). To verify audience delivery and demographic composition, specific measurement information is available to national advertisers by independent rating services such as Arbitron and Statistical Research, Inc.'s RADAR. These rating services provide demographic information such as the age and sex composition of the listening audiences. Consequently, national advertisers can verify that their advertisements are being heard by their target listening audience. Business Strategy Westwood One provides targeted radio audiences and commercial spots to national advertisers through its recognized programming and other network products. The Company, through its various radio networks, produces and distributes quality programming to radio stations seeking to increase their listening audience and improve local and national advertising revenue. The Company sells advertising time within its programs to national advertisers desiring to reach large listening audiences nationwide with specific demographic characteristics. In 1993 the Company developed and implemented a strategy to focus on its core radio network business and to reduce debt by divesting of all other businesses. In refocusing on its core network and radio syndication 3 business, the Company has concentrated on across-the-board cost reductions in order to improve profitability and, in February 1994, the Company took a major step to enhance its future and ability to compete by acquiring Unistar Radio Networks, Inc. ("Unistar") for $101,300,000 plus expenses along with the following additional matters in connection with the acquisition: (a) the sale by the Company to Infinity Network, Inc. ("INI"), a wholly-owned subsidiary of Infinity Broadcasting Corporation ("Infinity"), of 5,000,000 shares of the Company's Common Stock and a warrant to purchase up to an additional 3,000,000 shares of Common Stock at an exercise price of $3.00 per share, for a total purchase price of $15,000,000; (b) a Management Agreement between the Company and Infinity pursuant to which (a) the Chief Executive Officer of Infinity, currently Mel Karmazin, became the Chief Executive Officer of the Company, (b) the Chief Financial Officer of Infinity, currently Farid Suleman, became the Chief Financial Officer of the Company and (c) Infinity began managing the business and operations for an annual base fee of $2,000,000 (adjusted for inflation), an annual cash bonus (payable in the event of meeting certain financial targets) and additional warrants to acquire up to 1,500,000 shares of common stock exercisable after the Company's common stock reaches certain market prices per share. (c) a Voting Agreement providing for the reconstitution of the Board of Directors into a nine-member Board and the voting of Norman Pattiz's shares of the Company's Common Stock and Class B Stock and the shares of the Common Stock held by INI. The Company financed the acquisition ($101,300,000), with a new senior loan from a syndicate of banks in the amount of $125,000,000. Radio Programming The depth of Westwood One's programming has grown through internal expansion and through acquisition. The Company produces and distributes 24-hour continuous play formats, regularly scheduled and special syndicated programs, including exclusive live concerts, music and interview shows, national music countdowns, lifestyle short features, news broadcasts, talk programs, sporting events, and sports features. The Company controls most aspects of production of its programs, therefore being able to tailor its programs to respond to current and 4 changing listening preferences. The Company produces regularly scheduled short-form programs (typically 5 minutes or less), long-form programs (typically 60 minutes or longer) and 24-hour continuous play formats. Typically, the short-form programs are produced at the Company's in-house facilities located in Culver City, California, New York, New York and Arlington, Virginia. The long-form programs include shows produced entirely at the Company's in-house production facilities and recordings of live concert performances and sports events made on location. The 24-hour continuous play formats are produced at the Company's facilities in Valencia, California. Westwood One also produces and distributes special event syndicated programs. In 1994 the Company produced and distributed numerous special event programs, including exclusive broadcasts of the Rolling Stones Voodoo Lounge concert tour, Sting Live, an HBO simulcast of Barbara Streisand and an MTV simulcast of "The Eagles: Hell Freezes Over." Westwood One believes these broadcasts have contributed to its reputation and are an integral part of its business strategy to increase its share of the national radio network advertising market. Westwood One obtains most of the programming for its concert series by recording live concert performances of prominent recording artists. The agreements with these artists often provide the exclusive right to broadcast the concerts worldwide over the radio (whether live or pre- recorded) for a specific period of time. The Company may also obtain interviews with the recording artist and retain a copy of the recording of the concert and the interview for use in its radio programs and as additions to its extensive tape library. The agreements provide the artist with master recordings of their concerts and nationwide exposure on affiliated radio stations. In certain cases the artists may receive compensation. Westwood One's syndicated programs are produced at its in-house production facilities. The Company determines the content and style of a program based on the target audience it wishes to reach. The Company assigns a producer, writer, narrator or host, interviewer and other personnel to record and produce the programs. Because Westwood One controls the production process, it can refine the programs' content to respond to the needs of its affiliated stations and national advertisers. In addition, the Company can alter program content in response to current and anticipated audience demand. The Company produces and distributes eight 24-hour continuous play formats providing music, news and talk programming for Country, Hot Country, Adult Contemporary, Format 41, Oldies, AM only, Adult Rock and Roll and the 70's formats. Using its production facilities in Valencia, California, the Company provides all the programming for stations 5 affiliated with each of these formats. Affiliates compensate the Company for these formats by providing the Company with a portion of their commercial air time and, in most cases, cash fees. The Company believes that its tape library is a valuable asset and significantly enhances its future programming and revenue generating capabilities. The library contains previously broadcast programs, live concert performances, interviews, daily news programs, sports and entertainment features, Capitol Hill hearings and other special events. New programs can be created and developed at a low cost by excerpting material from the library. Affiliated Radio Stations Westwood One's radio network business strategy addresses the programming needs and financial limitations of radio stations. The Company offers radio stations a wide selection of regularly scheduled and special event syndicated programming as well as 24-hour continuous play formats. These programs and formats are completely produced by the Company and, therefore, the stations have no production costs. Typically, each program is offered for broadcast by the Company exclusively to one station in its geographic market, which assists the station in competing for audience share in its local marketplace. In addition, except for news programming, Westwood One's programs contain available commercial air time that the stations may sell to local advertisers. Westwood One typically distributes promotional announcements to the stations and places advertisements in trade and consumer publications to further promote the upcoming broadcast of its programs. Westwood One's networks enter into affiliation agreements with radio stations. In the case of news and current events programming, the agreements commit the station to broadcast only the advertisements associated with these programs and allows the station flexibility to have the news headlined by their newscasters. The other affiliation agreements require a station to broadcast the Company's programs and to use a portion of the program's commercial slots to air national advertisements and any related promotional spots. With respect to the 24-hour formats, the Company, in most cases, also receives a fee from the affiliated stations for the right to broadcast the formats. Radio stations in the top 200 national markets may also receive compensation for airing national advertising associated with the Company's news and current events programming. Affiliation agreements specify the number of times and the approximate time of day each program and advertisement may be broadcast. Westwood One requires that each station complete and promptly return to the Company an affidavit (proof-of-performance) that verifies the time of each broadcast. Affiliation agreements for Westwood One's entertainment programming are non-cancelable for 26 weeks and are automatically 6 renewed for subsequent 26-week periods, if not canceled 30 days prior to the end of the existing contract term. Affiliation agreements for Westwood One's news and current events programming generally run for a period of at least one year, are automatically renewable for subsequent periods and are cancelable by either the Company or the station upon 90 days' notice. The Company has a number of people responsible for station relations and marketing its programs to radio stations. Station relationships are managed geographically to allow the marketing staff to concentrate on specific geographical regions. This enables the Company's staff to develop and maintain close, professional relationships with radio station personnel and to provide them with quick programming assistance. National Advertisers Westwood One provides national advertisers with a cost-effective way to communicate their commercial messages to large listening audiences nationwide that have specific demographic characteristics. An advertiser can obtain both frequency (number of exposures to the target audience) and reach (size of listening audience) by purchasing advertising time in the Company`s programs. By purchasing time in programs directed to different formats, advertisers can be assured of obtaining high market penetration and visibility as their commercial messages will be broadcast on several stations in the same market at the same time. The Company supports its national sponsors with promotional announcements and advertisements in trade and consumer publications. This support promotes the upcoming broadcasts of Company programs and is designed to increase the advertisers' target listening audience. The Company sells its commercial time to advertisers either as "bulk" or "flighted" purchases. Bulk purchases are long-term contracts (26 to 52 weeks) that are sold "up-front" (early advertiser commitments for national broadcast time). Flighted purchases are contracts for a specific, short-term period of time (one to six weeks) that are sold at or above prevailing market prices. The Company's strategy for growth in advertising revenue is to increase the amount of advertising time sold on the usually more profitable flighted basis, to increase revenue of the non-RADAR rated programs, and to increase audience size for news, talk and current events programming. Competition The Company operates in a very competitive environment. In marketing its programs to national advertisers, the Company directly competes with other radio networks as well as with smaller independent radio syndication producers and distributors. In addition, Westwood One competes for advertising revenue with network television, cable television, print and other forms of communications media. The Company believes that the high quality of its programming and the strength of 7 its station relations and advertising sales forces enable it to compete effectively with other forms of communication media. Westwood One markets its programs to radio stations, including affiliates of other radio networks, that it believes will have the largest and most desirable listening audience for each of its programs. The Company often has different programs airing on a number of stations in the same geographic market at the same time. The Company believes that in comparison with any other independent radio syndication producer and distributor or radio network it has a larger and more diversified selection of programming from which national advertisers and radio stations may choose. In addition, the Company both produces and distributes programs, thereby enabling it to respond more effectively to the demands of advertisers and radio stations. The increase in the number of program formats has led to increased competition among local radio stations for audience. As stations attempt to differentiate themselves in an increasingly competitive environment, their demand for quality programming available from outside programming sources increases. This demand has been intensified by high operating and production costs at local radio stations and increased competition for local advertising revenue. Government Regulation Radio broadcasting and station ownership are regulated by the FCC. Westwood One, as a producer and distributor of radio programs, is not subject to regulation by the FCC. Employees On February 15, 1995, Westwood One had 414 full-time employees, including a domestic advertising sales force of 46 people. In addition, the Company maintains continuing relationships with approximately 50 independent writers, program hosts, technical personnel and producers. Certain employees at the Mutual Broadcasting System, NBC Radio Networks, and Unistar Radio Networks are covered by collective bargaining agreements. The Company believes relations with its employees and independent contractors are good. Item 2. Properties The Company owns a 7,600 square-foot building in Culver City, California in which its production facilities are located; a 14,000 square-foot building and an adjacent 10,000 square-foot building in Culver City, California which contains administrative, sales and marketing offices, and storage space; and a 7,700 square-foot unoccupied building in Culver City. In addition, the Company leases offices in New York; Chicago; Detroit; Dallas; Arlington, Virginia and Valencia, California. 8 The Company believes that its facilities are more than adequate for its current level of operations. Item 3. Legal Proceedings - None - Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of the Company's shareholders during the fourth quarter of the year ended December 31, 1994. 9 PART II Item 5. Market for Registrant's Common Stock and Related Shareholder Matters On March 1, 1995 there were approximately 370 holders of record of the Company's Common Stock, several of which represent "street accounts" of securities brokers. Based upon the number of proxies requested by brokers in conjunction with its shareholders' meeting on August 18, 1994, the Company estimates that the total number of beneficial holders of the Company's Common Stock exceeds 4,500. The Company's Common Stock has been traded in the over-the-counter market under the NASDAQ symbol WONE since the Company's initial public offering on April 24, 1984. The following table sets forth the range of high and low last sales prices on the NASDAQ/National Market System, as reported by NASDAQ, for the Common Stock for the calendar quarters indicated.
1994 High Low ---- ---- --- First Quarter 10 1/2 7 5/8 Second Quarter 8 7/8 7 1/8 Third Quarter 11 3/8 7 11/16 Fourth Quarter 11 1/4 7 5/8 1993 ---- First Quarter 2 5/8 1 19/32 Second Quarter 3 1/16 2 3/8 Third Quarter 3 1/8 2 3/8 Fourth Quarter 9 1/4 2 9/16
No cash dividend was paid on the Company's stock during 1994 or 1993, and the payment of dividends is restricted by the terms of The Loans. 10 Item 6. Selected Financial Data (In thousands except per share data) The table below summarizes selected consolidated financial data of the Company for each of the last five fiscal years: OPERATING RESULTS FOR YEAR ENDED:
November 30, December 31, ______________________________________ 1994 1993 1992 1991 1990 ____ ____ ____ ____ ____ NET REVENUES $136,340 $84,014 $86,376 $93,170 $92,389 DEPRECIATION AND AMORTIZATION 18,160 16,384 19,661 22,055 22,856 OPERATING INCOME (LOSS) 5,982 (2,191) (18,700) (5,931) (9,309) (LOSS) FROM CONTINUING OPERATIONS (2,730) (8,682) (21,397) (10,004) (12,915) (LOSS) FROM DISCONTINUED OPERATIONS - (15,227) (2,721) (6,778) (5,260) (LOSS) BEFORE EXTRAORDINARY ITEM (2,730) (23,909) (24,118) (16,782) (18,175) EXTRAORDINARY GAIN (LOSS) (590) - - 25,618 - NET INCOME (LOSS) ($3,320) ($23,909) ($24,118) $8,836 ($18,175) INCOME (LOSS) PER SHARE: Primary: Continuing Operations ($ .09) ($ .57) ($ 1.44) ($ .67) ($ .89) Discontinued Operations - ( 1.01) ( .18) ( .46) ( .36) -------- -------- --------- -------- -------- (Loss) Before Extraordinary Item ( .09) ( 1.58) ( 1.62) ( 1.13) ( 1.25) Extraordinary Item ( .02) - - 1.73 - -------- -------- --------- -------- -------- Net Income (Loss) ($ .11) ($ 1.58) ($ 1.62) $ .60 ($ 1.25) ======== ======== ========= ======== ======== Fully diluted: Continuing Operations ($ .09) ($ .57) ($ 1.44) ($ .30) ($ .89) Discontinued Operations - ( 1.01) ( .18) ( .28) ( .36) -------- -------- --------- -------- -------- (Loss) Before Extraordinary Item ( .09) ( 1.58) ( 1.62) ( .58) ( 1.25) Extraordinary Item ( .02) - - 1.06 - -------- -------- --------- -------- -------- Net Income (Loss) ($ .11) ($ 1.58) ($ 1.62) $ .48 ($ 1.25) ======== ======== ========= ======== ======== BALANCE SHEET DATA AT: November 30, December 31, ______________________________________ 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- CURRENT ASSETS $46,157 $32,987 $51,091 $46,126 $54,312 WORKING CAPITAL 7,685 (1,503) (11,942) 10,200 28,676 TOTAL ASSETS 260,112 152,067 295,740 322,561 343,783 LONG-TERM DEBT 115,443 51,943 146,622 169,083 214,342 TOTAL SHAREHOLDERS' EQUITY 95,454 55,151 75,204 98,765 89,496
[FN] - - ------------------------------------- Effective December 1, 1993, the Company changed its method of accounting for capitalized station affiliation agreements to expense the costs as incurred. The effect of this change in accounting method does not materially affect the comparability of the information reflected herein. Results for the year ended December 31, 1994 include Unistar from the time it was acquired in February 1994. No cash dividend was paid on the Company's common stock during the periods presented above. 11 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations (In thousands except for share and per share amounts) In August 1994, the Company changed its fiscal year end from November 30 to December 31 effective with the fiscal year ending December 31, 1994. Accordingly, in the following discussion "1994" will refer to the calendar year 1994, "1993" will refer to the fiscal year ended November 30, 1993 and "1992" will refer to the fiscal year ended November 30, 1992. On February 3, 1994 the Company completed the acquisition of all of the issued and outstanding capital stock of the Unistar Radio Networks, Inc. ("Unistar"). The acquisition was accounted for as a purchase, and accordingly, the operating results of Unistar are included with those of the Company from the date of acquisition. Effective December 1, 1993, the Company changed its method of accounting for capitalized station affiliation agreements and income taxes. In order to conform to predominate current industry practice, capitalized station affiliation agreements will be expensed as incurred. The cumulative effect of the change in accounting for station affiliation expenses in December 1993 was an expense of $4,344, or $.23 per share. SFAS No. 109 "Accounting for Income Taxes" was adopted by the Company in December 1993. The Company elected not to restate prior year's financial statements. Adopting SFAS No. 109 did not affect the December 1993 or current period results. In 1993, the Company classified the results of operations from Radio & Records and its Los Angeles and New York radio stations as discontinued operations. The Company disposed of these assets during 1993. RESULTS OF OPERATIONS Westwood One derives substantially all of its revenue from the sale of advertising time to advertisers. Net revenues increased 62% to $136,340 in 1994 from $84,014 in 1993 and decreased 3% in 1993 from $86,376 in 1992. The increase in 1994 net revenues was primarily a result of the purchase of Unistar in February 1994. The decrease in 1993 net revenues was attributed to the non-recurrence of the Company's exclusive radio coverage of the 1992 Summer Olympics, partially offset by net revenue growth associated with an overall increase in the network radio marketplace. Operating costs and expenses excluding depreciation and amortization increased 61% to $105,389 in 1994 from $65,353 in 1993 and decreased 15% in 1993 from $77,335 in 1992. The 1994 increase was primarily attributable to the purchase of Unistar and higher programming expenses resulting from the production of additional programs. The 1993 decrease was primarily due to cost reduction programs associated with affiliate compensation, programming, news and related staff expenses, and the non-recurrence of the 1992 Summer Olympics. 12 Depreciation and amortization increased 11% to $18,160 in 1994 from $16,384 in 1993 and decreased 17% in 1993 from $19,661 in 1992. The increase in 1994 was primarily a result of the purchase of Unistar, partially offset by lower amortization of production costs and lower amortization as a result of the Company's December 1, 1993 change in its method of accounting for capitalized station affiliation agreements. The reduction in 1993 was primarily due to lower amortization of production costs and lower write- offs resulting from fewer terminated station affiliation agreements. Corporate general and administrative expenses decreased 1% to $4,404 in 1994 from $4,468 in 1993 and decreased 26% in 1993 from $6,017 in 1992. The nominal decrease in 1994 is a result of across-the-board expense cuts, partially offset by fees attributable to the Infinity Management Agreement. The decrease in 1993 was attributable to across-the-board expense cuts and the non-recurrence of a 1992 one-time charge for a vested benefit related to an executive officer's employment contract. As a result of the purchase of Unistar, the Company accrued restructuring costs of $2,405 in the first quarter of 1994 principally relating to the consolidation of certain facilities and operations. Approximately $2,100 of these costs were paid in 1994, with the balance scheduled to be paid in 1995. Severance and termination expenses of $2,063 in 1992 were principally due to management changes implemented to achieve future efficiencies. Operating income increased $8,173 to $5,982 in 1994 from an operating loss of $2,191 in 1993 and the 1993 operating loss decreased 88% from $18,700 in 1992. The significant improvement in 1994 is attributable to the acquisition of Unistar and cost savings resulting from operating synergies from the Unistar acquisition, partially offset by higher depreciation and amortization expense as a result of the Unistar acquisition. The 1993 improvement was primarily due to extensive cost reduction programs and the non-recurrence of prior year severance and termination expenses, partially offset by the non-recurrence of profit from the 1992 Summer Olympics. Interest expense was $8,802, $6,551 and $5,562 in 1994, 1993 and 1992, respectively. The 1994 increase is principally attributable to higher debt levels as a result of the acquisition of Unistar, partially offset by the elimination of interest expense on the Company's 9% Senior Debentures due to their conversion to Common Stock. Other income is principally comprised of investment income. The other expense of $301 in 1992 was due principally to a provision to write-down a parcel of real estate that was held for sale to its net realizable value, partially offset by investment income. Equity in net loss of an unconsolidated subsidiary represents the Company's share of the operating performance of WNEW-AM, which was sold in August 1992. 13 Loss on the sale of an unconsolidated subsidiary of $6,536 in 1992 represents the provision for the sale of WNEW-AM, which closed on December 15, 1992. Loss from continuing operations decreased 69% to $2,730 ($.09 per share) from $8,682 ($.57 per share) in 1993 and 59% in 1993 from $21,397 ($1.44 per share) in 1992. Loss on discontinued operations, net of income tax benefit, was $3,140 in 1993 and $2,721 in 1992. The 1993 loss represents the operating performance of discontinued operations through March 1, 1993. The $12,087 provision for loss on disposal of discontinued operations included estimated future costs and operating results of the discontinued assets from March 1, 1993 until the date of disposition. In connection with the refinancing of its senior debt facility, the Company recorded an extraordinary loss of $590 ($.02 per share). The net loss decreased 86% to $3,320 ($.11 per share) in 1994 from $23,909 ($1.58 per share) in 1993 and 1% in 1993 from $24,118 ($1.62 per share) in 1992. Weighted average shares outstanding increased 94% to 29,414 in 1994 from 15,153 in 1993 and 2% in 1993 from 14,906 in 1992. The 1994 increase in weighted average shares is primarily attributable to the conversion of its 9% Senior Debentures into approximately 8,864 shares of Common Stock and the sale of 5,000 shares of Common Stock to a subsidiary of Infinity. Liquidity and Capital Resources At December 31, 1994, the Company's cash and cash equivalents were $2,439, a decrease of $1,429 from November 30, 1993. In addition, the Company had available borrowings under its Loans of $15,000. For 1994, net cash from operating activities was $2,445, an increase of $4,739 from 1993. The increase was primarily attributable to higher cash flow from operations and an increase in accounts payable due to the Unistar acquisition, partially offset by an increase in accounts receivable resulting principally from the Unistar acquisition. Net cash used by investing activities was $111,731 principally due to the purchase of Unistar. Consequently, cash used before financing activities was $109,286. In the first quarter of 1994, the Company entered into a new senior loan agreement with a syndicate of banks which was comprised of a $15,000 revolving facility and $110,000 in term loans which mature on November 30, 2001. In addition, the Company sold 5,000 shares of Common Stock and a warrant to purchase up to an additional 3,000 shares of Common Stock at an exercise price of $3.00 per share (subject to certain vesting conditions) to a subsidiary of Infinity for $15,000. Proceeds from the loans and Common 14 Stock sale were used to finance the acquisition of Unistar ($101,300), repay borrowings outstanding under its previous senior debt agreement ($8,841) and for working capital. In addition, from December 1993 through March 1994, holders of approximately $31,058 of the Company's 9% Senior Debentures converted their debentures to approximately 8,864 shares of Common Stock. In August 1994, the Company prepaid $5,000 on its term loans which mature on November 30, 2001. At December 31, 1994, the outstanding balance of the Company's term loans were $105,000. In January 1995, the Company prepaid an additional $2,500 on its term loans. As a result, the Company's next scheduled principal repayment of $2,500 is due in November 1995. Management believes that the Company's cash, available borrowings and anticipated cash flow from operations will be sufficient to finance current and forecasted operations over the next 12 months. Item 8. Financial Statements and Supplementary Data The Consolidated Financial Statements and the related notes and schedules of the Company are indexed on page F-1 of this Report, and attached hereto as pages F-1 through F-17 and by this reference incorporated herein. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 15 PART III Item 10. Directors and Executive Officers of the Registrant This information is incorporated by reference to the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the Company's fiscal year. Item 11. Executive Compensation This information is incorporated by reference to the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the Company's fiscal year. Item 12. Security Ownership of Certain Beneficial Owners and Management This information is incorporated by reference to the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after then end of the Company's fiscal year. Item 13. Certain Relationships and Related Transactions This information is incorporated by reference to the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the Company's fiscal year. 16 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents filed as part of this Report on Form 10-K 1. Financial statements and schedules to be filed thereunder are indexed on page F-1 hereof. 2. Exhibits
EXHIBIT NUMBER DESCRIPTION -------- ----------- 3.1 Certificate of Incorporation of Registrant. (1) 3.2 Agreement of Merger. (1) 3.3 Certificate of Amendment of Certificate of Incorporation, as filed on October 10, 1986. (2) 3.4 Certificate of Amendment of Certificate of Incorporation, as filed on October 9, 1986. (3) 3.5 Certificate of Amendment of Certificate of Incorporation, as filed on March 23, 1987. (3) 3.6 Certificate of Correction of Certificate of Amendment, as filed on March 31, 1987 at 10:00 a.m. (3) 3.7 Certificate of Correction of Certificate of Amendment, as filed on March 31, 1987 at 10:01 a.m. (3) 3.8 Bylaws of Registrant as currently in effect. 4 Form of Indenture for 6 3/4% Convertible Subordinated Debentures (including the form of the Debenture). (2) 4.1 Warrant Agreement dated August 27, 1990 between Registrant and Security Pacific National Bank, as Warrant Agent. (7) *10.1 Employment Agreement and Registration Rights Agreement, dated October 18, 1993, between Registrant and Norman J. Pattiz. (13) *10.2 First Amendment to Employment Agreement, dated January 26, 1994 between Registrant and Norman J. Pattiz. (13) *10.3 Second Amendment to Employment Agreement, dated February 2, 1994, between Registrant and Norman J. Pattiz. *10.4 Employment Agreement, dated April 19, 1990, between Unistar Communications Group, Inc., Unistar Radio Networks, Inc. and William J. Hogan. *10.5 Employment Agreement, dated June 1, 1992, between Registrant and Gregory P. Batusic. (11) *10.6 Employment Agreement, dated August 30, 1993, between Registrant and Eric R. Weiss. (13) 10.7 Form of Indemnification Agreement Between Registrant and its Directors and Executive Officers. (4) 10.8 Credit Agreement, dated February 1, 1994, between Registrant and The Chase Manhattan Bank (National Association) and Co-Agents. 10.9 Amendment No. 1 to the Credit Agreement, dated August 12, 1994, between Registrant and The Chase Manhattan Bank (National Association) and Co-Agents. 10.10 Amendment No. 2 to the Credit Agreement, dated August 31, 1994, between Registrant and The Chase Manhattan Bank (National Association) and Co-Agents. 10.11 Amendment No. 3 to the Credit Agreement, dated February 23, 1995, between Registrant and The Chase Manhattan Bank (National Association) and Co-Agents. 10.12 Purchase Agreement dated as of August 24, 1987, between Registrant and National Broadcasting Company, Inc. (5) 10.13 Stock Purchase Agreement, dated November 4, 1993, between Registrant and Unistar Communications Group, Inc., Unistar Radio Network, Inc., and Infinity Broadcasting Corporation. (12) 10.14 Securities Purchase Agreement, dated November 4, 1993, between Registrant and Infinity Network, Inc. (12) *10.15 Management Agreement, dated as of February 4, 1994, between Registrant and Infinity Broadcasting Corporation. (12) *10.16 Voting Agreement, dated as of February 4, 1994, among Registrant, Infinity Network, Inc., Infinity Broadcasting Corporation and Norman J. Pattiz. (12) 10.17 Westwood One, Inc. 1989 Stock Incentive Plan. (10) 10.18 Amendments to the Westwood One, Inc. Amended 1989 Stock Incentive Plan. (14) 10.19 Lease, dated July 19, 1989, between First Ball Associates Limited Partnership and Westwood One, Inc., relating to Arlington, Virginia offices. (6) 10.20 Lease, dated June 18, 1990, between Broadway 52nd Associates and Unistar Communications Group, Inc. relating to New York, New York offices. 10.21 Lease, dated December 18, 1991, between Valencia Paragon Associates, Ltd., and Unistar Communications Group, Inc. relating to Valencia, California offices. 10.22 Digital Audio Transmission Service Agreement, dated June 5, 1990, between Registrant and GE American Communications, Inc. (8) 10.23 Transmission Service Agreement, dated May 28, 1993, between IDB Communications Group, Inc. and Unistar Radio Networks, Inc. 10.24 Stipulation of Settlement of Class Action Law Suit. (6) 10.25 Agreement for Cancellation of Loan Documents, Guarantees and Securities Purchase Documents, dated as of November 19, 1993 between Registrant, Westwood One Stations Group, Inc., Westwood One Stations-LA, Inc., Radio & Records, Inc. and Westinghouse Electric Corporation. (13) 22 List of Subsidiaries 24 Consent of Independent Accountants 27 Financial Data Schedule
[FN] ********************** * Indicates a management contract or compensatory plan. (1) Filed as an exhibit to Registrant's registration statement on Form S-1 (File Number 2-98695) and incorporated herein by reference. (2) Filed as an exhibit to Registrant's registration statement on Form S-1 (Registration Number 33-9006) and incorporated herein by reference. (3) Filed as an exhibit to Registrant's Form 8 dated March 1, 1988 (File Number 0-13020), and incorporated herein by reference. (4) Filed as part of Registrant's September 25, 1986 proxy statement (File Number 0-13020) and incorporated herein by reference. (5) Filed an exhibit to Registrant's current report on Form 8-K dated September 4, 1987 (File Number 0-13020) and incorporated herein by reference. (6) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended November 30, 1989 (File Number 0-13020) and incorporated herein by reference. (7) Filed as an exhibit to Registrant's Quarterly report on Form 10-Q for the quarter ended August 31, 1990 (File Number 0-13020) and incorporated herein by reference. (8) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended November 30, 1990 (File Number 0-13020) and incorporated herein by reference. (9) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended November 30, 1991 (File Number 0-13020) and incorporated herein by reference. (10)Filed as part of Registrant's March 27, 1992 proxy statement (File Number 0-13020) and incorporated herein by reference. (11)Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended November 30, 1992 (File Number 0-13020) and incorporated herein by reference. (12)Filed as part of Registrant's January 7, 1994 proxy statement (File Number 0-13020) and incorporated herein by reference. (13)Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended November 30, 1993 (File Number 0-13020) and incorporated herein by reference. (14)Filed as an exhibit to Registrant's July 20, 1994 proxy statement (File Number 0-13020) and incorporated herein by reference. (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of fiscal 1994. 17 SIGNATURES Pursuant to the requirements of Section13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WESTWOOD ONE, INC. March 31, 1995 By FARID SULEMAN _______________________ Farid Suleman Director, Secretary and Chief Financial Officer Pursuant to the requirements of the Security Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date Principal Executive Officer: MEL A. KARMAZIN _______________ Director, President and March 31, 1995 Mel A. Karmazin Chief Executive Officer Principal Financial Officer and Chief Accounting Officer: FARID SULEMAN _______________ Director, Secretary and March 31, 1995 Farid Suleman Chief Financial Officer Additional Directors: NORMAN J. PATTIZ ___________________ Chairman of the Board of March 31, 1995 Norman J. Pattiz Directors DAVID L. DENNIS _________________ Director March 31, 1995 David L. Dennis GERALD GREENBERG _________________ Director March 31, 1995 Gerald Greenberg PAUL G. KRASNOW ________________ Director March 31, 1995 Paul G. Krasnow ARTHUR E. LEVINE ________________ Director March 31, 1995 Arthur E. Levine JOSEPH B. SMITH ________________ Director March 31, 1995 Joseph B. Smith
18 WESTWOOD ONE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES Page ____ 1. Consolidated Financial Statements --Report of Independent Accountants F-2 --Consolidated Balance Sheets at December 31, 1994 and November 30, 1993 F-3 --Consolidated Statements of Operations for the years ended December 31, 1994, November 30, 1993 and 1992 and the month ended December 31, 1993 F-4 --Consolidated Statements of Shareholders' Equity for the years ended December 31, 1994, November 30, 1993 and 1992 and the month ended December 31, 1993 F-5 --Consolidated Statements of Cash Flows for the years ended December 31, 1994, November 30, 1993 and 1992 and the month ended December 31, 1993 F-6 --Notes to Consolidated Financial Statements F-7 - F16 2. Financial Statement Schedules: IX. --Short-term Borrowings F-17
All other schedules have been omitted because they are not applicable, the required information is immaterial, or the required information is included in the consolidated financial statements or notes thereto. F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Westwood One, Inc. In our opinion, the consolidated financial statements listed in the index to consolidated financial statements and financial statement schedules on page F-1 present fairly, in all material respects, the financial position of Westwood One, Inc. and its subsidiaries at December 31, 1994, November 30, 1993 and 1992, and the results of their operations and their cash flows for the year ended December 31, 1994, the one month ended December 31, 1993 and for each of the two fiscal years in the period ended November 30, 1993, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in the Notes to Consolidated Financial Statements, effective December 1, 1993 the Company changed its accounting policy for capitalized station affiliation agreements and adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". PRICE WATERHOUSE LLP Century City, California February 24, 1995 F-2 WESTWOOD ONE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
December 31, November 30, 1994 1993 -------- ------ ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ 2,439 $ 3,868 Accounts receivable, net of allowance for doubtful accounts of $1,645 (1994) and $959 (1993) 37,631 19,480 Programming costs and rights 3,129 6,849 Other current assets 2,958 2,790 -------- ------- Total Current Assets 46,157 32,987 PROPERTY AND EQUIPMENT, NET 16,748 15,984 INTANGIBLE ASSETS, NET 191,287 90,745 OTHER ASSETS 5,920 12,351 -------- ------- TOTAL ASSETS $260,112 $152,067 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 15,325 $ 11,570 Accrued expenses and other liabilities 12,947 12,838 Amounts payable to affiliates 5,200 1,876 Current maturities of long-term debt 5,000 1,558 Short-term borrowings - 6,648 -------- -------- Total Current Liabilities 38,472 34,490 LONG-TERM DEBT 115,443 51,943 OTHER LIABILITIES 10,743 10,483 -------- -------- TOTAL LIABILITIES 164,658 96,916 -------- -------- COMMITMENTS AND CONTINGENCIES - - SHAREHOLDERS' EQUITY: Preferred stock: authorized 10,000,000 shares, none outstanding - - Common stock, $.01 par value: authorized, 117,000,000 shares; issued and outstanding, 30,652,652 (1994) and 15,978,758 (1993) 307 160 Class B stock, $.01 par value: authorized, 3,000,000 shares: issued and outstanding, 351,733 (1994 and 1993) 4 4 Additional paid-in capital 159,727 110,547 Accumulated deficit (64,584) (55,560) -------- -------- TOTAL SHAREHOLDERS' EQUITY 95,454 55,151 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $260,112 $152,067 ======= =======
See accompanying notes to consolidated financial statements. F-3 WESTWOOD ONE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Year Ended Year Ended Month Ended November 30, December 31, December 31, ------------------ 1994 1993 1993 1992 ---- ---- ---- ---- GROSS REVENUES $158,780 $ 6,887 $98,357 $101,290 Less Agency Commissions 22,440 970 14,343 14,914 -------- -------- ------- -------- NET REVENUES 136,340 5,917 84,014 86,376 -------- -------- ------- -------- Operating Costs and Expenses Excluding Depreciation and Amortization 105,389 5,411 65,353 77,335 Depreciation and Amortization 18,160 1,243 16,384 19,661 Corporate General and Administrative Expenses 4,404 245 4,468 6,017 Restructuring Costs 2,405 - - - Severance and Termination Expenses - - - 2,063 -------- -------- -------- -------- 130,358 6,899 86,205 105,076 -------- -------- -------- -------- OPERATING INCOME (LOSS) 5,982 (982) (2,191) (18,700) Interest Expense 8,802 381 6,551 5,562 Other (Income) Expense (290) (3) (60) 301 Equity in Net Loss of Unconsolidated Subsidiary - - - 789 Loss on Sale of Unconsolidated Subsidiary - - - 6,536 -------- --------- -------- -------- (LOSS) BEFORE INCOME TAXES, DISCONTINUED OPERATIONS, EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (2,530) (1,360) (8,682) (31,888) INCOME TAXES 200 - - (10,491) -------- -------- -------- -------- (LOSS) FROM CONTINUING OPERATIONS (2,730) (1,360) (8,682) (21,397) (LOSS) ON DISCONTINUED OPERATIONS, NET OF INCOME TAX BENEFIT - - (3,140) (2,721) PROVISION FOR (LOSS) ON DISPOSAL OF DISCONTINUED OPERATIONS - - (12,087) - -------- -------- -------- -------- (LOSS) BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (2,730) (1,360) (23,909) (24,118) EXTRAORDINARY ITEM - (LOSS) ON RETIREMENT OF DEBT (590) - - - CUMULATIVE EFFECT OF ACCOUNTING CHANGE - (4,344) - - -------- --------- -------- --------- NET (LOSS) ($3,320) ($ 5,704) ($23,909) ($24,118) ======== ========= ========= ========= (LOSS) PER SHARE: Continuing Operations ($ .09) ($ .07) ($ .57) ($ 1.44) Discontinued Operations - - ( 1.01) ( .18) -------- --------- --------- --------- (Loss) Before Extraordinary Item and Cumulative Effect of Accounting Change ( .09) ( .07) ( 1.58) ( 1.62) Extraordinary Item ( .02) - - - -------- --------- --------- --------- ( .11) ( .07) ( 1.58) ( 1.62) Cumulative Effect of Accounting Change - ( .23) - - -------- --------- --------- --------- Net (Loss) ($ .11) ($ .30) ($ 1.58) ($ 1.62) ======== ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING 29,414 19,051 15,153 14,906 ======== ========= ========= ========= Pro Forma Amounts Assuming the New Accounting Method is Applied Retroactively: (Loss) Before Extraordinary Item ($2,730) ($ 1,360) ($23,142) ($23,280) Net (Loss) ( 3,320) ( 1,360) ( 23,142) ( 23,280) (Loss) Per Share: (Loss) Before Extraordinary Item ($ .09) ($ .07) ($ 1.53) ($ 1.56) Net (Loss) ( .11) ( .07) ( 1.53) ( 1.56)
See accompanying notes to consolidated financial statements. F-4 WESTWOOD ONE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands)
Common Stock Class B Stock Additional Treasury Stock ------------ ------------- Paid-in Accumulated -------------- Shares Amount Shares Amount Capital (Deficit) Shares Amount ------ ------ ------ ------- ------- --------- ------ ------ BALANCE AT NOVEMBER 30, 1991 ............... 14,594 $146 352 $4 $106,854 ($7,533) 53 $706 Net loss for fiscal 1992 ................... - - - - - (24,118) - - Amortization of deferred compensation....... - - - - 281 - - - Issuance of treasury stock to 401-K plan.... - - - - (591) - (53) (706) Issuance of common stock under stock option plans......................... 2 - - - 5 - - - Conversion of Senior Debentures to common stock............................... 25 - - - 88 - - - Common stock issued as compensation to an officer.............................. 42 1 - - 67 - - - ------- ---- ----- ----- ------- ------ ---- ----- BALANCE AT NOVEMBER 30, 1992 ............... 14,663 147 352 4 106,704 (31,651) - - Net loss for fiscal 1993.................... - - - - - (23,909) - - Amortization of deferred compensation....... - - - - 281 - - - Issuance of common stock under stock option plans......................... 680 7 - - 1,381 - - - Conversion of Senior Debentures to common stock .............................. 591 6 - - 2,062 - - - Issuance of common stock to 401-K plan...... 46 - - - 119 - - - ------- ---- ----- ----- ------- ------ ---- ----- BALANCE AT NOVEMBER 30, 1993 ............... 15,980 160 352 4 110,547 (55,560) - - Net loss for December 1993.................. - - - - - (5,704) - - Issuance of common stock under stock option plans......................... 179 2 - - 366 - - - Conversion of Senior Debentures to common stock .............................. 3,542 35 - - 12,530 - - - ------- ---- ----- ----- ------- ------ ---- ----- BALANCE AT DECEMBER 31, 1993 ............... 19,701 197 352 4 123,443 (61,264) - - Net loss for 1994 .......................... - - - - - (3,320) - - Issuance of common stock and warrants................................... 5,000 50 - - 15,933 - - - Issuance of common stock under stock option plans......................... 629 7 - - 1,169 - - - Conversion of Senior Debentures to common stock .............................. 5,322 53 - - 19,170 - - - Issuance of common stock to 401-K plan...... 1 - - - 12 - - - ------- ---- ----- ----- ------- ------ ---- ----- BALANCE AT DECEMBER 31, 1994 ............... 30,653 $307 352 $4 $159,727 ($64,584) - - ======= ===== ===== ===== ======= ======= ==== =====
See accompanying notes to consolidated financial statements. F-5 WESTWOOD ONE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Year Ended Year Ended Month Ended November 30, December 31, December 31, -------------- 1994 1993 1993 1992 ---- ---- ---- ---- CASH FLOW FROM OPERATING ACTIVITIES: Net loss ($3,320) ($5,704) ($23,909) ($24,118) Adjustments to reconcile net loss to net cash provided by operating activities before cash payments related to extraordinary item: Depreciation and amortization: Programming costs and rights 8,072 752 9,721 12,536 Intangible assets 6,667 253 4,079 6,489 Property and equipment 3,238 238 2,111 3,198 Capitalized station affiliation agreements - - 1,461 1,383 Other 183 - - - Extraordinary item - loss on retirement of debt 590 - - - Cummulative effect of accounting change - 4,344 - - Loss on disposal of discontinued operations - - 12,087 - Equity in loss of unconsolidated subsidiary - - - 789 Loss on sale of unconsolidated subsidary - - - 6,536 Deferred income taxes - - - (11,622) Write-down and provision for loss on assets - - - 1,000 Other, including capitalized programming costs and rights (677) 11 (3,625) (4,719) Changes in assets and liabilities: Decrease (increase) in accounts receivable (19,191) 1,088 (2,239) 6,965 Decrease (increase) in prepaid assets (377) (197) 209 1,124 Increase (decrease) in accounts payable, accrued liabilities and amounts payable to affiliates 7,510 (95) (2,189) 4,041 -------- ------- -------- ------ Net cash provided by (used for) operating activities before cash payments related to extraordinary item 2,695 690 (2,294) 3,602 Cash payments related to extraordinary item (250) - - - -------- ------- -------- ------ Net Cash Provided By (Used For) Operating Activities 2,445 690 (2,294) 3,602 -------- ------- -------- ------ CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of companies (Unistar in 1994) (108,181) (72) (1,217) (1,878) Capital expenditures (1,487) (296) (2,270) (1,192) Proceeds (cash payments) related to sales of discontinued operations (576) (229) 88,062 - Proceeds (cash payments) related to sale of unconsolidated subsidary - - 10,372 (1,680) Capitalized station affiliation agreements - - (694) (545) Proceeds related to sale of property and equipment - - 853 - Other (principally deferred financing costs in 1994) (1,487) (82) (268) (397) -------- ------- -------- ------- Net Cash Provided By (Used For) Investing Activities (111,731) (679) 94,838 (5,692) -------- ------- -------- ------- CASH PROVIDED (USED) BEFORE FINANCING ACTIVITIES (109,286) 11 92,544 (2,090) -------- ------- -------- ------- CASH FLOW FROM FINANCING ACTIVITIES: Debt repayments (14,515) (4,133) (104,071) (2,306) Borrowings under debt arrangements 110,000 - 7,000 9,288 Issuance of common stock 16,126 368 1,507 - Issuance of subordinated debentures - - 433 853 -------- ------- -------- ------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 111,611 (3,765) (95,131) 7,835 -------- ------- -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,325 (3,754) (2,587) 5,745 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 114 3,868 6,455 710 -------- ------- --------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,439 $114 $3,868 $6,455 ======== ======= ========= =======
See accompanying notes to consolidated financial statements. F-6 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts) NOTE 1 - Summary of Significant Accounting Policies: Principles of Consolidation The consolidated financial statements include the accounts of all wholly-owned subsidiaries. Revenue Recognition Revenue is recognized when commercial advertisements are broadcast. Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity of less than three months to be cash equivalents. The carrying amount of cash equivalents approximates fair value because of the short maturity of these instruments. Depreciation Depreciation is computed using the straight line method over the estimated useful lives of the assets. Programming Costs and Rights The Company defers a portion of its costs for recorded library material and produced radio entertainment programs with a life of longer than a year. Recorded library material includes previously broadcast programs, live concert performances, interviews, news and special events. Programming costs and rights ("Production costs") are amortized using the straight line method over the period of expected benefit, not to exceed five years. The current portion of deferred production costs represents the portion to be amortized over the next twelve months. Measurement of Intangible Asset Impairment The Company periodically evaluates the carrying value of Intangible Assets. The Company considers the ability to generate positive broadcast cash flow (based on the consolidated statement of operations, calculated by subtracting from net revenue, operating costs and expenses excluding depreciation and amortization) as the key factor in determining whether the assets have been impaired. To date, the Company has not experienced an impairment in any of its intangible assets. Income Taxes Effective December 1, 1993, the Company implemented Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes" which requires the use of the asset and liability method of financial accounting and reporting for income taxes. Under FAS 109, deferred income taxes reflect the tax impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. Earnings (Loss) per Share Net income (loss) per share is based on the weighted average number of common shares and common equivalent shares (where inclusion of such equivalent shares would not be anti-dilutive) outstanding during the year. F-7 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Reclassification Financial statements for all prior periods have been reclassified to conform to the 1994 presentation. NOTE 2 - Accounting Change: Effective December 1, 1993, the Company changed its method of accounting for capitalized station affiliation agreements to expense these costs as incurred. The Company believes this method is preferable and conforms to the predominant current industry practice, including Unistar. Accordingly, the Company recognized the cumulative effect of the change as of December 1, 1993. The non-cash charge to earnings was an expense of $4,344, or $.23 per share and has been reflected in the financial statements for the month of December 1993. NOTE 3 - Change in Fiscal Year: In the third quarter of 1994, the Company changed its fiscal year end from November 30 to December 31 effective with the fiscal year ending December 31, 1994. The accompanying financial statements include audited statements of operations, shareholders' equity and cash flows for the one month transition period ended December 31, 1993. NOTE 4 - Acquisition of Unistar Radio Networks, Inc.: On February 3, 1994, the Company completed the acquisition of all of the issued and outstanding capital stock of Unistar Radio Networks, Inc. ("Unistar"). The acquisition was accounted for as a purchase. Accordingly, the operating results of Unistar are included with those of the Company from the date of acquisition. Based on management's estimates, the purchase price has been allocated to the fair value of assets and liabilities acquired. The excess of cost over net assets of acquired company resulting from the transaction is being amortized over 40 years. The pro forma unaudited combined condensed results of operations of the Company and Unistar for the years ended December 31, 1994 and November 30, 1993 (presented as though the combination had occurred on December 1, 1992 after giving effect to certain pro forma adjustments) are as follows:
December 31, November 30, 1994 1993 ---- ---- Net Revenues $140,403 $141,687 (Loss) from Continuing Operations ( 809) (4,301) (Loss) Per Share from Continuing Operations ( $.03) ( $.15)
The foregoing pro forma results of operations principally reflect adjusting historical interest expense, depreciation and amortization, the sale of 5,000 newly issued shares of common stock to a subsidiary of Infinity and restructuring costs based on the transaction being completed at the beginning of the periods presented. No adjustments were made to historical results for potential cost reductions due to the elimination of duplicate facilities and costs resulting from the acquisition of Unistar. However, 1994 pro forma results reflect the benefit of cost reductions to the extent that they have been realized. F-8 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 5 - Property and Equipment: Property and equipment is recorded at cost and is summarized as follows at:
December 31, November 30, 1994 1993 ---- ---- Land . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,378 $ 3,378 Recording and studio equipment . . . . . . . . . . . . 15,813 15,433 Buildings and leasehold improvements . . . . . . . . . 7,573 6,577 Furniture and equipment . . . . . . . . . . . . . . . 5,664 4,007 Transportation equipment . . . . . . . . . . . . . . . 690 721 Construction-in-progress . . . . . . . . . . . . . . . - 180 ------- ------- 33,118 30,296 Less: Accumulated depreciation and amortization . . . 16,370 14,312 ------- ------- Property and equipment, net . . . . . . . . . $16,748 $15,984 ======= =======
NOTE 6 - Intangible Assets: Intangible assets are summarized as follows at:
December 31, November 30, 1994 1993 ---- ---- Goodwill, less accumulated amortization of $16,334 (1994) and $12,127 (1993) . . . . . . . . . . . . . $153,205 $64,947 Acquired station affiliation agreements, less accumulated amortization of $3,382 (1994) and $1,851 (1993) . . . . . . . . . . . . . . . . . 21,025 8,156 Other intangible assets, less accumulated amortization of $4,543 (1994) and $3,958 (1993) . . . . . . . . . . . . . . . . . . . . . . . 17,057 17,642 -------- ------- Intangible assets, net . . . . . . . . . . . . $191,287 $90,745 ========= =======
Goodwill represents the excess of the cost of purchased businesses over the fair value of their net assets at the date of acquisition. Station affiliation agreements are comprised of values assigned to agreements acquired as part of the purchase of radio networks and are amortized using an accelerated method over 40 years. Intangible assets, except for acquired station affiliation agreements, are amortized on a straight-line basis over 40 years. F-9 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 7 - Debt: Long-term debt consists of the following at:
December 31, November 30, 1994 1993 ---- ---- Term Loans . . . . . . . . . . . . . . . . . . . . . . . $105,000 - 6 % Convertible Subordinated Debentures maturing 2011 . . 15,443 $15,443 Term Notes . . . . . . . . . . . . . . . . . . . . . . . - 7,000 9% Convertible Senior Subordinated Debentures maturing 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . - 31,058 ------- ------- 120,443 53,501 Less current maturities . . . . . . . . . . . . . . . . . 5,000 1,558 ------- ------- $115,443 $51,943 ======== =======
The Company's senior loan agreement with a syndicate of banks provides for $110,000 in term loans ("Term Loans") and a $15,000 revolving facility ("Revolver") which mature on November 30, 2001 (referred to collectively as "The Loans"). Interest is payable at the prime rate plus an applicable margin of up to 1.5% or LIBOR plus an applicable margin of up to 2.5%, at the Company's option. Based on the Company's Total Debt Ratio, the applicable margins may be reduced to as low as .5% for prime rate loans and 1.5% for LIBOR loans. At December 31, 1994, the applicable margins were 1.0% and 2.0%, respectively. Principal on the Term Loans is payable quarterly starting February 28, 1995, however in 1994, the Company prepaid the quarterly installments due on February 28, 1995 and May 31, 1995 resulting in a December 31, 1994 balance of $105,000. The Loans are secured by substantially all the Company's assets and contain covenants relating to dividends, liens, indebtedness, capital expenditures and interest coverage and leverage ratios. As a matter of policy, the Company does not engage in derivative trading, however as part of The Loans, the Company is required to enter into interest rate protection agreements. Accordingly, the Company has entered into two interest rate protection agreements under which the Company's interest rate on $50,000 of borrowings under The Loans will not exceed 8% (based on the current margin). The agreements are effective from July and August 1995 thru July and August 1996, with each covering $25,000 of borrowings. At December 31, 1994, the Company did not have any borrowings outstanding under the Revolver. The 6 3/4% Convertible Subordinated Debentures ("Debentures") are unsecured and subordinated in right of payment to senior indebtedness. Interest on the Debentures is payable semiannually on April 15 and October 15. The Debentures are convertible at any time prior to maturity, unless previously redeemed, into shares of common stock of the Company at the conversion price of $24.58 per share, subject to adjustment upon the occurrence of certain events. F-10 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) During 1994, the Company repaid the Term Notes which were outstanding at the beginning of the year ($7,000). In addition, the 9% Convertible Senior Subordinated Debentures, which were outstanding on November 30, 1993, were converted into approximately 8,864,000 shares of common stock. The aggregate maturities of long-term debt for the next five fiscal years and thereafter, pursuant to the Company's debt agreements as in effect at December 31, 1994, are as follows: Year ---- 1995 . . . . . . . . $ 5,000 1996 . . . . . . . . 15,000 1997 . . . . . . . . 15,000 1998 . . . . . . . . 20,000 1999 . . . . . . . . 20,000 Thereafter . . . . . 45,443 -------- $120,443 ========
With the exception of the Company's Debentures, the fair value of short and long-term debt approximates its carrying value. The fair value of the Debentures at December 31, 1994 was approximately $10,350, based on its quoted market price. NOTE 8 - Shareholders' Equity: The authorized capital stock of the Company consists of Common stock, Class B stock and Preferred stock. Common stock is entitled to one vote per share while Class B stock is entitled to 50 votes per share. In connection with the Company's purchase of Unistar, the Company sold 5 million shares of common stock and a warrant to purchase up to an additional 3 million shares of common stock at an exercise price of $3.00 per share (subject to certain vesting conditions) to a wholly-owned subsidiary of Infinity Broadcasting Corporation for $15,000. In December 1992, the Company's Board of Directors authorized the issuance of 41,500 shares of common stock to an officer of the Company for services performed in fiscal 1992. As part of a settlement relating to class action lawsuits filed against the Company, it issued warrants to purchase 3,000,000 shares of the Company's common stock at $17.25 per share. The warrants expire on September 4, 1997. Warrants not exercised may be redeemable under certain circumstances at $1.00 per warrant. F-11 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 9 - Stock Options: The Company has stock option plans established in 1989 which provide for the granting of options to directors, officers and key employees to purchase stock at its market value on the date the options are granted. There are 4,800,000 shares authorized under the 1989 Plan, as amended. Options granted generally become exercisable after one year in 25% increments per year and expire within ten years from the date of grant. The 1989 Plan will remain in existence for 10 years or until otherwise terminated by the Board of Directors. Information concerning options outstanding under the Plans is as follows for the year ended: December 31, November 30, 1994 1993 ---- ---- Shares authorized under option plans at end of period . . . . . . . . . . . . . . . . . 4,800,000 2,800,000 Exercisable at end of period . . . . . . . . 608,750 734,750 -at exercise prices per share . . . . . . . $1.63-$5.38 $1.63-$9.13 Exercised during the period . . . . . . . . . 629,000 679,500 -at exercise prices per share . . . . . . . $1.63-$3.00 $2.00-$2.75 Granted during the period . . . . . . . . . . 630,000 745,000 -at exercise prices per share . . . . . . . $7.50-$9.75 $1.63-$5.38 Canceled during the period . . . . . . . . . 91,875 141,250 Expired during the period . . . . . . . . . . 50,000 171,000 Available for new stock options at end of period . . . . . . . . . . . . . . . . . . . 1,632,125 170,250
As part of a Management Agreement between the Company and Infinity Broadcasting Corporation ("Infinity"), a subsidiary of Infinity was given warrants to acquire up to 1,500,000 shares of common stock at prices ranging between $3.00 and $5.00 per share, subject to adjustment, which are exercisable after the Company's common stock reaches certain market prices per share. At December 31, 1994, 500,000 warrants were exercisable at $3.00 per share. F-12 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On December 1, 1986, the Chairman of the Board was granted options not covered by the Plans to acquire 525,000 shares of common stock, which vested ratably over a seven-year term or immediately upon a change in control of the Company. The options became exercisable at the fair market value of the common stock, as defined, on the date of vesting. At December 31, 1994, all the options granted are exercisable at exercise prices ranging from $1.67 to $16.31 per share. NOTE 10 - Income Taxes: Effective December 1, 1993, the Company changed its method of accounting for income taxes as required by FAS109. As permitted under the new rules, prior year financial statements have not been restated, and adoption of FAS109 did not affect reported earnings. The Company has approximately $90,000 of available U.S. net operating loss carryforwards for tax purposes. Utilization of the carryforwards is dependent upon future taxable income and they begin to expire in 2002. As a result of the Company's prior and pending debt and equity transactions, some of the Federal net operating losses may be subject to certain limitations. For financial purposes, a valuation allowance of $27,781 has been recorded to offset the deferred tax assets related to those carryforwards. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities on the Company's balance sheet and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities at December 31, 1994 follow: Deferred tax liabilities: Affiliation agreements . . . . . . $ 9,143 Programming costs and rights . . . 2,186 Depreciation . . . . . . . . . . . 1,189 Other . . . . . . . . . . . . . . 351 ------ Total deferred tax liabilities . 12,869 Deferred tax assets: Net operating loss . . . . . . . . 32,650 Accrued liabilities and reserves . 6,953 Tax credits (AMT and ITC) . . . . 1,047 ------ Total deferred tax assets . . . . 40,650 ------ Valuation allowance . . . . . . . . 27,781 ------ Total deferred income taxes $ - =======
F-13 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of the provision (benefit) for income taxes related to continuing operations is summarized as follows:
Year Ended --------------------------------- December 31, November 30, Current payable: 1994 1993 1992 ---- ---- ---- Federal . . . . . . . . . . . . . $ 70 $ - $ - State . . . . . . . . . . . . . . 130 - 26 -------- ------ -------- 200 - 26 -------- ------ -------- Deferred: Federal . . . . . . . . . . . . . - - (9,520) State . . . . . . . . . . . . . . - - (2,102) -------- ------ -------- - - (11,622) -------- ------ -------- Total expense (benefit) for income taxes . . . . . . . . . . . . . 200 - (11,596) Less amount allocated to discontinued operations . . . . . . . . . . - - 1,105 -------- ------ -------- Expense (benefit) allocated to continuing operations . . . . . $ 200 $ - $(10,491) ======== ======= ========
The deferred tax benefits recorded for the year ended November 30, 1992, are attributable to the reversal of deferred taxes for timing differences, provided for in earlier years. Note 11 - Related Party Transactions: In connection with the acquisition of Unistar, the Company sold 5,000,000 shares of the Company's common stock and a warrant to purchase up to an additional 3,000,000 shares to a subsidiary of Infinity (See Note 8) and entered into a Management Agreement with Infinity. Pursuant to the Management Agreement, the Company paid or accrued expenses aggregating $1,849 to Infinity in 1994. In addition, several of Infinity's radio stations are affiliated with the Company's radio networks and the Company purchases several programs from Infinity. During 1994 the Company incurred expenses aggregating approximately $12,159 for Infinity affiliations and programs. NOTE 12 - Restructuring Costs: As a result of the Company's February 1994 acquisition of Unistar, the Company consolidated certain facilities and operations. Accordingly, the Company recorded an expense of approximately $2,405 for the estimated restructuring charges, including the costs of facility consolidations, eliminating programs, employee separations, relocations and related costs. F-14 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 13 - Commitments and Contingencies: The Company has various non-cancelable, long-term operating leases for office space and equipment. In addition, the Company is committed under various contractual agreements to pay for talent, broadcast rights, research, certain digital audio transmission services and the Management Agreement with Infinity. The approximate aggregate future minimum obligations under such operating leases and contractual agreements for the five years after December 31, 1994, are set forth below: Year ---- 1995 . . . . . . . . . . . . . $21,389 1996 . . . . . . . . . . . . . 20,292 1997 . . . . . . . . . . . . . 14,725 1998 . . . . . . . . . . . . . 12,235 1999 . . . . . . . . . . . . . 10,258 ------ $78,899 ======
NOTE 14 - Supplemental Cash Flow Information: Supplemental Information on cash flows, including amounts from discontinued operations, and non-cash transactions is summarized as follows:
Year Ended ----------------------------------- November 30, December 31, ----------------------- 1994 1993 1992 ---- ---- ---- Cash paid (received) for: Interest . . . . . . . . . . . . . $ 7,763 $16,580 $17,083 Income taxes . . . . . . . . . . . 125 31 (176) Non-cash investing and financing activities: Conversion of Senior Debentures to common stock . . . . . . . . 19,223 2,068 89 Disposition of discontinued operations: Debt exchanged . . . . . . . . - 19,724 - Accrued interest exchanged . . - 198 - Accounts receivable exchanged - (448) -
For the one month ended December 31, 1993, $12,565 of Senior Debentures were converted to common stock. F-15 WESTWOOD ONE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE 15 - Discontinued Operations: At the end of the Company's first fiscal quarter of 1993, the Company classified the results of operations from Radio & Records and its Los Angeles (KQLZ-FM) and New York (WYNY-FM) radio stations as discontinued operations. These three businesses collateralized the Company's 16% Debentures and Revolving Credit Facility with Westinghouse Electric Corporation ("WEC"). In June 1993 the Company completed the sales of its Los Angeles and New York radio stations, and used the net proceeds from the sales to retire the Company's 16% Debentures and reduce the outstanding balance of its Revolving Credit Facility. On November 1, 1993, WEC acquired the outstanding stock of Radio & Records and the net assets of Westwood One Stations Group for the outstanding balance of the Revolving Credit Facility, accrued interest and any other potential claims. Accordingly, the historical net loss of the Company's owned-and-operated radio stations and Radio & Records have been reported separately from continuing operations, and the prior periods have been restated (including an allocation of interest of $7,043 and $12,273 for fiscal 1993 and 1992 respectively). The Company made a provision for the loss on the disposition of these assets including estimated future costs and operating results from March 1, 1993 until the date of disposition, of $12,087. Revenue from discontinued operations for fiscal 1993 and 1992 were $22,282 and $36,443, respectively. NOTE 16 - Quarterly Results of Operations (unaudited): The following is a tabulation of the unaudited quarterly results of operations. The quarterly results are presented for the years ended December 31, 1994 and November 30, 1993.
(In thousands, except per share data) First Second Third Fourth For the Quarter Quarter Quarter Quarter Year ------- ------- ------- ------- ------- 1994 ---- Net revenues . . . . . . . . . . . . . . . . . . . . $26,052 $36,151 $36,491 $37,646 $136,340 Operating income (loss) . . . . . . . . . . . . . . . (5,622) 4,341 4,010 3,253 5,982 Income (loss) before extraordinary item . . . . . . . (7,416) 2,183 1,658 845 (2,730) Net income (loss) . . . . . . . . . . . . . . . . . . (8,006) 2,183 1,658 845 (3,320) Income (loss) per share: Before extraordinary item . . . . . . . . . . . . . (.29) 0.07 0.05 0.02 (0.09) Net income (loss) . . . . . . . . . . . . . . . . $ (.32) $ 0.07 $ 0.05 $ 0.02 $ (0.11) 1993 ---- Net revenues . . . . . . . . . . . . . . . . . . . . $17,137 $21,207 $21,732 $23,938 $84,014 Operating income (loss) . . . . . . . . . . . . . . . (4,291) 319 973 808 (2,191) (Loss) from continuing operations . . . . . . . . . . (6,072) (1,303) (580) (727) (8,682) Net (loss) . . . . . . . . . . . . . . . . . . . . . (9,212) (1,303) (9,080) (4,314) (23,909) (Loss) per share: From continuing operations . . . . . . . . . . . . (0.40) (0.09) (0.04) (0.04) (0.57) Net (loss) . . . . . . . . . . . . . . . . . . . . $ (0.61) $ (0.09) $ (0.60) $ (0.28) $ (1.58)
The following is a tabulation of the unaudited quarterly results of operations for each of the quarters for the fiscal year ended December 31, 1993. As a result of restating the quarterly periods, the effect of accounting change is presented as if the change was made as of the beginning of the year.
First Second Third Fourth For the Quarter Quarter Quarter Quarter Year ------- ------- ------- ------- -------- Net revenues . . . . . . . . . . . . . . . . . . . . $18,086 $22,023 $22,611 $22,183 $84,903 Operating income (loss) . . . . . . . . . . . . . . . (3,068) 1,378 1,040 62 (588) (Loss) from continuing operations . . . . . . . . . . (4,885) (227) (494) (1,348) (6,954) (Loss) before cumulative effect of accounting change (7,117) (227) (8,994) (4,935) (21,273) Income (loss) per share: From continuing operations . . . . . . . . . . . . (0.33) (0.02) (0.03) (0.08) (0.45) Before cumulative effect of accounting change . . . $ (0.47) $ (0.02) $ (0.60) $ (0.29) $ (1.37)
F-16 WESTWOOD ONE, INC. SCHEDULE IX CONSOLIDATED SHORT-TERM BORROWINGS (In thousands)
MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE CATEGORY OF WEIGHTED OUT- OUT- INTEREST AGGREGATE BALANCE AT AVERAGE STANDING STANDING RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD PERIOD - - ----------- ---------- -------- ---------- ---------- ---------- Year ended December 31, 1994: Note payable $ - - $2,657 $ 139 8.4% Year ended November 30, 1993: Note payable 6,448 8.3% 7,248 4,399 8.2 Year ended November 30, 1992: Note payable 6,800 8 6,800 3,948 7.5
Notes: Short-term borrowings during the years covered by this schedule consist of loans made under various established credit lines. The average amount outstanding during each period was computed by dividing the average outstanding principal balance by 365 days. The weighted average interest rate during each period was computed by dividing the actual interest expense on such borrowings by the average amount outstanding during that period. F-17 EX-3.8 2 EXHIBIT 3.8 TO FORM 10-K BYLAWS OF WESTWOOD ONE, INC. (A Delaware Corporation) As Amended and Restated ARTICLE I OFFICES Section 1.01. REGISTERED OFFICE. The registered office of Westwood One, Inc. (the "Corporation") in the State of Delaware shall be located at Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, and the name of the registered agent at that address shall be The Corporation Trust Company. Section 1.02. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the Corporation shall be located at 9540 Washington Boulevard, Culver City, California 90232. The Board of Directors of the Corporation (the "Board of Directors") may change the location of said principal executive office. Section 1.03. OTHER OFFICES. The Corporation may also have an officer or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 2.01. ANNUAL MEETINGS. The annual meeting of stockholders of the Corporation shall be held between May 1 and August 30 of each year on such date at such time as the Board of Directors shall determine. At each annual meeting of stockholders, directors shall be elected in accordance with the provisions of Section 3.04 hereof and any other proper business may be transacted. Section 2.02. SPECIAL MEETINGS. Special meetings of stockholders for any purpose or purposes may be called at any time by a majority of the Board of Directors or by the Chairman of the Board. Special meetings may not be called by any other person or persons. Each special meeting shall be held at such date and time as is requested by the person or persons calling the meeting, with the limits fixed by law. 1 Section 2.03. PLACE OF MEETINGS. Each annual or special meeting of stockholders shall be held at such location as may be determined by the Board of Directors or, if no such determination is made, at such place as may be determined by the Chairman of the Board. If no location is so determined, any annual or special meeting shall be held at the principal executive office of the Corporation. Section 2.04. NOTICE OF MEETINGS. Written notice of each annual or special meeting of stockholders stating the date and time when, and the place where, it is to be held shall be delivered either personally or by mail to stockholders entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. The purpose or purposes for which the meeting is called may, in the case of an annual meeting, and shall, in the case of a special meeting, also be stated. If mailed, such notice shall be directed to a stockholder at his address as it shall appear on the stock books of the Corporation, unless he shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, in which case such notice shall be mailed to the address designated in such request. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 2.05. CONDUCT OF MEETINGS. All annual and special meetings of stockholders shall be conducted in accordance with such rules and procedures as the Board of Directors may determine subject to the requirements of applicable law, and as to matters not governed by such rules and procedures, as the chairman of such meetings shall determine. The chairman of any annual or special meetings of stockholders shall be the Chairman of the Board. The Secretary, or in the absence of the Secretary, a person designated by the Chairman of the Board, shall act as secretary of the meeting. Section 2.06. QUORUM. At any meeting of stockholders, the presence, in person or by proxy, of the holders of record of shares then issued and outstanding and entitled to vote representing a majority of the votes eligible to be cast at the meeting shall constitute a quorum for the transaction of business; provided, however, that this Section 2.06 shall not affect any different requirement which may exist under statute, pursuant to 2 the rights of any authorized class or series of stock, or under the Certificate of Incorporation of the Corporation (the "Certificate") for the vote necessary for the adoption of any measure governed thereby. In the absence of a quorum, the stockholders present in person or by proxy, by majority vote and without further notice, may adjourn the meeting from time to time until a quorum is attained. At any reconvened meeting following such an adjournment at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Section 2.07. VOTES REQUIRED. A majority of the votes cast at a duly called meeting of stockholders, at which a quorum is present, shall be sufficient to take or authorize action upon any matter which may properly come before the meeting, unless the vote of greater or different number thereof is required by statue, by the rights of any authorized class of stock or by the Certificate. Unless the Certificate or the resolution of the Board of Directors adopted in connection with the issuance of shares of any class or series of stock provides for a greater or lesser number of votes per share, or limits or denies voting rights, each outstanding share of stock, regardless of class, shall be entitled to one vote on each matter submitted to a vote of meeting of stockholders. Section 2.08. CUMULATIVE VOTING. Except as otherwise provided by applicable law, there shall be no cumulative voting permitted in the election of Directors, or any other matter brought before the stockholders. Section 2.09. PROXIES. A stockholder may vote the shares owned of record by him either in person or by proxy executed in writing (which shall include writings sent by telex, telegraph, cable or facsimile transmission) by the stockholder himself or by his duly authorized attorney-in-fact. No proxy shall be valid after three (3) years from its date, unless the proxy provides for a longer period. Each proxy shall be in writing, subscribed by the stockholder or his duly authorized attorney-in-fact, and dated, but it need not be sealed, witnessed or acknowledged. Section 2.10. STOCKHOLDER ACTION. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual meeting or special meeting of stockholders of the Corporation, unless such action requiring or permitting stockholder approval is approved by a majority of the Continuing Directors (as defined in the Certificate), in which case such action may be authorized or taken by the holders of outstanding shares of stock having not less than the minimum voting power that would be necessary to authorize or take such action at a meeting of stockholders at which all shares entitled 3 to vote thereon were present and voted, provided all other requirements of applicable law and the Certificate have been satisfied. Section 2.11. LIST OF STOCKHOLDERS. The Secretary of the Corporation shall prepare and make (or cause to be prepared and made), at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of, and the number of shares registered in the name of, each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the duration thereof, and may be inspected by any stockholder who is present. Section 2.12. INSPECTORS OF ELECTION. In advance of any meeting of stockholders, the Board of Directors may appoint Inspectors of Election to act at such meeting or at any adjournment or adjournments thereof. If such Inspectors are not so appointed or fail or refuse to act, the chairman of any such meeting may (and, upon the demand of any stockholder or stockholder's proxy, shall) make such an appointment. The number of Inspectors of Election shall be one (1) or three (3) as directed by the Chairman of the Board from time to time. If there are three (3) Inspectors of Election, the decision, act or certificate of a majority shall be effective and shall represent the decision, act or certificate of all. No such Inspector need be a stockholder of the Corporation. The Inspectors of Election shall determine the number of shares outstanding, the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies; they shall receive votes, ballots, or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close and determine the result; and finally, they shall do such acts as may be proper to conduct the election or vote with fairness to all stockholders. On request, the Inspectors shall make a report in writing to the secretary of the meeting concerning any challenge, question or other matter as may have been determined by them and shall execute and deliver to such secretary a certificate of any fact found by them. 4 ARTICLE III DIRECTORS Section 3.01. POWERS. The business and affairs of the Corporation shall be managed by and be under the direction of the Board of Directors. The Board of Directors shall exercise all the power of the Corporation, except those that are conferred upon or reserved to the stockholders by statute, the Certificate or these Bylaws. Section 3.02. NUMBER. Except as otherwise fixed pursuant to the provisions of Section 4 of Article Fourth of the Certificate in connection with rights to elect additional directors under specified circumstances which may be granted to the holders of any class or series of Preferred Stock, par value One Cent ($0.01) per share of the Corporation ("Preferred Stock"), the number of directors shall be fixed from time to time by resolution of the Board of Directors but shall not be less than three (3). The Board of Directors shall consist of nine (9) directors until changed as herein provided. Section 3.03. INDEPENDENT OUTSIDE DIRECTORS. At least thirty three and one-third percent (33 1/3%) of the members of the Board of Directors of the Corporation shall at all times be "Independent Outside Directors," which term is hereby defined to mean any director who: has not been an officer or employee of the Corporation or Infinity Broadcasting Corporation or any of their respective subsidiaries, or any other person having a relationship which, in the opinion of the Board of Directors or a committee thereof, would interfere with the exercise of independent judgement in carrying out the responsibilities of a director. Section 3.04. ELECTION AND TERM OF OFFICE. Except as provided in Section 3.07 hereof and subject to the right to elect additional directors under specified circumstances which may be granted, pursuant to the provisions of Section 4 of Article Fourth of the Certificate, to the holders of any class or series of Preferred Stock, directors shall be elected by the stockholders of the Corporation. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. The number of directors in each class shall be the whole number contained in the quotient obtained by dividing the authorized number of directors (fixed pursuant to Section 3.02 hereof) by three. If a fraction is also contained in such quotient, then additional directors shall be apportioned as follows: if such fraction is one-third, the additional director shall be a member of Class I; and if such fraction is two-thirds, one of the additional directors shall be a member of Class I and the other shall be a member of Class II. Except as otherwise required by applicable law, each director shall serve for a term ending on the date of 5 the third annual meeting of stockholders of the Corporation following the annual meeting at which such director was elected. Notwithstanding the foregoing provisions of this Section 3.04: each director shall serve until his successor is elected and qualified or until his death, resignation or removal; no decrease in the authorized number of directors shall shorten the term of any incumbent director; and additional directors, elected pursuant to Section 4 of Article Fourth of the Certificate in connection with rights to elect such additional directors under specified circumstances which may be granted to the holders of any class or series of Preferred Stock, shall not be included in any class, but shall serve for such term or terms and pursuant to such other provisions as are specified in the resolution of the Board of Directors establishing such class or series. Section 3.05. ELECTION OF CHAIRMAN OF THE BOARD. At the organizational meeting immediately following the annual meeting of stockholders, the directors shall elect a Chairman of the Board from among the directors, who shall hold office until the corresponding meeting of the Board of Directors in the next year and until his successor shall have been elected or until his earlier resignation or removal. Any vacancy in such office may be filled for the unexpired portion of the term in the same manner by the Board of Directors at any regular or special meeting. Section 3.06. REMOVAL. Subject to the right to elect directors under specified circumstances which may be granted pursuant to Section 4 of Article Fourth of the Certificate to the holders of any class or series of Preferred Stock, any director may be removed from office only as provided in Article Tenth of the Certificate. Section 3.07. VACANCIES AND ADDITIONAL DIRECTORSHIPS. Except as otherwise provided pursuant to Section 4 of Article Fourth of the Certificate in connection with rights to elect additional directors under specified circumstances which may be granted to the holders of any class or series of Preferred Stock, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, regardless of their class, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified or until such director's death, resignation or removal, whichever first occurs. No decrease in 6 the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Section 3.08. REGULAR AND SPECIAL MEETINGS. Regular meetings of the Board of Directors shall be held immediately following the annual meeting of the stockholders, and at such other times as shall be from time to time set by the Board of Directors, unless a regular meeting is otherwise called by the Chairman of the Board in accordance with applicable law. Special meetings of the Board of Directors shall be held upon call by or at the direction of the Chairman of the Board, the Chief Executive Officer, the Executive Vice President, or any two directors, except that when the Board of Directors consists of one director, then the one director may call a special meeting. Except as otherwise required by law, notice of each special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least two days before the day on which the meeting is to be held, or shall be sent to him at such place by telex, telegram, cable, facsimile transmission or telephoned or delivered to him personally, not later than the day before the day on which the meeting is to be held. Such notice shall state the time and place of such meeting, but need not state the purpose or purposes thereof, unless otherwise required by law, the Certificate or these Bylaws. Notice of any meeting need not be given to any director who shall attend such meeting in person or who shall waive notice thereof, before or after such meeting, in a signed writing. Section 3.09. QUORUM. At all meetings of the Board of Directors, a majority of the fixed number of directors shall constitute a quorum for the transaction of business, except that when the Board of Directors consists of one director, then the one director shall constitute a quorum. In the absence of a quorum, the directors present, by majority vote and without notice other than by announcement, may adjourn the meeting from time to time until a quorum shall be present. At any reconvened meeting following such an adjournment at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Section 3.10. VOTES REQUIRED. Except as otherwise provided by applicable law or by the Certificate, the vote of a majority of the directors present at a meeting duly held at which a quorum is present shall be sufficient to pass any measure. Section 3.11. PLACE AND CONDUCT OF MEETINGS. Each regular meeting and special meeting of the Board of Directors shall be held at a location determined as follows: The Board of Directors 7 may designate any place, within or without the State of Delaware, for the holding of any meeting. If no such designation is made: (i) any meeting called by a majority of the directors shall be held at such location, within the county of the Corporation's principal executive office, as the directors calling the meeting shall designate; and (ii) any other meeting shall be held at such location, within the county of the Corporation's principal executive office, as the Chairman of the Board may designate or, in the absence of such designation, at the Corporation's principal executive office. Subject to the requirements of applicable law, all regular and special meetings of the Board of Directors shall be conducted in accordance with such rules and procedures as the Board of Directors may approve and, as to matters not governed by such rules and procedures, as the chairman of such meeting shall determine. The chairman of any regular or special meeting shall be the Chairman of the Board, or in his absence a person designated by the Board of Directors. The Secretary, or in the absence of the Secretary a person designated by the chairman of the meeting, shall act as secretary of the meeting. Meetings of the Board of Directors may be held through use of conference telephone or similar communications equipment so long as all members participating in such meeting can hear one another at the time of such meeting. Participation in such a meeting constitutes presence in person at such meeting. Section 3.12. ACTION BY UNANIMOUS WRITTEN CONSENT. Any action required or permitted to be taken by the Board may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such Directors. Section 3.13. FEES AND COMPENSATION. Directors shall be paid such compensation as may be fixed from time to time by resolutions of the Board of Directors (a) for their usual and contemplated services as directors, (b) for their services as members of committees appointed by the Board of Directors, including attendance at committee meetings as well as services which may be required when committee members must consult with management staff, and (c) for extraordinary services as directors or as members of committees appointed by the Board of Directors, over and above those services for which compensation is fixed pursuant to items (a) and (b) in this Section 3.13. Compensation may be in the form of an annual retainer fee or a fee for attendance at meetings, or both, or in such other form or on such basis as the resolutions of the Board of Directors shall fix. Directors shall be reimbursed for all reasonable expenses incurred by them in attending meetings of the Board of Directors and 8 committees appointed by the Board of Directors and in performing compensable extraordinary services. Nothing contained herein shall be construed to preclude any director from serving the Corporation in any other capacity, such as an officer, agent, employee, consultant or otherwise, and receiving compensation therefor. Section 3.14. COMMITTEES OF THE BOARD OF DIRECTORS. Subject to the requirements of applicable law, the Board of Directors may from time to time establish committees, including standing or special committees, which shall have such duties and powers as are authorized by these Bylaws or by the Board of Directors. Committee members, and the chairman of each committee, shall be appointed by the Board of Directors. The Chairman of the Board, in conjunction with the several committee chairmen, shall make recommendations to the Board of Directors for its final action concerning members to be appointed to the several committees of the Board of Directors. Any member of any committee may be removed at any time with or without cause by the Board of Directors. Vacancies which occur on any committee shall be filled by a resolution of the Board of Directors. If any vacancy shall occur in any committee by reason of death, resignation, disqualification, removal or otherwise, the remaining members of such committee, so long as a quorum is present, may continue to act until such vacancy is filled by the Board of Directors. The Board of Directors may, by resolution, at any time deemed desirable, discontinue any standing or special committee. Members of standing committees, and their chairmen, shall be elected yearly at the organizational meeting of the Board of Directors which is held immediately following the annual meeting of stockholders. 9 Section 3.15. MEETINGS OF COMMITTEES. Each committee of the Board of Directors shall fix its own rules of procedure consistent with the provisions of applicable law and of any resolutions of the Board of Directors governing such committee. Each committee shall meet as provided by such rules or such resolution of the Board of Directors, and shall also meet at the call of its chairmen or any two (2) members of such committee. Unless otherwise provided by such rules or by such resolution, the provisions of these Bylaws under Article III entitled "Directors" relating to the place of holding meetings and the notice required for meetings of the Board of Directors shall govern the place of meetings and notice of meetings for committees of the Board of Directors. A majority of the members of each committee shall constitute a quorum thereof, except that when a committee consists of one (1) member, then the one (1) member shall constitute a quorum. In the absence of a quorum, a majority of the members present at the time and place of any meeting may adjourn the meeting from time to time until a quorum shall be present and the meeting may be held as adjourned without further notice or waiver. Except in cases where it is otherwise provided by the rules of such committee or by a resolution of the Board of Directors, the vote of a majority of the members present at a duly constituted meeting at which a quorum is present shall be sufficient to pass any measure by the committee. ARTICLE IV OFFICERS Section 4.01. DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation shall have a Chairman of the Board or a Chief Executive Officer or both, such Vice Presidents as the Board of Directors deems appropriate, a Secretary and a Chief Financial Officer. These officers shall be elected annually by the Board of Directors at the organizational meeting immediately following the annual meeting of stockholders, and each such officer shall hold office until the corresponding meeting of the Board of Directors in the next year and until his successor shall have been elected and qualified or until his earlier resignation, death or removal. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Section 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the Chairman of the Board of Directors and shall, subject to the power and authority of the Board of Directors, have general supervision, direction and control of the business and affairs of the Corporation. In addition to the above duties, he shall have such other duties as may from time to time be assigned to him by the Board of Directors. 10 Section 4.03. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the general manager of the Corporation, subject to the power of, and accountable to, the Board of Directors. He shall have general charge and supervision of the operating elements of the Corporation and shall perform such other duties as may be assigned to him from time to time by the Board of Directors. Section 4.04. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be the financial officer of the Corporation. He shall be responsible to the Chief Executive Officer and the Board of Directors for the management and supervision of all financial matters and to provide for the financial growth and stability of the Corporation. He shall attend all regular meetings of the Board of Directors and keep the Directors currently informed concerning all significant financial matters that could impact upon the business or affairs of the Corporation. He shall also perform such additional duties as may be assigned to him from time to time by the Board of Directors or the Chief Executive Officer. Section 4.05. VICE PRESIDENTS. Vice Presidents of the Corporation that are elected by the Board of Directors shall perform such duties as may be assigned to them from time to time by the Chief Executive Officer. Section 4.06. SECRETARY. The Secretary shall keep the minutes of the meetings of the stockholders, the Board of Directors and all committee meetings. He shall be the custodian of the corporate seal and shall affix it to all documents which he is authorized by law or the Board of Directors to sign and seal. He also shall perform such other duties as may be assigned to him from time to time by the Board of Directors or the Chief Executive Officer. Section 4.07. ASSISTANT OFFICERS. The Chief Executive Officer may appoint one or more assistant secretaries, and such other assistant officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as may be specified from time to time by the Chief Executive Officer. Section 4.08. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case of the absence or disability of an officer of the Corporation or for any other reason that may seem sufficient to the Board of Directors, the Board of Directors, or any officer designated by it, or the Chief Executive Officer, may, for the time of the absence or disability, delegate such officer's duties and powers to any other officer of the Corporation. Section 4.09. OFFICERS HOLDING TWO OR MORE OFFICES. The 11 same person may hold any two or more of the above-mentioned offices. However, no officer shall execute, acknowledge or verify any instrument in more than one capacity, if such instrument is required by law, by the Certificate or by these Bylaws, to be executed, acknowledged or verified by any two or more officers. Section 4.10. COMPENSATION. The Board of Directors shall have the power to fix the compensation of all officers and employees of the Corporation. Section 4.11. RESIGNATIONS. Any officer may resign at any time by giving written notice to the Board of Directors, to the Chairman of the Board, to the Chief Executive Officer, or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein unless otherwise determined by the Board of Directors. The acceptance of a resignation by the Corporation shall not be necessary to make it effective. Section 4.12. REMOVAL. Any officer of the Corporation may be removed, with or without cause, by the affirmative vote of a majority of the entire Board of Directors. Any assistant officer of the Corporation may be removed, with or without cause, by the Chairman of the Board, the Chief Executive Officer or by the Board of Directors. ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER CORPORATE AGENTS To the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), the Corporation shall indemnify and hold harmless against all expenses, liability and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by each person who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise (any such action, suit or proceeding being hereinafter in this Article referred to as a "proceeding"), by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, or was a director, 12 officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation (any such person being hereafter in this Article referred to as an "indemnifiable party"). The right to indemnification conferred by this Article shall be a contract right. Where required by law, the indemnification provided for in this Article shall be made only as authorized in the specific case upon a determination, in the manner provided by law, that the indemnification of the indemnifiable party is proper in the circumstances. The Corporation shall advance to indemnifiable parties expenses incurred in defending any proceeding prior to the final disposition thereof subject to the receipt of such undertakings from such indemnifiable party as shall be required by the applicable law. This Article shall create a right of indemnification for each such indemnifiable party whether or not the proceeding to which the indemnification relates arose in whole or in part prior to adoption of this Article (or the adoption of the comparable provisions of the Bylaws of the Corporation's predecessor corporation) and, in the event of the death of an indemnifiable party, such right shall extend to such indemnifiable party's heirs and legal representatives. If a claim under this Article is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the indemnifiable party may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the indemnifiable party shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the indemnifiable party has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard or conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard 13 of conduct. The right of indemnification hereby given shall not be exclusive of any right such indemnifiable party may have, whether by law or under any agreement, insurance policy, vote of the Board of Directors or stockholders, or otherwise. The Corporation shall have power to purchase and maintain insurance on behalf of any indemnifiable party against any liability asserted against or incurred by the indemnifiable party in such capacity or arising out of the indemnifiable party's status as such whether or not the Corporation would have the power to indemnify the indemnifiable party against such liability. ARTICLE VI STOCK Section 6.01. CERTIFICATES. Except as otherwise provided by law, each stockholder shall be entitled to a certificate or certificates which shall represent and certify the number and class (and series, if appropriate) of shares of stock owned by him in the Corporation. Each certificate shall be signed in the name of the Corporation by the Chairman of the Board or the Chief Executive Officer or a Vice President together with the Secretary, or an Assistant Secretary, or the Chief Financial Officer. Any or all of the signatures on any certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue. Section 6.02. TRANSFER OF SHARES. Shares of stock shall be transferable on the books of the Corporation only by the holder thereof, in person or by his duly authorized attorney, upon the surrender of the certificate representing the shares to be transferred, properly endorsed, to the Corporation's registrar if the Corporation has a registrar. The Board of Directors shall have power and authority to make such other rules and regulations concerning the issue, transfer and registration of certificates of the Corporation's stock as it may deem expedient. Section 6.03. TRANSFER AGENTS AND REGISTRARS. The Corporation may have one or more transfer agents and one or more registrars of its stock whose respective duties the Board of Directors or the Secretary may, from time to time, define. No certificate of stock shall be valid until countersigned by a transfer agent, if the Corporation has a transfer agent, or until registered by a registrar, if the Corporation has a registrar. 14 The duties of transfer agent and registrar may be combined. Section 6.04. STOCK LEDGERS. Original or duplicate stock ledgers, containing the names and addresses of the record stockholders of the Corporation, and the number of shares of each class of stock held by them, shall be kept at the principal executive office of the Corporation or at the office of its transfer agent or registrar. The Secretary or his designee shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 6.05. RECORD DATES. The Board of Directors shall fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of, or to vote at, any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or in order to make a determination of stockholders for any other proper purpose. Such date in any case shall be not more than sixty (60) days, and in case of a meeting of stockholders, not less than ten (10) days, prior to the date on which the particular action, requiring such determination of stockholders, is to be taken. Only those stockholders of record on the date so fixed shall be entitled to any of the foregoing rights, notwithstanding the transfer of any such stock on the books of the Corporation after any such record date fixed by the Board of Directors. Section 6.06. NEW CERTIFICATES. In case any certificate of stock is lost, stolen, mutilated or destroyed, the Board of Directors may authorize the issuance of a new certificate in place thereof upon such terms and conditions as it may deem advisable; or the Board of Directors may delegate such power to any officer or officers or agents of the Corporation; but the Board of Directors or such officer or officers or agents, in their discretion, may refuse to issue such a new certificate unless the Corporation is ordered to do so by a court of competent 15 jurisdiction. Furthermore, the Corporation, or its officers or agents, may require the owner of a lost, stolen, mutilated or destroyed certificate, or his legal representative, to give the Corporation a bond (or other security) sufficient to indemnify it against any claim that may be made on account of the alleged loss, theft, mutilation or destruction of any such certificate or the issuance of new certificates or uncertified shares. Section 6.07. STOCK PURCHASE PLANS; STOCK OPTION PLANS. 1. The Corporation may adopt and carry out a stock purchase plan or agreement or stock option plan or agreement providing for the issue and sale, for such consideration as may be fixed, of its unissued shares, or of issued shares acquired or to be acquired, to one or more of the employees or directors of the Corporation or of a subsidiary or to a trustee on their behalf and for the payment for such shares in installments or at one time, and may provide for aiding any such persons in paying for such shares by compensation for services rendered, promissory notes or otherwise. 2. A stock purchase plan or agreement or stock option plan or agreement may include, among other features, the fixing of eligibility for participation therein, the class and price of shares to be issued or sold under the plan or agreement, the number of shares which may be subscribed for, the method of payment therefor, the reservation of title until full payment therefor, the effect of the termination of employment, an option or obligation on the part of the Corporation to repurchase the shares upon termination of employment, subject to applicable law, restrictions upon transfer of the shares and the time limits of and termination of the plan. ARTICLE VII CORPORATE RECORDS Section 7.01. TYPES OF RECORDS. The Corporation shall keep adequate and correct books and records of account, shall keep minutes of the proceedings of the stockholders, Board of Directors and committees of the Board of Directors and shall keep at its principal executive office, or at the office of its transfer agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders and the number and class of shares held by each. Such minutes shall be kept in written form. Such other books and records shall be kept either in written form or in any other form capable of being converted into clearly legible written form within a reasonable time. 16 Section 7.02. FINANCIAL STATEMENTS AND REPORTS. To the extent applicable, the Corporation will file with the Securities and Exchange Commission ("S.E.C.") all quarterly, other interim, and annual financial reports required by the Securities and Exchange Act of 1934 (the "Exchange Act"). Further, so long as the Corporation is subject to the reporting requirements of Section 12 of the Exchange Act, it shall prepare and submit to stockholders an annual report in accordance with Rule 14a-3 of the S.E.C. A copy of the foregoing reports shall be maintained in the principal executive office of the Corporation and such reports shall be exhibited at all reasonable times to any stockholder requesting an examination of them. The financial statements referred to in this section shall be accompanied by the report thereon, if any, of any independent accountants engaged by the Corporation or the certificate of an authorized officer of the Corporation that such financial statements were prepared without audit from the books and records of the Corporation. Section 7.03. STOCKHOLDERS' RIGHT OF INSPECTION. The books and records and minutes of proceedings of the stockholders and the Board of Directors and committees of the Board of Directors shall be open to inspection, upon the written demand under oath stating the purpose thereof, by any stockholder or holder of a voting trust certificate at any reasonable time during usual business hours, for any proper purpose. This right of inspection shall extend to the records of the subsidiaries, if any, of the Corporation. Such inspection may be made in person, or by agent or attorney, and the right of inspection includes the right to copy and make extracts. Section 7.04. DIRECTORS' RIGHT OF INSPECTION. Every director shall have the right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the Corporation and/or its subsidiary corporations for a purpose reasonably related to his position as a director. Such inspection may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts. ARTICLE VIII SUNDRY PROVISIONS Section 8.01. FISCAL YEAR. The fiscal year of the corporation shall end on the 31st day of December of each year. Section 8.02. SEAL. The seal of the Corporation shall bear the name of the Corporation, the date of its incorporation, and the word "Delaware." 17 Section 8.03. VOTING OF STOCK IN OTHER CORPORATIONS. Any shares of stock in other corporations or associations, which may from time to time be held by the Corporation, may be represented and voted at any of the stockholders' meetings thereof by the Chairman of the Board or his designee. The Board of Directors, however, may by resolution appoint some other person or persons to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution. Section 8.04. AMENDMENTS. These Bylaws may be adopted, repealed, rescinded, altered or amended only as provided in Articles Fifth and Sixth of the Certificate. 18 EX-10.3 3 EXHIBIT 10.3 TO FORM 10-K SECOND AMENDMENT THIS SECOND AMENDMENT is made effective as of February 2, 1994 with reference to the Employment Agreement dated October 18, 1993 by and between Westwood One, Inc. (the "Company") and Norman J. Pattiz ("Employee"), as amended by the First Amendment dated January 26, 1994 (the "Agreement"). WHEREAS, Employee and the Company desire to amend certain provisions of the Agreement and except for such amendment to have such Agreement remain in full force and effect; NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is acknowledged, Employee and Company hereby agree as follows: The Agreement is hereby amended as follows: 1. Section 3.1 (Salary and Bonus). The Agreement shall be amended by adding the following sentence to the end of Section 3.1: "Notwithstanding anything in this Agreement to the contrary, the incentive compensation determined and payable as set forth on Schedule 2 shall be determined in accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended, and the final regulations promulgated by the United States Treasury Department thereunder." 2. Schedule 2. Schedule 2 to the Agreement shall be amended and restated in its entirety to read as set forth on the Schedule 2 attached hereto and incorporated in the Agreement by this reference. 3. Limited Effect of Amendment. Each and every one of the other terms and conditions of the Agreement shall remain unchanged and in full force and effect, and the Agreement shall be amended only as specifically set forth herein. 1 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. EMPLOYEE WESTWOOD ONE, INC. NORMAN J. PATTIZ By: ERIC R. WEISS _________________________ ___________________ Norman J. Pattiz Eric R. Weiss Executive Vice President 2 SCHEDULE 2 CASH INCENTIVE COMPENSATION For each fiscal year of the Company, commencing with the fiscal year ending November 30, 1994, that the Company meets or exceeds its EBITAD target as established by the Compensation Committee of the Board of Directors (or other similar committee of the Board of Directors meeting the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended) not later than 90 days after the beginning of each such fiscal year, Employee will be entitled to receive cash incentive compensation ("CIC Bonus") as follows: Fiscal Year CIC Bonus ___________ _________ 1994 $250,000 1995 $275,000 1996 $302,500 1997 $332,750 1998 $366,025
If the termination date of this Agreement is other than the last day of a fiscal year, Employee will be entitled to a pro- rated CIC Bonus for the portion of the year preceding the termination date if the EBITAD target is met through the end of the month ending on or next preceding the termination date. EBITAD means earnings before interest, taxes, amortization and depreciation as reported in the Company's Form 10-K for the fiscal year, or, if for a portion of the year, as approved by the Board based on the Company's books and records. The CIC Bonus for any year shall be paid not later than 30 days after the filing by the Company of its Form 10-K with the Securities and Exchange Commission for such year, or if the CIC bonus is for a part of the year, not later than 60 days after the end of the last month taken into account in determining whether the EBITAD target is met. 3 EX-10.4 4 EXHIBIT 10.4 TO FORM 10K ***************** EMPLOYMENT AGREEMENT This Agreement dated as of April 19, 1990 (as from time to time amended and in effect, this "Agreement") is among UniStar Communications Group, Inc., a Delaware corporation ("UniStar"), UniStar Radio Networks, Inc. ("Networks"; UniStar and Networks are collectively sometimes referred to herein as the "Company") and William J. Hogan (the "Executive"). The Executive is currently employed by the Networks as Co-President and Co-Chief Operating Officer. The parties desire to provide for the Executive's continued employment by Networks on behalf of the Company in those capacities in accordance with the provisions of this Agreement. It is therefore agreed as follows: 1. Employment. The Company hereby employs the Executive as Co-President and Co-Chief Executive Officer of Networks for a period commencing on the date of this Agreement and ending April 18, 1995 (the "Employment Term"). The Executive hereby accepts such employment and agrees to perform the services specified herein, all upon and subject to the terms and conditions hereinafter stated. 2. Duties. The Executive shall serve the Company as a Co-President and Co-Chief Operating Officer of the Networks. The Executive shall report to, and be subject to the direction and control of, the Co-Chairmen of the Company and the Board of Directors of the Company (the "Board"). The Executive shall have such duties, authority and responsibilities as are normally associated with his positions and as may be determined from time to time by the Co-Chairmen and the Board consistent with his position with Networks. The Executive shall devote his best efforts and all of his business time to the performance of his duties under this Agreement and shall perform them faithfully, diligently and competently. The Executive shall not engage in outside activities if such activities would materially interfere with the performance of his duties under this Agreement. 3. Salary. The Company shall pay to the Executive, as compensation in full for the Executive's services hereunder, before any deduction or withholding, a base salary for each year in the Employment Term as follows: 1 April 19, 1990 - April 18, 1991 $322,000 April 19, 1991 - April 18, 1992 $353,000 April 19, 1992 - April 18, 1993 $384,000 April 19, 1993 - April 20, 1994 $415,000 April 19, 1994 - April 20, 1995 $446,000 4. Bonus. (a) Signing Bonus. The Executive shall receive from the Company a signing bonus for executing this Agreement in the amount of $30,163.14. The signing bonus shall be payable on January 1, 1991; provided that the Executive is employed by the Company on that date. Should the Executive's employment with the Company be terminated for any reason whatsoever the following amounts shall be repayable to the Company by the Executive if such termination occurs during the periods indicated below: April 19, 1990 - April 18, 1991 $30,163.14 April 19, 1991 - April 18, 1992 $29,187.18 April 19, 1992 - April 18, 1993 $24,992.73 April 19, 1993 - April 18, 1994 $15,753.00 (b) Additional Bonus. In addition to his annual base salary, the Executive may receive such discretionary bonus as the Board may, in its sole and absolute discretion, determine. 5. Fringe Benefits. The Executive shall be entitled to participate in or receive all benefits under any employee benefit plan or arrangement made available by the Company to its senior executives, subject to and on a basis consistent with the terms and conditions of such plans and arrangements, including, without limitations, all appropriate deductions. 6. Business Expenses. The Company shall pay or reimburse the Executive for all reasonable, ordinary and necessary out-of-pocket expenses for entertainment, travel, meals, hotel accommodations and the like incurred by him in connection with the performance of his services for the Company pursuant to this Agreement, each such payment or reimbursement to be upon submission by him of a statement documenting such expenses in accordance with Company policy. 7. Vacation. During each year of the Employment Term, the Executive shall be entitled to four weeks vacation to be taken at times selected by him, with the reasonable concurrence of the Co-Chairmen of the Company, which are consistent with the proper performance of his duties. 2 8. Termination. (a) Death, Disability or Discharge Without Cause. If the Executive dies during the Employment Term, this Agreement shall automatically terminate and the Company shall have no further obligation to the Executive or his estate except to reimburse the Executive for accrued and unpaid base salary, accrued out-of-pocket expenses pursuant to Section 6 hereof, and the obligation, to the extent required under the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), to provide to the family of the Executive a temporary extension of medical insurance coverage at group rates, which premium the family member requesting such continued coverage shall be obligated to pay in full. If, during the Employment Term, the Executive is prevented by reason of disability from performing his duties for 180 consecutive calendar days, then the Company may, by notice to the Executive subsequent thereto, terminate his employment under this Agreement as of the date of the notice. If the Executive's employment is terminated by reason of disability, the Executive shall continue to receive his base salary, reduced by any payments received by the Executive under the Company's long-term disability program, for a period of six months following such termination and the opportunity to extend medical coverage pursuant to and in accordance with COBRA (at the cost of the Executive), but shall not be obligated to provide any other benefits described in this Agreement. Subject to paragraphs (c) and (d) below, if the Executive is discharged by the Company "without cause," as defined in paragraph (b) below, then the Company shall remain obligated to pay to him an amount equal to his base salary for the lesser of (i) one year and (ii) the remainder of the Employment Term, all reimbursement for accrued out-of-pocket expenses due to the Executive under Section 6 hereof, as well as to provide the Executive with continued medical coverage pursuant to and in accordance with COBRA (until the earlier of such time as is provided for under COBRA on such time as the Executive obtains major medical coverage from another employer), but shall not be obligated to provide any other benefits described in this Agreement. (b) Discharge for Cause. Prior to the end of the Employment Term, the Company, upon 30 days prior written notice, may discharge the Executive for cause and terminate this Agreement without any further obligation to the Executive except to pay the Executive's (i) accrued and unpaid base salary through the date of termination, (ii) unreimbursed accrued out-of-pocket expenses pursuant to Section 6 hereof and (iii) any benefits required to be provided under COBRA. For purposes of this Agreement, a discharge for "cause" shall mean a discharge resulting from (A) fraud, theft, gross malfeasance, or other similar actions on the part of the Executive (including, without limitation, conduct of a 3 felonious or criminal nature, embezzlement or misappropriation of corporate assets) in each case affecting the Company or that in the reasonable judgment of the Board (taking into account all relevant circumstances) would likely have a material and demonstrable adverse effect on the Company or the business or professional reputation of the Executive; (B) the chronic addiction of the Executive to drugs or alcohol which adversely affects the performance of the Executive's duties under this Agreement; (C) the Executive's willful failure, refusal or neglect to perform the services reasonably required of him as and when directed by, or to follow the policies or directives of, both of the Co-Chairmen of the Company or the Board after written notice from the Co-Chairmen or the Board (which notice shall specifically identify the manner in which the Co-Chairmen or the Board, as the case may be, believes that the Executive has failed); or (D) gross misconduct of the Executive in the discharge of his duties hereunder or gross misconduct that, in the reasonable judgment of the Board, may become a matter of public knowledge and that, in the reasonable judgment of the Board, may have a material and demonstrable adverse effect on the business, condition or affairs of the Company or any subsidiary of the Company. If the Executive is discharged by the Company for any reason other than those enumerated in this Section 8(b) or by reason of disability, such discharge shall be deemed to be a discharge "without cause." (c) Voluntary Termination by Executive. If the Executive voluntarily terminates his employment with the Company, the Company shall not be obligated to make any further payments of base salary, signing bonus or provide any other benefits under this Agreement (other than those benefits required to be provided to the Executive under COBRA). (d) Termination as a Result of change of Control. If the Executive's employment is terminated for any reason (including, without limitation, voluntary termination by the Executive) within six months after a Change of Control (as hereinafter defined), then, notwithstanding the provisions of Section 8(a), the Company shall pay to the Executive an amount equal to (i) the Executive's then base salary for a period of one year and (ii) all reimbursement for accrued out-of-pocket expenses due to the Executive under Section 6 hereof, which amounts shall be payable in one payment on the data of termination of his employment, and the Company shall continue to provide the Executive with continued medical coverage pursuant to and in accordance with COBRA, but shall not be required to make any other payments or provide any other benefits to the Executive. For purposes of this Section 8(d), "Change of Control" shall mean, such time as Messrs. Nicholas J. Verbitsky, C.T. Robinson, William C. Moyes and Richard W. Clark and their respective affiliates shall no longer own in the aggregate in excess of 30% of the voting stock of the Company 4 and shall all cease to be members of the Board; or (b) as neither Mr. Nicholas J. Verbitsky or Mr. C. T. Robinson is the chief executive officer of the Company. 9. Covenant Not to Compete. (a) In consideration of the employment by the Company of the Executive under this Agreement, the Executive agrees that (i) during the Executive's employment with the Company and (ii) unless (x) the Executive is terminated without cause or (y) the Executive remains in the employ of the Company for the entire Employment Term and is not offered continued employment with the Company pursuant to a new employment agreement the terms of which are substantially similar to the terms of this Agreement, then for the two-year period following any termination of the Executive's employment with the Company, the Executive will not, without the prior written approval of the Board, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, officer, director, or in any other individual or representative capacity, engage in any business situated anywhere in the United States (or its territories or possessions) or activity substantially similar to that of the Company or any subsidiary (i) conducted during the Employment Term, or (ii) under active consideration by the Company or any of its subsidiaries at the time of termination or within six months prior thereto, including, without limitation, the radio network business, radio research and consulting business, marketing and sales of radio programming or the ownership of radio stations in markets where the Company owns radio stations at the time the Executive resigns or is discharged. The obligations of the Executive pursuant to this Section 9(a)(ii) shall only be in effect for a one-year period if his employment with the Company terminates because of a "Change of Control" as pursuant to Section 8(d) hereof. (b) The Executive agrees that during the employment Term and thereafter, the Executive shall not, directly or indirectly, disclose to anyone at any time (except in the regular course of the Company's business or as required by law), or use in competition with the Company or any subsidiary, any information acquired by the Executive during his employment hereunder with respect to any confidential or secret aspect of the Company's or any subsidiary's operations or affairs unless such information has become public knowledge other than by reason of unauthorized actions (direct or indirect) of the Executive. (c) The Executive shall not, directly or indirectly, either during the term of the Executive's employment under this Agreement or for a period of one year thereafter, solicit the services of any person who was a full-time employee of the Company 5 or any subsidiary during the last year of the term of the Executive's employment under this Agreement. (d) All files, records (including any records relating to customers or customer accounts), documents, questionnaires, handbooks and similar items relating to the business of the Company or any subsidiary shall remain the exclusive property of the Company or such subsidiary, and all such items shall be immediately returned to the Company or such subsidiary upon the termination of the Executive's employment with the Company. (e) Nothing contained herein shall prevent the Executive from using his learned skills, know-how or general business experience, including such skills, know-how and experience gained while working for the Company. 10. Confidential Information. (a) The Executive recognizes and acknowledges that the Executive may receive certain confidential information and trade secrets ("Secrets") concerning the Company's business and affairs that may be of great value to the Company. The Executive therefore agrees that during the term hereof he will not disclose or exploit any such Secrets, except (i) with the prior written consent of the Company; (ii) as he may be required to do so by applicable law: (iii) as required by the Company in the ordinary course of his employment hereunder: or (iv) with respect to Secrets published or non-confidential manner. (b) After the Executive's employment with the Company ceases, he shall not disclose or exploit any idea, literary material or similar property which during the term hereof was under development or being produced by the Company which the Executive obtained directly by reason of his employment hereunder, except as may be excused by Section lO(a) of this Agreement. (c) The Company expressly agrees that Employee's contacts, relationships and knowledge of the broadcasting industry, its trade procedures and practices and all other knowledge customarily possessed by senior executives in positions similar to the Executive's position with the Company as such may now and hereafter exist shall not be deemed to be Secrets hereunder. 11. Remedies. (a) The Executive acknowledges that the remedy at law for breach of his covenants under Section 9 or 10 hereof would be inadequate and, accordingly, in the event of any breach or threatened breach by the Executive of the provisions of Section 9 or 10 hereof, the Company shall be entitled, in addition to all 6 other remedies, to an injunction restraining any such breach (without posting any bond or other security). (b) It is agreed that in the event the covenants of the Executive contained in Section 9 or 10 hereof shall finally be determined by any court (i) to be void or unenforceable in any particular area or jurisdiction, and if such determination is affirmed on appeal, if any, then the parties hereto shall consider such covenants to be amended and modified so as to eliminate therefrom the particular area or jurisdiction as to which such covenants are held to be void or otherwise unenforceable, and as to all other areas and jurisdictions covered by such covenants, the terms and provisions hereof shall remain in full force and effect as originally written; or (ii) to be effective in any particular area or jurisdiction only if such covenants are modified to limit their duration or scope, and if such determination is upheld on appeal, if any, then the parties hereto shall consider such covenants to be amended and modified with respect to the particular area or jurisdiction so as to comply with the order of such court or other constituted legal authority, and as to all other areas and jurisdictions, and the Executives covenants contained herein shall remain in full force and effect as originally written. (c) The provisions of this Section 11 shall survive any termination of this Agreement. 12. Unique Services. The services of the Executive hereunder are of a special, unique and extraordinary character that gives them a particular value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law, and a breach by the Executive of any provision of this Agreement will cause the Company great and irreparable injury and damage. Accordingly, unless the Executive validly exercises his right to terminate this Agreement as expressly provided herein, the Executive hereby expressly agrees that the Company shall be entitled to the remedies of injunction, specific performance and other equitable relief in order to prevent a breach of this Agreement by the Executive. This provision shall not, however, be construed as a waiver of any rights which the Company may have in the premises for damages or otherwise. 13. Warranties and Representation of the Executive. The Executive hereby warrants and represents to the Company as follows: (a) The Executive's execution and delivery of this Agreement does not violate or conflict with any provision of any document, instrument or agreement (oral or written) to which the Executive is subject. 7 (b) The Executive has not paid or accepted, and will not pay or accept any money, service or other valuable consideration for the inclusion of any plug, reference or product identification, or any other matter, in any program to be broadcast on any radio network of the Company, or cause or permit any other violation of the Federal Communications Act of 1934, as amended. (c) The Executive agrees that all of the results of the Executive's services hereunder during the term of this Agreement shall be deemed to have been accomplished in the course of the Executive's employment hereunder and all proprietary interest, if any, therein, shall, for all purposes, as between the Executive and the Company, its successors, licensees and assigns, belong to the Company and be the Company's exclusive property. (d) The Executive hereby agrees to indemnify and hold the Company and its successors and assigns harmless of and from any and all losses, damages, costs and expenses, including, without limitation, reasonable attorney's fees, arising out of or in connection with the breach of violation of any of the warranties, representations, covenants or agreements made the Executive herein. 14. Insurance. The Company may secure in its own name or otherwise and at its own expense, life, accident, or other insurance covering the Executive, or the Executive and others, and the Executive shall not have any right, title or interest in or to any such insurance. If the Executive shall be required to assist the Company to procure such insurance, the Executive agrees that he shall submit to such medical and other examinations, and shall sign such applications and other instruments in writing, as may be reasonably required by the Company and any insurance company to which application for such insurance shall be made. 15. Notices. Notices required or permitted to be sent under this Agreement shall be deemed effective on the earlier of receipt or four (4) business days after being deposited in the United States mail, postage prepaid, certified mail, return receipt requested, to the addresses of the parties set forth below. Company: UniStar Communications Group, Inc. 1440 Broadway New York, New York 10018 Attention: Nicholas J. Verbitsky with a copy to: 8 Morgan, Lewis & Bockius 101 Park Avenue New York, New York 10178 Attention: Martin Eric Weisberg, Esq. UniStar Communications Group, Inc. 660 Southpointe Court, Suite 300 Colorado Springs, C0 80906 Executive: William J. Hogan UniStar Communications Group, Inc. 1440 Broadway New York, New York 10018 or to such other person or address as any party may hereafter designate by notice as provided in this Section 15. 16. Severability. The invalidity or unenforceability of any term or provision of this Agreement shall not affect the validity or enforceability of the remaining terms or provisions of this Agreement which shall remain in full force and effect and any such invalid or unenforceable term or provision shall be given full effect as far as possible. 17. Binding Effect. This Agreement is not assignable by either party except that it shall inure to the benefit of and be binding upon any successor to the Company by merger or consolidation or the acquisition of all or substantially all of the Company's assets provided that such successor assumes all of the obligations of the Company, and shall inure to the benefit of the heirs and legal representatives of the Executive. 18. No Implied Waiver. Failure to insist upon strict compliance with any provision hereof shall not be a waiver of such provision or any other provision hereof. Furthermore, the waiver by either party hereto of a breach of any provision of thing Agreement by the other party shall not be construed to waive any subsequent breach by such party. 19. Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of New York applicable to agreements made and to be performed in New York and shall be construed and interpreted without regard to any rule or requirement that Agreements be construed against the party causing it to be drafted. 9 20. Entire Agreement: Amendment. (a) This Agreement, upon taking effect, embodies the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior agreements, both written and oral, between and among the Executive and the Company and any predecessors of the Company concerning the Executive's employment. (b) No provision of this Agreement may be amended or waived except by a writing signed by the parties hereto. 21. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of the day and year first above written. COMPANY: UNISTAR COMMUNICATIONS GROUP, INC. By N.J. VERBITSKY Name: N.J. Verbitsky Title: Co-Chairman/CEO UNISTAR RADIO NETWORKS, INC. By N.J. VERBITSKY Name: N.J. Verbitsky Title: Co-Chairman/CEO EXECUTIVE: By WILLIAM J. HOGAN William H. Hogan EX-10.8 5 EXHIBIT 10.8 TO FORM 10-K WESTWOOD ONE, INC. and SUBSIDIARY GUARANTORS _____________________________ CREDIT AGREEMENT Dated as of February 1, 1994 ______________________________ THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Administrative Agent, and BANK OF MONTREAL and THE FIRST NATIONAL BANK OF BOSTON, as Co-Agents PAGE TABLE OF CONTENTS
Page ____ Section 1. Definitions and Accounting Matters . . . . . . . . 1 1.01 Certain Defined Terms . . . . . . . . . . . . . . 1 1.02 Accounting Terms and Determinations . . . . . . . 28 1.03 Types and Series of Loans and Commitments . . . . 29 Section 2. Commitments . . . . . . . . . . . . . . . . . . . 30 2.01 Loans . . . . . . . . . . . . . . . . . . . . . . 30 2.02 Borrowings . . . . . . . . . . . . . . . . . . . 30 2.03 Changes of Commitments . . . . . . . . . . . . . 31 2.04 Commitment Fee . . . . . . . . . . . . . . . . . 32 2.05 Lending Offices . . . . . . . . . . . . . . . . . 32 2.06 Several Obligations; Remedies Independent . . . . 32 2.07 Notes . . . . . . . . . . . . . . . . . . . . . . 33 2.08 Conversions or Continuations of Loans . . . . . . 33 Section 3. Payments of Principal and Interest . . . . . . . 34 3.01 Repayment of Loans . . . . . . . . . . . . . . . 34 3.02 Interest . . . . . . . . . . . . . . . . . . . . 35 3.03 Optional Prepayments . . . . . . . . . . . . . . 36 3.04 Mandatory Prepayments . . . . . . . . . . . . . . 37 Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . . . . . . . 39 4.01 Payments . . . . . . . . . . . . . . . . . . . . 39 4.02 Pro Rata Treatment . . . . . . . . . . . . . . . 40 4.03 Computations . . . . . . . . . . . . . . . . . . 41 4.04 Minimum Amounts . . . . . . . . . . . . . . . . . 41 4.05 Certain Notices . . . . . . . . . . . . . . . . . 42 4.06 Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . 43 4.07 Sharing of Payments, Etc. . . . . . . . . . . . . 43 Section 5. Yield Protection, Etc. . . . . . . . . . . . . . 46 5.01 Additional Costs . . . . . . . . . . . . . . . . 46 5.02 Limitation on Eurodollar Loans . . . . . . . . . 49 5.03 Illegality . . . . . . . . . . . . . . . . . . . 50 5.04 Treatment of Affected Loans . . . . . . . . . . . 50 5.05 Compensation . . . . . . . . . . . . . . . . . . 51 5.06 U.S. Taxes . . . . . . . . . . . . . . . . . . . 52 Section 6. Conditions Precedent . . . . . . . . . . . . . . 56 6.01 Term Loans . . . . . . . . . . . . . . . . . . . 56 6.02 Initial Revolving Credit Loans . . . . . . . . . 60 6.03 Initial and Subsequent Loans . . . . . . . . . . 60 Section 7. Representations and Warranties . . . . . . . . . 61 7.01 Corporate Existence . . . . . . . . . . . . . . . 61 7.02 Financial Condition . . . . . . . . . . . . . . . 61 (ii) Page ____ 7.03 Litigation . . . . . . . . . . . . . . . . . . . 62 7.04 No Breach . . . . . . . . . . . . . . . . . . . . 62 7.05 Action . . . . . . . . . . . . . . . . . . . . . 62 7.06 Approvals . . . . . . . . . . . . . . . . . . . . 63 7.07 Use of Loans . . . . . . . . . . . . . . . . . . 63 7.08 ERISA . . . . . . . . . . . . . . . . . . . . . . 63 7.09 Investment Company Act . . . . . . . . . . . . . 63 7.10 Public Utility Holding Company Act . . . . . . . 64 7.11 Material Agreements . . . . . . . . . . . . . . . 64 7.12 Environmental Laws . . . . . . . . . . . . . . . 64 7.13 Subsidiaries, Etc. . . . . . . . . . . . . . . . 65 7.14 Assets of the Company . . . . . . . . . . . . . . 65 7.15 Agreements . . . . . . . . . . . . . . . . . . . 65 7.16 Solvency . . . . . . . . . . . . . . . . . . . . 65 7.17 Security Documents . . . . . . . . . . . . . . . 66 7.18 Certain Representations included in Unistar/Infinity Transaction Documents. . . . . 66 7.19 Senior Indebtedness . . . . . . . . . . . . . . . 66 7.20 Disclosure. . . . . . . . . . . . . . . . . . . . 66 7.21 Certain Documents . . . . . . . . . . . . . . . . 67 Section 8. Covenants of the Company . . . . . . . . . . . . 67 8.01 Financial Statements . . . . . . . . . . . . . . 67 8.02 Litigation . . . . . . . . . . . . . . . . . . . 71 8.03 Existence, Etc. . . . . . . . . . . . . . . . . . 72 8.04 Insurance . . . . . . . . . . . . . . . . . . . . 72 8.05 Capital Expenditures . . . . . . . . . . . . . . 72 8.06 Liens . . . . . . . . . . . . . . . . . . . . . . 73 8.07 Indebtedness, Etc. . . . . . . . . . . . . . . . 73 8.08 Investments and Joint Ventures . . . . . . . . . 74 8.09 Restricted Payments . . . . . . . . . . . . . . . 75 8.10 Debt Ratios . . . . . . . . . . . . . . . . . . . 77 8.11 Total Interest Coverage Ratio; Total Pro Forma Debt Service Coverage Ratio . . . . . . . 78 8.12 Prohibition of Fundamental Changes . . . . . . . 78 8.13 Interest Rate Protection Agreements . . . . . . . 80 8.14 Sale or Discount of Receivables . . . . . . . . . 80 8.15 Lines of Business . . . . . . . . . . . . . . . . 80 8.16 Transactions With Affiliates . . . . . . . . . . 80 8.17 Use of Proceeds . . . . . . . . . . . . . . . . . 81 8.18 Certain Obligations Respecting Subsidiaries . . . 81 8.19 Modifications of Certain Documents; Subordinated Debt . . . . . . . . . . . . . . . 82 Section 9. Guarantee . . . . . . . . . . . . . . . . . . . . 82 9.01 Guarantee . . . . . . . . . . . . . . . . . . . . 83 9.02 Obligations Unconditional . . . . . . . . . . . . 83 9.03 Reinstatement . . . . . . . . . . . . . . . . . . 84 9.04 Subrogation . . . . . . . . . . . . . . . . . . . 85 9.05 Remedies . . . . . . . . . . . . . . . . . . . . 85 9.06 Continuing Guarantee . . . . . . . . . . . . . . 85 (iii) Page ____ 9.07 Rights of Contribution . . . . . . . . . . . . . 85 9.08 Limitation on Subsidiary Obligor Obligations . . 86 Section 10. Events of Default . . . . . . . . . . . . . . . 86 Section 11. The Agents . . . . . . . . . . . . . . . . . . . 91 11.01 Appointment, Powers and Immunities . . . . . . . 91 11.02 Reliance by Each Agent . . . . . . . . . . . . . 92 11.03 Defaults . . . . . . . . . . . . . . . . . . . . 93 11.04 Rights as a Bank . . . . . . . . . . . . . . . . 93 11.05 Indemnification . . . . . . . . . . . . . . . . 94 11.06 Non-Reliance on Agents and Other Banks . . . . . 94 11.07 Failure to Act . . . . . . . . . . . . . . . . . 95 11.08 Resignation or Removal of Agents . . . . . . . . 95 11.09 Collateral Sub-Agents . . . . . . . . . . . . . 96 Section 12. Miscellaneous . . . . . . . . . . . . . . . . . 96 12.01 Waiver . . . . . . . . . . . . . . . . . . . . . 96 12.02 Notices . . . . . . . . . . . . . . . . . . . . 96 12.03 Expenses, Etc. . . . . . . . . . . . . . . . . . 97 12.04 Amendments, Etc. . . . . . . . . . . . . . . . . 98 12.05 Successors and Assigns . . . . . . . . . . . . . 99 12.06 Bank Assignments and Participations . . . . . . 100 12.07 Survival . . . . . . . . . . . . . . . . . . . . 102 12.08 Captions . . . . . . . . . . . . . . . . . . . . 102 12.09 Counterparts . . . . . . . . . . . . . . . . . . 103 12.10 Governing Law; Submission to Jurisdiction . . . 103 12.11 Waiver of Jury Trial . . . . . . . . . . . . . . 103 12.12 Treatment of Certain Information; Confidentiality . . . . . . . . . . . . . . . 103 12.13 Senior Indebtedness . . . . . . . . . . . . . . 104 SCHEDULE I - Banks and Commitments SCHEDULE II - Permitted Liens SCHEDULE III - Material Agreements SCHEDULE IV - Subsidiaries and Investments SCHEDULE V - Litigation SCHEDULE VI - Conflicts with Certain Agreements SCHEDULE VII - Scheduled Cost Savings EXHIBIT A-1 - Form of Term Loan Note EXHIBIT A-2 - Form of Revolving Credit Note EXHIBIT B - Form of Security Agreement EXHIBIT C - Form of Opinion of Counsel to the Obligors EXHIBIT D - Form of Opinion of Special Counsel to the Obligors EXHIBIT E - Form of Opinion of Special New York Counsel to Chase EXHIBIT F - Form of Confidentiality Agreement EXHIBIT G - Form of Borrowing Notice
(iv) CREDIT AGREEMENT dated as of February 1, 1994, between: WESTWOOD ONE, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (together with its successors and assigns, the "Company"); each of the Subsidiaries of the Company identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereof (individually, together with its successors and assigns, a "Subsidiary Guarantor" and, together with the Company, the "Obligors"); each of the lenders identified under the caption "BANKS" on the signature pages hereof or which, pursuant to Section 12.06(a) hereof, shall become a "Bank" hereunder (individually, a "Bank" and, collectively, the "Banks"); THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association, as administrative agent for the Banks (in such capacity, together with its successors in such capacity, the "Administrative Agent"); THE FIRST NATIONAL BANK OF BOSTON, a national banking association, and BANK OF MONTREAL, a bank organized under the laws of Canada, as co-agents for the Banks (in such capacity, together with their respective successors in such capacity, the "Co-Agents" and, together with the Administrative Agent, the "Agents"). The Company has requested the Banks to make loans to the Company in an aggregate principal amount not exceeding $125,000,000 at any one time outstanding to finance the Unistar Acquisition (as such term is defined in Section 1.01 hereof), the repayment of the Retained Unistar Debt (as so defined), the payment of certain related fees and expenses, and the working capital requirements of the Company and its Subsidiaries. The Obligors, the Banks and the Agents are entering into this Agreement pursuant to which the Banks will make such loans to the Company, and each Subsidiary Guarantor will guarantee the loans so made to the Company, and the Obligors will execute and deliver a security agreement and related documents providing for security interests and liens to be granted to the Banks and the Agents hereunder. Accordingly, the parties hereto hereby agree as follows: Section 1. Definitions and Accounting Matters. 1.01 Certain Defined Terms. As used herein, the following terms shall have the following meanings (all terms defined in this Section 1.01 or in other provisions of this - 2 - Agreement in the singular to have the same meanings when used in the plural and vice versa): "Acquisition" shall mean any transaction, or any series of related transactions, consummated after the date of this Agreement (other than the Unistar Acquisition), by which the Company and/or any of its Subsidiaries directly or indirectly acquires (whether through purchase of assets, merger or otherwise) (a) all or any substantial part of any ongoing business or all or all or any substantial part of the assets of any corporation, partnership or other entity or of any division of any entity, (b) control of at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors or (c) control of a majority ownership interest in any partnership or other entity. The terms "Acquire" and "Acquired" used as a verb shall have a correlative meaning. For purposes hereof, the "amount" of an Acquisition shall be equal to the aggregate amount of cash and the fair market value of all non-cash consideration paid or delivered by the Company and its Subsidiaries in connection therewith. "Adjusted Pro Forma Operating Cash Flow" shall mean (a) Operating Cash Flow for the Company for the Fiscal Year ended November 30, 1993 (calculated as if the cost savings described in Schedule VII hereto had been achieved during such Fiscal Year) plus (b) Operating Cash Flow for Unistar for the fiscal year of Unistar ended December 31, 1993. "Affiliate" shall mean any Person which directly or indirectly controls, or is under common control with, or is controlled by, the Company and, if such Person is an individual, any member of the immediate family (including parents, spouse and children) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person which owns directly or indirectly 5% or more of the securities having - 3 - ordinary voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person. Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate solely by reason of his or her being a director, officer or employee of the Company or any of its Subsidiaries and the Company and its Subsidiaries shall not be deemed to be Affiliates of each other. "Agreement" shall mean this Credit Agreement, as the same shall be modified and supplemented and in effect from time to time, and the words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement unless otherwise specified. "Applicable Lending Office" shall mean, for each Bank and for each type of Loan, the "Lending Office" of such Bank (or of an affiliate of such Bank) designated for such type of Loan on the signature pages hereof or such other office of such Bank (or of an affiliate of such Bank) as such Bank may from time to time specify to the Administrative Agent and the Company as the office by which its Loans of such type are to be made and maintained. "Applicable Margin" shall mean: (a) with respect to Base Rate Loans, 1.50% at all times when the Total Debt Ratio is greater than 5.00 to 1, 1.00% at all times when the Total Debt Ratio is greater than 4.00 to 1 and less than or equal to 5.00 to 1, and 0.50% at all times when the Total Debt Ratio is less than or equal to 4.00 to 1; and (b) with respect to Eurodollar Loans, 2.50% at all times when the Total Debt Ratio is greater than 5.00 to 1, 2.00% at all times when the Total Debt Ratio is greater than 4.00 to 1 and less than or equal to 5.00 to 1, and 1.50% at all times when the Total Debt Ratio is less than or equal to 4.00 to 1. For purposes of this definition, the Total Debt Ratio shall be determined (i) for any day during the period commencing on the Closing Date and ending on the second Business Day after the - 4 - first date the Company delivers consolidated financial statements of the Company pursuant to either Section 8.01(a) or 8.01(b) hereof on the basis of the most recent consolidated financial statements of the Company referred to in Section 7.02 hereof, and (ii) for any day thereafter on the basis of the then most recent consolidated financial statements of the Company delivered pursuant to said Section 8.01(a) or 8.01(b), and any change in the Applicable Margin as a result of a change in the Total Debt Ratio shall be effective as of the second Business Day following the date the relevant financial statements of the Company are delivered pursuant to said Section 8.01(a) or 8.01(b) to the Administrative Agent, provided that in the event that Company shall fail to deliver any consolidated financial statements by the respective date required pursuant to said Sections 8.01(a) and 8.01(b), the Total Debt Ratio then in effect shall continue to be in effect until the second Business Day following the date such financial statements are in fact delivered. "Bailee Agreements" shall have the meaning assigned to such term in Section 6.01(o) hereof. "Base Rate" shall mean, for any day, the higher of (a) the Federal Funds Rate for such day plus 1/4 of 1% and (b) the Prime Rate for such day. Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate. "Base Rate Loans" shall mean Loans that bear interest at rates based upon the Base Rate. "Basic Documents" shall mean, collectively, this Agreement, the Notes and the Security Documents. "Business Day" shall mean any day on which commercial banks are not authorized or required to close in New York City and, if such day relates to a borrowing of, a payment or prepay- ment of principal of or interest on, or a Continuance of or a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice by the Company with respect to any such borrowing, payment, prepayment, Continuance, Conversion or Interest Period, which is also a day on which dealings in Dollar deposits are carried out in the London interbank market. - 5 - "Capital Expenditures" shall mean, for any period, expenditures (including the aggregate amount of Capital Lease Obligations incurred during such period) made by the Company or any of its Subsidiaries to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements, but excluding repairs) during such period computed in accordance with GAAP. "Capital Lease Obligations" shall mean, for any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal Property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP. "Chase" shall mean The Chase Manhattan Bank (National Association). "Class Action Warrants" shall mean the warrants outstanding as of the date hereof (not in excess of 3,000,000 in number), each exercisable by the holder thereof to purchase one share of the common stock of the Company at a price of $17.25 per share, as in effect from time to time. "Closing Date" shall mean the date upon which the Term Loans are made hereunder. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Collateral" shall mean the "Collateral" under and as defined in the Security Agreement. "Commitment Termination Date" shall mean the Quarterly Date falling on or nearest to November 30, 2001. "Commitments" shall mean, collectively, the Term Loan Commitments and the Revolving Credit Commitments. "Consolidated Subsidiary" shall mean, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or Acquired) the financial statements of which are (or - 6 - are required to be) consolidated with the financial statements of such Person in accordance with GAAP. "Continue", "Continuation" and "Continued" shall refer to the continuation pursuant to Section 2.08 hereof of a Eurodollar Loan from one Interest Period for such Loan to the next Interest Period for such Loan. "Convert", "Conversion" and "Converted" shall refer to a conversion pursuant to Section 2.08 hereof of Base Rate Loans into Eurodollar Loans or of Eurodollar Loans into Base Rate Loans, which may be accompanied by the transfer by a Bank (at its sole discretion) of a Loan from one Applicable Lending Office to another. "Default" shall mean an Event of Default or an event which with notice or lapse of time or both would become an Event of Default. "Deferred Programming Expense" shall mean, for any period, costs of the Company and its Subsidiaries incurred during such period in connection with the development of new programming, which costs are deferred and amortized by the Company and its Subsidiaries. "Disposition" shall mean any sale, assignment, transfer or other disposition (including, without limitation, the transfer of all or a substantial part of its rights by means of an exclusive license or sublicense) of any Property (whether now owned or hereafter acquired) by the Company or any of its Subsidiaries to any other Person, excluding the granting of Liens under and other dispositions by the Company or such Subsidiary pursuant to the Security Agreement. The terms "Dispose" and "Disposed" used as a verb shall have a correlative meaning. "Dollars" and "$" shall mean lawful money of the United States of America. "Environmental Laws" shall mean any and all Federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, - 7 - contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes. "Equity Issuance" shall mean (a) any issuance or sale by the Company or any of its Subsidiaries after the date hereof of (i) any capital stock or other ownership interests in the Company or any Subsidiary or (ii) any Equity Rights therefor or (b) the receipt by the Company or any of its Subsidiaries after the date hereof of any capital contribution (whether or not evidenced by any equity security issued by the recipient of such contribution); provided that Equity Issuance shall not include (v) any such issuance or sale by any Subsidiary of the Company to the Company or any Wholly Owned Subsidiary of the Company, (w) any capital contribution by the Company or any Wholly Owned Subsidiary of the Company to any Subsidiary of the Company, (x) any such issuance upon the exercise of the Initial Warrant or the Incentive Warrants, any other such issuance pursuant to the Securities Purchase Agreement, or the conversion rights provided for by the 9% Debenture Indenture and the 6-3/4% Debenture Indenture, (y) any such issuance or sale to directors, officers or employees of the issuing or selling Person as compensation for services rendered to such Person or any Subsidiary of such Person, or (z) any such issuance to a Person as consideration for the sale by such Person of any Property to the Company or any of its Subsidiaries pursuant to an Acquisition permitted by Section 8.12(b)(ii) hereof. "Equity Rights" shall mean, with respect to the Company or any of its Subsidiaries, any outstanding subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind for the issuance, sale, purchase, or registration of any shares of any class of capital stock or any other ownership interests in the Company or such Subsidiary (as the case may be); provided that Equity Rights shall not include the Initial Warrant, the Incentive Warrants, the conversion rights provided for by the 9% Debenture Indenture and the 6-3/4% Debenture Indenture or the registration rights provided for by the Registration Rights Agreement. - 8 - "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" shall mean any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Company or is under common control (within the meaning of Section 414(c) of the Code) with the Company. "Eurodollar Base Rate" shall mean, with respect to any Eurodollar Loan for any Interest Period therefor, the arithmetic mean, as determined by the Administrative Agent, of the rates per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) quoted by the respective Reference Banks at approximately 11:00 a.m. London time (or as soon thereafter as practicable) on the date two Business Days prior to the first day of such Interest Period for the offering by the respective Reference Banks to leading banks in the London interbank market of Dollar deposits having a term comparable to such Interest Period and in an amount equal to $5,000,000. "Eurodollar Loans" shall mean Loans that bear interest at rates based upon rates referred to in the definition of "Eurodollar Base Rate" in this Section 1.01. "Eurodollar Rate" shall mean, for any Eurodollar Loan for any Interest Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to the quotient of (a) the Eurodollar Base Rate for such Loan for such Interest Period divided by (b) the result of 1 minus the Reserve Requirement (if any) for such Loan for such Interest Period. "Event of Default" shall have the meaning assigned to such term in Section 10 hereof. "Existing Credit Agreement" shall mean the Loan and Security Agreement dated as of November 15, 1993 by and between the Company, various of its Subsidiaries and Foothill Capital Corporation, as the same shall be modified and supplemented and in effect from time to time. "Excess Cash Flow" shall mean, for any Fiscal Year, the amount (if any) by which (a) Operating Cash Flow for such Fiscal - 9 - Year exceeds (b) the sum of (i) Total Debt Service for such Fiscal Year plus (ii) the aggregate amount of Capital Expenditures made by the Company and its Subsidiaries during such Fiscal Year made as permitted by Section 8.05 hereof plus (iii) the excess (if any) of Working Investment for the Company and its Consolidated Subsidiaries as at the end of such Fiscal Year over Working Investment for the Company and its Consolidated Subsidiaries as at the end of the prior Fiscal Year (or, minus the excess (if any) of Working Investment for the Company and its Consolidated Subsidiaries as at the end of the prior Fiscal Year over Working Investment for the Company and its Consolidated Subsidiaries as at the end of such Fiscal Year) plus (iv) the aggregate amount of Management Fees paid during such Fiscal Year plus (v) federal, state and local taxes actually paid by the Company and its Subsidiaries during such Fiscal Year plus (vi) $2,000,000 plus (vii) the amount of Restructuring Expenses (up to but not exceeding $8,700,000 in the aggregate) deducted in determining Operating Cash Flow for such Fiscal Year. "Federal Funds Rate" shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average rate charged to Chase on such day on such transactions as determined by the Administrative Agent. "Fiscal Year" shall mean a fiscal year of the Company. "Fixed Charges Ratio" shall mean, as at any date of determination thereof, the ratio of (a) Operating Cash Flow for the period of four fiscal quarters of the Company ended on, or most recently ended prior to, such date to (b) the sum of (i) Capital Expenditures made during such period plus (ii) Management Fees paid during such period plus (iii) the sum of all principal payments scheduled to be made during such period plus Total Interest for such period. - 10 - "GAAP" shall mean generally accepted accounting principles applied on a basis consistent with those which, in accordance with Section 1.02(a) hereof, are to be used in making the calculations for purposes of determining compliance with the terms of this Agreement. "Guarantee" shall mean a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarilyfor the purpose of enabling a debtor to make payment of his, her or its obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall have a correlative meaning. "Guaranteed Obligations" shall have the meaning assigned to such term in Section 9.01 hereof. "Hazardous Material" shall mean, collectively, any oil hazardous waste, hazardous material or hazardous substance as defined in the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6921 et seq., the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et seq., or any other Federal or State Environmental Law. "Incentive Warrants" shall mean the Stock Incentive Option as defined in the Management Agreement (comprising three warrants each for 500,000 shares of the Company's common stock) to be issued to INI pursuant to the Management Agreement, as the same shall be modified and in effect from time to time. "Indebtedness" shall mean, as to any Person, without duplication: (a) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or similar - 11 - instruments (including, without limitation, obligations under agreements not to compete and Interest Rate Protection Agreements); (b) all obligations of such Person for the deferred purchase price of property or services (including without limitation obligations under agreements not to compete), except trade accounts payable and accrued liabilities arising in the ordinary course of business which are not overdue by more than 60 days or which are being contested in good faith byappropriate proceedings; (c) all Capital Lease Obligations of such Person; (d) all Indebtedness of others secured by a Lien on any properties, assets or revenues of such Person; (e) all Indebtedness of others Guaranteed by such Person; and (f) all obligations of such Person, contingent or otherwise, in respect of letters of credit or bankers' acceptances or similar instruments; provided, that the indebtedness of the Companyunder the 9% Debentures and the 9% Debenture Indenture shall not constitute "Indebtedness" hereunder. "Infinity" shall mean Infinity Broadcasting Corporation, a Delaware corporation. "INI" shall mean (a) Infinity Network Inc., a Delaware corporation that, on the date hereof, is a Wholly Owned Subsidiary of Infinity, or (b) any other Wholly Owned Subsidiary of Infinity which owns capital stock or other ownershipinterests of the Company; provided that Infinity shall have notified the Administrative Agent of the name of such other Subsidiary and the amount of such ownership interests owned by it. "Initial Warrant" shall mean the Warrant to be issued to INI pursuant to, and as defined in, the Securities Purchase Agreement. "Interest Period" shall mean, with respect to any Eurodollar Loan, each period commencing on the date such Eurodollar Loan is made or Converted from a Base Rate Loan orthe last day of the immediately preceding Interest Period for such Loan and ending on the numerically corresponding day in the first, second, third, sixth or (in respect of any such Loan of a particular series, with the approval of all of the Banks holding Loans and/or Commitments of such series) twelfth calendar month thereafter, as the Company may select as provided in Section 4.05 hereof, except that each Interest Period which commences on the last Business Day of a calendar month (or on any day for which - 12 - there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. Notwithstanding the foregoing: (a) no Interest Period for any Term Loan may commence before and end after any Principal Payment Date unless, after giving effect thereto, the aggregate principal amount of the Term Loans having Interest Periods which end after such Principal Payment Date shall be equal to or less than the aggregate principal amount of the Term Loans scheduled to be outstanding after giving effect to the payments of principal of such Loans required to be made on such Principal Payment Date; (b) no Interest Period for any Revolving Credit Loan may end after the Commitment Termination Date; (c) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day (or, if such next succeeding Business Day falls in the next succeeding calendar month, on the immediately preceding Business Day); and (d) notwithstanding clause (a) and (b) above, no Interest Period shall have a duration of less than one month and, if the Interest Period for any Eurodollar Loan would otherwise be a shorter period, such Loan shall not be available as a Eurodollar Loan hereunder. "Interest Rate Protection Agreement" shall mean, for any Person, an interest rate swap, cap or collar agreement or similar arrangement between such Person and a financial institution providing for the transfer or mitigation of interest risks either generally or under specific contingencies. "Investment" shall mean, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any "short sale" or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property fromanother Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding 90 days representing the purchase price of inventory, supplies, goods, services or advertising sold in the ordinary course of business); or (c) the entering into of any Guarantee - 13 - of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person. "Joint Venture" shall mean a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided that, no such entity that is a Subsidiary of any Person shall be considered to be a Joint Venture to which such Person is a party. "Lien" shall mean, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this Agreement, the Company or any of its Subsidiaries shall be deemed to own subject to a Lien any Property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property. "Loans" shall mean, collectively, Term Loans and Revolving Credit Loans. "Majority Banks" shall mean the Majority Term Loan Banks and Majority Revolving Credit Banks. "Majority Revolving Credit Banks" shall mean, at any time, Revolving Credit Banks holding at least 66-2/3% of the sum of (a) the aggregate outstanding principal amount of the Revolving Credit Loans and (b) if the Revolving Credit Commit- ments are then in effect, the aggregate unused amount of Revolving Credit Commitments. "Majority Term Loan Banks" shall mean, at any time, Term Loan Banks having at least 66-2/3% of the aggregate amount of the Term Loan Commitments (or, if the Term Loan Commitments have terminated, the aggregate outstanding principal amount of the Term Loans). "Management Agreement" shall mean a Management Agreement between the Company and Infinity in substantially the form of Exhibit A to the Stock Purchase Agreement, as the same - 14 - shall be modified and supplemented and in effect from time to time. "Management Fees" shall mean, for any period, fees and cash incentive bonuses payable to Infinity under the Management Agreement during such period for administrative, management and other services performed for the Company and its Subsidiaries. "Management Services Subordination Agreement" shall mean a subordination agreement, in form and substance satisfactory to the Administrative Agent, between Infinity, the Company and the Administrative Agent providing for the subordination of the Management Fees to all amounts owing to the Banks and the Administrative Agent hereunder and under the other Basic Documents, as the same shall be modified and supplemented and in effect from time to time. "Margin Stock" shall mean margin stock within the meaning of Regulation U and Regulation X. "Material Adverse Effect" shall mean a material adverse effect on (a) the Property, business, operations, financial condition, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (b) the ability of any Obligor to perform its obligations under any of the Basic Documents to which it is a party, (c) the validity or enforceability of any of the Basic Documents, (d) the rights and remedies of any of the Banks and the Agents under any of the Basic Documents or (e) the timely payment of any principal of or interest on the Loans or any other amounts payable in connection therewith. "Multiemployer Plan" shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been made by the Company or any ERISA Affiliate and which is covered by Title IV of ERISA. "9% Debenture Indenture" shall mean the Indenture dated as of December 15, 1990 between the Company and The Bank of New York, as Trustee, providing for the 9% Debentures, as the same shall be modified and supplemented and in effect from time to time. "9% Debentures" shall mean the 9% Convertible Senior Subordinated Debentures Due 2002 of the Company, as the same - 15 - shall be modified and supplemented and in effect from time to time. "Notes" shall mean Term Loan Notes and Revolving Credit Notes. "Operating Cash Flow" shall mean, for any period for any Person, the sum, for such Person and its Subsidiaries, of the following (determined on a consolidated basis without duplication in accordance with GAAP, except as otherwise specified below): (a) net revenues of such Person and its Subsidiaries for such period (excluding (i) any net gain or loss arising from the sale of capital assets during such period; (ii) any gain arising from any write-up of assets during such period; (iii) net earnings for such period of any other Person in which such Person or any of its Subsidiaries has an ownership interest unless such net earnings shall have actually been received by such Person or such Subsidiary in the form of cash distributions; (iv) any portion of the net earnings of any Subsidiary of such Person for such period which for any reason is unavailable for payment of dividends to such Person or any other such Subsidiary; (v) any gain realized during such period arising from the acquisition of any securities of such Person or any of its Subsidiaries; (vi) any "extra- ordinary earnings" or "extraordinary losses" for such period as such terms are interpreted under GAAP; and (vii) any interest income of such Person and its Subsidiaries realized during such period); minus (b) operating expenses of such Person for such Period, including, without limitation, capitalized programming expenses, capitalized station affiliation agreement costs and, with respect to the Company, all out-of-pocket expenses payable to Infinity pursuant to Section 1.6 of the Management Agreement, but excluding (i) depreciation, amortization (including, without limitation, amortization of Deferred Programming Expenses), and other non-cash charges accrued for such period by such Person and its Subsidiaries, and (ii) with respect to the Company for any period ending on or prior to November 30, 1994, the amount of Restructuring Expenses (up to but not exceeding $8,700,000 in the aggregate) incurred during such period to the extent such Restructuring Expenses were included in determining operating expenses for such period); provided that: (1) for purposes hereof (other than for purposes of computing the Total Debt Ratio for determinations of the Applicable Margin), Operating Cash Flow (W) for the period - 16 - of four fiscal quarters of the Company ending February 28, 1994 shall be increased by $5,300,000; (X) for the period of four fiscal quarters of the Company ending May 31, 1994 shall be increased by $3,975,000; (Y) for the period of four fiscal quarters of the Company ending August 31, 1994 shall be increased by $2,650,000; and (Z) for the period of four fiscal quarters of the Company ending November 30, 1994 shall be increased by $1,325,000; (2) for purposes of computing the Total Interest Coverage Ratio and the Fixed Charges Ratio for any period, Operating Cash Flow of the Company and its Subsidiaries for such period shall be calculated after taxes; and (3) for purposes of computing the Senior Debt Ratio and the Total Debt Ratio for any period, Operating Cash Flow of the Company and its Subsidiaries for such period shall be calculated before taxes. "Other Pro Forma Interest" shall mean, for any period, an aggregate amount equal to interest for such period on an amount equal to the outstanding principal amount of Indebtedness referred to in Section 8.07(a)(v) hereof outstanding on the day immediately preceding such period at the respective rate per annum equal to the rate specified in the applicable instrument evidencing or governing the related series of Indebtedness; provided that interest on a floating rate basis for such period shall be deemed to accrue on such Indebtedness at a rate per annum equal to the rate of interest with respect to such Indebtedness in effect on the day immediately preceding such period. "Payment Default" shall mean an Event of Default under Section 10(a) hereof. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permitted Liens" shall mean: (a) pledges or deposits by the Company or any of its Subsidiaries under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith - 17 - deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness of the Company or any of its Subsidiaries), or leases to which the Company or any of its Subsidiaries are parties, deposits to secure public or statutory obligations of the Company or any of its Subsidiaries, deposits of cash or U.S. Government bonds to secure surety or appeal bonds or performance bonds to which the Company or any of its Subsidiaries are parties or which are issued for their account, or deposits for the payment of rent (provided that such deposits as security for the payment of rent are required in the ordinary course of business); (b) Liens imposed by law, such as landlords', carriers', warehousemen's, materialmen's and mechanics' liens, or Liens arising out of judgments or awards against the Company or any of its Subsidiaries with respect to which the Company or such Subsidiary at the time shall currently be prosecuting an appeal or proceedings for review in good faith and by proper proceedings; (c) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment and Liens for taxes, assessments or other governmental charges the payment of which is being contested in good faith and by appropriate proceedings and for which adequate reserves, determined in accordance with GAAP, are being maintained; (d) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights of way, highways and railroad crossings, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or other Liens incidental to the conduct of the business of the Company or any of its Subsidiaries or to the ownership of their Property which were not incurred in connection with Indebtedness of the Company or any of its Subsidiaries, which Liens do not in the aggregate materially detract from the value of said Properties or materially impair the operation of the business taken as a whole of the Company or such Subsidiary; (e) (i) Liens created in connection with Capital Lease Obligations of the Company or any of its Subsidiaries, - 18 - provided that such Liens do not encumber any Property other than the Property financed by the capital lease under which such Capital Lease Obligations exist and (ii) Liens permitted by clause (iv) of Section 8.06 hereof; (f) existing Liens in respect of Property of the Company or any of its Subsidiaries listed on Schedule II hereto (excluding, however, following the making of the initial Loans hereunder, the existing Liens securing obligations of the Company and its Subsidiaries under the Existing Credit Agreement); (g) Liens created pursuant to the Security Documents; (h) extensions, renewals, refinancings or replacements of any Permitted Liens referred to in clauses (e) and (f) above, provided that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal, refinancing or replacement is limited to the Property originally encumbered thereby. "Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof). "Plan" shall mean an employee benefit or other plan established or maintained by the Company or any ERISA Affiliate and which is covered by Title IV of ERISA, other than a Multi- employer Plan. "Post-Default Rate" shall mean, in respect of the principal of any Loan or any other amount payable by any Obligor under this Agreement, any Note or any other Basic Document to which it is a party, from and after the occurrence and during the continuance of a Payment Default, a rate per annum equal to the lesser of (a) 2% plus the Base Rate as in effect from time to time plus the Applicable Margin for Base Rate Loans (provided that, with respect to a Eurodollar Loan, the "Post-Default Rate" for such principal shall be, for the period from and including such date of occurrence of such Payment Default to but excluding the date upon which such Loan is Converted to a Base Rate Loan pursuant to Section 2.08 hereof, a rate per annum equal to 2% plus the interest rate for such Loan as provided in - 19 - Section 3.02(a)(ii) hereof and, thereafter, the rate provided for above in this definition), and (b) the maximum rate permitted by the law of the State of New York. "Prime Rate" shall mean the rate of interest from time to time announced by Chase at the Principal Office as its prime commercial lending rate. "Principal Office" shall mean the principal office of the Administrative Agent and Chase, presently located at 1 Chase Manhattan Plaza, New York, New York 10081. "Principal Payment Date" shall mean each Quarterly Date on which a principal payment in respect of Term Loans is required to be made pursuant to Section 3.01(a) hereof. "Pro Forma Debt Service" shall mean, for any period, the sum of the following for such period: (a) Pro Forma Interest for such period plus (b) the aggregate amount of payments of principal scheduled to be made by the Company and its Subsidi- aries in respect of Indebtedness during such period. "Pro Forma Interest" shall mean, for any period, the sum of the following for such period: (a) Senior Pro Forma Interest plus (b) Subordinated Pro Forma Interest plus (c) Other Pro Forma Interest. "Property" shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible (and including, without limitation, rights and interests in contracts and leases). "Proxy Statement" shall mean the Proxy Statement dated January 7, 1994 for the Special Meeting of the Shareholders of the Company to be held on January 28, 1994, as the same shall be modified and supplemented and in effect from time to time. "Quarterly Dates" shall mean the last Business Day of February, May, August and November in each year, the first of which shall be the first such day after the date of this Agreement. - 20 - "Reference Banks" shall mean Chase, The First National Bank of Boston and Bank of Montreal (or their Applicable Lending Offices, as the case may be). "Registration Rights Agreement" shall mean a Registration Rights Agreement between the Company and INI in substantially the form of Exhibit C to the Stock Purchase Agreement, as the same shall be modified and supplemented and in effect from time to time. "Regulation D", "Regulation U" and "Regulation X" shall mean, respectively, Regulation D, Regulation U and Regulation X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be amended or supplemented from time to time. "Regulatory Change" shall mean, with respect to any Bank, any change after the date of this Agreement in United States Federal, state or foreign law or regulations (including, without limitation, Regulation D) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks including such Bank of or under any United States Federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Release" shall mean any "release" as such term is defined in 42 U.S.C. Section 9601(22) or any successor statute. "Reserve Requirement" shall mean, for any Interest Period for any Eurodollar Loan, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, Reserve Requirement shall include any other reserves required to be maintained by such member banks by reason of any Regulatory Change against (a) any category of liabilities which includes deposits by reference to which the Eurodollar Base Rate is to be determined as provided in the definition of "Eurodollar Base - 21 - Rate" in this Section 1.01 or (b) any category of extensions of credit or other assets which includes Eurodollar Loans. "Restricted Payments" shall mean: (a) any declaration or payment (whether made by the Company or any of its Subsidiaries) of dividends or other distributions (in cash, property or obligations) on account of any shares of any class of stock of the Company, but excluding dividends on account of common stock of the Company payable solely in shares of common stock of the Company; (b) any payment (whether made or effected by the Company or any of its Subsidiaries, other than any payment to the Company by any of its Subsidiaries or to any Subsidiary of the Company by any of such Subsidiary's Subsidiaries) on account of, or any payment (whether made or effected by the Company or any of its Subsidiaries, other than any payment to the Company by any of its Subsidiaries or to any Subsidiary of the Company by any of such Subsidiary's Subsidiaries) or the setting apart of money for a sinking or other analogous fund for the purchase, redemption, prepayment, retirement or other acquisition of, any shares of any class of capital stock of the Company or any of its Subsidiaries or any Equity Rights therefor; (c) any payment (whether made by the Company or any of its Subsidiaries) on account of the purchase, redemption, prepayment, defeasance (including, but not limited to, in- substance or legal defeasance) or other acquisition or retirement for value of any of the Subordinated Debt; and (d) any payment of management or similar fees (including, without limitation, Management Fees, but excluding all expenses payable to Infinity, in its capacity as "Manager", under Section 1.6 of the Management Agreement) by the Company or any of its Subsidiaries to Infinity or any other Affiliate of the Company (other than to any employee, officer or director of the Company or its Subsidiaries in connection with the performance of such employee's, officer's or director's duties in such capacity). - 22 - "Restructuring Expenses" shall mean, for any period, the aggregate amount of costs and expenses incurred by the Company and its Subsidiaries during such period in connection with the consummation of the Unistar Acquisition and the other transactions contemplated by Unistar/Infinity Transaction Documents, including, without limitation, legal expenses, severance costs and other employee benefits, lease termination expenses and other restructuring expenses incurred in connection with such transactions. "Retained Unistar Debt" shall mean the "Retained Debt", as defined in the Proxy Statement. "Revolving Credit Banks" shall mean (a) on the date of this Agreement, the Banks having Revolving Credit Commitments as specified on Schedule I hereto under the heading "Revolving Credit Commitments" and (b) thereafter, the Banks from time to time holding Revolving Credit Loans and, if any Revolving Credit Commitments are then in effect, Revolving Credit Commitments (after giving effect to any assignments thereof pursuant to Section 12.06(a) hereof). "Revolving Credit Commitments" shall mean, with respect to each Revolving Credit Bank, the obligation of such Bank to make Revolving Credit Loans in an aggregate principal amount at any one time outstanding up to, but not exceeding (a) in the case of a Revolving Credit Bank that is a party to this Agreement as of the date hereof, the amount set forth opposite the name of such Bank on Schedule I hereto under the heading "Revolving Credit Commitments" and (b) in the case of any other Revolving Credit Bank, the aggregate amount of the Revolving Credit Commitments of other Revolving Credit Banks acquired by it pursuant to Section 12.06(a) hereof (in each case, as the same may be reduced from time to time pursuant to Section 2.03 hereof or increased or reduced from time to time pursuant to said Section 12.06(a)). "Revolving Credit Loans" shall have the meaning assigned to such term in Section 2.01(b) hereof. "Revolving Credit Notes" shall mean the promissory notes provided for by Section 2.07(b) hereof and all promissory notes delivered in substitution therefor, in each case as the - 23 - same shall be modified and supplemented and in effect from time to time. "Securities Purchase Agreement" shall mean the Securities Purchase Agreement dated as of November 4, 1993 between the Company and INI, as the same shall be modified and supplemented and in effect from time to time. "Security Agreement" shall mean a Security Agreement substantially in the form of Exhibit B hereto between the Obligors and the Administrative Agent, as the same shall be modified and supplemented and in effect from time to time. "Security Documents" shall mean, collectively, the Security Agreement, all Uniform Commercial Code financing statements required by this Agreement or the Security Agreement to be filed with respect to the security interests in personal Property and fixtures created pursuant to the Security Agreement, and the Bailee Agreements. "Senior Debt" shall mean all Indebtedness (other than the Subordinated Debt) of the Company and its Subsidiaries, determined on a consolidated basis. "Senior Debt Ratio" shall mean, as of any date of determination thereof, the ratio of (a) Senior Debt outstanding as of such date to (b) Operating Cash Flow for the period of four fiscal quarters of the Company ended on, or most recently ended prior to, such date. "Senior Officer" shall mean (a) prior to the consummation of the Unistar Acquisition, the Senior Vice President - Business and Legal Affairs, and Senior Vice President - Financial Operations of the Company, and (b) thereafter, the Chief Executive Officer, Chief Financial Officer and Senior Vice President - Financial Operations of the Company and such other officers of the Company as may be designated by its Chief Financial Officer to, and reasonably acceptable to, the Administrative Agent. "Senior Pro Forma Interest" shall mean, for any period, an amount equal to interest for such period on an amount equalto the aggregate principal amount of Loans outstanding on the day immediately preceding such period at a rate per annum (calculated - 24 - as provided in Section 4.03 hereof) equal to the sum of (a) the Eurodollar Rate on the day immediately preceding such period that would be applicable to Loans that are Eurodollar Loans hereunder for an Interest Period commencing on such date and having a term of three months plus (b) the Applicable Margin for Loans that are Eurodollar Loans on the day immediately preceding such period; provided that such rate per annum shall not exceed, for any amount of the Loans as to which the Company has capped the interest rate thereon by entering into an Interest Rate Protection Agreement as to a notional amount equal to such amount of the Loans that is in effect on the day immediately preceding such period, a rate per annum equal to the capped rate provided for in such Interest Rate Protection Agreement (but, if such Interest Rate Protection Agreement is scheduled to terminate prior to the end of such period, only for that part of such period prior to the scheduled date of termination) appropriately adjusted to reflect fees and other costs payable by the Company under such Interest Rate Protection Agreement to the extent allocable to such period (or part thereof). "series" shall have the meaning assigned to such term in Section 1.03 hereof. "6-3/4 Debenture Indenture" shall mean the Indenture dated as of October 15, 1986 between the Company and Security Pacific National Bank, as Trustee, providing for the 6-3/4% Debentures, as the same be modified and supplemented and in effect from time to time. "6-3/4% Debentures" shall mean the 6-3/4% Convertible Subordinated Debentures Due 2011 of the Company, as the same shall be modified and supplemented and in effect from time to time. "Stock Collateral" shall mean the "Stock Collateral" under and as defined in the Security Agreement. "Stock Purchase Agreement" shall mean the Stock Purchase Agreement dated as of November 4, 1993 among UCGI, Unistar, Infinity and the Company, as the same shall be modified and supplemented and in effect from time to time. - 25 - "Subordinated Debt" shall mean the Indebtedness of the Company in respect of the 6-3/4% Debentures and the indebtedness of the Company in respect of the 9% Debentures. "Subordinated Debt Documents" shall mean the 6-3/4% Debentures, the 6-3/4% Debenture Indenture, the 9% Debentures and the 9% Debenture Indenture. "Subordinated Pro Forma Interest" shall mean, for any period, an amount equal to the interest for such period on an amount equal to the aggregate principal amount of the 6-3/4% Debentures outstanding on the day immediately preceding such period at a rate per annum (calculated as provided in the 6-3/4% Debenture Indenture) equal to 6-3/4%. "Subsidiary" shall mean, for any Person, any corpora- tion, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. "Wholly Owned Subsidiary" shall mean, for any Person, any such corporation, partnership or other entity of which all of the securities or other ownership interests (other than, in the case of a corporation, directors' qualifying shares) are so owned or controlled. "Term Loan Banks" shall mean (a) on the date of this Agreement, the Banks having Term Loan Commitments as specified on Schedule I hereto under the heading "Term Loan Banks" and (b) thereafter, the Banks from time to time holding Term Loans or, if the Term Loan Commitments are then in effect, Term Loan Commitments (after giving effect to any assignments thereof pursuant to Section 12.06(a) hereof). "Term Loan Commitment" shall mean, as to each Term Loan Bank, the obligation of such Bank to make Term Loans in an aggregate principal amount at any one time outstanding up to but - 26 - not exceeding (a) in the case of a Term Loan Bank that is a party to this Agreement as of the date hereof, the amount set forth opposite the name of such Bank on Schedule I hereto under the heading "Term Loan Commitments" and (b) in the case of any other Term Loan Bank, the aggregate amount of the Term Loan Commitments of other Term Loan Banks acquired by it pursuant to Section 12.06(a) hereof (in each case, as the same may be reduced from time to time pursuant to Section 2.03 hereof or increased or reduced from time to time pursuant to said Section 12.06(a)). "Term Loan Notes" shall mean the promissory notes provided for by Section 2.07(a) hereof and all promissory notes delivered in substitution therefor, in each case as the same shall be modified and supplemented and in effect from time to time. "Term Loans" shall have the meaning assigned to such term in Section 2.01(a) hereof. "Total Debt" shall mean all Indebtedness of the Company and its Subsidiaries, determined on a consolidated basis. "Total Debt Ratio" shall mean, as of any date of determination thereof, the ratio of (a) Total Debt outstanding as of such date to (b) Operating Cash Flow for the period of the four fiscal quarters of the Company ended on, or most recently ended prior to, such date. "Total Debt Service" shall mean, as at the last day of any Fiscal Year, the sum (calculated without duplication) of all payments of principal of and interest on Indebtedness of the Company and its Subsidiaries made or scheduled to be made during such Fiscal Year. "Total Interest" shall mean, for any period, all interest, whether paid in cash or accrued as a liability, on all Indebtedness (including imputed interest on Capital Lease Obligations) of the Company and its Subsidiaries, determined on a consolidated basis, for such period, provided that (a) there shall be added to "Total Interest" any fees or commissions or net losses amortized during such period under Interest Rate Protection Agreements and any fees or commissions payable in connection with any letters of credit during such period and (b) there shall be subtracted from "Total Interest" any net gains - 27 - under Interest Rate Protection Agreements during such period and the aggregate amount of interest income in respect of cash and cash equivalents of the Company and its Restricted Subsidiaries realized during such period. "Total Interest Coverage Ratio" shall mean, as of any date of determination thereof, the ratio of (a) Operating Cash Flow for the period of four fiscal quarters of the Company ended on, or most recently ended prior to, such date to (b) Total Interest for such period. "Total Pro Forma Debt Service Coverage Ratio" shall mean, as of any date of determination thereof, the ratio of (a) Operating Cash Flow for the period of four fiscal quarters of the Company ended on, or most recently ended prior to, such date to (b) Pro Forma Debt Service for the period of four fiscal quarters next following the period referred to in clause (a) above. "type" shall have the meaning assigned that term in Section 1.03 hereof. "UCGI" shall mean Unistar Communications Group, Inc., a Delaware corporation. "Unistar" shall mean Unistar Radio Networks, Inc., a Delaware corporation. "Unistar Acquisition" shall mean the acquisition by the Company of the Unistar Shares from UCGI on substantially the terms set forth in the Stock Purchase Agreement. "Unistar/Infinity Transaction Documents" shall mean the Stock Purchase Agreement, the Securities Purchase Agreement, the Management Agreement, the Voting Agreement, the Registration Rights Agreement, the Initial Warrant and the Incentive Warrants. "Unistar Shares" shall mean all of the issued and outstanding shares of capital stock of Unistar. "Voting Agreement" shall mean a Voting Agreement between the Company, Norman J. Pattiz and INI in substantially the form of Exhibit B to the Stock Purchase Agreement, as the - 28 - same shall be modified and supplemented and in effect from time to time. "Working Investment" shall mean, as at any date of determination thereof, for any Person and its Consolidated Subsidiaries (determined in accordance with GAAP), the excess of (a) the sum of (i) the amount of all trade receivables and accounts receivable, plus (ii) the value of all inventory including, without limitation, all work-in-process and all merchandise inventory, plus (iii) all prepaid expenses and all unbilled contracts over (b) the sum of (i) the amount of all accounts payable plus (ii) all accrued liabilities plus all deferred revenue. 1.02 Accounting Terms and Determinations (a) Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Administrative Agent or the Banks hereunder shall (unless otherwise disclosed to the Banks as provided in Section 1.02(b) hereof, but subject to Section 1.02(c) hereof) be prepared, in accordance with GAAP applied on a basis consistent with the accounting principles used in the preparation of the audited financial statements of the Company and its Consolidated Subsidiaries referred to in Section 7.02 hereof, and all computations made for the purpose of determining compliance with Section 8 hereof, and those made for the purpose of determining the Applicable Margin and the amount of each prepayment required by Section 3.04 hereof, shall utilize accounting principles and policies in effect at the time of the preparation of and in conformity with those used to prepare such audited financial statements. (b) The Company shall deliver to the Administrative Agent and the Banks at the same time as the delivery of any annual or quarterly financial statement under Sections 8.01(a) or 8.01(b) hereof a description in reasonable detail of any material variation between the application of accounting principles employed in the preparation of such statement and the application of accounting principles employed in the preparation of the next preceding annual or quarterly financial statements and reasonable estimates of the difference between such statements arising as a consequence thereof. - 29 - (c) Except as otherwise provided herein, if any changes in accounting principles from those used in the preparation of the audited financial statements referred to in Section 7.02 hereof are hereafter required or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and are adopted by the Company or any of its Subsidiaries with the agreement of its independent certified public accountants and such changes result in a change in the method of calculation of any of the financial covenants, standards or terms in or relating to Section 3.04, Section 8 or any other provision of this Agreement, the parties hereto agree to enter into discussions with a view to amending such provisions so as to equitably reflect such changes with the desired result that the criteria for evaluating the financial condition of the Company and its Consolidated Subsidiaries shall be the same after such changes as if such changes had not been made, provided that no change in such accounting principles that would affect the method of calculation of any of said financial covenants, standards or terms shall be given effect in such calculations until such provisions are amended, in a manner satisfactory to the Majority Banks, to so reflect such change in accounting principles. (d) The Company will maintain its accounts and the accounts of its Subsidiaries on the basis of a fiscal year ending November 30 of each year, and the last days of the first three fiscal quarters in each Fiscal Year will be February 28 or 29 (as the case may be), May 31 and August 31 of each year, respectively; provided that (i) the Company may, by prior written notice to the Administrative Agent and the Banks, change the last day of the Fiscal Year and of each of its Subsidiaries to December 31 (and will thereupon change the last days of its and its Subsidiaries first three fiscal quarters in each Fiscal Year to March 31, June 30 and September 30, respectively); and (ii) in connection with any such change in the basis of the Fiscal Year, the Company, the Banks and the Administrative Agent hereby agree to enter into discussions, promptly after the Company has given the written notice referred to in clause (i) above, with a view to amending this Agreement to address to the mutual satisfaction of the parties the effect of such change on the financial and other covenants contained herein and on the other terms and - 30 - conditions of this Agreement that may be affected solely by reason of such change. 1.03 Types and Series of Loans and Commitments. Loans hereunder are distinguished by "type" and "series" and Commitments hereunder are distinguished by "series". The "type" of a Loan refers to whether such Loan is a Base Rate Loan or a Eurodollar Loan. The "series" of a Loan refers to whether such Loan is a Term Loan or a Revolving Credit Loan and the "series" of a Commitment refers to whether such Commitment is an Term Loan Commitment or a Revolving Credit Commitment. Section 2. Commitments 2.01 Loans (a) Term Loans. Each Term Loan Bank severally agrees, on the terms and conditions of this Agreement, to make term loans to the Company on the Closing Date in an aggregate principal amount up to but not exceeding the amount of such Bank's Term Loan Commitment as then in effect. Loans made pursuant to this Section 2.01(a) are herein called "Term Loans". Subject to the terms and conditions of this Agreement, the Company may (as provided in Section 2.08 hereof) Convert Term Loans of one type into Term Loans of the other type or Continue Term Loans of one type as Term Loans of the same type. (b) Revolving Credit Loans. Each Revolving Credit Bank severally agrees, on the terms and conditions of this Agreement, to make loans to the Company on any Business Day during the period from and including the Closing Date to and including the Commitment Termination Date in an aggregate principal amount up to but not exceeding the amount of such Bank's Revolving Credit Commitment as then in effect. Loans made pursuant to this Section 2.01(b) are herein called "Revolving Credit Loans". Subject to the terms and conditions of this Agreement, during such period the Company may borrow, prepay and reborrow the amount of the Revolving Credit Commitments by means of Base Rate Loans and Eurodollar Loans and may (as provided in Section 2.08 hereof) Convert Revolving Credit Loans of one type into Revolving Credit Loans of the other type or Continue Revolving Credit Loans of one type as Revolving Credit Loans of the same type. PAGE - 31 - 2.02 Borrowings. The Company shall give the Administrative Agent (which shall promptly notify the Term Loan Banks and/or the Revolving Credit Banks, as applicable) notice of each borrowing hereunder as provided in Section 4.05 hereof. Not later than 11:00 a.m. New York time on the date specified for each borrowing hereunder, each such Bank shall make available the amount of the Loan(s) to be made by it on such date to the Administrative Agent, at account number NYAO-DI-900-9-000002 maintained by the Administrative Agent with Chase at the Principal Office, in immediately available funds, for account of the Company. The amount so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available to the Company by depositing the same, in immediately available funds, in an account of the Company maintained with Chase at the Principal Office designated by the Company or by wiring the same, in immediately available funds, to any account specified by the Company in the related notice of such borrowing. 2.03 Changes of Commitments (a) Voluntary. The Company shall have the right to terminate or reduce the aggregate amount of the Term Loan Commitments and/or the Revolving Credit Commitments, as the case may be, at any time or from time to time prior to the Closing Date (in the case of the Term Loan Commitments) or the Commitment Termination Date (in the case of the Revolving Credit Commitments); provided that (x) the Company shall give notice of each such termination or reduction as provided in Section 4.05 hereof and (y) each partial reduction shall be in an aggregate amount at least equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof (or, if less, the aggregate amount of Term Loan Commitments or Revolving Credit Commitments, as the case may be, then remaining). (b) Mandatory (i) The Commitments shall automatically terminate if the Closing Date shall not have occurred on or prior to March 31, 1994. (ii) The aggregate unused amount of the Term Loan Commitments shall be automatically reduced to zero and the - 32 - Term Loan Commitments shall terminate at the close of business on the Closing Date. (iii) The aggregate amount of the Revolving Credit Commitments shall be automatically reduced to zero and the Revolving Credit Commitments shall terminate at the close of business on the Commitment Termination Date. (iv) Each series of Commitments shall be automatically reduced by the amount of any prepayment of Loans of the related series made as required by Section 3.04 hereof (other than, with respect to the Revolving Credit Loan Commitments, paragraph (e) thereof) or, if any of the events described in said Section 3.04 occurs prior to the Closing Date or at any time when Loans of such series are outstanding in an amount less than the amount of such series of Commitments as then in effect, which would have been required to be made if Loans had been outstanding in an aggregate principal amount equal to the aggregate amount of such Commitments on the date of such occurrence. (c) Effect of Commitment Reductions. Commitments once terminated or reduced may not be reinstated. 2.04 Commitment Fee. The Company shall pay to the Administrative Agent a commitment fee on the daily average unused amount of Revolving Credit Commitment held by each Revolving Credit Bank for account of such Revolving Credit Bank, for the period from and including the Closing Date to but not including the earlier of the date such Revolving Credit Commitment is terminated and the Commitment Termination Date, at a rate per annum equal to 1/2 of 1%. Accrued commitment fees shall be payable on each Quarterly Date and on the date the relevant Commitment is terminated or expires. 2.05 Lending Offices. The Loans of each type made by each Bank shall be made and maintained at such Bank's Applicable Lending Office for Loans of such type. 2.06 Several Obligations; Remedies Independent. The failure of any Bank to make any Loan to be made by it on the date specified therefor shall not relieve any other Bank of its obligation to make any Loan on such date, but neither any Bank nor the Agents shall be responsible for the failure of any other - 33 - Bank to make a Loan to be made by such other Bank. The amounts payable by the Company at any time hereunder and under the Notes to each Bank shall be a separate and independent debt and each Bank shall be entitled to protect and enforce its rights arising out of this Agreement and the Notes, and it shall not be necessary for any other Bank or the Agents to consent to, or be joined as an additional party in, any proceedings for such purposes. 2.07 Notes. (a) The Term Loans made by each Term Loan Bank shall be evidenced by a single promissory note (each, a "Term Loan Note") of the Company in substantially the form of Exhibit A-1 hereto, dated the Closing Date, payable to the order of such Bank in a principal amount equal to the amount of such Bank's Term Loan made on the Closing Date and otherwise duly completed. (b) The Revolving Credit Loans made by each Revolving Credit Bank shall be evidenced by a single promissory note (each, a "Revolving Credit Note") of the Company in substantially the form of Exhibit A-2 hereto, dated the Closing Date, payable to the order of such Bank in a principal amount equal to the amount of such Bank's Revolving Credit Commitment as in effect on the Closing Date and otherwise duly completed. (c) The date, amount, type, interest rate, and duration of Interest Period (if applicable) of each Loan of any series held by any Bank, and each payment made on account of the principal thereof, shall be recorded by such Bank on its books and, prior to any transfer of the Note evidencing such Loans of such series held by such Bank, endorsed by such Bank on the schedule attached to such Note or any continuation thereof; provided that the failure of such Bank to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under such Note. (d) No Bank shall be entitled to have its Notes subdivided, by exchange for promissory notes of lesser denominations or otherwise, except in connection with a permitted assignment of all or any portion of such Bank's relevant Commitments, Loans and/or Notes pursuant to Section 12.06 hereof. - 34 - 2.08 Conversions or Continuations of Loans. Subject to Section 4.04 hereof, the Company shall have the right to Convert Loans of one type and series into Loans of the other type of the same series or Continue Loans of one type and series as Loans of the same type and series, at any time or from time to time, provided that: (a) the Company shall give the Administrative Agent notice of each such Conversion or Continuation as provided in Section 4.05 hereof; and (b) Eurodollar Loans may be Converted only on the last day of an Interest Period for such Loans. All borrowings, Conversions and Continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, at no time will the aggregate number of Eurodollar Tranches exceed six. As used in this Section 2.08, the term "Eurodollar Tranche" is the collective reference to Eurodollar Loans the Interest Periods with respect to which begin on the same date and end on the same later date (whether or not such Eurodollar Loans shall originally have been made on the same date). Notwithstanding the foregoing, and without limiting the rights and remedies of the Banks under Section 10 hereof, in the event that any Event of Default shall have occurred and be continuing, the Administrative Agent may (and at the request of the Majority Banks shall) suspend the right of the Company to Convert any Loan into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan, in which event all Loans shall be Converted (on the last day(s) of the respective Interest Periods therefor) into Base Rate Loans or, if outstanding as Base Rate Loans, Continued as Base Rate Loans. Section 3. Payments of Principal and Interest 3.01 Repayment of Loans. (a) The Company hereby promises to pay to the Administrative Agent for account of each Term Loan Bank the aggregate principal amount of the Term Loans held by such Bank in 28 installments payable on the Principal Payment Dates as follows (each such installment to be in an amount equal to the product of (i) the aggregate amount of the Term Loans made to the Company on the Closing Date times (ii) the percentage set forth below opposite each such Principal Payment Date): - 35 - Principal Payment Date Percentage of Falling on or Nearest To: Principal Amount (%) ________________________ ____________________ February 28, 1995 2.2727 May 31, 1995 2.2727 August 31, 1995 2.2727 November 30, 1995 2.2727 February 29, 1996 3.4090 May 31, 1996 3.4090 August 31, 1996 3.4090 November 30, 1996 3.4090 February 28, 1997 3.4090 May 31, 1997 3.4090 August 31, 1997 3.4090 November 30, 1997 3.4090 February 28, 1998 4.5455 May 31, 1998 4.5455 August 31, 1998 4.5455 November 30, 1998 4.5455 February 28, 1999 4.5455 May 31, 1999 4.5455 August 31, 1999 4.5455 November 30, 1999 4.5455 February 29, 2000 3.4090 May 31, 2000 3.4090 August 31, 2000 3.4090 November 30, 2000 3.4090 February 28, 2001 3.4090 May 31, 2001 3.4090 August 31, 2001 3.4090 November 30, 2001 3.4090 (b) The Company hereby promises to pay to the Administrative Agent for account of each Revolving Credit Bank the aggregate principal amount of the Revolving Credit Loans outstanding on the Commitment Termination Date and held by such Bank on the Commitment Termination Date. - 37 - 3.02 Interest. (a) The Company hereby promises to pay to the Administrative Agent for account of each Bank interest on the unpaid principal amount of each Loan held by such Bank for the period commencing on and including the date of such Loan to but excluding the date such Loan is paid in full, at the following rates per annum: (i) during any period while such Loan is a Base Rate Loan, the Base Rate (as in effect from time to time) plus the Applicable Margin; and (ii) during any period while such Loan is a Eurodollar Loan, for each Interest Period relating thereto, the Eurodollar Rate for such Loan for such Interest Period plus the Applicable Margin. (b) Notwithstanding the foregoing, to the maximum extent permitted by the law of the State of New York, the Company hereby promises to pay to the Administrative Agent interest at the applicable Post-Default Rate on the aggregate principal amount of and interest on Loans and on all other amounts payable by the Company hereunder and under the other Basic Documents from and after the occurrence and during the continuance of each Payment Default (such interest to be paid for the account of the respective Banks or the Administrative Agent to which such principal, interest or other amount not paid when due is payable). (c) Accrued interest on each Loan shall be payable (i) in the case of a Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the case of a Eurodollar Loan, on the last day of each Interest Period therefor and, if such Interest Period is longer than three months, at three-month intervals following the first day of such Interest Period, and (iii) in the case of any Loan, upon the payment or prepayment thereof or the Conversion of such Loan to a Loan of the other type (but only on the principal amount so paid, prepaid or Converted), except that interest payable at the Post-Default Rate shall be payable from time to time on demand. Promptly after the determination of any interest rate provided for herein or any change therein, the Administrative Agent shall give notice thereof to the Banks to which such interest is payable and to the Company. - 37 - 3.03 Optional Prepayments. Subject to Section 4.04 hereof, the Company shall have the right to prepay Loans made to it at any time or from time to time, provided that: (a) the Company shall give the Administrative Agent notice of each such prepayment as provided in Section 4.05 hereof (and, upon the date specified in any such notice of prepayment, the amount to be prepaid shall become due and payable hereunder); and (b) each partial prepayment shall, at the option of the Company, be applied to the prepayment of Revolving Credit Loans or the Term Loans pro rata in accordance with the respective aggregate principal amounts of the Revolving Credit Loans and Term Loans so prepaid (the amount of the Term Loans so prepaid to be applied to the remaining installments of such Loans in the inverse order of maturity); provided that, if the Company so elects in the related notice of prepayment referred to in clause (a) above, all or that part (as specified by the Company in such notice) of any amount required by clause (b) above to be applied to the installments of the Term Loans in the inverse order of maturity shall instead be applied to the installments of the Term Loans in the direct order of their maturity except that no such installment scheduled to be paid after the date which is 180 days after the date of such prepayment may be prepaid pursuant to this proviso. 3.04 Mandatory Prepayments. The Company shall prepay the Loans as follows: (a) Dispositions. Upon the receipt by the Company or any Subsidiary of the proceeds of any Disposition (other than any Disposition permitted by Section 8.12(c) hereof), the principal of the Loans shall, to the extent the net proceeds of such Disposition (when taken together with the aggregate amount of net proceeds of all other Dispositions (other than any permitted by said Section 8.12(c) during such Fiscal Year) shall exceed $250,000, be prepaid (as specified in paragraph (f) below) in an amount equal to such net proceeds. For purposes of this Section 3.04(a), "net proceeds" shall mean all cash amounts received in respect of any such Disposition (including any cash amounts received by way of deferred payment pursuant to a note receivable or otherwise but only as and when received), net of (i) expenses incurred in connection with such Disposition and taxes paid (or reasonably estimated to be payable) in connection therewith and (ii) contractually required repayments of Indebtedness payable to Persons other than the Banks hereunder to - 38 - the extent secured by a Lien on the relevant Properties that are the subject of such Disposition. (b) Casualty Events. In the event of the receipt by the Company or any Subsidiary of the proceeds of any property or casualty insurance (excluding, however, any business interruption insurance), except to the extent such proceeds are to be applied reasonably promptly towards the repair, reconstruction or replacement of the property the damage to or loss of which gave rise to the payment thereof, the principal of the Loans shall be prepaid (as specified in paragraph (f) below) in an amount equal to such proceeds, provided that (i) for purposes of determining the amount of such proceeds to be so applied, such proceeds shall be net of taxes paid (or reasonably estimated to be payable) in connection therewith and of contractually required repayments of Indebtedness payable to Persons other than the Banks hereunder to the extent secured by a Lien on such Property and (ii) subject to clause (i) above, unless the Majority Banks otherwise agree, if at the time such proceeds are received by the Company or any of its Subsidiaries a Payment Default shall have occurred and be continuing, such proceeds shall be applied to the prepayment of the Loans in the manner required by this Section 3.04(b) and shall not be used for the repair, reconstruction or replacement of such property. (c) Excess Cash Flow, Etc. Upon the date of the delivery to the Administrative Agent of the financial statements of the Company pursuant to Section 8.01(b) hereof for each Fiscal Year (as used herein, the "immediately preceding Fiscal Year") commencing with the Fiscal Year ending on November 30, 1994, but in no event later than April 30 of the next succeeding Fiscal Year, the principal of Loans shall be prepaid (as specified in paragraph (f) below) in an aggregate amount equal to the sum of (i) 50% of Excess Cash Flow for the immediately preceding Fiscal Year plus (ii) the aggregate amount of payments made by the Company and its Subsidiaries during such immediately preceding Fiscal Year to redeem Class Action Warrants to the extent permitted by Section 8.09(g) hereof. (d) Equity Issuances. Upon any Equity Issuance, the principal of the Loans shall be prepaid (as specified in paragraph (f) below) in an amount equal to 50% of the net proceeds thereof. For purposes of this Section 3.04(d), "net proceeds" shall mean, with respect to any Equity Issuance, the - 39 - aggregate amount of all cash received by the Company and its Subsidiaries in respect thereof and the fair market value of all non-cash consideration received by the Company and its Subsidiaries in respect thereof, net of expenses incurred by the Company and its Subsidiaries in connection therewith. (e) Reductions of Revolving Credit Commitments. Upon each reduction in the aggregate amount of the Revolving Credit Commitments pursuant to Section 2.03 hereof to an aggregate amount less than the then aggregate outstanding principal amount of the Revolving Credit Loans, Revolving Credit Loans shall be prepaid in the amount required so that, after giving effect thereto, the aggregate outstanding principal amount of the Revolving Credit Loans is less than or equal to the amount of the Revolving Credit Loan Commitments as so reduced. (f) Application and Timing of Payments. Each prepayment under this Section 3.04 shall be applied, first, to the prepayment of the Term Loans (such prepayment to be applied to the remaining installments of such Loans in the inverse order of maturity), and then, after all Term Loans have been paid in full, to the prepayment of Revolving Credit Loans. The Company shall give notice to the Administrative Agent of each prepayment pursuant to this Section 3.04 in the same manner and at the same time as is required for any optional prepayment pursuant to Section 3.03 hereof. Section 4. Payments; Pro Rata Treatment; Computations; Etc. 4.01 Payments. (a) Except to the extent otherwise provided herein or therein, all payments of principal, interest and other amounts to be made by each Obligor under this Agreement and the other Basic Documents, shall be made in Dollars, in immediately available funds, to the Administrative Agent at account number NYAO-DI-900-9-000002 maintained by the Administrative Agent with Chase at the Principal Office, not later than 11:00 a.m. New York time on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). - 40 - (b) The Administrative Agent or any Bank for whose account any such payment is to be made, may (but shall not be obligated to) debit the amount of any such payment which is not made by such time to any ordinary deposit account of any Obligor with it (with notice to the Company and, if such Obligor is not the Company, such Obligor). (c) The Company shall, at the time it makes any payment under this Agreement or any Note, notify the Administra- tive Agent (which shall so notify the intended recipient(s) thereof) of the Loans or other amounts payable by the Company hereunder to which such payment is to be applied in which case such payment shall be so applied, subject to Sections 3.03, 3.04 and 4.02 hereof (and in the event that it fails to so specify, the Administrative Agent may distribute the amount of such payment to the Banks in such manner as the Majority Banks may determine to be appropriate, subject to said Sections 3.03, 3.04 and 4.02). (d) Each payment received by the Administrative Agent under this Agreement or any Note for account of any Bank shall be paid by the Administrative Agent promptly to such Bank, in immediately available funds, for account of such Bank's Applicable Lending Office for the Loan or other obligation in respect of which such payment is made. (e) All payments by each Obligor hereunder shall be made without deduction, set-off or counterclaim. (f) If the due date of any payment under this Agreement or any Note would otherwise fall on a day which is not a Business Day such payment shall be made on the immediately preceding Business Day and interest on any principal so paid shall be payable to, but excluding, the date such payment is made. 4.02 Pro Rata Treatment. Except to the extent otherwise provided herein: (a) each borrowing under each series of Commitments shall be made from the Banks holding such series of Commit- ments, each payment of commitment fees in respect of each series of Commitments shall be made for account of the Banks holding such series of Commitments, and each termination or - 41 - reduction of the amount of each series of Commitments shall be applied to such series, pro rata according to the respective unused amounts of the Commitments of such series; (b) the making, Conversion and Continuation of Loans of a particular type and series (other than Conversions provided for by Section 5.04 hereof) shall be made pro rata among the Banks holding Loans of such type and series according to the respective principal amounts of their Commitments of such series (in the case of making Loans) or their Loans of such series (in the case of Conversions and Continuations of Loans), and Eurodollar Loans of a particular type and series having the same Interest Period shall be allocated pro rata among the Banks according to the amounts of their respective Loans of such type and series; (c) each payment or prepayment of principal of Loans of a particular type and series shall be made to the Administrative Agent for account of the Banks holding Loans of such type and series pro rata in accordance with the respective unpaid principal amounts of the Loans of such type and series held by such Banks; and (d) each payment of interest on Loans of a particular type and series shall be made to the Administrative Agent for account of the Banks holding Loans of such type and series pro rata in accordance with the amounts of interest on Loans of such type and series then due and payable to such Banks. 4.03 Computations. Interest on Eurodollar Loans shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable and interest on Base Rate Loans and commitment fees shall be computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest or commitment fee is payable. Notwithstanding the foregoing, for each day that the Base Rate is calculated by reference to the Federal Funds Rate, interest on Base Rate Loans shall be computed on the basis of a year of 360 days and actual days elapsed. - 42 - 4.04 Minimum Amounts. Except for mandatory prepayments made pursuant to Section 3.04 hereof and Conversions or prepayments made pursuant to Section 5.04 hereof, each borrowing, Conversion and prepayment of principal of Base Rate Loans shall be in an amount at least equal to $1,000,000 and in multiples of $500,000 in excess thereof and each borrowing, Conversion and prepayment of Eurodollar Loans shall be in an amount at least equal to $1,000,000 and in multiples of $500,000 in excess thereof (borrowings of Loans of different types or series, Conversions of or into Loans of different types or, in the case of Eurodollar Loans having different Interest Periods, prepayments of Loans of different types or series or, in the case of Eurodollar Loans, having different Interest Periods at the same time hereunder to be deemed separate borrowings, Conversions and prepayments for purposes of the foregoing, one for each type or series or Interest Period). 4.05 Certain Notices. Notices by the Company to the Administrative Agent of terminations or reductions of the Commitments, of borrowings, Conversions, Continuations and optional and mandatory prepayments of Loans, of series of Loans, of types of Loans and of the duration of Interest Periods shall be irrevocable and shall be effective only if received by the Administrative Agent not later than 11:00 a.m. New York time on the number of Business Days prior to the date of the relevant termination, reduction, borrowing, Conversion, Continuation or prepayment or the first day of such Interest Period specified below: Number of Business Notice Days Prior ______ __________ Termination or reduction of Commitments 1 Borrowing or prepayment of, or Conversions into, Base Rate Loans 1
- 43 - Borrowing or prepayment of, Conversions into, Continuations as, or duration of Interest Period for, Eurodollar Loans 3
Each such notice of termination or reduction shall specify the amount and the series of the Commitments to be terminated or reduced. Each such notice of borrowing, Conversion, Continuation or optional or mandatory prepayment shall specify the series of Loans to be borrowed, Converted, Continued or prepaid and the amount (subject to Section 4.04 hereof) and type of each Loan to be borrowed, Converted, Continued or prepaid and the date of borrowing, Conversion, Continuation or optional prepayment (which shall be a Business Day). Each such notice of the duration of an Interest Period shall specify the Loans to which such Interest Period is to relate. The Administrative Agent shall promptly notify the relevant Banks of the contents of each such notice. In the event that the Company fails to select the type of any Loan, or the duration of any Interest Period for any Eurodollar Loan, within the time period and otherwise as provided in this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be automatically Converted into a Base Rate Loan on the last day of the then current Interest Period for such Loan or (if outstanding as a Base Rate Loan) will remain as, or (if not then outstanding) will be made as, a Base Rate Loan. 4.06 Non-Receipt of Funds by the Administrative Agent. Unless the Administrative Agent shall have been notified by a Bank or the Company (the "Payor") prior to the date on which the Payor is to make payment to the Administrative Agent of (in the case of a Bank) the proceeds of a Loan to be made by it hereunder or (in the case of the Company) a payment to the Administrative Agent for account of one or more of the Banks hereunder (such payment being herein called the "Required Payment"), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date and, if the Payor has not in fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment shall, on demand, repay to the - 44 - Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at, if such recipient is a Bank, a rate per annum equal to the Federal Funds Rate for such day or, if such recipient is the Company, at a rate per annum equal to the Base Rate then in effect plus (if such Required Payment related to the making of a Base Rate Loan) the Applicable Margin for Base Rate Loans and, if such recipient(s) shall fail promptly to make such payment, the Administrative Agent shall be entitled to recover such amount, on demand, from the Payor, together with interest as aforesaid. 4.07 Sharing of Payments, Etc. (a) Each Obligor agrees that, in addition to (and without limitation of) any right of set-off, banker's lien or counterclaim a Bank may otherwise have, each Bank shall be entitled, at its option, to offset balances held by it for account of such Obligor at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Bank's Loans or any other amount payable to such Bank hereunder, that is not paid when due (regardless of whether such balances are then due to such Obligor), in which case it shall promptly notify the Company (and, if such Obligor is not the Company, such Obligor) and the Administrative Agent thereof, provided that such Bank's failure to give such notice shall not affect the validity thereof. (b) (i) Prior to the date the principal amount then outstanding of, and accrued interest on, the Loans become due and payable pursuant to Section 10 hereof, if any Term Loan Bank shall obtain payment of any principal of or interest on any of the Term Loans or payment of any other amount under this Agreement, any Note evidencing Term Loans held by it or the Security Agreement through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise, and, as a result of such payment, such Term Loan Bank shall have received a greater percentage of the principal or interest then due hereunder in respect of Term Loans held by such Term Loan Bank than the percentage of principal or interest then due and payable hereunder in respect of Term Loans held by the other Term - 45 - Loan Banks received by the other Term Loan Banks, such Term Loan Bank shall promptly purchase from such other Term Loan Banks participations in (or, if and to the extent specified by such Term Loan Bank, direct interests in) the Term Loans held by such other Term Loan Banks (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all of such Term Loan Banks shall share the benefit of such excess payment (net of any expenses which may be incurred by such Term Loan Bank in obtaining or preserving such excess payment) pro rata in accordance with the principal and/or interest on the Term Loans then due and payable held by each of such Term Loan Banks. To such end all the Term Loan Banks shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. (ii) Prior to the date the principal amount then outstanding of, and accrued interest on, the Loans become due and payable pursuant to Section 10 hereof, if any Revolving Credit Bank shall obtain payment of any principal of or interest on any of the Revolving Credit Loans or payment of any other amount under this Agreement, any Note evidencing Revolving Credit Loans held by it or the Security Agreement through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise, and, as a result of such payment, such Revolving Credit Bank shall have received a greater percentage of the principal or interest then due hereunder in respect of Revolving Credit Loans held by such Revolving Credit Bank than the percentage of principal or interest then due and payable hereunder in respect of Revolving Credit Loans held by the other Revolving Credit Banks received by the other Revolving Credit Banks, such Revolving Credit Bank shall promptly purchase from such other Revolving Credit Banks participations in (or, if and to the extent specified by such Revolving Credit Bank, direct interests in) the Revolving Credit Loans held by such other Revolving Credit Banks (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all of such Revolving Credit Banks shall share the benefit of such excess payment (net of any expenses which may be incurred by - 46 - such Revolving Credit Bank in obtaining or preserving such excess payment) pro rata in accordance with the principal and/or interest on the Revolving Credit Loans then due and payable held by each of such Revolving Credit Banks. To such end all the Revolving Credit Banks shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. (iii) On and after the date the principal amount then outstanding of, and accrued interest on, the Loans become due and payable pursuant to Section 10 hereof, if any Bank shall obtain payment of any principal of or interest on the Loans of any series or payment of any other amount under this Agreement, any Note held by it or the Security Agreement or otherwise through the exercise of any right of set-off, banker's lien or counterclaim or similar right, and, as a result of such payment, such Bank shall have received a greater percentage of the principal or interest then due hereunder in respect of the Loans held by such Bank than the percentage of principal or interest then due and payable hereunder in respect of the Loans held by the other Banks received by the other Banks holding Loans it shall promptly purchase from such other Banks participations in (or if and to the extent specified by such Bank, direct interests in) the Loans of such series held by such other Banks (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all of such Banks shall share the benefit of such excess payment (net of any expenses which may be incurred by such Bank in obtaining or preserving such excess payment) pro rata in accordance with the principal and/or interest on the Loans of such series then due and payable held by each of such Banks. To such end all the Banks shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. (c) Each Obligor agrees that any Bank so purchasing such a participation (or direct interest) may exercise all rights of set-off, banker's lien, counterclaim or similar rights with respect to such participation as fully as if such Bank were a - 47 - direct holder of Loans or other amounts (as the case may be) owing to such Bank in the amount of such participation. (d) Nothing contained herein shall require any Bank to exercise any such right or shall affect the right of any Bank to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of any Obligor. If, under any applicable bankruptcy, insolvency or other similar law, any Bank receives a secured claim in lieu of a set-off to which this Section 4.07 applies, such Bank shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Banks entitled under this Section 4.07 to share in the benefits of any recovery on such secured claim. Section 5. Yield Protection, Etc. 5.01 Additional Costs. (a) The Company shall pay directly to each Bank from time to time such amounts as such Bank may determine to be necessary to compensate it for any costs which such Bank determines are attributable to its making or maintaining of any Eurodollar Loans hereunder or its obligation to make any Eurodollar Loans hereunder, or any reduction in any amount receivable by such Bank hereunder in respect of any of such Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), resulting from any Regulatory Change which: (i) changes the basis of taxation of any amounts payable to such Bank under this Agreement or its Notes in respect of any of such Loans (other than taxes imposed on or measured by the overall net income of such Bank or of its Applicable Lending Office for any of such Loans by the jurisdiction in which such Bank is incorporated or has its principal office or such Applicable Lending Office); or (ii) imposes or modifies any reserve, special deposit or similar requirements (other than the Reserve Requirement utilized in the determination of the Eurodollar Rate for such Loan) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, - 48 - such Bank (including any of such Loans or any deposits referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof), or any commitment of such Bank (including the Commitments of such Bank hereunder); or (iii) imposes any other condition affecting this Agreement or its Notes (or any of such extensions of credit or liabilities) or its Commitments. If any Bank requests compensation from the Company under this Section 5.01(a), the Company may, by notice to such Bank (with a copy to the Administrative Agent), suspend the obligation of such Bank to make or Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change giving rise to such request ceases to be in effect (in which case the provisions of Section 5.04 hereof shall be applicable); provided, that such suspension shall not affect the right of such Bank to receive the compensation so requested. (b) Without limiting the effect of the provisions of paragraph (a) of this Section 5.01, in the event that, by reason of any Regulatory Change, any Bank either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Bank which includes deposits by reference to which the interest rate on Eurodollar Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Bank which includes Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets which it may hold, then, if such Bank so elects by notice to the Company (with a copy to the Administrative Agent), the obligation of such Bank to make or Continue, or to Convert Base Rate Loans into, Eurodollar Loans hereunder shall be suspended until such Regulatory Change ceases to be in effect (in which case the provisions of Section 5.04 hereof shall be applicable). (c) Without limiting the effect of the foregoing provisions of this Section 5.01 (but without duplication), the Company shall pay directly to each Bank from time to time on request such amounts as such Bank may determine to be necessary to compensate such Bank (or, without duplication, the bank holding company of which such Bank is a subsidiary) for any costs which it determines are attributable to the maintenance by such - 49 - Bank (or any Applicable Lending Office or such bank holding company), pursuant to any law or regulation or any interpretation, directive or request (whether or not having the force of law) of any court or governmental or monetary authority (i) following any Regulatory Change or (ii) implementing any risk-based capital guideline or requirement (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) heretofore or hereafter issued by any government or governmental or supervisory authority implementing at the national level the Basle Accord (including, without limitation, the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) and the Final Risk-Based Capital Guidelines of the Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A)), of capital in respect of its Commitments or Loans (such compensation to include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of such Bank (or any Applicable Lending Office or such bank holding company) to a level below that which such Bank (or any Applicable Lending Office or such bank holding company) could have achieved but for such law, regulation, interpretation, directive or request). For purposes of this Section 5.01(c), "Basle Accord" shall mean the proposals for risk-based capital framework described by the Basle Committee on Banking Regulations and Supervisory Practices in its paper entitled "International Convergence of Capital Measurement and Capital Standards" dated July 1988, as amended, modified and supplemented and in effect from time to time or any replacement thereof. (d) Each Bank shall notify the Company of any event occurring after the date of this Agreement that will entitle such Bank to compensation under paragraph (a) or (c) of this Section 5.01 as promptly as practicable after it obtains actual knowledge thereof and determines to request such compensation and will designate a different Applicable Lending Office for the Loans of such Bank affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable opinion of such Bank, be disadvantageous to such Bank, except that such Bank shall have no obligation to designate an Applicable Lending Office located in the United States of America, provided that no Bank shall be entitled to compensation under this Section 5.01 for any costs incurred more than six months prior to the date the - 50 - respective Bank requests such compensation from the Company. Each Bank will furnish to the Company a certificate setting forth the basis and amount of each request by such Bank for compensation under paragraph (a) or (c) of this Section 5.01. Determinations and allocations by any Bank for purposes of this Section 5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or (b) of this Section 5.01, or of the effect of capital maintained pursuant to paragraph (c) of this Section 5.01, on its costs or rate of return of maintaining Loans or its obligation to make Loans, or on amounts receivable by it in respect of Loans, and of the amounts required to compensate such Bank under this Section 5.01, shall be conclusive, provided that such determinations and allocations are made on a reasonable basis. Notwithstanding anything in this Section 5.01 to the contrary, no Bank shall be entitled to compensation (i) if any increase in costs results from any Bank failing to comply with any of the requirements set forth in Section 5.06(a) or (ii) for any costs to a Bank that are already taken into account in the determination of the applicable interest rate. 5.02 Limitation on Eurodollar Loans. Anything herein to the contrary notwithstanding, if, on or prior to the deter- mination of any Eurodollar Base Rate for any Eurodollar Loans for any Interest Period: (a) the Administrative Agent determines, which determination shall be conclusive, that quotations of interest rates for the relevant deposits referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for such Eurodollar Loans as provided herein; or (b) if such Loans are Term Loans and/or Revolving Credit Loans, the Majority Term Loan Banks and/or Majority Revolving Credit Banks, respectively, determine, which determination shall be conclusive, and notify the Adminis- trative Agent that the relevant rates of interest referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the basis of which the rate of interest for Eurodollar Loans for such Interest Period is to be determined are not likely adequately to cover the cost to such Banks of making or maintaining Eurodollar Loans for such Interest Period; - 51 - then the Administrative Agent shall give the Company and each of the Banks which are to make or which hold such Loans prompt notice thereof, and so long as such condition remains in effect, such Banks shall be under no obligation to make additional Eurodollar Loans, to Continue Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans and each outstanding Eurodollar Loan held by such Bank shall, on the last day of the then current Interest Period for such Eurodollar Loan, be Converted automatically into Base Rate Loans in accordance with Section 2.08 hereof. 5.03 Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Bank or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans hereunder, then such Bank shall promptly notify the Company thereof (with a copy to the Administrative Agent) and such Bank's obligation to make or Continue, or to Convert Loans of the other type into, Eurodollar Loans shall be suspended until such time as such Bank may again make and maintain Eurodollar Loans (in which case the provisions of Section 5.04 hereof shall be applicable). 5.04 Treatment of Affected Loans. If the obligation of any Bank to make Eurodollar Loans or Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03 hereof, such Bank's Eurodollar Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for such Eurodollar Loans (or, in the case of a Conversion required by Section 5.01(b) or 5.03 hereof, on such earlier date as such Bank may specify to the Company with a copy to the Administrative Agent) and, unless and until such Bank gives notice as provided below that the circumstances specified in Section 5.01 or 5.03 hereof which gave rise to such Conversion no longer exist: (a) to the extent that such Bank's Eurodollar Loans of any series have been so Converted, all payments and prepayments of principal which would otherwise be applied to such Bank's Eurodollar Loans of such series shall be applied instead to its Base Rate Loans of such series; and (b) all Loans which would otherwise be made or Continued by such Bank as Eurodollar Loans shall be made or Continued instead as Base Rate Loans and all Base Rate Loans - 52 - of such Bank which would otherwise be Converted into Eurodollar Loans shall remain as Base Rate Loans. If such Bank gives notice to the Company with a copy to the Administrative Agent that the circumstances specified in Section 5.01 or 5.03 hereof which gave rise to the Conversion of such Bank's Eurodollar Loans of any series pursuant to this Section 5.04 no longer exist (which such Bank agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurodollar Loans of such series held by other Banks are outstanding, such Bank's Base Rate Loans of such series shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the extent necessary so that, after giving effect thereto, all Loans of such series held by such Banks and by such Bank are held pro rata (as to principal amounts, types and Interest Periods) in accordance with their respective Loans of such series. 5.05 Compensation. The Company shall pay to the Administrative Agent for account of each Bank, upon the request of such Bank through the Administrative Agent, such amount or amounts as shall be sufficient (in the reasonable opinion of such Bank) to compensate it for any loss, cost or expense which such Bank determines is attributable to: (a) any payment, prepayment or Conversion of a Eurodollar Loan made by such Bank for any reason (including, without limitation, the acceleration of the Loans pursuant to Section 10 hereof) on a date other than the last day of the Interest Period for such Loan; or (b) any failure by the Company for any reason (including, without limitation, the failure of any of the conditions precedent specified in Section 6 hereof to be satisfied) to borrow a Eurodollar Loan from such Bank on the date for such borrowing specified in the relevant notice of borrowing given pursuant to Section 2.02 hereof. Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess, if any, of (i) the amount of interest which otherwise would have accrued on the principal amount so paid, prepaid or Converted or not borrowed for the period from the date of such payment, - 53 - prepayment, Conversion or failure to borrow to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, the Interest Period for such Loan which would have commenced on the date specified for such borrowing) at the applicable rate of interest for such Loan provided for herein over (ii) the amount of interest which otherwise would have accrued on such principal amount at a rate per annum equal to the interest component of the amount such Bank would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by such Bank). Each Bank will furnish a certificate to the Company setting forth the basis and amount of each request by such Bank for compensation under paragraph (a) or (b) of this Section 5.05, such certificate to be conclusive as to the amount of compensation to which such Bank is entitled provided the determination of such amount is made on a reasonable basis. 5.06 U.S. Taxes. (a) Prior to the date of the initial Loans hereunder, and from time to time thereafter if requested by the Company or the Administrative Agent or required because, as a result of a change in law or a change in circumstances or otherwise, a previously delivered form or statement becomes incomplete or incorrect in any material respect, each Bank organized under the laws of a jurisdiction outside the United States shall provide, if applicable, the Administrative Agent and the Company with complete, accurate and duly executed forms or other statements prescribed by the Internal Revenue Service of the United States certifying such Bank's exemption from, or entitlement to a reduced rate of, United States withholding taxes (including backup withholding taxes) with respect to its beneficial interest in payments to be made to such Bank hereunder and under the Notes. If such Bank has transferred a beneficial interest in any part of the Notes payable to it, it will forward to the Company or the Administrative Agent any such statements or forms executed by the Person to which it has transferred such beneficial interest. (b) The Company and the Administrative Agent shall be entitled to deduct and withhold any and all present or future taxes or withholdings, and all liabilities with respect thereto, from payments hereunder or under the Notes, if and to the extent - 54 - that the Company or the Administrative Agent in good faith determines that such deduction or withholding is required by the law of the United States, including, without limitation, any applicable treaty of the United States. In the event the Company or the Administrative Agent shall so determine that deduction or withholding of taxes is required, it shall advise the affected Bank as to the basis of such determination prior to actually deducting and withholding such taxes. In the event the Company or the Administrative Agent shall so deduct or withhold taxes from amounts payable hereunder, it (i) shall pay to or deposit with the appropriate taxing authority in a timely manner the full amount of taxes it has deducted or withheld; (ii) shall provide evidence of payment of such taxes to, or the deposit thereof with, the appropriate taxing authority and a statement setting forth the amount of taxes deducted or withheld, the applicable rate, and any other information or documentation reasonably requested by the Banks from whom the taxes were deducted or withheld; and (iii) shall forward to such Banks any official tax receipts or other documentation with respect to the payment or deposit of the deducted or withheld taxes as may be issued from time to time by the appropriate taxing authority. Unless the Company and the Administrative Agent shall have received forms or other documents satisfactory to them indicating that payments hereunder or under any Note are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Company or the Administrative Agent may withhold taxes from such payments at the applicable statutory rate in the case of payment to or for any Bank organized under the laws of a jurisdiction outside the United States. (c) Each Bank organized under the laws of the United States or any state thereof agrees (i) that as between it and the Company or the Administrative Agent, it shall be the Person to deduct and withhold taxes, and to the extent required by law it shall deduct and withhold taxes, on amounts that such Bank may remit to any other Person(s) by reason of any undisclosed sale of a participation in this Agreement to such other Person(s) pursuant to Section 12.06; and (ii) to indemnify the Company and the Administrative Agent and any officers, directors, agents or employees of the Company or the Administrative Agent against and to hold them harmless from any tax, interest, additions to tax, penalties, reasonable counsel and accountants fees and disbursements arising from the assertion by any appropriate taxing authority of any claim against them relating to a failure - 55 - to withhold taxes as required by law with respect to amounts described in clause (i) of this paragraph (c). (d) Each assignee of a Bank's interest in this Agreement in conformity with Section 12.06 shall be bound by this Section 5.06, so that such assignee will have all of the obligations and provide all of the forms and statements and all indemnities, representations and warranties required to be given under this Section 5.06. Unless the Company shall have consented in writing to such assignment, no such assignee of a Bank's interest in this Agreement shall have the right to any payment under this Section 5.06 in excess of the amount that would have been payable by the Company to the assignor Bank. (e) Notwithstanding the foregoing, in the event that any withholding taxes shall become payable solely as a result of any change in any statute, treaty, ruling, determination or regulation occurring after the Initial Date (as hereinafter defined) in respect of any sum payable hereunder or under any Note to any Bank (or any participant in a Loan held by a Bank) or the Administrative Agent (i) the sum payable by the Company shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.06) such Bank (or any participant in a Loan held by a Bank) or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Company shall make such deductions and (iii) the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. For purposes of this Section 5.06, the term "Initial Date" shall mean (i) in the case of the Administrative Agent, the date hereof, (ii) in the case of each Bank as of the date hereof, the date hereof and (iii) in the case of any other Bank, the date it becomes a Bank hereunder pursuant to Section 12.06. No amount payable hereunder to a holder of a participation in a Loan shall be greater in amount than the amount that would have been paid to the holder of the Loan had it retained the Loan and not sold the participation therein. (f) If as a result of withholding taxes becoming payable in connection with any amount payable to or with respect to a Bank (i) the sum payable by the Company is increased pursuant to clause (i) of Section 5.06(e) hereof and (ii) such - 56 - Bank utilizes a credit against any tax liability arising hereunder for which it is liable (other than the income tax liability directly satisfied by such withholding), then such Bank shall promptly pay to the Company an amount equal to such amount as the Bank estimates in a good faith exercise of its judgment represents the credit so utilized (not to exceed the corresponding sum payable by the Company pursuant to Section 5.06(e) hereof), provided that a Bank shall not be obligated to make any payment hereunder to the extent such payment would result in such Bank's being in a worse after-tax economic position than if amounts paid to such Bank had not been subject to withholding taxes. In the event the credit is later disallowed, deferred or recaptured for any reason, the Company will pay the Bank such amount as will equal the amount of the credit so disallowed, deferred or recaptured, provided that the Company shall not be obligated to pay any amount hereunder to a Bank with respect to any credit that is later disallowed or recaptured in excess of the amount paid hereunder to the Company by such Bank in respect of such credit. In any such case, the applicable Bank shall provide to the Company a statement in reasonable detail setting forth the determination of such credit utilized by such Bank. Section 6. Conditions Precedent 6.01 Term Loans. The obligation of each Term Loan Bank to make the Term Loan to be made by it is subject to (i) the condition precedent that such Term Loan shall be made on or before March 31, 1994 and (ii) the receipt by the Administrative Agent of the following, each of which shall be satisfactory to the Administrative Agent in form and substance: (a) Corporate Documents. The following documents, each certified as indicated below: (i) a copy of the charter, as amended, of each Obligor certified by the Secretary or Assistant Secretary of such Obligor, and a "long form" certificate as to the good standing of and charter documents filed by such Obligor from such Secretary of State, in each case dated as of a date no earlier than 15 days prior to the Closing Date; - 57 - (ii) a certificate of the Secretary or an Assistant Secretary of each Obligor, dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Obligor as in effect on the date of the adoption of the resolutions referred to in clause (B) below and on the date of such certificate, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors of such Obligor authorizing the execution, delivery and performance of such of the Basic Documents to which such Obligor is or is intended to be a party, the extensions of credit hereunder and the grant of the security interests provided for by the Security Agreement, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the charter of such Obligor has not been amended since the date of the certification thereto furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer of such Obligor executing this Agreement, any of the Notes or any of the Security Documents and each other document required to be delivered by such Obligor to any of the Agents or the Banks hereunder or thereunder (and each of the Agents and the Banks may conclusively rely on such certificate until it receives notice in writing from such Person); and (iii) a certificate of another officer of each Obligor dated the Closing Date and certifying as to the incumbency and specimen signature of the Secretary or Assistant Secretary, as the case may be, of such Obligor, and a corresponding certificate of another officer of such Obligor as to its signing officers. (b) Officer's Certificate. A certificate of a Senior Officer of the Company dated the Closing Date to the effect set forth in Section 6.03(a) hereof. (c) Opinion of Counsel to the Obligors. An opinion of Riordan & McKinzie, counsel to the Obligors, dated the Closing Date, substantially in the form of Exhibit C hereto and an opinion of Debevoise & Plimpton, special New York counsel to the Obligors, dated the Closing Date, substantially in the form of Exhibit D hereto (and each - 58 - Obligor hereby instructs each such counsel to deliver its respective opinion to the Banks and the Agents). (d) Opinion of Counsel to Chase. An opinion of Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase, dated the Closing Date, substantially in the form of Exhibit E hereto. (e) Notes. The Notes, duly completed and executed and delivered. (f) Security Agreement. The Security Agreement, duly completed, executed and delivered by each Obligor and the Administrative Agent and the certificates identified under the name of such Obligor in Schedule I thereto, in each case accompanied by undated stock powers executed in blank. In addition, each Obligor shall have taken such other action (including delivering to the Administrative Agent for filing, appropriately completed and duly executed Uniform Commercial Code financing statements) as the Administrative Agent shall have requested in order to perfect the security interests created pursuant to the Security Agreement. In addition, each Obligor shall have delivered to the Administrative Agent the results (completed no earlier than 30 days prior to the Closing Date) of (i) a Uniform Commercial Code search request in each jurisdiction in which such Obligor holds any Property that is to be pledged to the Administrative Agent under the Security Agreement, and (ii) search requests of the U.S. Patent & Trademark Office and the U.S. Copyright Office relative to each Obligor. (g) Approvals and Consents. Evidence that all necessary governmental and third party and shareholder consents, licenses, permits and approvals in connection with the execution, delivery, performance, validity and enforceability of each of the Basic Documents and the other transactions contemplated hereby has been issued or obtained and are in full force and effect. (h) Repayment of Existing Indebtedness. Evidence that the principal of and interest on all Indebtedness outstanding under the Existing Credit Agreement, and all other amounts owing thereunder have been (or is - 59 - simultaneously) repaid in full and all commitments under the Existing Credit Agreement have been canceled; in addition, the Administrative Agent shall have received from any Person holding any Lien securing any such Indebtedness, such Uniform Commercial Code termination statements, mortgage releases and other instruments, in each case in proper form for recording, as the Administrative Agent shall have requested to release and terminate of record the Liens securing such Indebtedness (or arrangements for such release and termination satisfactory to the Majority Banks shall have been made). (i) Arrangements regarding Conversion of 9% Debentures. Evidence that arrangements in form and substance satisfactory to the Administrative Agent shall have been made providing for the conversion to common stock, redemption or retirement, in each case in accordance with the terms of the 9% Debenture Indenture, on or prior to the 90th day following the Closing Date, of all of the 9% Debentures outstanding on the Closing Date. (j) Consummation of Unistar Acquisition and Related Transactions. Evidence that: (i) the Company has purchased (or is simultaneously purchasing) the Unistar Shares in accordance with the terms of the Stock Purchase Agreement; (ii) the transactions contemplated by Section 1 of the Securities Purchase Agreement have been consummated (or is simultaneous being consummated in accordance with the terms of the Securities Purchase Agreement); and (iii) all conditions specified in Sections 5 and 6 of each of the Stock Purchase Agreement and the Securities Purchase Agreement have been satisfied (as if the reference to the "Purchaser" in Section 5.7 of the Securities Purchase Agreement referred to the Majority Banks) without any waivers thereof except for waivers approved by the Majority Banks. (k) Unistar. Documentation in form and substance satisfactory to the Administrative Agent pursuant to which Unistar shall, upon the consummation of the Unistar Acquisition, become (i) a "Subsidiary Guarantor" (and, thereby, an "Obligor") hereunder and (ii) party to the Security Agreement as a "Subsidiary" (and, thereby, an "Obligor") thereunder. - 60 - (l) Adjusted Pro Forma Operating Cash Flow. Pro forma consolidated financial statements of the Company and its Subsidiaries demonstrating that: (i) the ratio of Total Debt (determined after giving effect to the making of the Term Loans and the consummation of the other transactions to be consummated on or prior to the Closing Date as contemplated by this Section 6.01) to Adjusted Pro Forma Operating Cash Flow does not exceed 5.25:1; (ii) the ratio of Senior Debt (determined after giving effect to the making of the Loans on the Closing Date and the consummation of such other transactions) to Adjusted Pro Forma Operating Cash Flow does not exceed 4.75:1; and (iii) Adjusted Pro Forma Operating Cash Flow is not less than $28,000,000. (m) Fees and Expenses. Evidence that all amounts payable by the Company on or prior to the Closing Date in connection with this Agreement, including without limitation, under Sections 2.04 and 12.03 hereof, have been paid in full (in the case of amounts payable under said Section 12.03, to the extent that invoices therefor have been delivered to the Company). (n) Management Services Subordination Agreement. The Management Services Subordination Agreement, duly executed and delivered by Infinity and the Company. (o) Bailee Agreements. Agreements (collectively, "Bailee Agreements"), in form and substance satisfactory to the Administrative Agent, between the Administrative Agent and each of (a) First American Record Management, and (b) Iron Mountain Records Management (collectively, the "Bailees") whereby each Bailee acknowledges that the Administrative Agent has a security interest in the inventory or equipment, as applicable, located on the premises of the Bailees and whereby each Bailee disclaims any Lien thereon. - 61 - (p) Other Documents. Such other documents as the Administrative Agent or special New York counsel to Chase may reasonably request. 6.02 Initial Revolving Credit Loans. The obligation of each Revolving Credit Bank to make the initial Revolving Credit Loan to be made by it is subject to the condition precedent that the Term Loans shall have been made or are being made simultaneously therewith. 6.03 Initial and Subsequent Loans. The obligation of each Bank to make each Loan to be made by it upon the occasion of each borrowing by the Company hereunder (including the initial borrowing) is subject to the further conditions precedent that: (a) Both immediately prior to such borrowing and also after giving effect thereto and to the proposed use of the proceeds thereof: (i) no Default shall have occurred and be continuing; and (ii) the representations and warranties made by each Obligor in Section 7 hereof, and by each Obligor in each of the other Basic Documents to which such Obligor is a party, shall be true on and as of the date of such borrowing with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); each notice of borrowing by the Company hereunder shall constitute a certification by the Company to the effect set forth in this clause (a), both as of the date of such notice and, unless the Company otherwise notifies the Administrative Agent prior to the date of such borrowing, as of the date of such borrowing. (b) The Administrative Agent shall have received a Borrowing Notice duly completed and executed by a Senior Officer of the Company in substantially the form of Exhibit G hereto. Section 7. Representations and Warranties. The Company represents and warrants to the Banks that (and each other Obligor represents and warrants to the Banks as to itself and its Subsidiaries only that): - 62 - 7.01 Corporate Existence. Each of the Company and its Subsidiaries: (a) is a corporation duly organized and validly existing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals necessary to own its properties and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary (other than in any of such jurisdictions where the failure so to qualify would not have a Material Adverse Effect). 7.02 Financial Condition. The consolidated balance sheet of the Company and its Consolidated Subsidiaries as at November 30, 1992 and the related consolidated statements of income, retained earnings and changes in financial position (or of cash flow, as the case may be) of the Company and its Consolidated Subsidiaries for the fiscal year ended on said date, with the opinion thereon (in the case of said consolidated balance sheet and statements) of Price Waterhouse, and the unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as at August 31, 1993 and the related consolidated statements of income, retained earnings and changes in financial position (or of cash flow, as the case may be) of the Company and its Consolidated Subsidiaries for the nine-month period ended on such date, heretofore furnished to each of the Banks, fairly present in all material respects the consolidated financial condition of the Company and its Consolidated Subsidiaries as at said dates and the consolidated results of their operations for the fiscal year and nine-month period ended on said dates (subject, in the case of such financial statements as at August 31, 1993, to normal year-end audit adjustments), all in accordance with generally accepted accounting principles and practices applied on a consistent basis. Since November 30, 1993 there has been no material adverse change in the consolidated financial condition, operations, business or prospects taken as a whole of the Company and its Subsidiaries from that set forth in said financial statements as at said date. 7.03 Litigation. Except as set forth in Schedule V hereto, there are no legal or arbitral proceedings, or any proceedings by or before any governmental or regulatory authority or agency, now pending or (to the knowledge of the Company) - 63 - threatened against the Company or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. 7.04 No Breach. Except as set forth in Schedule VI hereto, none of the execution and delivery of this Agreement and the Notes and the other Basic Documents, the consummation of the transactions herein and therein contemplated and compliance with the terms and provisions hereof and thereof will conflict with or result in a breach of, or require any consent under, the charter or by-laws of any Obligor, or any applicable law or regulation or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which any of them is subject, or constitute a default under any such agreement or instrument, except for any such conflict, breach or default that would not have a Material Adverse Effect or (except for the Liens created pursuant to the Security Documents) result in the creation or imposition of any Lien (other than, except with respect to Stock Collateral, Permitted Liens) upon any Property of the Company or any of its Subsidiaries pursuant to the terms of any such agreement or instrument. 7.05 Action. Each Obligor has all necessary corporate power and authority to execute, deliver and perform its obligations under each of the Basic Documents to which it is a party; the execution, delivery and performance by each Obligor of each of the Basic Documents to which it is or is intended to be a party have been duly authorized by all necessary corporate action on its part; and this Agreement has been duly and validly executed and delivered by each Obligor and constitutes, and each of the other Basic Documents to which such Obligor is a party when executed and delivered by such Obligor (in the case of the Notes, for value) will constitute, its legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors' rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 7.06 Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any - 64 - governmental or regulatory authority or agency are necessary for the making or performance by any Obligor of this Agreement or any of the other Basic Documents to which it is or is intended to be a party, for the consummation of the transactions contemplated hereby or thereby, or for the validity or enforceability thereof, except for filings with respect to the Security Documents referred to in Section 6.01(f) hereof. 7.07 Use of Loans. Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock. 7.08 ERISA. The Company and the ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the PBGC or any Plan or Multiemployer Plan (other than to make contributions in the ordinary course of business). 7.09 Investment Company Act. The Company is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 7.10 Public Utility Holding Company Act. The Company is not a "holding company", or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 7.11 Material Agreements. Schedule III hereto is a complete and correct list, as of the date of this Agreement, of each credit agreement, loan agreement, indenture, purchase agreement, guarantee or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Company or any of its Subsidiaries the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $100,000 and the aggregate principal or face amount outstanding - 65 - or which may become outstanding under each such arrangement is correctly described in said Schedule III. 7.12 Environmental Laws. The Company and each of its Subsidiaries have obtained all permits, licenses and other authorizations which are required under all Environmental Laws, except to the extent failure to have any such permit, license or authorization would not have a Material Adverse Effect. The Company and each of its Subsidiaries are in compliance with the terms and conditions of all such permits, licenses and authorizations, and are also in compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Environmental Law or in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, except to the extent failure to comply would not have a Material Adverse Effect. No notice, notification, demand, request for information, citation, summons or order has been issued and is, as of the Closing Date, pending, no complaint has been filed, no penalty has been assessed and no investigation or review is pending or threatened in writing by any governmental or other entity with respect to any alleged failure by the Company or any of its Subsidiaries to have any permit, license or authorization required in connection with the conduct of the business of the Company or any of its Subsidiaries or with respect to any generation, treatment, storage, recycling, transportation, discharge or disposal, or any Release of any Hazardous Materials generated by the Company or any of its Subsidiaries. 7.13 Subsidiaries, Etc. Set forth in Schedule IV hereto is a complete and correct list, as of the date of this Agreement, of all Subsidiaries of the Company (and the respective jurisdiction of incorporation of each such Subsidiary) and of all Investments held by the Company or any of its Subsidiaries in any Joint Venture or other Person. Except (a) as disclosed in Schedule IV hereto, (b) prior to the Closing Date, for the Liens created by the Existing Credit Agreement, (c) with respect to periods after the Closing Date, for Permitted Liens of the type described in paragraphs (b) and (c) of the definition of "Permitted Liens" set forth in Section 1.01 hereof, and (d) for the Liens created by the Security Documents, the Company owns, free and clear of Liens, all outstanding shares of such Subsidiaries (and each such Subsidiary owns, free and clear of - 66 - Liens, all outstanding shares of its Subsidiaries) and all such shares are validly issued, fully paid and non-assessable and the Company (or the respective Subsidiary) also owns, free and clear of Liens, all such Investments. 7.14 Assets of the Company. Each of the Company and its Subsidiaries has good and marketable title to all of its Properties, free and clear of all Liens (except Liens permitted by Section 8.06 hereof). 7.15 Agreements. None of the Company or any of its Subsidiaries is in default under any agreement, instrument or other document to which it is a party or by which it or its Property is bound in any manner that could reasonably be expected to have a Material Adverse Effect. 7.16 Solvency. (a) The fair saleable value of the assets of the Company exceeds and will, immediately following the making of each Loan, exceed the amount that will be required to be paid on or in respect of the existing debts and other liabilities (including contingent liabilities) of the Company, as they mature. (b) The Company does not and will not have, immediately following the making of each Loan, unreasonably small capital to carry out its business as conducted or as proposed to be conducted. (c) The Company does not intend to, and does not believe that it will, incur debts beyond its ability to pay such debts as they mature. 7.17 Security Documents. The Security Documents create, as security for the obligations purported to be secured thereby, a valid and enforceable and, upon the filing of the financing statements and the taking of the other steps referred to in the last sentence of this Section 7.17, perfected, security interest in and Lien on all of the Properties covered thereby in favor of the Administrative Agent, superior to and prior to the right of all third Persons and subject to no other Liens (except Liens permitted by Section 8.06 hereof). The respective pledgor or assignor is, and will be, the sole and beneficial owner (or, - 67 - in the case of any leasehold interests, the lessee) and has, and will have, good and marketable title to all such owned Properties and a valid leasehold interest in all such leased Properties, in each case free and clear of all Liens (except Liens permitted by Section 8.06 hereof). No filings or recordings are required in order to perfect the security interests created under, and/or the Liens granted by, the Security Documents except for filings and other steps to be taken with respect to the Liens created by the Security Documents as contemplated thereby. 7.18 Certain Representations included in Unistar/Infinity Transaction Documents. Each of the repre- sentations and warranties made by the Company in Article III of the Stock Purchase Agreement and Article II of the Securities Purchase Agreement (other than Sections 2.14, 2.16, 2.17 and 2.19 of the Securities Purchase Agreement) are true in all material respects on the date hereof as if made on and as of such date. 7.19 Senior Indebtedness. The Loans, when made, will constitute "Senior Indebtedness" under and as defined in the 6-3/4% Debenture Indenture and in the 9% Debenture Indenture. 7.20 Disclosure. No information, report, financial statement, exhibit, schedule or disclosure letter (including, without limitation, the Proxy Statement) furnished in writing by or on behalf of the Company or any of its Subsidiaries to the Administrative Agent or any Bank in connection with the negotiation, preparation or delivery of this Agreement and the other Basic Documents or included herein or therein or delivered pursuant hereto or thereto contains any untrue statement of material fact or omits or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the date hereof by the Company and its Subsidiaries to the Administrative Agent and the Banks in connection with this Agreement and the other Basic Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in all material respects, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. As of the Closing Date, there will be no fact (other than matters of a general economic nature) known to any Obligor that could have a Material Adverse Effect that has not been disclosed herein, in the other Basic Documents or in a report, financial statement, - 68 - exhibit, schedule, disclosure letter or other writing furnished to the Administrative Agent for use in connection with the transactions contemplated hereby. 7.21 Certain Documents. The Company has furnished to the Administrative Agent and each of the Banks true and complete copies of each of the Unistar/Infinity Transaction Documents, each as in effect on the date hereof. Section 8. Covenants of the Company. The Company covenants and agrees with the Banks and the Agents that, so long as any Commitment or Loan is outstanding and until payment in full of all amounts payable by the Company and the other Obligors hereunder: 8.01 Financial Statements. The Company will deliver to each of the Banks: (a) as soon as available and in any event within 45 days after the end of each quarterly fiscal period of each Fiscal Year, consolidated statements of income, retained earnings and cash flow of the Company and its Consolidated Subsidiaries for such period and for the period from the beginning of such Fiscal Year to the end of such period, and the related consolidated balance sheet as at the end of such period, setting forth in each case in comparative form the corresponding consolidated figures for the corresponding period in the preceding Fiscal Year, accompanied by a certificate of a Senior Officer of the Company, which certificate shall state that said financial statements fairly present in all material respects the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments and the absence of footnote disclosure); (b) as soon as available and in any event within 90 days after the end of each Fiscal Year, consolidated statements of income, retained earnings and cash flow of the Company and its Consolidated Subsidiaries for such year and the related consolidated balance sheet as at the end of such - 69 - Fiscal Year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding Fiscal Year, and accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as at the end of, and for, such Fiscal Year in accordance with generally accepted accounting principles, and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any Default continuing as of the date of such certificate; (c) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, which the Company shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange; (d) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (e) as soon as possible, and in any event within ten days after the Company knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan have occurred or exist, a statement signed by a Senior Officer of the Company setting forth details respecting such event or condition and the action, if any, which the Company or an ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Company or an ERISA Affiliate with respect to such event or condition): (i) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a - 70 - failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the Code); (ii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the complete or partial withdrawal by the Company or any ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by the Company or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; and (v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against the Company or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; (f) not less than three Business Days prior to the occurrence of any transaction or event that would give rise to an obligation to make a prepayment of Loans pursuant to Section 3.04(a) or (d) hereof, notice thereof describing such transaction or event and the expected proceeds to be received therefrom, in detail satisfactory to the Administrative Agent; (g) not later than the end of the first fiscal quarter of each Fiscal Year, a budget for the Company and its Subsidiaries for the current Fiscal Year in detail reasonably satisfactory to the Majority Banks, and - 71 - thereafter from time to time any modification to such budget as soon as available; (h) promptly after the Company knows that any Default has occurred, notice of such Default, describing the same in reasonable detail and describing the steps being taken to remedy the same; (i) immediately upon becoming aware that the holder of any note or any other evidence of Indebtedness of the Company or any of its Subsidiaries has given notice or taken any other action with respect to a claimed default or event of default, a notice specifying the notice given or action taken by such holder and the nature of the claimed default or event of default and the steps being taken to remedy the same; (j) promptly upon receipt by the Company, a copy of each report sent by the Company's independent certified public accountants which deliver the opinion on the Company's financial statements pursuant to clause (b) above in connection with any annual, interim or special audit made by them of the books of the Company or any of its Subsidiaries, and promptly upon completion of any response report, a copy of such response report; (k) as soon as possible and in any event within ten days after the Company has received any written notice or other written communication from any governmental authority to the effect that the Company or any of its Subsidiaries is not in compliance with any Environmental Laws, a notice of such circumstance describing the same in reasonable detail; (l) at the time the Company furnishes each set of financial statements pursuant to clause (a) or (b) above, summaries in detail reasonably satisfactory to the Administrative Agent of the operating revenues and operating expenses of the Company and its Subsidiaries; and (m) promptly, from time to time, such other information regarding (i) the business, affairs, operations or conditions (financial or otherwise) of the Company or any of its Subsidiaries, (ii) compliance by the Company with its obligations contained in the Basic Documents and the - 72 - Unistar/Infinity Transaction Documents and (iii) the other transactions contemplated hereby, in each case as any Bank or the Administrative Agent may reasonably request. The Company will furnish to each Bank, at the time it furnishes each set of financial statements pursuant to paragraph (a) or (b) above, a certificate of a Senior Officer of the Company (i) to the effect that no Default has occurred and is continuing (or, if any Default has occurred and is continuing, describing the same in reasonable detail and describing the action that the Company has taken and proposes to take with respect thereto) and (ii) setting forth in reasonable detail the computations or other information necessary to determine whether the Company is in compliance with Sections 3.04, 8.05, 8.06, 8.07, 8.08, 8.10 and 8.11 hereof. 8.02 Litigation. The Company will promptly give to each Bank notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect of such legal or other proceedings, affecting the Company or any of its Subsidiaries, except proceedings which, if adversely determined, could not reasonably be expected to have a Material Adverse Effect. 8.03 Existence, Etc. The Company will, and will cause each of its Subsidiaries to: (a) preserve and maintain its legal existence and all of its material rights, privileges and franchises (provided that nothing in this Section 8.03 shall prohibit any transaction expressly permitted by Section 8.12 hereof); (b) comply with the requirements of all applicable laws, rules, regulations and orders of governmental or regulatory authorities if failure to comply with such requirements would have a Material Adverse Effect; (c) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves (determined in accordance with GAAP) are being maintained; (d) maintain all of its Properties used or useful in its business in good working order and condition, ordinary wear and tear excepted; and (e) permit representatives of any Bank or the Administrative Agent, during normal business - 73 - hours, to examine, copy and make extracts from its books and records, to inspect its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Bank or the Administrative Agent (as the case may be). 8.04 Insurance. The Company will, and will cause each of its Subsidiaries to, keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations. 8.05 Capital Expenditures. The Company will not permit the aggregate amount of Capital Expenditures in any Fiscal Year to exceed the sum of (a) $2,000,000 plus (b) for each Fiscal Year commencing on and after December 1, 1994, the excess, if any, of the aggregate amount of Capital Expenditures permitted in the immediately preceding Fiscal Year over the actual amount of Capital Expenditures made by the Company and its Consolidated Subsidiaries in such immediately preceding Fiscal Year (provided that the amount of such excess for such immediately preceding Fiscal Year shall not exceed $2,000,000). 8.06 Liens. The Company will not, and will not permit any of its Subsidiaries to, create, incur or suffer to exist (a) any Lien on or in respect of any of the Stock Collateral except (i) Liens created pursuant to the Security Documents, (ii) prior to the Closing Date, Liens created pursuant to the Existing Credit Agreement and (iii) with respect to periods after the Closing Date, for Permitted Liens of the type described in paragraphs (b) and (c) of the definition of "Permitted Liens" set forth in Section 1.01 hereof, or (b) any Lien on or in respect of any of its other Properties now owned or hereafter acquired, securing Indebtedness or other obligations, except (i) Liens created pursuant to the Security Documents, (ii) Permitted Liens, (iii) prior to the Closing Date, Liens created pursuant to the Existing Credit Agreement, and (iv) Liens upon real and/or tangible personal Property acquired after the date hereof (by purchase, construction or otherwise) by the Company or any of its Subsidiaries, each of which Liens either (x) existed on such Property before the time of its acquisition and was not created in anticipation thereof or (y) was created solely for the purpose - 74 - of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such Property, provided that no such Lien shall extend to or cover any Property of the Company or any of it Subsidiaries other than the Property so acquired and/or improvements thereon. 8.07 Indebtedness, Etc. (a) The Company will not, and will not permit any of its Subsidiaries to, create, assume, incur or suffer to exist any Indebtedness except: (i) Indebtedness of the Company and its Subsidiaries under this Agreement, the Notes or any of the Security Documents; (ii) until the Closing Date, Indebtedness of the Company under the Existing Credit Agreement; (iii) the 6-3/4% Debentures; (iv) Capital Lease Obligations and Indebtedness of the Company and its Subsidiaries secured by Liens permitted under Section 8.06(b)(iv) hereof up to but not exceeding $2,000,000 at any one time outstanding; (v) Indebtedness of the Company's Subsidiaries in respect of the loans and advances referred to in Section 8.08(d)(ii) hereof; (v) additional Indebtedness of the Company up to but not exceeding $5,000,000 at any one time outstanding; and (vi) Interest Rate Protection Agreements entered into pursuant to Section 8.13 hereof. (b) The Company will not permit the aggregate outstanding face amount of the 9% Debentures to exceed (i) $18,500,000 during the period commencing on the Closing Date and ending on the 90th day thereafter, and (ii) $0 from and after such 90th day. - 75 - 8.08 Investments and Joint Ventures. The Company will not, and will not permit any of its Subsidiaries to, make or permit to remain outstanding any other Investment in any Person or enter into any Joint Venture, except: (a) Investments of the Company and its Subsidiaries in direct obligations of the United States of America, or any agency thereof, or obligations guaranteed as to principal and interest by the United States of America, or any agency thereof, in each case maturing no more than 90 days from the date of acquisition thereof; (b) the Company or any of its Subsidiaries may acquire and hold certificates of deposit and other time deposits of, and bankers' acceptances (provided that such time deposit or bankers' acceptance shall mature within one year after the date so acquired), and other bank accounts with, any Bank or any other bank having capital and surplus of at least $500,000,000; (c) the Company or any of its Subsidiaries may acquire and hold commercial paper (i) issued by any bank holding company controlling any Bank or (ii) rated A-2 or better by Standard & Poor's Corporation or P-2 or better by Moody's Investors Service, Inc.; (d) (i) existing Investments of the Company or any of its Subsidiaries in their respective existing Subsidiaries and the Unistar Acquisition, and (ii) additional Investments by the Company or any of its Subsidiaries in the ordinary course of business in the form of loans and advances to their respective Subsidiaries, provided that such loans and advances are evidenced by promissory notes and such promissory notes are delivered to the Administrative Agent under the Security Agreement as collateral security for the Secured Obligations (as defined in the Security Agreement) promptly upon the making of the related loan or advance, such promissory notes to constitute Pledged Debt under and as defined in the Security Agreement; (e) Investments in the form of Acquisitions permitted by Section 8.12(b)(ii) hereof; - 76 - (f) existing Investments and Joint Ventures of the Company and its Subsidiaries listed on Schedule IV hereto; (g) additional Investments and Joint Ventures of the Company and its Subsidiaries up to but not exceeding $1,000,000 in the aggregate at any one time outstanding minus the aggregate amount of Acquisitions made from and after the date hereof under Section 8.12(b)(i) hereof; (h) loans or advances to officers and employees by the Company or any of its Subsidiaries for travel, business or relocation expenses in the ordinary course of business; and (i) Investments in money market funds substantially all of whose assets consist of Investments permitted by clauses (a), (b) and (c) of this Section 8.08. 8.09 Restricted Payments. The Company will not, and will not permit any of its Subsidiaries to, make any Restricted Payment, except for: (a) the conversion of 9% Debentures into shares of common stock (and cash payments for fractional shares of such common stock of the Company in connection therewith), or the redemption or retirement of the 9% Debentures on terms which have substantially the same economic effect for the Company as a conversion thereof in accordance with the terms of the 9% Debenture Indenture; (b) the conversion of the 6-3/4% Debentures into shares of common stock of the Company (and cash payments for fractional shares of such common stock in connection therewith) in accordance with the terms of the 6-3/4% Debenture Indenture; (c) subject to the subordination provisions applicable thereto, cash payments by the Company of principal of and interest on the Subordinated Debt (but only in the amounts and at the times required to be made by the terms thereof); (d) payments by the Company in respect of the repurchase by the Company of any capital stock, or Equity Rights therefor, issued to employees of the Company, in an aggregate amount not exceeding the sum of (i) $250,000 - 77 - during any Fiscal Year (but not exceeding $2,000,000 in the aggregate), and (ii) the net proceeds of issuances of capital stock to employees of the Company after the Closing Date; (e) with respect to each Equity Issuance after the date hereof, other Restricted Payments by the Company in an amount not exceeding (i) 50% of the net proceeds of such Equity Issuance minus (ii) the aggregate amount of Acquisitions made under Section 8.12(b)(ii) hereof with proceeds from such Equity Issuance, provided that (x) both prior to and after giving effect to each such Restricted Payment, no Default shall have occurred and be continuing, and (y) no such Restricted Payment shall be made prior to the prepayment required to be made under Section 3.04(d) hereof with respect to such Equity Issuance; (f) (i) the issuance and delivery to INI of Incentive Warrants pursuant to Section 2.3 of the Management Agreement, and (ii) subject in each case to the terms of the Management Services Subordination Agreement and provided that, both prior to and after giving effect to each such payment, no Default shall have occurred and be continuing: (x) cash payments of Management Fees to Infinity at the times and in the amounts provided for by Section 2.1 of the Management Agreement in respect of each Fiscal Year; and (y) a cash payment of Management Fees to Infinity at the times and in the amounts provided for by Section 2.2 of the Management Agreement, so long as: (1) at least three Business Days (but not more than 30 Business Days) prior to the date of such payment, the Company shall have delivered to the Administrative Agent the financial statements required to be delivered for such Fiscal Year pursuant to Section 8.01(b) hereof and a certificate of a Senior Officer of the Company setting forth a computation of the Excess Cash Flow for the prior Fiscal Year and describing the amount of such Management Fees to be paid; and - 78 - (2) such payment shall be made promptly following any prepayment required to be made under Section 3.04(c) hereof with respect to Excess Cash Flow for such prior Fiscal Year; and (g) payments by the Company to redeem the Company's outstanding Class Action Warrants when and to the extent required by the terms thereof. 8.10 Debt Ratios. (a) Senior Debt Ratio. The Company will not permit the Senior Debt Ratio, at the Closing Date and at any Quarterly Date occurring during any period specified below, to exceed the ratio set forth opposite such period:
Period (both dates inclusive) Ratio _____________________________ _____ Closing Date to 5/31/95 4.75:1 6/1/95 to 8/31/95 4.50:1 9/1/95 to 2/29/96 4.25:1 3/1/96 to 8/31/96 3.75:1 9/1/96 to 8/31/97 3.25:1 Thereafter 3.00:1
(b) Total Debt Ratio. The Company will not permit the Total Debt Ratio, at the Closing Date and at any Quarterly Date occurring during any period specified below, to exceed the ratio set forth opposite such period:
Period (both dates inclusive) Ratio _____________________________ _____ Closing Date to 5/31/95 5.25:1 6/1/95 to 8/31/95 5.00:1 9/1/95 to 2/29/96 4.75:1 3/1/96 to 8/31/96 4.25:1 9/1/96 to 8/31/97 3.75:1 Thereafter 3.00:1
(c) Fixed Charges Ratio. The Company will not permit the Fixed Charges Ratio to be less than 1.10 to 1.00 on the - 79 - Closing Date and any Quarterly Date occurring after the Closing Date. 8.11 Total Interest Coverage Ratio; Total Pro Forma Debt Service Coverage Ratio. (a) Total Interest Coverage Ratio. The Company will not permit the Total Interest Coverage Ratio, at the Closing Date and at any Quarterly Date occurring during any period specified below, to be less than the ratio set forth opposite such period:
Period (both dates inclusive) Ratio _____________________________ _____ Closing Date to 11/30/94 2.00:1 12/1/94 to 11/30/95 2.25:1 12/1/95 to 11/30/96 2.50:1 Thereafter 3.00:1
(b) Total Pro Forma Debt Service Coverage Ratio. The Company will not permit the Total Pro Forma Debt Service Coverage Ratio to be less than 1.15:1 on the Closing Date and any Quarterly Date occurring after the Closing Date. 8.12 Prohibition of Fundamental Changes (a) The Company will not, and will not permit any of its Subsidiaries to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution). (b) The Company will not, and will not permit any of its Subsidiaries to, effect any Acquisition or create or Acquire any new Subsidiary other than Unistar and other than: (i) Acquisitions which, together with the Investments permitted by Section 8.08(g) hereof, do not exceed $1,000,000 in the aggregate, and (ii) with respect to each Equity Issuance after the date hereof, Acquisitions by the Company in an amount not exceeding (1) 50% of the net proceeds of such Equity Issuance minus (2) the aggregate amount of Restricted - 80 - Payments made under Section 8.09(e) hereof with proceeds from such Equity Issuance, provided that: (x) both prior to and after giving effect to each such Acquisition, no Default shall have occurred and be continuing, (y) no such Acquisition shall be made prior to the prepayment required to be made under Section 3.04(d) hereof with respect to such Equity Issuance, and (z) each business, group of assets or Person so Acquired shall have Operating Cash Flow for the twelve months ended on or most recently ended prior to the date of such Acquisition of at least $1; and (c) The Company will not, and will not permit any of its Subsidiaries to, convey, sell, lease, transfer or otherwise Dispose of, in one transaction or a series of transactions, all or any substantial part of its business, all or any part of its tangible personal Property, all or any part of its trademarks, copyrights, programming or other intangible personal Property, or all or any substantial part of its real property, whether now owned or hereafter acquired, except for Dispositions by the Company and its Subsidiaries to each other and except that the Company and/or any Subsidiary may Dispose of (i) any inventory or other Property in the ordinary course of business and on ordinary business terms, (ii) obsolete or worn-out Property, tools or equipment no longer used or useful in its business, (iii) KM Records, Inc. and (iv) other Property in an aggregate amount not exceeding $500,000 in any Fiscal Year. 8.13 Interest Rate Protection Agreements. The Company will from time to time enter into and maintain in full force and effect Interest Rate Protection Agreements with one or more of the Banks (and/or with other counterparties reasonably satisfactory to the Majority Banks), pursuant to documentation and on terms reasonably satisfactory to the Majority Banks, which effectively enable the Company, as at any date (commencing no later than 90 days after the Closing Date), to protect itself against fluctuations in the rates of interest on the Loans as to a notional principal amount at least equal to 50% of the Loans then outstanding for a period of at least three years from such date. - 81 - 8.14 Sale or Discount of Receivables. The Company will not, and will not permit any of its Subsidiaries to, discount or sell with recourse, or sell for less than the greater of the face value or market value thereof, any of its notes receivable or accounts receivable. 8.15 Lines of Business. The Company will not, and will not permit any of its Subsidiaries to, engage, directly or indirectly, in any business other than producing and distributing radio programs, sales of advertising time, and supporting activities related thereto. 8.16 Transactions With Affiliates. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, (a) make any Investment in an Affiliate, (b) transfer, sell, lease, assign or otherwise dispose of any assets to an Affiliate, (c) merge or consolidate with or purchase or acquire any assets from an Affiliate, (d) Guarantee or assume any obligations of an Affiliate or (e) enter into any other transaction directly or indirectly with or for the benefit of an Affiliate; provided that (i) any Affiliate who is an individual may serve as a director, officer or employee of the Company and its Subsidiaries and receive reasonable compensation or indemnification in connection with his or her services in such capacity, (ii) the Company or any of its Subsidiaries may enter into any transaction with an Affiliate in the ordinary course of business if the monetary or business consideration arising therefrom would be substantially as advantageous to the Company or such Subsidiary as the monetary or business consideration which would obtain in a comparable arm's length transaction with a Person not an Affiliate and (iii) subject to Section 1.7 of the Management Agreement, nothing herein shall be deemed to prohibit the Company from engaging in the transactions contemplated by the Unistar/Infinity Transaction Documents. 8.17 Use of Proceeds. The Company will use the proceeds of the Loans solely for the following purposes: (a) the proceeds of the Term Loans will be used solely (i) to finance the Unistar Acquisition and the payment of Restructuring Expenses, (ii) to repay the Indebtedness outstanding under the Existing Credit Agreement and the Retained Unistar Debt and other amounts owing in respect thereof and (iii) for general corporate purposes of the Company and its Subsidiaries, and (b) the proceeds of the - 82 - Revolving Credit Loans will be used for general corporate purposes of the Company and its Subsidiaries. 8.18 Certain Obligations Respecting Subsidiaries. The Company will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that (a) the Company at all times following the Closing Date owns (subject only to the Lien of the Security Agreement) all of the Unistar Shares and (b) except as permitted by Section 8.12 hereof, the Company and each of its other Subsidiaries at all times owns (subject only to the Lien of the Security Agreement) at least the same percentage of the issued and outstanding shares of each class of stock of each of its other Subsidiaries as is owned by it on the date of this Agreement. Without limiting the generality of the foregoing, none of the Company nor any of its Subsidiaries shall sell, transfer or otherwise Dispose of any shares of stock of any Subsidiary owned by them, nor permit any such Subsidiary to issue any shares of stock of any class whatsoever to any Person (other than to the Company or to another Obligor). In the event that (a) any such additional shares of stock shall be issued by any such Subsidiary or (b) any Obligor shall create or Acquire any new Subsidiary (subject to Section 8.12(b) hereof) and shall thereby become the owner of shares of capital stock of such Subsidiary, in each case, the respective Obligor agrees forthwith to deliver to the Administrative Agent, pursuant to the Security Agreement, the certificates evidencing such shares of stock, accompanied by undated stock powers executed in blank and shall take such other action as the Administrative Agent shall request to perfect the security interest created therein pursuant to the Security Agreement (and each of the Banks hereby authorizes the Administrative Agent to take such action, and to execute such documents and other instruments, as may be necessary to give effect to the creation and perfection of such security interests). 8.19 Modifications of Certain Documents; Subordinated Debt. (a) The Company will not, without the prior consent of the Majority Banks, (i) waive, amend or otherwise modify any provision of any of the Subordinated Debt Documents, (ii) waive, amend or otherwise modify any provision of any of the Unistar/Infinity Transaction Documents in any manner that could - 83 - have a material adverse effect on the Banks, or (iii) waive, amend or otherwise modify any provision of the Class Action Warrants in any manner that is materially adverse to the Company. (b) The Company will not, and will not permit any Subsidiary to, amend or otherwise modify any provision of its charter or by-laws in any manner that would have a material adverse effect on the Banks without the prior consent of the Majority Banks. (c) Except as permitted by Sections 8.09(a) and 8.09(b) hereof, the Company will not, without the prior consent of the Majority Banks, exercise any option or right under any of the Subordinated Debt Documents to prepay, redeem, defease, or to make any payment the effect of which is to prepay, redeem or defease, any of the Subordinated Debt. (d) The Company will at all times exercise its option under Section 1402 of the 6-3/4% Debenture Indenture (and take all action as shall be necessary to give effect to such exercise) to apply all 6-3/4% Debentures that shall have been redeemed or converted on or prior to the Closing Date as a credit against the mandatory sinking fund payments required from time to time by said Indenture. Section 9. Guarantee 9.01 Guarantee. Each of the Subsidiary Guarantors hereby jointly and severally guarantees to each of the Banks and the Agents and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration, by mandatory or optional prepayment or otherwise) of (a) the principal of and interest on the Loans made by the Banks to, and the Note held by each Bank of, the Company and all other amounts from time to time owing to the Banks or the Administrative Agent by the Company under this Agreement and under the Notes and by each of the Obligors under each of the other Basic Documents, and (b) all obligations of the Company to any Bank in respect of Interest Rate Protection Agreements entered into by the Company and such Bank pursuant to Section 8.13 hereof, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the "Guaranteed Obligations"). Each of the Subsidiary Guarantors - 84 - hereby further jointly and severally agrees that if any of the Guaranteed Obligations shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory or optional prepayment or otherwise), such Subsidiary Guarantor will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. 9.02 Obligations Unconditional. The obligations of each of the Subsidiary Guarantors under Section 9.01 hereof are absolute and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of any other Obligor under this Agreement or any other Basic Document or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 9.02 that the obligations of the each of the Subsidiary Guarantors hereunder shall be absolute and unconditional, joint and several, under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that, to the extent permitted by applicable law, the occurrence of any one or more of the following shall not affect the liability of any of the Subsidiary Guarantors under this Section 9: (i) at any time or from time to time, without notice to such Subsidiary Guarantor, the time for any performance of or compliance with any of its Guaranteed Obligations shall be extended, or such performance or compliance shall be waived; (ii) any of the acts mentioned in any of the provisions of this Agreement or any other Basic Document shall be done or omitted; (iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any right under this Agreement or any other Basic - 85 - Document shall be waived or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; or (iv) any lien or security interest granted as security for any of the Guaranteed Obligations shall fail to be perfected. Each of the Subsidiary Guarantors hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any of the Agents and the Banks exhaust any right, power or remedy or proceed against any other Obligor under this Agreement or any other Basic Document or against any other Person under any other guarantee of, or security for, any of such Subsidiary Guarantor's Guaranteed Obligations. 9.03 Reinstatement. The obligations of each of the Subsidiary Guarantors under this Section 9 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any other Subsidiary Guarantor in respect of any of the Obligor's Guaranteed Obligations is rescinded or must be otherwise restored by any holder of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise and each of the Obligors jointly and severally agrees that it will indemnify each of the Agents and the Banks on demand for all reasonable costs and expenses (including, without limitation, fees of counsel) incurred by such Agent or such Bank in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. 9.04 Subrogation. Each of the Subsidiary Guarantors hereby jointly and severally agrees that until the payment and satisfaction in full of all of the Guaranteed Obligations and the expiration and termination of all Commitments under this Agreement it shall not exercise any right or remedy arising by reason of any performance by it of its guarantee in Section 9.01 hereof, whether by subrogation or otherwise, against any other Obligor or any other guarantor of any of the Guaranteed - 86 - Obligations or any security for any of such Guaranteed Obligations. 9.05 Remedies. Each of the Subsidiary Guarantors jointly and severally agrees that, as between the Subsidiary Guarantors, on the one hand, and the Agents and the Banks, on the other hand, the obligations of the Company under this Agreement and the Notes may be declared to be forthwith due and payable as provided in Section 10 hereof (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 10) for purposes of Section 9.01 hereof notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Company and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Company) shall forthwith become due and payable by such Subsidiary Guarantor for purposes of said Section 9.01. 9.06 Continuing Guarantee. The guarantee in this Section 9 is a continuing guarantee, and shall apply to all Guaranteed Obligations of each of the Subsidiary Guarantors whenever arising. 9.07 Rights of Contribution. The Subsidiary Guarantors hereby agree, as between themselves, that if any of them (an "Excess Funding Guarantor") shall pay any Guaranteed Obligations under Section 9.01 hereof in excess of such Excess Funding Guarantor's Pro Rata Share (as hereinafter defined) of such Guaranteed Obligations, the other such Obligors shall, on demand (but subject to the next sentence hereof), pay to such Excess Funding Guarantor an amount equal to their respective Pro Rata Shares of such Excess Funding Guarantor's payment. The payment obligation of each of such Subsidiary Guarantors to any Excess Funding Guarantor under this Section 9.07 shall be subordinate and subject in right of payment to the prior payment in full of the obligations of such Obligor under the other provisions of this Section 9 and such Excess Funding Guarantor shall not exercise any right or remedy with respect to such excess until payment and satisfaction in full of all of such obligations. For the purposes hereof, "Pro Rata Share" shall mean, for any Subsidiary Guarantor, a percentage equal to the percentage that the excess of the fair value of its assets as at - 87 - December 31, 1993 over the amount of its liabilities (including contingent liabilities) as at such date is of the excess of the aggregate value of the assets of all other Subsidiary Guarantors as at such date over their aggregate liabilities (including contingent liabilities) as at such date. 9.08 Limitation on Subsidiary Obligor Obligations. In any action or proceeding involving any State corporate law, or any State or Federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any of the Subsidiary Guarantor under Section 9.01 hereof would otherwise, taking into account the provisions of Section 9.07 hereof, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under said Section 9.01, then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by Subsidiary Guarantor, any Bank, the Agents or any other Person, be automatically limited and reduced to the highest amount which is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding. Section 10. Events of Default. If one or more of the following events (herein called "Events of Default") shall occur and be continuing: (a) The Company shall default in the payment or prepayment when due of any principal of or interest on any Loan; or the Company shall default in the payment of any fee or any other amount payable by it hereunder which shall remain unremedied for a period of three days; or the Company shall default in the payment of any fee or other amount payable by it under the Security Documents for a period of five days after notice from the intended recipient of such fee or other amount; or (b) The Company or any of its Subsidiaries shall default in the payment when due of any principal of or interest on any of its other Indebtedness aggregating $250,000 or more beyond any applicable grace periods, or in the payment when due of any amount under any Interest Rate Protection Agreement for a notional principal amount - 88 - exceeding $1,000,000; or the Company shall become obligated to purchase or otherwise acquire, prior to the stated maturity thereof, any of its other Indebtedness aggregating $250,000 or more, or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness or any event specified in any Interest Rate Protection Agreement shall occur if the effect of such other event is to cause, or would (after giving effect to any applicable notice requirement or grace period) permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due, or to be prepaid, purchased or otherwise acquired in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity or, in the case of an Interest Rate Protection Agreement, to permit the payments owing under such Interest Rate Protection Agreement to be liquidated; or (c) Any representation, warranty or certification made or deemed made in any Basic Document (or in any modification or supplement thereto) by any Obligor, or any certificate furnished to any Bank or any of the Agents pursuant to the provisions thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (d) The Company shall default in the performance of any of its obligations under any of Sections 8.05, 8.07, 8.08, 8.09, 8.10, 8.11, 8.12, 8.13, 8.14, 8.15, 8.17, 8.18 or 8.19 hereof; or the Company shall default in the performance of any of its obligations under Section 8.06 or 8.16 hereof and such default shall continue unremedied for a period of 15 days; or any Obligor shall default in the performance of any of its obligations, under this Agreement or any other Basic Document which imposes on it a monetary obligation and such default shall remain unremedied for a period of three days; or, except as otherwise provided in this paragraph (d), any Obligor shall default in the performance of any of its other obligations in this Agreement or any other Basic Document and such default shall continue unremedied for a period of 30 days after such Obligor obtains actual knowledge thereof or after notice thereof to the Company by any Agent or any Bank (through any Agent); or - 89 - (e) The Company or any of its Subsidiaries shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or (f) The Company or any of its Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing; or (g) A proceeding or case shall be commenced, without the application or consent of the Company or any of its Subsidiaries, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or such Subsidiary or of all or any substantial part of its assets, or (iii) similar relief in respect of the Company or such Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Company or such Subsidiary shall be entered in an involuntary case under the Bankruptcy Code; or (h) A final judgment or judgments for the payment of money in excess of $250,000 in the aggregate shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against the Company and/or any of its Subsidiaries and the same shall not be discharged (or provision shall not be made for such discharge), or a - 90 - stay of execution thereof shall not be procured, within 30 days from the date of entry thereof and the Company or the relevant Subsidiary shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or (i) An event or condition specified in Section 8.01(e) hereof shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, the Company or any ERISA Affiliate shall incur or in the opinion of the Majority Banks shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) which would constitute, in the reasonable judgment of the Majority Banks, a Material Adverse Effect; or (j) Except for expiration in accordance with its terms, any of the Security Documents shall be terminated or shall cease to be in full force and effect, for whatever reason; or shall cease to give the Administrative Agent the Liens, rights, powers and privileges purported to be created thereby (including without limitation a prior perfected security interest in and Lien on all of the Properties covered thereby in accordance with the terms thereof) in favor of the Administrative Agent, subject to no equal or prior Liens (except as permitted thereby); or (k) the Management Agreement shall be terminated or otherwise cease to be in full force and effect, or the Company is or becomes entitled to terminate the Management Agreement under Section 3.2(b)(ii) thereof; or (l) (i) less than one-third of the members of the Board of Directors of the Company shall be persons designated by INI, or (ii) from and after the 90th day following the Closing Date, less than a majority of the members of the Board of Directors of the Company shall be designated by INI or persons designated in the manner provided in Section 1(a) of the Voting Agreement; or (m) any 9% Debentures shall remain outstanding on or after the 90th day following the Closing Date; - 91 - THEREUPON: (i) in the case of an Event of Default other than an Event of Default with respect to the Company referred to in clause (f) or (g) of this Section 10 the Administrative Agent may and, upon request of the Majority Banks, shall, by notice to the Company, cancel all of the Commitments then in effect and declare the principal amount then outstanding of, and the accrued interest on, the Loans and all other amounts owing by the Company to the Administrative Agent, the Co-Agents and the Banks under this Agreement and under the Notes to be forthwith due and payable, whereupon such amounts shall be immediately due and payable, without presentment, demand, protest or other formalities of any kind all of which are hereby expressly waived by the Obligors and (ii) in the case of the occurrence of an Event of Default with respect to the Company referred to in clause (f) or (g) of this Section 10, the Commitments forthwith shall be automatically canceled and the principal amount then outstanding of, and the accrued interest on, the Loans and all other amounts payable by the Company under this Agreement and the Notes shall become automatically immediately due and payable, without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by each Obligor. Section 11. The Agents 11.01 Appointment, Powers and Immunities. Each Bank hereby irrevocably appoints and authorizes the Administrative Agent to act as its agent hereunder and under the other Basic Documents with such powers as are specifically delegated to the Administrative Agent by the terms of this Agreement and of the other Basic Documents, together with such other powers (if any) as are reasonably incidental thereto. None of the Co-Agents, in their capacity as Co-Agents, shall have any duties or responsibilities under this Agreement or any fiduciary relationship with the Administrative Agent, or any Bank, and no implied covenants, functions, responsibilities, duties or liabilities shall be read into this Agreement or any other Basic Document or otherwise exist against any Co-Agent in its capacity as Co-Agent hereunder. No Agent (which term, either in the singular or the plural, as used in this sentence and in Section 11.05 and the first sentence of Section 11.06 hereof shall include reference to such Agent's affiliates and its own and its affiliates' officers, directors, employees and agents): (a) shall have any duties or responsibilities except those - 92 - expressly set forth in the Basic Documents with respect to such Agent (if any); (b) shall by reason of any Basic Document be a trustee for any of the Banks or the other Agents; (c) shall be responsible to any of the Banks or the other Agents for any recitals, statements, representations or warranties contained in any Basic Document, or in any certificate or other document referred to or provided for in, or received by it under any Basic Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Basic Document or any other document referred to or provided for herein or therein or for any failure by any Obligor or any other Person to perform any of its obligations hereunder or thereunder; (d) except as expressly required by any Basic Document, shall be required to initiate or conduct any litigation or collection proceedings under any Basic Document; or (e) shall be responsible for any action taken or omitted to be taken by it under any Basic Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct. Without limiting the generality of the foregoing, each of the Agents shall be conclusively entitled to assume that the conditions precedent set forth in Section 6 hereof have been satisfied unless such Agent has received a notice to the effect that any of such conditions have not been satisfied from either the Majority Banks or, if the related borrowing is of a Term Loan, the Majority Term Loan Banks, or, if the related borrowing is of a Revolving Credit Loan, the Majority Revolving Credit Banks, in each case referring to the relevant subsection(s) and stating that the relevant condition(s) have not been satisfied or unless the Company so notifies such Agent. Each Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by such Agent in good faith. Each Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until a notice of the assignment or transfer thereof shall have been filed with the Administrative Agent, together with a notice of such assignment or transfer to the Company. Each of the Banks hereby irrevocably authorizes the Administrative Agent to execute, deliver and/or perform each of the Security Documents. The Administrative Agent is hereby authorized to determine whether the cost to the Obligors is disproportionate to the benefit to be realized by the Banks by perfecting a Lien in any given Property, or whether any given Property is immaterial or of inconsequential value, and if the - 93 - Administrative Agent makes any such determination the applicable Obligor(s) shall not be required to perfect a Lien on such Property in favor of the Administrative Agent. 11.02 Reliance by Each Agent. The Administrative Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent. As to any matters not expressly provided for by this Agreement or any other Basic Document, the Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Majority Banks or, if and to the extent required hereby or by any other Basic Document, in accordance with instructions given by all of the Banks, the Majority Term Loan Banks and/or the Majority Revolving Credit Banks, as the case may be, and such instructions of such Banks and any action taken or failure to act pursuant thereto shall be binding on all of the Banks or, if applicable, on all of the Term Loan Banks and/or Revolving Credit Banks, as the case may be. 11.03 Defaults. (a) No Agent shall be deemed to have knowledge or notice of the occurrence of a Default (except, in the case of the Administrative Agent only) unless it has received notice from another Agent, a Bank or the Company specifying such Default and stating that such notice is a "Notice of Default". In the event that the Administrative Agent receives such a notice of the occurrence of a Default, it shall give prompt notice thereof to the Banks. (b) The Administrative Agent shall (subject to Sections 11.01, 11.05 and 11.07 hereof) take such action with respect to any Default as shall be directed by the Majority Banks, or, if and to the extent required herein or in any other Basic Document, all of the Banks, the Majority Term Loan Banks and/or the Majority Revolving Credit Banks, as the case may be, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from - 94 - taking such action, with respect to such Default as it shall deem advisable in the best interest of all of the Banks, except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the agreement or consent of the Majority Banks, the Majority Term Loan Banks, the Majority Revolving Credit Banks or all of the Banks. 11.04 Rights as a Bank. With respect to its Commitment(s) and the Loans made by it, each Agent (and any successor to any Agent) in its capacity as a Bank hereunder or under any Basic Document shall have the same rights and powers hereunder or thereunder as any other Bank and may exercise the same as though it were not acting as an Agent, and the term "Bank" or "Banks" shall, unless the context otherwise indicates, include each Agent in its individual capacity. Each Agent (and any successor to any Agent) and its affiliates may (without having to account therefor to any Bank) accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with any of the Obligors (and any of their Subsidiaries or Affiliates) as if it were not acting as an Agent, and each Agent and its affiliates may accept fees and other consideration from any of the Obligors for services in connection with this Agreement or otherwise without having to account for the same to the Banks. 11.05 Indemnification. The Banks agree to indemnify the Administrative Agent (to the extent not reimbursed under Section 12.03 hereof, but without limiting the obligations of the Company under said Section 12.03) ratably in accordance with the aggregate principal amount of the Loans and, if any of the Commitments are then in effect, the aggregate unused amount of such Commitments held by the Banks, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent (including by any Bank) arising out of or by reason of any investigation or any way relating to or arising out of this Agreement or any other Basic Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby (including, without limitation, the costs and expenses which the Company is obligated to pay under Section 12.03 hereof, but excluding, unless a Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of - 95 - its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified. 11.06 Non-Reliance on Agents and Other Banks. Each Bank agrees that it has, independently and without reliance on any Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and its Subsidiaries and decision to enter into this Agreement and that it will, independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Basic Documents. No Agent shall be required to keep itself informed as to the performance or observance by any Obligor or other party of this Agreement or any of the other Basic Documents or any other document referred to or provided for herein or therein or to inspect the Properties or books of the Company or any of its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Banks by the Administrative Agent hereunder, no Agent shall have any duty or responsibility to provide any Bank with any credit or other information concerning the affairs, financial condition or business of the Company or any of its Subsidiaries (or any of their affiliates) which may come into the possession of such Agent or any of its affiliates. 11.07 Failure to Act. Except for action expressly required of the Administrative Agent hereunder and under the other Basic Documents, the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Banks of their indemnification obligations under Section 11.05 hereof against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. 11.08 Resignation or Removal of Agents. Subject to the appointment and acceptance of a successor Agent as provided below, each Agent may resign at any time by giving notice thereof to the Banks, the other Agents and the Company, and the - 96 - Administrative Agent and any Co-Agent may each be removed at any time with or without cause by the Majority Banks. Upon any such resignation or removal, the Majority Banks shall have the right to appoint a successor Administrative Agent or Co-Agent, as the case may be, in each case (except during the continuance of a Default or an Event of Default) with the consent of the Company (which consent shall not be unreasonably withheld), provided that any failure of the Company to object to a proposed successor Agent within 15 days after notice of the proposed appointment to the Company shall be deemed to constitute consent of the Company to such appointment of such proposed successor Agent. If no successor Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation or the Majority Banks' removal, as the case may be, and consented to by the Company (but only if the consent of the Company to the appointment of a successor Agent is required as provided above), then the retiring Agent may, on behalf of the relevant Banks, appoint a successor Agent, which shall be a Bank which has an office in New York, New York with a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation or removal hereunder as an Agent, the provisions of this Section 11 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as an Agent. 11.09 Collateral Sub-Agents. Each Bank by its execution and delivery of this Agreement agrees that, in the event it shall hold any Investments of any Obligor constituting part of the Collateral under and as defined in the Security Agreement, such Investments shall be held in the name and under the control of such Bank, and such Bank shall hold such Investments as a collateral sub-agent for the Administrative Agent under the Security Agreement. Each Obligor and Bank, by its execution and delivery of this Agreement hereby consents to the foregoing. - 97 - Section 12. Miscellaneous. 12.01 Waiver. No failure on the part of any Agent or any Bank to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any Note preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. 12.02 Notices. All notices and other communications provided for herein and under the Security Documents (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof (below the name of the Company, in the case of any Obligor other than the Company); or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. 12.03 Expenses, Etc. The Company agrees to pay or reimburse each of the Banks and each of the Agents for paying: (a) all reasonable out-of-pocket costs and expenses of the respective Agents (including, without limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase), in connection with (i) the review, negotiation, preparation, execution and delivery of this Agreement and the other Basic Documents and the Unistar Acquisition Documents and the making of Loans hereunder and (ii) any amendment, modification or waiver of any of the terms of this Agreement or any of the other Basic Documents; (b) all reasonable out-of-pocket costs and expenses of each of the Banks and the Agents (including reasonable counsels' fees) in connection with any Default and any enforcement or collection proceedings resulting therefrom (including the enforcement of this Section 12.03); and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any - 98 - governmental or revenue authority in respect of this Agreement or any of the other Basic Documents or any other document referred to herein or therein and all costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement or any other Basic Document or any other document referred to herein or therein. The Company hereby agrees (to the fullest extent permitted by law) to indemnify each Agent and each Bank and their respective directors, officers, employees and agents for, and hold each of them harmless against, any and all losses, liabilities, claims, damages or expenses incurred by any of them (including any and all losses, liabilities, claims, damages, penalties, actions, judgments, suits, costs, expenses or disbursements incurred by any Agent to any Bank) arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings) relating to any of the Commitments and the Loans or any actual or proposed use by the Company or any of its Subsidiaries of the proceeds of any of the Loans or any of the other transactions contemplated hereby or by the other Basic Documents or other Unistar Acquisition Documents, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation or litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified). 12.04 Amendments, Etc. (a) Any provision of this Agreement (including the Schedules hereto) or the Notes may be amended only by an instrument in writing signed by the Obligors (or, in the case of the Notes, the Company only) and (except as otherwise provided below in this Section 12.04(a)) the Majority Banks, or by the Company (in the case of this Agreement, acting with the agreement or consent of the other Obligors, provided that the Agents and the Banks may conclusively assume that any such action by the Company has been agreed or consented to by the other Obligors) and the Administrative Agent (in the case of this Agreement, acting with the agreement or consent of, except as otherwise so provided, the Majority Banks), and any provision of this - 99 - Agreement (including the Schedules hereto) or the Notes may be waived by (except as otherwise so provided) the Majority Banks or by the Administrative Agent (acting with the agreement or consent of, except as otherwise so provided, the Majority Banks); provided that, except as otherwise expressly provided in clauses (i) through (iv) below, the agreement or consent of the Majority Banks shall not be required to take any of the actions referred to in any of said clauses (i) through (iv): (i) any modification or waiver altering the terms of Section 4 or 5 hereof shall require the agreement or consent of all of the Banks that would be adversely affected thereby; (ii) any alteration of this Section 12.04 or the definition of "Majority Banks", "Term Loan Banks", "Revolving Credit Banks", "Majority Term Loan Banks" or "Majority Revolving Credit Banks" shall require the agreement or consent of each of the Banks; (iii) any modification or waiver extending any date fixed for any scheduled payment of principal of or interest on the Term Loans, or reducing the amount of any scheduled payment of principal thereof or the rate at which interest is payable thereon or the amount of any fee payable to the Term Loan Banks hereunder shall require the agreement or consent of all of the Term Loan Banks and any extension of the term or increase in the amount of a Term Loan Commitment of any Term Loan Bank shall require the agreement or consent of such Term Loan Bank, provided that, solely for the purpose of determining whether or not the condition precedent specified in Section 6.03(a)(i) hereof is satisfied with respect to borrowings under the Revolving Credit Commitments, at any time during the continuance of a Payment Default, any modification or waiver extending the date fixed for any scheduled payment of principal of or interest on the Term Loans shall also require the agreement or consent of the Majority Revolving Credit Banks; and (iv) any modification or waiver extending the date fixed for any scheduled payment of principal of or interest on the Revolving Credit Loans or reducing the amount of any scheduled payment of principal thereof or the rate at which interest is payable thereon or the amount of any fee payable to the Revolving Credit Banks hereunder shall require the agreement or consent of all of the Revolving Credit Banks and any extension of the term or increase in the amount of the Revolving Credit Commitment of any Revolving Credit Bank shall require the agreement or consent of such Revolving Credit Bank. Anything in this Section 12.04 to the contrary notwithstanding, any modification or waiver of any provision of this Agreement or any of the other Basic Documents reducing the - 100 - rights or increasing the obligations of any Agent hereunder or thereunder shall require the agreement or consent of such Agent. (b) The Administrative Agent may, with the prior consent of the Majority Banks (but not otherwise), consent to any modification, supplement or waiver of any of the Security Documents, provided that, without the prior consent of each Bank, the Administrative Agent may not (except as provided herein or in the Security Documents) modify, supplement or waive any term with respect to the application of proceeds under and pursuant to the Security Agreement or release any collateral or otherwise terminate any Lien under any Security Document providing for collateral security except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Lien covering Property which is the subject of a Disposition of Property permitted hereunder or to which the Majority Banks have consented hereunder. 12.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, provided that no Obligor may assign any of its rights or obligations hereunder or under any of the other Basic Documents without the prior consent of all of the Banks and the Agents. 12.06 Bank Assignments and Participations. (a) Subject to paragraph (b) below, each Bank may assign to any other Bank or any other bank or financial institution all or any part of its Loans and Commitments, provided that: (i) except for an assignment consented to by the Administrative Agent and, except during the continuance of an Event of Default, any such assignment of less than all of such Bank's Loans and Commitments of each series to a single assignee shall be in a minimum amount of $5,000,000 and (iii) each partial assignment by such Bank of its Term Loans and Term Loan Commitments or its Revolving Credit Loans or Revolving Credit Commitments shall be made in such a manner so that the same proportion of each of its outstanding Term Loans and Term Loan Commitments (if then in effect) or Revolving Credit Loans and Revolving Credit Commitments (if then in effect), as the case may be, is assigned to the assignee. Upon written notice to the Company and the Administrative Agent of an assignment permitted hereunder (which notice shall identify the assignee, the amount - 101 - of the assignor's Loan(s) and Commitment(s) assigned in detail reasonably satisfactory to the Administrative Agent), the assignee shall have, to the extent of such assignment, the obligations, rights and benefits of a Bank hereunder holding the Loan(s) and/or Commitment(s) assigned to it (in addition to the Loan(s) and Commitment(s) of such series, if any, theretofore held by such assignee). In connection with the assignment by a Bank of all or any portion of its Loan(s) and/or Commitment(s) to another Person as permitted hereunder, upon request of such Bank or such Person, the Company will issue promissory notes in substantially the form of Exhibit A-1 or A-2 hereto (as appropriate) (as such form may have been modified), each dated the date of the Notes originally issued hereunder (or, if interest has been paid on such Loan(s), the last day through which interest shall have been paid on such Loan(s)) and payable to the order of such Person in a principal amount equal to the Loan(s) so assigned and otherwise duly completed, and the assigning Bank shall make an appropriate notation on the schedule attached to the related Note(s) held by it as to the principal amount of the Loan(s) and/or Commitment(s) so assigned. (b) If any assignment made pursuant to paragraph (a), above shall be made to any Person that is organized under the laws of any jurisdiction other than the United States of America or any State thereof, such Person shall furnish such certificates, documents or other evidence to the Company and the Administrative Agent as shall be required by Section 5.06 hereof to evidence such Person's exemption from U.S. withholding taxes with respect to any payments under or pursuant to this Agreement because any such payments to such Person are effectively connected with the conduct by such Person of a trade or business in the United States. (c) A Bank may sell or agree to sell to one or more other Persons a participation in all or any part of any Loans held by it, or in its Commitment(s), provided that each purchaser of a participation (a "Participant"), except as otherwise provided in Section 4.07(c) or 5.06(e) hereof, shall not have any other rights or benefits under this Agreement or any Note or any other Basic Document (the Participant's rights against such Bank in respect of such participation to be those set forth in the agreements executed by such Bank in favor of the Participant). Each Bank's right to sell such participations is subject to the following conditions: (i) such Bank's obligations under this - 102 - Agreement (including, without limitation, its Commitment(s), if any, hereunder) shall remain unchanged, (ii) such Bank shall remain solely responsible for the performance of such obligations and (iii) the Obligors, the Agents, and the other Banks shall continue to be entitled to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. All amounts payable by the Company to any Bank under Section 5 hereof in respect of the Loan(s) held by it, and its Commitment(s), shall be determined as if such Bank had not sold or agreed to sell any participations in such Loan(s) and Commitment(s), and as if such Bank were funding and maintaining each of such Loan(s) and Commitment(s) in the same way that it is funding and maintaining the portion of such Loan and Commitment in which no participations have been sold. In no event shall a Bank that sells a participation agree with the Participant to take or refrain from taking any action hereunder or under any other Basic Document except that such Bank may agree with the Participant that it will, on behalf of the Participant, request the Company to furnish information to such Bank for delivery to the Participant, of the type specified in Section 8.01(m) hereof and may further agree with the Participant that it will not, without the consent of the Participant, agree to any of the following (but only if and to the extent that such agreement would have an adverse effect on the Participant): (i) increase or extend the term, or extend the time or waive any requirement for the reduction or termination, of such Bank's related Commitment(s), (ii) extend the date fixed for the payment of principal of or interest on the related Loan or Loans or any portion of any fee hereunder payable to the Participant, (iii) reduce the amount of any such payment of principal or (iv) reduce the rate at which interest is payable thereon, or any fee hereunder payable to the Participant, to a level below the rate at which the Participant is entitled to receive such interest or fee. (d) Anything in this Section 12.06 to the contrary notwithstanding, any Bank may assign and pledge all or any portion of its Loans and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Bank from its obligations hereunder. - 103 - (e) A Bank may furnish any information concerning the Company or any of its Subsidiaries in the possession of such Bank from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of Section 12.12(b) hereof. 12.07 Survival. The obligations of the Company under Sections 5.01, 5.05, 5.06 and 12.03 hereof and the obligations of the Banks under Sections 11.05 and 12.12 hereof shall survive the repayment of the Loans and the termination of the Commitments. In addition, each representation and warranty made, or deemed to be made by a notice of any borrowing, herein or pursuant hereto shall survive the making of such representation and warranty, and no Bank shall be deemed to have waived, by reason of making any Loan hereunder, any Default which may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that such Bank or any of the Agents may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such extension of credit was made. 12.08 Captions. The table of contents and captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. 12.09 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. 12.10 Governing Law; Submission to Jurisdiction. This Agreement and the Notes shall be governed by, and construed in accordance with, the law of the State of New York. Each Obligor hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each Obligor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a - 104 - court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 12.11 Waiver of Jury Trial. EACH OF THE OBLIGORS, THE AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 12.12 Treatment of Certain Information; Confidentiality. (a) The Company acknowledges that (i) services may be offered or provided to it (in connection with this Agreement or otherwise) by each Bank or by one or more subsidiaries or affiliates of such Bank and (ii) information delivered to each Bank by the Company and its Subsidiaries may be provided to each such subsidiary and affiliate, it being understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of clause (b) below as if it were a Bank hereunder. (b) Each Bank and each Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices, any non-public information supplied to it by the Company pursuant to this Agreement which is identified by the Company as being confidential at the time the same is delivered to the Banks or the Agents, provided that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for any of the Banks or any of the Agents, (iii) at their request, to bank examiners or other regulators having analogous responsibilities, (iv) to auditors or accountants, (v) to the Agents or any other Bank (or to Chase Securities, Inc.), (vi) in connection with any litigation arising under or in connection with the transactions contemplated by this Agreement or the other Basic Documents, (vii) to a subsidiary or affiliate of such Bank as provided in clause (a) above or (viii) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or - 105 - participant) first executes and delivers to the respective Bank a Confidentiality Agreement substantially in the form of Exhibit F hereto. In no event shall any Bank or any Agent be obligated or required to return any materials furnished by the Company. 12.13 Senior Indebtedness. Each of the parties hereto agrees that the obligations of the Company with respect to the Loans hereunder and under the Notes constitute "Senior Indebtedness" under and as defined in the 6-3/4% Debenture Indenture and "Senior Indebtedness" under and as defined in the 9% Debenture Indenture. - 106 - IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed as of the day and year first above written. COMPANY _______ WESTWOOD ONE, INC. By /s/ Eric R. Weiss ___________________________ Title: Senior Vice President Address for Notices: c/o Infinity Broadcasting Corporation 600 Madison Avenue New York, New York 10022 Attention: Mel Karmazin Telecopier No.: (212) 888-2959 Telephone No.: (212) 750-6400 - 107 - SUBSIDIARY GUARANTORS _____________________ WESTWOOD ONE RADIO, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President MUTUAL BROADCASTING SYSTEM, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President WESTWOOD NATIONAL RADIO CORPORATION By /s/ Eric R. Weiss __________________________ Title: Senior Vice President WESTWOOD ONE SATELLITE SYSTEMS, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President WESTWOOD ONE STATIONS-NYC, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President WESTWOOD ONE STATIONS GROUP, INC. (f/k/a Westwood One Stations, Inc.) By /s/ Eric R. Weiss __________________________ Title: Senior Vice President - 108 - NATIONAL RADIO NETWORK, INC. ____________________________ By /s/ Eric R. Weiss __________________________ Title: Senior Vice President THE SOURCE, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President TALKNET, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President KM RECORDS, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President WESTWOOD ONE STATIONS-LA, INC. By /s/ Eric R. Weiss __________________________ Title: Senior Vice President - 109 - BANKS AND CO-AGENTS ___________________ THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By /s/ William E. Rottino ________________________ Title: Vice President Address for Notices: The Chase Manhattan Bank (National Association) 1 Chase Manhattan Plaza New York, New York 10081 Telecopier No.: (212) 552-4095 Telephone No.: (212) 552-4846 Attention: William Rottino Lending Office for all Loans: The Chase Manhattan Bank (National Association) 1 Chase Manhattan Plaza New York, New York 10081 - 110 - BANK OF MONTREAL, as a Bank and as a Co-Agent By /s/ Catherine Shea ____________________ Title: Director Address for Notices: Bank of Montreal 430 Park Avenue - 16th Floor New York, NY 10022 Telecopier No.: (212) 605-1525 (212) 605-1648 Telephone No.: (212) 605-1423 Attention: Catherine Shea Director Lending Office for all Loans: 115 South LaSalle Street - 11th Fl Chicago, Illinois 60603 - 111 - THE FIRST NATIONAL BANK OF BOSTON, as a Bank and as a Co-Agent By /s/ Lisa Gallagher ____________________ Title: Director Address for Notices: Bank of Boston 100 Federal Street Boston, MA 02110 Attention: Steve Pratt-Otto Telecopier No.: (617) 434-3401 Telephone No.: (617) 434-5425 Lending Office for all Loans: Bank of Boston Loan Processing 100 Federal Street (01-1B-12) Boston, MA 02110 ADMINISTRATIVE AGENT ____________________ THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Administrative Agent By /s/ William E. Rottino ________________________ Title: Vice President Address for Notices to Chase as Administrative Agent: The Chase Manhattan Bank (National Association) New York Agency 4 Chase Metrotech Center 13th Floor Brooklyn, New York 11245 Telecopier No.: (718) 242-6900 Telephone No.: (718) 242-7970 Attention: Lilianne Pouponneau EX-10.9 6 EXHIBIT 10.9 TO FORM 10-K AMENDMENT NO. 1 AMENDMENT NO. 1 dated as of August 12, 1994, between WESTWOOD ONE, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Company"); each of the Subsidiaries of the Company identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto (individually, a "Subsidiary Guarantor" and, collectively, the "Subsidiary Guarantors'); each of the Banks party to the Credit Agreement referred to below; BANK OF MONTREAL and THE FIRST NATIONAL BANK OF BOSTON, as Co-Agents for said Banks (individually, a "Co-Agent" and, collectively, the "Co-Agents"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for said Banks (in such capacity, together with its successors in such capacity, the "Administrative Agent"). The Company, the Subsidiary Guarantors, the lenders party thereto (individually, a "Bank" and, collectively, the "Banks"), the Co-Agents and the Administrative Agent are parties to a Credit Agreement dated as of February 1, 1994 (the "Credit Agreement"), providing, subject to the terms and conditions thereof, for loans to be made by said Banks to the Company in an aggregate principal amount not exceeding $125,000,000. The Company, the Subsidiary Guarantors and the Banks wish to amend the Credit Agreement in certain respects, and accordingly, the parties hereto hereby agree as follows: Section 1. Definitions. Except as otherwise defined in this Amendment No. 1, terms defined in the Credit Agreement are used herein as defined therein. Section 2. Amendments. Upon the execution and delivery hereof by the Company, each of the Subsidiary Guarantors and the Majority Banks, but effective as of the date hereof, the second proviso to Section 3.03 of the Credit Agreement shall be amended to read in its entirety as follows: "; provided that, if the Company so elects in the related notice of prepayment referred to in clause (a) above, all or that part (as specified by the Company in such notice) of any amount required by clause (b) above to be applied to the installments of the Term Loans in the inverse order of maturity shall instead be applied as follows: (i) first, such prepayment shall be applied to the installments of the Term Loans scheduled to be paid on or prior to the later of (x) August 31, 1995 and (y) the date 180 days after the date of such prepayment (such later date, the "Specified Date") in the direct order of the maturities thereof; 1 (ii) then (after prepayment in full of the pre-Specified Date installments of the Term Loans pursuant to clause (i) above), (x) one-half of the remainder of such prepayment shall be applied to the post-Specified Date installments in the direct order of the maturities thereof and (y) one-half of the remainder of such prepayment shall be applied to the post-Specified Date installments in the inverse order of their maturities; provided that the aggregate amount applied to the post-Specified Date installments in connection with the instant prepayment pursuant to clause (x) above, together with the aggregate amount of all previous prepayments of the post-Specified Date installments pursuant to said clause (x), shall not exceed $5,000,000; and (iii) finally, any amount not applied pursuant to clauses (i) and (ii) above shall be applied to the remaining installments of the Term Loans in the inverse order of the maturities thereof." Section 3. Representations and Warranties. The Company and the Subsidiary Guarantors represent and warrant to the Banks that the representations and warranties set forth in Section 7 of the Credit Agreement are true and complete on the date hereof as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date) and as if each reference in said Section 7 to "this Agreement" included reference to this Amendment No. 1. Section 4. Miscellaneous. Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect. This Amendment No. 1 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 1 by signing any such counterpart. This Amendment No. 1 shall be governed by, and construed in accordance with, the law of the State of New York. 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered as of the day and year first above written. WESTWOOD ONE, INC. By /s/ Farid Suleman SUBSIDIARY GUARANTORS _____________________ WESTWOOD ONE RADIO, INC. By /s/ Farid Suleman MUTUAL BROADCASTING SYSTEM, INC. By /s/ Farid Suleman WESTWOOD NATIONAL RADIO CORPORATION By /s/ Farid Suleman WESTWOOD ONE SATELLITE SYSTEMS, INC. By /s/ Farid Suleman WESTWOOD ONE STATIONS-NYC, INC. By /s/ Farid Suleman NATIONAL RADIO NETWORK, INC. By /s/ Farid Suleman THE SOURCE, INC. By /s/ Farid Suleman TALKNET, INC. By /s/ Farid Suleman 3 KM RECORDS, INC. By /s/ Farid Suleman WESTWOOD ONE STATIONS-LA, INC. By /s/ Farid Suleman UNISTAR RADIO NETWORKS, INC. By /s/ Farid Suleman BANKS _____ THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as a Bank and as Administrative Agent By /s/ John P. White Title: Vice President THE FIRST NATIONAL BANK OF BOSTON, as a Bank and a Co-Agent By /s/ Lisa Gallagher Title: Director BANK OF MONTREAL, as a Bank and a Co-Agent By /s/ Catherine Shea Title: Director 4 CIBC, INC. By /s/ Harold Birk Title: Vice President CONTINENTAL BANK By /s/ L. Dustin Vincent Title: Vice President SOCIETY NATIONAL BANK By /s/ Paul Nestvold Title: Officer 5 EX-10.10 7 EXHIBIT 10.10 TO FORM 10-K AMENDMENT NO. 2 AMENDMENT NO. 2 dated as of August 31, 1994, between WESTWOOD ONES INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Company"); each of the Subsidiaries of the Company identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto (individually, a "Subsidiary Guarantor" and, collectively, the "Subsidiary Guarantors"); each of the Banks party to the Credit Agreement referred to below; BANK OF MONTREAL and THE FIRST NATIONAL BANK OF BOSTON, as Co-Agents for said Banks (individually, a "Co-Aqent" and, collectively, the "Co-Agents"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for said Banks (in such capacity, together with its successors in such capacity, the "Administrative Aqent"). The Company, the Subsidiary Guarantors, the lenders party thereto (individually, a "Bank" and, collectively, the "Banks"), the Co-Agents and the Administrative Agent are parties to a Credit Agreement dated as of February 1, 1994 (as heretofore amended, the "Credit Aqreement"), providing, subject to the terms and conditions thereof, for loans to be made by said Banks to the Company in an aggregate principal amount not exceeding $125,000,000. In accordance with Section 1.02(d) of the Credit Agreement, the Company wishes to change the fiscal year of the Company and each of its Subsidiaries to December 31 of each year, and to change the last day of the first three fiscal quarters of each fiscal year to March 31, June 30 and September 30 in each year, effective as of September 30, 1994. The Company, the Subsidiary Guarantors, the Banks and the Administrative Agent wish to amend the Credit Agreement to reflect such change in fiscal year and fiscal quarter, and wish to amend the Credit Agreement in certain other respects. Accordingly, the parties hereto hereby agree as follows: Section 1. Definitions. Except as otherwise defined in this Amendment No. 2, terms defined in the Credit Agreement are used herein as defined therein. Section 2. Amendments. Upon the execution and delivery hereof by the Company, each of the Subsidiary Guarantors and the Majority Banks, but effective as of the date hereof, the Credit Agreement shall be amended as follows: A. References in the Credit Agreement (including references to the Credit Agreement as amended hereby) to "this Agreement" (and indirect references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be references to the 1 Credit Agreement as amended hereby. B. Section 1.01 of the Credit Agreement shall be amended by adding the following new definition in its appropriate alphabetical location: "Calculation Dates" shall mean (a) the last Business Day of February, 1994, (b) the last Business Day of May, 1994, and (c) commencing with the last Business Day of September, 1994, the last Business Day of March, June, September and December in each year. C. The definition of "Operating Cash Flow" in Section 1.01 of the Credit Agreement shall be amended by deleting "November 30, 1994" in clause (b)(ii) of such definition and substituting "December 31, 1994" therefor; and by deleting Clause (1) of the provision therein and substituting the following, respectively, therefor: "(1) for purposes hereof (other than for purposes of computing the Total Debt Ratio for determinations of the Applicable Margin), Operating Cash Flow (W) for the period of four fiscal quarters of the Company ending February 28, 1994 shall be increased by $5,300,000; (X) for the period of four fiscal quarters of the Company ending May 31, 1994 shall be increased by $3,975,000; (Y) for the period of four fiscal quarters of the Company ending September 30, 1994 shall be increased by $2,650,000; and (Z) for the period of four fiscal quarters of the Company ending December 31, 1994 shall be increased by $1,325,000;". D. Section 1.02(d) of the Credit Agreement shall be amended to read in its entirety as follows: "(d) From and after September 30, 1994, the Company will maintain its accounts and the accounts of its Subsidiaries on the basis of a fiscal year ending December 31 of each year, and the last days of the first three fiscal quarters in each Fiscal Year will be March 31, June 30 and September 30 of each year, respectively." E. Section 3.04(c) of the Credit Agreement shall be amended by deleting "with the Fiscal Year ending on November 30, 1994" therein and substituting "with the Fiscal Year ending on December 31, 1994" therefor. F. Section 8.05 of the Credit Agreement shall be amended by deleting "for each Fiscal Year commencing on and after December 1, 1994" therein and substituting "for each Fiscal Year commencing on and after January 1, 1995" therefor. 2 G. Sections 8.10 and 8.11 of the Credit Agreement shall be amended to read in their entirety as follows: "8.10 Debt Ratios. (a) Senior Debt Ratio. The Company will not permit the Senior Debt Ratio, at the Closing Date and at any Calculation Date occurring during any period specified below, to exceed the ratio set forth opposite such period: Period (both dates inclusive) Ratio Closing Date to 6/30/95 4.75:1 7/1/95 to 9/30/95 4.50:1 10/1/95 to 3/31/96 4.25:1 4/1/96 to 9/30/96 3.75:1 10/1/96 to 9/30/97 3.25:1 Thereafter 3.00:1 (b) Total Debt Ratio. The Company will not permit the Total Debt Ratio, at the Closing Date and at any Calculation Date occurring during any period specified below, to exceed the ratio set forth opposite such period: Period (both dates inclusive) Ratio Closing Date to 6/30/95 5.25:1 7/1/95 to 9/30/95 5.00:1 10/1/95 to 3/31/96 4.75:1 4/1/96 to 9/30/96 4.25:1 10/1/96 to 9/30/97 3.75:1 Thereafter 3.00:1 (c) Fixed Charges Ratio. The Company will not permit the Fixed Charges Ratio to be less than 1.10 to 1.00 on the Closing Date and any Calculation Date occurring after the Closing Date. 8.11 Total Interest Coverage Ratio: Total Pro Forma Debt Service Coverage Ratio. (a) Total Interest Coverage Ratio. The Company will not permit the Total Interest Coverage Ratio, at the Closing Date and at any Calculation Date occurring during any period specified below, to be less than the ratio set forth opposite such period: Period (both dates inclusive) Ratio Closing Date to 12/31/94 2.00:1 1/1/95 to 12/31/95 2.25:1 1/1/96 to 12/31/96 2.50:1 3 Thereafter 3.00:1 (b) Total Pro Forma Debt Service Coverage Ratio. The Company will not permit the Total Pro Forma Debt Service Coverage Ratio to be less than 1.15:1 on the Closing Date and any Calculation Date occurring after the Closing Date." Section 3. Representations and Warranties. The Company and the Subsidiary Guarantors represent and warrant to the Banks that the representations and warranties set forth in Section 7 of the Credit Agreement are true and complete on the date hereof as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date) and as if each reference in said Section 7 to "this Agreement" included reference to this Amendment No. 2. Section 4. Miscellaneous. Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect. This Amendment No. 2 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 2 by signing any such counterpart. This Amendment No. 2 shall be governed by, and construed in accordance with, the law of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly executed and delivered as of the day and year first above written. WESTWOOD ONE, INC. By /s/ Farid Suleman SUBSIDIARY GUARANTORS _____________________ WESTWOOD ONE RADIO, INC. By /s/ Farid Suleman 4 MUTUAL BROADCASTING SYSTEM, INC. By /s/ Farid Suleman WESTWOOD NATIONAL RADIO CORPORATION By /s/ Farid Suleman WESTWOOD ONE SATELLITE SYSTEMS, INC. By /s/ Farid Suleman WESTWOOD ONE STATIONS-NYC, INC. By /s/ Farid Suleman NATIONAL RADIO NETWORK, INC. By /s/ Farid Suleman THE SOURCE, INC. By /s/ Farid Suleman TALKNET, INC. By /s/ Farid Suleman KM RECORDS, INC. By /s/ Farid Suleman WESTWOOD ONE STATIONS-LA, INC. By /s/ Farid Suleman UNISTAR RADIO NETWORKS, INC. By /s/ Farid Suleman 5 BANKS _____ THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as a Bank and as Administrative Agent By /s/ John P. White Title: Vice President THE FIRST NATIONAL BANK OF BOSTON, as a Bank k and a Co-Agent By /s/ Lisa Gallagher Title: Director BANK OF MONTREAL, as a Bank and a Co-Agent By /s/ Gretchen Shugart Title: Director CIBC, INC. By /s/ Harold Birk Title: Vice President BANK OF AMERICA ILLINOIS By /s/ Nancy L. Sun Title: Vice President SOCIETY NATIONAL BANK By /s/ Paul Nestvold Title: Officer 6 EX-10.11 8 EXHIBIT 10.11 TO FORM 10-K AMENDMENT NO. 3 AMENDMENT NO. 3 dated as of February 23, 1995, between WESTWOOD ONE, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Company"); each of the Subsidiaries of the Company identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto (individually, a "Subsidiary Guarantor" and, collectively, the "Subsidiary Guarantors"); each of the Banks party to the Credit Agreement referred to below; BANK OF MONTREAL and THE FIRST NATIONAL BANK OF BOSTON, as Co-Agents for said Banks (individually, a "Co-Agent" and, collectively, the "Co-Agents"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for said Banks (in such capacity, together with its successors in such capacity, the "Administrative Agent"). The Company, the Subsidiary Guarantors, the lenders party thereto (individually, a "Bank" and, collectively, the "Banks"), the Co-Agents and the Administrative Agent are parties to a Credit Agreement dated as of February 1, 1994 (as heretofore amended, the "Credit Agreement"), providing, subject to the terms and conditions thereof, for loans to be made by said Banks to the Company in an aggregate principal amount not exceeding $125,000,000. The Company, the Subsidiary Guarantors, the Banks and the Administrative Agent wish to amend the Credit Agreement in certain respects and, accordingly, the parties hereto hereby agree as follows: Section 1. Definitions. Except as otherwise defined in this Amendment No. 3, terms defined in the Credit Agreement are used herein as defined therein. Section 2. Amendments. Upon the execution and delivery hereof by the Company, each of the Subsidiary Guarantors and the Majority Banks, but effective as of Closing Date, the Credit Agreement shall be amended as follows: A. General. References in the Credit Agreement (including references to the Credit Agreement as amended hereby) to "this Agreement" (and indirect references such as hereunder "hereby", "herein" and "hereof") shall be deemed to be references to the Credit Agreement as amended hereby. B. Interest Rate Protection Agreements. Section 8.13 of the Credit Agreement shall be amended by deleting the phrase "to protect itself against fluctuations in the rates of interest on the Loans as to a notional principal amount at least equal to 50% of the Loans then outstanding" and substituting the following therefor: "to protect itself against fluctuations in the rates of interest on the Loans as to a notional principal amount at least equal to 40% of the Loans then outstanding". 1 Section 3. Representations and Warranties. The Company and the Subsidiary Guarantors represent and warrant to the Banks that the representations and warranties set forth in Section 7 of the Credit Agreement are true and complete on the date hereof as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date) and as if each reference in said Section 7 to "this Agreement" included reference to this Amendment No. 3. Section 4. Miscellaneous. Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect. This Amendment No. 3 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 3 by signing any such counterpart. This Amendment No. 3 shall be governed by, and construed in accordance with, the law of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to be duly executed and delivered as of the day and year first above written. WESTWOOD ONE, INC. By /s/ Farid Suleman SUBSIDIARY GUARANTORS _____________________ WESTWOOD ONE RADIO, INC. By /s/ Farid Suleman MUTUAL BROADCASTING SYSTEM, INC. By /s/ Farid Suleman WESTWOOD NATIONAL RADIO CORPORATION By /s/ Farid Suleman WESTWOOD ONE SATELLITE SYSTEMS, INC. By /s/ Farid Suleman WESTWOOD ONE STATIONS-NYC, INC. By /s/ Farid Suleman NATIONAL RADIO NETWORK, INC. By /s/ Farid Suleman THE SOURCE, INC. By /s/ Farid Suleman 2 TALKNET, INC. By /s/ Farid Suleman KM RECORDS, INC. By /s/ Farid Suleman WESTWOOD ONE STATIONS-LA, INC. By /s/ Farid Suleman UNISTAR RADIO NETWORKS, INC. By /s/ Farid Suleman BANKS _____ THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as a Bank and as Administrative Agent By /s/ John P. White Title: Vice President 3 THE FIRST NATIONAL BANK OF BOSTON, as a Bank and a Co-Agent By /s/ Mary E. Meduski Title: Vice President BANK OF MONTREAL, as a Bank and a Co-Agent By /s/ Gretchen Shugart Title: Director CIBC INC. By /s/ Harold Birk Title: Vice President BANK OF AMERICA ILLINOIS By /s/ Nancy L. Sun Title: Vice President SOCIETY NATIONAL BANK By /s/ Paul Nestvold Title: Officer 4 EX-10.20 9 EXHIBIT 10.20 TO FORM 10-K LEASE Between BROADWAY 52ND ASSOCIATES OWNER AND UNISTAR COMMUNICATIONS GROUP, INC. TENANT Premises: Entire Seventeenth (17th) Floor 1675 Broadway New York, New York 1 LEASE dated as of the 18th day of June, 1990 between BROADWAY 52nd ASSOCIATES, a New York partnership having its principal office at 345 Park Avenue, Borough of Manhattan, City, County and State of New York, as landlord (referred to as "Owner"), and UNISTAR COMMUNICATIONS GROUP, INC., a Delaware corporation, having as office at 1440 Broadway, Borough of Manhattan, City, County and State of New York, as tenant (referred to as "Tenant). WITNESSETH: Owner and Tenant hereby covenant and agree as follows: ARTICLE 1 DEMISE, PREMISES, TERM, RENTS Section 1.01. Owner hereby leases to Tenant and Tenant hereby hires from Owner the entire seventeenth (17th) floor in the building located on the northwest corner of Broadway and West 52nd Street and known as 1675 Broadway and 225 West 52nd Street in the Borough of Manhattan, City of New York (said building is referred to as the "Building", and the Building, together with the plot of land upon which it stands and all other land and development rights demised in the Ground and Development Rights Lease referred to in Article 7 is referred to collectively as the "Real Property"), at the annual rental rate or rates set forth in Section 1.03, and upon and subject to all of the terms, covenants and conditions contained in this Lease. The premises leased to Tenant, together with all appurtenances, fixtures, improvements, additions and other property attached thereto or installed therein at the commencement of, or at any time during, the term of this Lease, other than Tenant's Personal Property (as defined in Article 4), are referred to, collectively, as the "Demised Premises". Section 1.02. A. The Demised Premises are leased for a term (referred to as the "Demised Term") to commence (subject to the provisions of subsection B of this Section 1.02) on March 1, 1991 and to end on September 30, 2000 unless the Demised Term shall sooner terminate pursuant to any of the terms, covenants or conditions of this Lease or pursuant to law. B. Notwithstanding anything in subsection A of this section 1.02 to the contrary, if on or prior to the date set forth in said subsection A for the commencement of the Demised Term, a temporary or permanent Certificate(s) of Occupancy covering the Demised Premises has not been issued by the Department of Buildings of the City of New York or Owner shall have failed substantially to complete Owner's initial Construction (as defined in Article 12) or if prior to March 1, 1991 a temporary or permanent Certificate(s) of Occupancy covering the Demised Premises and permitting its use as "offices" and "broadcasting studio" without 2 material conditions as to such use (and if a temporary certificate, Owner shall obtain a permanent certificate without interruption of Tenant's occupancy), shall have been so issued and owner shall have substantially completed Owner's Initial Construction, as the case may be, then: (a) the Demised Term shall not commence on the date set forth in said subsection A but shall, instead, commence on a date, fixed by Owner in a notice to Tenant, not sooner than fifteen (15) days next following the date of the giving of such notice, which notice shall state that (i) a temporary or permanent Certificate(s) of Occupancy covering the Demised Premises and permitting its use as "offices" and "broadcasting studio" without material conditions as to such use (and if a temporary certificate, Owner shall obtain a permanent certificate without interruption of Tenant's occupancy) has been, or prior to the commencement date fixed in said notice is expected to be, issued by the Department of Buildings of the City of New York and (ii) Owner has, or prior to the commencement date fixed in said notice will have, subsequently completed Owner's initial Construction whether or not the Demised Term shall occur before of after March 1, 1991; and (b) the Demised Term shall end nevertheless on September 30, 2000 unless sooner terminated pursuant to any of the terms, covenants or conditions of this Lease or pursuant to law; and (c) except as aforesaid, neither the validity of this Lease nor the obligations of Tenant under this Lease shall be affected thereby. If, by the date fixed in any such notice, a temporary or permanent Certificate(s) of Occupancy covering the Demised Premises has not been issued or Owner's initial Term shall commence on a date fixed by Owner in a further notice by Owner not sooner than fifteen (15) days next following the date of the giving of such further notice. The date upon which the Demised Term shall commence pursuant to subsection A of this Section or pursuant to this subsection B is referred to as the "commencement Date", and the date fixed pursuant to said subsection A as the date upon which the Demised Term shall end is referred to as the "expiration Date". C.Tenant waives any right to rescind this Lease under Section 223- a of the New York Real Property Law or any successor statute of similar import then in force and further waives the right to recover any damages which may result from Owner's failure to deliver possession of the Demised Premises on the date set forth in subsection A of this Section, or in any notice given pursuant to subsection B of this Section, for the commencement of the Demised Term. D. After the determination of the Commencement Date, Tenant agrees, upon request of Owner, to execute, acknowledge and deliver to Owner an instrument, in form satisfactory to Owner, setting forth said Commencement Date and the Expiration Date. Section 1.03. A. This Lease is made at the annual rental rate(s)(referred to as "Fixed Rent") of SIX HUNDRED EIGHTEEN THOUSAND THREE HUNDRED FIFTY EIGHT ($618,358.00) DOLLARS with respect to the period from the Commencement Date to the last day of the calendar month 3 in which the day immediately preceding the fifth (5th) anniversary date of the Commencement Date shall occur, both dates inclusive, and SIX HUNDRED FORTY TWO THOUSAND ONE HUNDRED FORTY ONE ($642,141.00) DOLLARS with respect to the remainder of the Demised Term. B. The Fixed Rent and any additional rent payable pursuant to the provisions of this Lease shall be payable by Tenant to Owner at its office (or at such other place as Owner may designate in a notice to Tenant) in lawful money of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, or by Tenant's good check drawn on a bank or trust company whose principal office is located in New York City and which is a member of the New York Clearinghouse Association, without prior demand therefor and without any offset or deduction whatsoever except as otherwise specifically provided in this Lease. The Fixed Rent shall be payable in equal monthly installments of FIFTY ONE THOUSAND FIVE HUNDRED TWENTY NINE and 83/100 ($51,529.83) DOLLARS with respect to the period from the Commencement Date to the last day of the calendar month in which the day immediately preceding the fifth (5th) anniversary date of the Commencement Date shall occur, both dates inclusive, and FIFTY THREE THOUSAND FIVE HUNDRED ELEVEN and 75/100 ($$53,511.75) DOLLARS with respect to the remainder of the first (1st) day of each month during the Demised Term (except as otherwise provided in subsection C of this Section). C. Tenant shall pay to Owner, on the Commencement Date a sum equal to ONE THOUSAND SEVEN HUNDRED SEVENTEEN and 67/100 ($1,717.67) Dollars, multiplied by the number of calendar days in the period from the Commencement Date to the last day of the month in which the Commencement Date shall occur, both inclusive or if the Commencement Date shall occur on the first day of any calendar month Tenant shall pay to Owner the sum of FIFTY ONE THOUSAND FIVE HUNDRED TWENTY NINE and 83/100 ($51,529.83) DOLLARS. Such payment shall constitute payment of the Fixed Rent for the period (referred to, herein, as the "Initial Rent Period") from the Commencement Date to and including the last day of the calendar month in which the Commencement Date shall occur. D. If Tenant shall use or occupy all or any part of the Demised Premises for the conduct of business prior to the Commencement Date, such use or occupancy shall be deemed to be under all of the terms, covenants and conditions of this Lease, including the covenant to pay Fixed Rent for the period from the commencement of said use or occupancy to and including the date immediately preceding the Commencement Date, without, however, affecting the Expiration Date. The provisions of the foregoing sentence shall not be deemed to give to Tenant any right to use or occupy all or any part of the Demised Premises prior to the Commencement Date without the consent of Owner. Section 1.04. Tenant covenants (i) to pay the Fixed Rent, any increases in the Fixed Rent, and any additional rent payable pursuant to the 4 provisions of this Lease, and (ii) to observe and perform, and to permit no violation of, the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed. (See Article 38 and Article 48.) ARTICLE 2 USE AND OCCUPANCY Section 2.01. Tenant shall use and occupy the Demised Premises for the following purpose: Executive and general offices, broadcasting studio and related uses provided the related uses comply with all applicable zoning resolutions and laws. Section 2.02. Tenant shall not use or occupy, or permit the use or occupancy of, the Demised Premises or any part thereof, for any purpose other than the purpose specifically set forth in Section 2.01, or in any manner which, in Owner's reasonable judgement, (a) shall materially adversely affect or materially interfere with (i) any services required to be furnished by Owner to Tenant or to any other tenant or occupant of the Building, or (ii) the proper and economical rendition of any such service, or (iii) the use or enjoyment of any part of the Building by any other tenant or occupant, or (b) shall tend to impair the character or dignity of the Building. ARTICLE 3 ALTERATIONS Section 3.01. Tenant shall not make or perform, or permit the making or performance of any alterations, installations, improvements, additions or other physical changes in or about the Demised Premises (referred to collectively as "Alterations") without Owner's prior consent. Owner agrees not to unreasonably withhold or delay its consent to any nonstructural Alterations proposed to be made by Tenant to adapt the Demised Premises for Tenant's business purposes. Notwithstanding the foregoing provisions of this Section or Owner's consent to any Alterations, all Alterations and decorations shall be made and performed in conformity with and subject to the following provisions: All Alterations and decorations shall be made and performed at Tenant's sole cost and expense and at such time and in such manner as Owner may, from time to time, reasonably designate; no Alterations or decoration shall adversely affect the structural integrity of the building; Alterations shall be made only by contractors or mechanics approved by Owner, such approval not unreasonably to be withheld or delayed (notwithstanding the foregoing, all Alterations requiring mechanics in trades with respect to which Owner has adopted or may hereafter adopt a list or lists of approved contractors shall be made only by contractors selected by Tenant from such list or lists); no Alteration or decoration shall affect any part of the Building other than the Demised Premises or 5 adversely affect any service required to be furnished by Owner to Tenant or to any other tenant or occupant of the Building or reduce the value or utility of the Building; no Alteration or decoration shall affect the outside appearance of the Building or the color or style of any venetian blinds (except that Tenant may remove any venetian blinds provided that they are promptly replaced by Tenant with blinds of a similar type, material and color); all business machines and mechanical equipment shall be placed and maintained by Tenant in settings sufficient, in Owner's reasonable judgement, to absorb and prevent vibration, noise and annoyance to other tenants or occupants of the Building; Tenant shall submit to Owner detailed plans and specifications which approval shall not be unreasonably withheld or delayed prior to the commencement of such proposed Alteration, Tenant shall have procured and paid for, and exhibited to Owner, so far as the same may be required from time to time, all permits and authorizations of all municipal departments and governmental subdivisions and authorities having or claiming jurisdiction; prior to the commencement of each proposed Alteration or decoration, Tenant shall furnish to Owner duplicate original policies or certificates of workmen's compensation insurance covering all persons to be employed in connection with such Alteration or decoration, including those to be employed by all contractors and subcontractors, and of comprehensive public liability insurance (including ARTICLE 4 OWNERS OF IMPROVEMENTS Section 4.01. All appurtenances, fixtures, improvements, additions and other property attached to or installed in the premises demised in this lease, whether by Owner or Tenant or others, and whether at Owner's expense, or Tenant's expense, or the joint expense of Owner and Tenant, shall be and remain the property of Owner, except that any such fixtures, improvements, additions and other property installed at the sole expense of Tenant with respect to which Tenant has not been granted any credit or allowance by Owner, whether pursuant to Schedule A or otherwise, and which are removable without material damage to the said premises shall be and remain the property of Tenant and are referred to as "Tenant's Personal Property". Any replacements of any property of Owner, whether made at Tenant's expense or otherwise, shall be and remain the property of Owner. (See Article 40) ARTICLE 5 REPAIRS Section 5.01 . Tenant shall take good care of the Demised 6 Premises (including, but not limited to, any Class E Fire Alarm and Communication system and any sprinkler system and any installations made or equipment installed. as a result of any requirement of New York City Local Law #16 of 1984 or any successor law of like import) and, at Tenant's sole cost and expense, shall make all repairs and replacements, structural and otherwise, ordinary and extraordinary, foreseen and unforeseen, as and when needed to preserve the Demised Premises (including, but not limited to, any Class E Fire Alarm and Communication system and any sprinkler system and any installations made or equipment installed as a result of any requirement of New York City Local Law # 16 of 1984 or any successor law of like import) in good and safe working order and in first class repair and condition, except that Tenant shall not be required to make any such structural repairs or structural replacements to the Demised Premises unless necessitated or occasioned by the acts, omissions or negligence of Tenant or any person claiming through or under Tenant, or any of their servants, employees, contractors, agents, visitors or licensees, or by the manner of use or occupancy of the Demised Premises by Tenant or any such person (in contradistinction to the mere use or occupancy of the Demised Premises for the purposes set forth in Section 2.01). Without affecting Tenant's obligations set forth in the preceding sentence, Tenant, at Tenant's sole cost and expense, shall also (i) make all repairs and replacements, and perform all maintenance as and when necessary, to the lamps, tubes, ballasts, and starters in the lighting fixtures installed in the Demised Premises, (ii) make all repairs and replacements, as and when necessary, to Tenant's Personal Property and to any Alterations made or performed by or on behalf of Tenant or any person claiming through or under Tenant, and (iii) if the Demised Premises shall include any space on any ground, street, mezzanine or basement floor in the Building, make all replacements, as and when necessary, to all windows and plate and other glass in, on or about such space, and obtain and maintain, throughout the Demised Term, plate glass insurance policies issued by companies, and in form and amounts, satisfactory to Owner, in which Owner, its agents and any lessor under any ground or underlying lease shall be named as parties insured, and (iv) perform all maintenance and make all repairs and replacements, as and when necessary, to any air conditioning equipment, private elevators, escalators, conveyors or mechanical systems (other than the Building's standard equipment and systems including, without limitation, the core toilets) which may be installed in the Demised Premises by Owner, Tenant or others. However, the provisions of the foregoing sentence shall not be deemed to give to Tenant any right to install 7 air conditioning equipment, elevators, escalators, conveyors or mechanical systems. All repairs and replacements made by or on behalf of Tenant or any person claiming through or under Tenant shall be made and performed in conformity with, and subject to the provisions of, the third (3rd) sentence of Section 3.01 and shall be at least equal in quality and class to the original work or installation. The necessity for, and adequacy of, repairs and replacements pursuant to this Article 5 shall be measured by the standard which is appropriate for first class office buildings of similar construction and class in the Borough of Manhattan, City of New York. (See Article 49) ARTICLE 6 COMPLIANCE WITH LAWS Section 6.01. Tenant at Tenant's sole cost and expense, shall comply with all present and future laws, orders and regulations (including, but not limited to, the New York State Energy Conservation Construction Code) of Federal, State, County and Municipal authorities, and with all directions, requirements, orders and notices of violation thereof, issued by all public officers, which shall impose any duty upon Owner or Tenant with respect to the Demised Premises or the use or occupation thereof, including, but not limited to, any requirement that any hazardous material be dealt with in any particular manner, whether ordinary or extraordinary, foreseen or unforeseen, except that Tenant shall not be required to make any structural Alterations in order so to comply unless such Alterations shall be necessitated or occasioned, in whole or in pan, by the acts, omissions, or negligence of Tenant or any person claiming through or under Tenant, or any of their servants, employees, contractors, agents, visitors or licensees, or by the manner of use or occupancy of the Demised Premises by Tenant or by any such person (in contradistinction to the mere use or occupancy of the Demised Premises for the purposes set forth in Section 2.01). Any work or installations made or performed by or on behalf of Tenant or any person claiming through or under Tenant pursuant to the provisions of this Article shall be made in conformity with, and subject to the provisions of, the third (3rd) sentence of Section 3.01. For the purposes of this Article, any requirement that any hazardous material be dealt with in any particular manner shall be deemed to be a non-structural Alteration. Compliance with any requirement regarding any hazardous material shall be made in conformity with the provisions of Section 3.06. Section 6.02. Tenant shall not do anything, or permit 8 anything to be done, in or about the Demised Premises which shall (i) invalidate or be in conflict with the provisions of any fire or other insurance policies covering the Building or any property located therein, or (ii) result in a refusal by fire insurance companies of good standing to insure the Building or any such property in amounts reasonably satisfactory to Owner, or (iii) subject Owner to any liability or responsibility for injury to any person or property by reason of any business operation being conducted in the Demised Premises, or (iv) cause any increase in the fire insurance rates applicable to the Building or property located therein at the beginning of the Demised Term or at any time thereafter. Tenant, at Tenant's expense, shall comply with all present and future rules, orders, regulations and requirements of the New York Board of Fire Underwriters and the New York Fire Insurance Rating Organization or any similar body and the issuer of any insurance obtained by Owner covering the Building and/or the Real Property, whether ordinary or extraordinary, foreseen or unforeseen, including but not limited to, any requirement that any hazardous material be dealt with in any particular manner. Section 6.03. In any action or proceeding wherein Owner and Tenant are parties, a schedule or "make up" of rates applicable to the Building or property located therein issued by the New York Fire Insurance Rating Organization, or other similar body fixing such fire insurance rates, shall be conclusive evidence of the facts therein stated and of the several items and charges in the fire insurance rates then applicable to the Building or property located therein. (See Article 52) ARTICLE 7 REPLACED BY ARTICLE 47 ARTICLE 8 PROPERTY LOSS, ETC. Section 8.01. Any Building employee to whom any property shall be entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant's agent with respect to such property and neither Owner nor Owner's agents shall be liable for any loss of, or damage to, any such property by they or otherwise. Neither (i) the performance by Owner, Tenant or others of any decorations, repairs adaptions, additions or improvements in or to the Building or the Demised Premises, nor (ii) the failure of Owner or others to make any such decorations, repairs, alterations, additions or 9 improvements, nor (iii) any damage to the Demised Premises or to the property of Tenant, nor any injury to any persons, caused by other tenants or persons in the Building, or by operations in the construction of any private, public or quasi-public work or by any other cause, nor (iv) any latent defect in the Building or in the Demised Premises, nor (v) any temporary closing, darkening or bricking up of any window of the Demised Premises for any reason whatsoever including, but not limited to, Owner's own or any permanent closing, darkening or bricking up of such windows if required by law or in connection with any construction upon adjacent property by Owner or others, nor (iv) any inconvenience or annoyance to Tenant or injury to or interruption of Tenant's business by reason of any of the events or occurrences referred to in the foregoing subdivisions (i) thorough (v), shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner, or its agents, or any lessor under any ground or underlying lease, other than such liability as may be imposed upon Owner by law for Owner's negligence or the negligence of Owner's agents, servants or employees in the operation or maintenance of the Building or for the breach by Owner of any express covenant of this Lease on Owner's part to be performed. Tenant's taking possession of the Demised Premises shall be conclusive evidence, as against Tenant, that, at the time such possession was so taken, the Demised Premises and the Building were in good and satisfactory condition and Owner's Initial Construction was substantially completed. Access to the Demised Premises by Tenant's contractors as permitted by, and in accordance with the provisions of Schedule A shall not be deemed to constitute possession of the Demised Premises for purposes of this Section 8.01, or affect Owner's obligation to complete Owner's initial construction. ARTICLE 9 DESTRUCTION - FIRE OR OTHER CASUALTY Section 9.01. If the Demised Premises shall be damaged by fire or other casualty and if Tenant shall give prompt notice to Owner of such damage, Owner, at Owner's expense, shall repair such damage. However, Owner shall have no obligation to repair any damage to, or to replace, Tenant's Personal Property or any other property or effects of Tenant. Except as otherwise provided in Section 9.03, if the entire Demised Premises shall be rendered untenantable by reason of any such damage, the Fixed Rent shall abate for the period from the date of such damage to the date when 10 such damage shall have been repaired, and if only a part of the Demised Premises shall be so rendered untenantable, the Fixed Rent shad abate for such period in the proportion which the area of the part of the Demised Premises so rendered untenantable bears to the total area of the Demised Premises. However, if, prior to the date when all of such damage shad have been repaired, any part of the Demised Premises so damaged shall be rendered tenantable and shall be used or occupied by Tenant or any person or persons Claiming through or under Tenant, then the amount by which the Fixed Rent shall abate shall be equitably apportioned for the period from the date of any such use or occupancy to the date when all such damage shall have been repaired. Owner agrees that if it is reimbursed by its rent insurance policies covering the Building for a time period following the date that the Demised Premises, or any part thereof, shall once again become tenantable and prior to the date Tenant shall resume the conduct of its business in the Demised Premises or such part thereof, in which time period Tenant enters the Demised Premises to perform work therein to re-install or repair its business equipment and other personal property, any abatement with respect to such space shall extend beyond the date that such space has become so tenantable by the number of days that such rent insurance policy provides Owner with reimbursement for Tenant to perform such work. Owner further agrees to attempt, in good faith, to give to Tenant a non-binding notice estimating the date that the Demised Premises or the applicable portion thereof shall become tenantable at least fifteen (15) days prior thereto, without any liability if the Demised Premises are not rendered tenantable by the date fixed in said notice. Tenant hereby expressly waives the provisions of Section 227 of the New York Real Property Law, and of any successor law of like import then in force, and Tenant agrees that the provisions of this Article shall govern and control in lieu thereof. Notwithstanding the foregoing provisions of this Section, if, prior to or during the Demised Term, (i) the Demised Premises shad be totally damaged or rendered wholly untenantable by fire or other casualty, and if Owner shall decide not to restore the Demised Premises, or (ii) the Building shall be so damaged by fire or other casualty that, in Owner's opinion, substantial alteration, demolition, or reconstruction of the Building shall be required (whether or not the Demised Premises shall have been damaged or rendered untenantable), then, in any of such events, Owner, at Owner's option, may give to Tenant, within ninety (90) days after such fire or other casualty, a five (5) days' notice of termination of this Lease and, in the event such notice is given, this Lease and the Demised Term shall come to an end and expire 11 (whether or not said term shall have commenced) upon the expiration of said five (5) days with the same effect as if the date of expiration of said five (5) days were the Expiration Date, the Fixed Rent shall be apportioned as of such date and any prepaid portion of Fixed Rent for any period after such date shall be refunded by Owner to Tenant. If Owner shall be obligated to repair any damage pursuant to this Section, Owner agrees to commence such repairs within a reasonable time after the occurrence of such damage and thereafter to complete such repairs with reasonable diligence (without any obligation, however, to employ labor at overtime or other premium pay rates). Section 9.02. Owner now has and shall attempt to maintain, throughout the Demised Term, in Owner's fire insurance policies covering the Building, provisions to the effect that such policies shall not be invalidated should the insured waive, in writing, prior to a loss, any or all right of recovery against any party for loss occurring to the Building. In the event that at any time Owner's fire insurance carriers shall exact an additional premium for the inclusion of such or similar provisions, Owner shall give Tenant notice thereof. In such event, if Tenant agrees, in writing, to reimburse Owner for such additional premium for the remainder of the Demised Term, Owner shall require the inclusion of such or similar provisions by Owner's fire insurance carriers. As long as such or similar provisions are included in Owner's fire insurance policies then in force, Owner hereby waives (i) any obligation on the part of Tenant to make repairs to the Demised Premises necessitated or occasioned by fire or other casualty that is an insured risk under such policies, and (ii) any right of recovery against Tenant, any other permitted occupant of the Demised Premises, and any of their servants, employees, agents or contractors, for any loss occasioned by fire or other casualty that is an insured risk under such policies. In the event that at any time Owner's fire insurance carriers shall not include such or similar provisions in Owner's fire insurance policies, the waivers set forth in the foregoing sentence shall, upon notice given by Owner to Tenant, be deemed of no further force or effect. During any period while the foregoing waiver of right of recovery is in effect, Owner shall look solely to the proceeds of such policies to compensate Owner for any loss occasioned by fire or other casualty which is an insured risk under such policies or under other insurance policies covering risks against which a reasonably prudent landlord in the Borough of Manhattan would carry insurance for similar office buildings. 12 Section 9.03. Except as expressly provided Section 9.02, nothing contained in this Lease shall relieve Tenant of any liability to Owner or to its insurance carriers which Tenant may have under law or the provisions of this Lease in connection with any damage to the Demised Premises or the Building by fire or other casualty. Notwithstanding the provisions of Section 9.01, if any such damage, occurring after any date when the waivers set forth in Section 9.02 are no longer in force and effect, is due to the fault or neglect of Tenant, any person claiming through or under Tenant, or any of their servants, employees, agents, contractors, visitors or licensees, then there shall be no abatement of Fixed Rent by reason of such damage. Section 9.04. Tenant acknowledges that it has been advised that Owner's insurance policies do not cover Tenant's Personal Property or any other property of Tenant in the Demised Premises; accordingly, it shall be Tenant's obligation to obtain and maintain insurance covering its property in the Demised Premises and loss of profits including, but not limited to, water damage coverage and business interruption insurance. Tenant shall attempt to obtain and maintain, throughout the Demised Term, in Tenant's fire and other insurance policies covering Tenant's Personal Property and other property of Tenant in the Demised Premises, and Tenant's use and occupancy of the Demised Premises, and/or Tenant's profits (and shall cause any other permitted occupants of the Demised Premises to attempt to obtain and maintain, in similar policies), provisions to the effect that such policies shall not be invalidated should the insured waive, in writing, prior to a loss, any or all right of recovery against any party for loss occasioned by fire or other casualty which is an insured risk under such policies in the event that at any time the insurance carriers issuing such policies shall exact an additional premium for the inclusion of such or similar provisions, Tenant shall give Owner notice thereof. In such event, if Owner agrees, in writing, to reimburse Tenant or any person claiming through or under Tenant, as the case may be, for such additional premium for the remainder of the Demised Term, Tenant shall require the inclusion of such or similar provisions by such insurance carriers. As long as such or similar provisions are included in such insurance policies then in force, Tenant hereby waives (and agrees to cause any other permitted occupants of the Demised Premises to execute and deliver to Owner written instruments waiving) any right of recovery against Owner, any lessors under any ground or underlying leases, any other tenants or occupants of the Building, and any servants, employees, agents or contractors of Owner or of any such 13 lessor, or of any such other tenants or occupants, for any loss occasioned by fire or other casualty which is an insured risk under such policies. In the event that at any time such insurance earners shall not include such or similar provisions in any such insurance policy, the waiver set forth in the foregoing sentence (or in any written instrument executed by any other permitted occupant of the Demised Premises) shall, upon notice given by Tenant to Owner, be deemed of no further force or effect with respect to any insured risks under such policy from and after the giving of such notice. During any period while any such waiver of right of recovery is in effect, Tenant, or any other permitted occupant of the Demised Premises, as the case may be, shall look solely to the proceeds of such policies to compensate Tenant or such other permitted occupant for any loss occasioned by fire or other casualty which is an insured risk under such policies or under other insurance policies covering risks against which a reasonably prudent tenant with a similar use in the Burough of Manhattan would carry insurance. (See Article 41) ARTICLE 10 EMINENT DOMAIN Section 10.01. If the whole of the Demised Premises shall be acquired for any public or quasi-public use or purpose, whether by condemnation or by deed in lieu of condemnation, this Lease and the Demised Term shall end as of the date of the vesting of title with the same effect as if said date were the Expiration Date. If only a part of the Demised Premises shall be so acquired or condemned then, except as otherwise provided in this Section, this Lease and the Demised Term shall continue in force and effect but, from and after the date of the vesting of title, the Fixed Rent shall be reduced in the proportion which the area of the part of the Demised Premixes so acquired or condemned bears to the total area of the Demised Premises immediately prior to such acquisition or condemnation. If only a part of the Real Property shall be so acquired or condemned, then (i) whether or not the Demised Premises shall be affected thereby, Owner, at Owner's option, may give to Tenant, within sixty (60) days next following the date upon which Owner should have received notice of vesting of title, a five (5) days' notice of termination of this Lease, and (ii) if the part of the Real Property so acquired or condemned shall contain more than ten (10%) per cent of the total area of the Demised Premises immediately prior to such acquisition or condemnation, or if, by reason of such acquisition or condemnation, Tenant no longer has reasonable means of access to the Demised Premises, Tenant, at Tenant's 14 option, may give to Owner, within sixty (60) days next following the date upon which Tenant shall have received notice of vesting of title, a five (5) days' notice of termination of this Lease. In the event any such five (5) days notice of termination is given, by Owner or Tenant, this Lease and the Demised Term shall come to an end and expire upon the expiration of said five (5) days with the same effect as if the date of expiration of said five (5) days were the Expiration Date. If a part of the Demised Premises shall be so acquired or condemned and this Lease and the Demised Term shall not be terminated pursuant to the foregoing provisions of this Section, Owner, at Owner's expense, shall restore that part of the Demised Premises not so acquired or condemned to a self-contained rental unit in the event of any termination of this lease and the Demised Term pursuant to the provisions of this Section, the Fixed Rent shall be apportioned as of the date of such termination and any prepaid portion of Fixed Rent for any period after such date shall be refunded by Owner to Tenant. Section 10.02. In the event of any such acquisition or condemnation of all or any part of the Real Property, Owner shall be entitled to receive the entire award for any such acquisition or condemnation, Tenant shall have no claim against Owner or the condemning authority for the value of any unexpired portion of the Demised Term and Tenant hereby expressly assigns to Owner all of its right in and to any such award. Nothing contained in this Section shall be deemed to prevent Tenant from making a claim in any condemnation proceedings for the value of any items of Tenant's Personal Property which are compensable, in law, as trade fixtures. ARTICLE 11 ASSIGNMENT AND SUBLETTING Section 11.01. Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, covenants that, without the prior consent of Owner in each instance, it shall not (i) assign whether by merger, consolidation or otherwise, mortgage or encumber its interest in this lease, in whole or in part, or (ii) sublet, or permit the subletting of, the Demised Premises or any part thereof or (iii) permit the Demised Premises or any part thereof to be occupied, or used for desk space, mailing privileges or otherwise, by any person other than Tenant. Subject to the provisions of Section 42.02, the sale, pledge, transfer or other alienation of (a) any of the 15 issued and outstanding capital stock of any corporate Tenant (unless such stock is publicly traded on a recognized security exchange or over-the-counter market) or (b) any interest in any partnership or joint venture Tenant, however, accomplished, and whether in a single transaction or in a series of related or unrelated transactions, shall be deemed for the purposes of this Section as an assignment of this Lease which shall require the prior consent of Owner in each instance. Section 11.02. If Tenant's interest in this Lease is assigned, whether or not in violation of the provisions of this Article, Owner may collect rent from the assignee; if the Demised Premises or any part thereof are sublet to, or occupied by, or used by, any person other than Tenant, whether or not in violation of this Article, Owner, after default by Tenant under this Lease, may collect rent from the subtenant, user or occupant. In either case, Owner shall apply the net amount collected to the rents reserved in this Lease, but neither any such assignment, subletting, occupancy, or use, whether with or without Owner's prior consented nor any such collection or application, shall be deemed a waiver of any term, covenant or condition of this Lease or the acceptance by Owner of such assignee, subtenant, occupant or user as tenant The consent by Owner to any assignment, subletting, occupancy or use shall not relieve Tenant from its obligation to obtain the express prior consent of Owner to any further assignment, subletting, occupancy or use. The listing of any name other than that of Tenant on any door of the Demised Premises or on any directory or in any elevator in the Building, or otherwise, shall not operate to vest in the person so named any right or interest in this Lease or in the Demised Premises or the Building, or be deemed to constitute, or serve as a substitute for, any prior consent of Owner required under this Article, and it is understood that any such listing shall constitute a privilege extended by Owner which shall be revocable at Owner's will by notice to Tenant. Tenant agrees to pay to Owner reasonable counsel fees incurred by Owner in connection with any proposed assignment of Tenant's interest in this Lease or any proposed subletting of the Demised Premises or any part thereof. Neither any assignment of Tenant's interest in this Lease nor any subletting, occupancy or use of the Demised Premises or any part thereof by any person other than Tenant, nor any collection of rent by Owner from any person other than Tenant as provided in this Section, nor any application of any such rent as provided in this Section shall, in any circumstances, relieve Tenant of its obligation fully to observe and perform the terms, covenants 16 and conditions of this Lease on Tenant's part to be observed and performed. Section 11.03. As long as Tenant is not in default under any of the terms, covenants or conditions of this Lease on Tenant's part to be observed or performed beyond the applicable grace period provided in the Lease for curing of such default. Owner agrees not to unreasonably withhold or delay Owner's prior consent to sublettings by Tenant of all or parts of the Demised Premises to not more than four (4) subtenants. Each such subletting shall be for undivided occupancy by the subtenant (ie. with no further right on the part of such subtenant to further sublet space) of that part of the Demised Premises affected thereby, for the use permitted in this Lease, and at no time shall there be more than four (4) occupants, including Tenant in the Demised Premises. Without Owner's prior consent, Tenant shall not (a) negotiate or enter into a proposed subletting with any tenant, subtenant or occupant of any space in the Building or (b) publicly advertise the Demised Premises or any part thereof for subletting at a rental lower than the higher of (i) the Fixed Rent, then in effect, allocable to the space sought to be sublet or (ii) the rental at which the Owner is then offering to rent comparable space in the Building. At least thirty (30) days prior to any proposed subletting, Tenant shall submit to Owner a statement containing the name and address of the proposed subtenant and all of the principal terms and conditions of the proposed subletting including, but not limited to, the proposed commencement and expiration dates of the term thereof. Unless the proposed sublet area shall constitute an entire floor or floors, such statement shall be accompanied by a floor plan delineating the proposed sublet area. Owner may, however, withhold such consent if, in Owner's reasonable judgment, the occupancy of the proposed subtenant will tend to impair the character or dignity of the Building or impose any additional material burden upon Owner in the operation of the Building or if the owner shall have any other reasonable objections to the proposed subletting. In the event of any dispute between Owner and Tenant as to the reasonableness of Owner's failure or refusal to consent to any subletting, such dispute shall be submitted to arbitration, in accordance with the provisions of Article 36. Notwithstanding the foregoing provisions of this Section, (I) in the event Tenant proposes to sublet all or substantially all of the Demised Premises whether or not such subletting is for all or substantially all of the remainder of the Demised Term, Owner at Owners option, may give to Tenant, within thirty (30) days after the submission by Tenant to Owner of the statement required to be submitted in connection with subletting, a notice 17 terminating this Lease on the date (referred to as the "Earlier Termination Date") immediately prior to the proposed commencement date of the term of the proposed subletting, as set forth in such statement, and, in the event such notice is given, this Lease and the Demised Term shall come to an end and expire on the Earlier Termination Date with the same effect as if it were the Expiration Date, the Fixed Rent shall be apportioned as of said Earlier Termination Date and any prepaid portion of Fixed Rent for any period after such date shall be refunded by Owner to Tenant; or (2) in the event Tenant proposes to sublet all or any portion of the Demised Premises, Owner, at Owner's option, may give to Tenant, within thirty (30) days after the submission by Tenant to Owner, of the statement required to be submitted in connection with such proposed subletting affecting one half (1/2) or more than one half (1/2) of the Demised Premises or within twenty (20) days after the submission by Tenant to Owner of the statement required to be submitted in connection with such proposed subletting affecting less than one half (1/2) of the Demised premises, notice electing to eliminate such portion of the Demised Premises (said portion is referred to as the "Eliminated Space") from the Demised Premises during the period (referred to as the "Elimination Periods) commencing on the date (referred to as the "Elimination Date") immediately prior to the proposed commencement date of the term of the proposed subletting, as set forth in such statement, and ending on the proposed expiration date of the term of the proposed subletting, as set forth in such statement, and in the event such notice is given (i) the Eliminated Space shall be eliminated from the Demised Premises during the Elimination Period; (ii) Tenant shall surrender the Eliminated Space to Owner on or prior to the Elimination Date in the same manner as if said Date were the Expiration Date; (iii) if the Eliminated Space shall constitute less than an entire floor, (a) Owner, at Owner's expense, shall have the right to make any alterations and installations in the Demised Premises required, in Owner's judgement, reasonably exercised, to make the Eliminated Space a self-contained rental unit with access through corridors to the elevators and core toilets serving the Eliminated Space, and if the Demised Premises shall contain any core toilets or any corridors (including any corridors proposed to be constructed by Owner pursuant to this subdivision [iii]), providing access from the Eliminated Space to the core area, (b) Owner and any tenant or other occupant of the Eliminated Space shall have the right to use such toilets and corridors in common with Tenant and any other permitted occupants of the Demised Premises, and the right to install signs and directional indicators in or about such corridors indicating 18 the name and location of such tenant or other occupant; (iv) during the Elimination Period, the Fixed Rent and Tenant's Proportionate Share (as defined in Article 23), shall each be reduced in the proportion which the area of the Eliminated Space bears to the total area of the Demised Premises immediately prior to the Elimination Date (including an equitable portion of the area of any corridors referred to in subdivision (iii) of this sentence as part of the area of the Eliminated Space for the purpose of computing such reduction), and in the event that the Eliminated Space shall be the entire Demised Premises, during the Elimination Period, Tenant shall have no rights with respect to the Demised Premises nor any obligations with respect to the Demised Premises, including, but not limited to, any obligations to pay Fixed Rent or any increases therein or any additional rent, and any prepaid portion of Fixed Rent for any period after the Elimination Date allocable to the Eliminated Space shall be refunded by Owner to Tenant; (v) there shall be an equitable apportionment of any increase in the Fixed Rent pursuant to Article 23 for the Escalation Year and Tax Escalation Year (as defined in Article 23) in which said Elimination Date shall occur, (vi) if the Elimination Period shall end prior to the Expiration Date, the Eliminated Space, in its then existing condition (provided such condition shall enable the Eliminated Space to be used reasonably for general office purposes), shall be deemed restored to and once again a part of the Demised Premises during the period (referred to as the "Restoration Period") commencing on the date next following the expiration of the Elimination Period and ending on the Expiration Date, (vii) during the Restoration Period, if any, the Fixed Rent and Tenant's Proportionate Share, shall each be increased in the proportion which the area of the Eliminated Space bears to the total area of the Demised Premises immediately prior to the commencement of the Restoration Period (including an equitable portion of the area of any corridors referred to in subdivision (iii) of this sentence as a part of the area of the Eliminated Space for the purpose of computing such increase) and in the event that the Eliminated Space shall be the entire Demised Premises, during the Restoration Period, the Demised Premises, in its then existing condition (provided such condition shall enable the Eliminated Space to be used reasonably for general office purposes), shall be deemed restored to Tenant and Tenant shall have all rights with respect to the Demised Premises which are set forth in this Lease and all obligations with respect to the Demised Premises which are set forth in this Lease, including, but not limited to, the obligations for the payment of Fixed Rent and any increases therein and any additional rent (as 19 they would have been adjusted if Tenant occupied the Demised Premises during the Elimination Period); and (viii) there shall be an equitable apportionment of any increase in the Fixed Rent pursuant to Article 23 for the Escalation Year and Tax Escalation Year in which the Restoration Period, if any, shall commence; however, notwithstanding the foregoing, Owner and Tenant acknowledge the possibility that all or any of the tenants or occupants of the Eliminated Space may not have vacated and surrendered all or any portions of the Eliminated Space to Owner by the commencement of the Restoration Period; accordingly, notwithstanding anything to the contrary contained in the foregoing provisions of this Section (x) the Restoration Period applicable to the Eliminated Space shall commence on the commencement of the Restoration Period with expect to those portions, if any, of the Eliminated Space which are vacant on the commencement of the Restoration Period and with respect to those portions, if any, of the Eliminated Space which are not vacant on the commencement of the Restoration Period on the respective later date or dates upon which such portions of the Eliminated Space become vacant and Owner gives notice to Tenant of such vacancy and the Expiration Date shall not be affected thereby, the increases in the Fixed Rent and Tenant's Proportionate Share shall be equitably adjusted to reflect the fact that all or any portions of the Eliminated Space have not been restored to Tenant on the commencement of the Restoration Period but are restored to Tenant and included back in the Demised Premises on a date or dates after the commencement of the Restoration Period and (y) except as set forth in this sentence, neither the validity of this Lease nor the obligations of Tenant under this Lease shall be affected thereby and (z) Tenant waives any right to rescind this Lease and to recover any damages which may result from the failure of Owner to deliver possession of all or any portion of the Estimated Space on the commencement of the Restoration Period. At the request of Owner, Tenant shall execute and deliver an instrument or instruments in form satisfactory to Owner, setting forth any modifications to this Lease contemplated in or resulting from the operation of the foregoing provisions of this Section; however, neither Owner's failure to request any such instrument nor Tenant's failure to execute or deliver any such instrument shall vitiate the effect of the foregoing provisions of this Section. The failure by Owner to exercise any option under this Section with respect to any subletting shall not be deemed a waiver of such option with respect to any extension of such subletting or any subsequent subletting of the premises affected thereby or any other portion of the Demised Premises. Owner and Tenant agree that (xx) any increase in the rental value of the 20 Demised Premises over and above the fixed Rent payable pursuant to the provisions of this Lease, as such Fixed Rent may be increased from time to time pursuant to the provisions of this Lease, and (yy) any consideration paid to Tenant or any subtenant or other person claiming through or under Tenant in connection with an assignment of the Tenant's interest in this Lease or the interest of any subtenant or other person claiming through or under Tenant under any sublease whether or not such assignment shall be effected with court approval in a proceeding of the types described in subsection 16.01 (c) or (d), or in any similar proceeding, or otherwise, shall accrue to the benefit of Owner and not to the benefit of Tenant, or of any subtenant or other person claiming through or under Tenant, or of the creditors of Tenant or of any such subtenant or other person claiming through or under Tenant Accordingly, it is agreed that if Owner shall fail to exercise its option to sooner terminate this Lease in connection with any proposed subletting by Tenant of all or substantially all of the Demised Premises, or its option to eliminate the Demised Premises or to eliminate from the Demised Premises any portion thereof in connection with any proposed subletting by Tenant of the entire Demised Premises or any portion thereof, or if any subtenant or other person claiming through or under Tenant shall sublet all or any portion of the Demised Premises, Tenant shall pay to Owner a sum equal to any Subletting Profit, as such term is hereinafter defined. All rentals and other sums payable by any subtenant to Tenant or to any subtenant or other person claiming through or under Tenant in connection with (i) any subletting of the entire Demised Premises in excess of the Fixed Rent then payable by Tenant to Owner under this Lease, or (ii) any subletting of a portion of the Demised Premises in excess of that proportion of the fixed Rent payable by Tenant to Owner under this Lease which the area of the portion of the Demised Premises so Sublet bears to the total area of the Demised Premises, are referred to, in the aggregate as "Subletting Profit"; in computing any Subletting Profit there shall be deducted first brokerage commission, reasonable legal and other professional fees and Alteration costs (which Alteration costs shall not exceed an amount equal to Twenty Five ($25.00) Dollars per rentable sq. ft. of the sublet space in question), reasonable advertising fees and reasonable rent concession periods (not to exceed three [3] months for any subletting) any such commissions, legal and other professional fees, Alteration costs, advertising fees and rent concessions shall be paid or granted by tenant or any such subtenant or other person claiming through or under Tenant in connection with such subletting owner and Tenant such that if Tenant, or any 21 subtenant or other person claiming through or under Tenant, shall assign or have assigned its interest as Tenant under this Lease or its interest as subtenant under any sublease as the case may be, whether or not such assignment shall be effected with court approval in a projecting of the types described in subsections 16.01 (c) or (d), or in any similar proceeding, or otherwise Tenant shall pay to Owner a sum equal to any consideration paid to Tenant or any subtenant or other person claiming through or under Tenant for such assignment. All sums payable hereunder by Tenant shall be paid to Owner as additional rent immediately upon such sums being paid (after the permitted deductions from Subletting Profits referred to in the preceding provisions of this section have first been recouped) to Tenant or to any subtenant or other person claiming through or under Tenant and, if requested by Owner, Tenant shall promptly enter into a written agreement with Owner setting forth the amount of such sums to be paid to Owner, however, neither Owner's failure to request the execution of such agreement nor Tenant's failure to execute such agreement shall vitiate the provisions of this Section. For the purposes of this Section, a trustee, receiver or other representative of the Tenant's or any subtenant's estate under any federal or state bankruptcy act shall be deemed a person claiming through or under Tenant. Neither Owner's consent to any subletting nor anything contained in this Section shall be deemed to grant to any subtenant or other person claiming through or under Tenant the right to sublet all or any portion of the Demised Premises or to permit the occupancy of all or any portion of the Demised Premises by others. Neither any subtenant referred to in this Section nor its heirs, distributes executors, administrators, legal representatives, successors nor assigns without the prior consent of Owner in each instance, shall (i) assign, whether by merger, consolidation or otherwise, mortgage or encumber its interest in any sublease, in whole or in part, or (ii) sublet, or permit the subletting of, that part of the Demised Premises affected by such subletting or any part thereof, or (ii) permit such part of the Demised Premises affected by such subletting or any part thereof to be occupied or used for desk space, mailing privileges or otherwise, by any person other than such subtenant and any sublease shall provide that any violation of the foregoing provisions of this sentence shall be an event of default thereunder. The sale, pledge, transfer or other alienation of (a) the issued and outstanding capital stock of any corporate subtenant (unless such stock is publicly traded on any recognized security exchange or over-the-counter market) or (b) any interest in any partnership or joint venture subtenant, however accomplished, and whether in a single 22 transaction or in a series of related or unrelated transactions, shall be deemed for the purposes of this Section as an assignment of such sublease which shall require the prior consent of Owner in each instance and any sublease shall so provide. Section 11.04. In the event that, at any time after Tenant may have assigned Tenant's interest in this Lease, this Lease shall be disaffirmed or rejected in any proceeding of the types described in subsections 16.01 (c) and (d), or in any similar proceeding, or in the event of termination of this Lease by reason of any such proceeding or by reason of lapse of time following notice of termination given pursuant to Section 16.01 based upon any of the Events of Default set forth in said subsections, Tenant, upon request of Owner given within thirty (30) days next following any such disaffirmance, rejection or termination (and actual notice thereof to Owner in the event of a disaimance or rejection or in the event of termination other than by act of Owner), shall (i) pay to Owner all Fixed Rents additional rent and other charges due and owing by the assignee to Owner under this Lease to and including the date of such disaffirmance, rejection or termination, and (ii) as "tenant", enter into a new lease with Owner of the Demised Premises for a term commencing on the effective date of such disaffirmance, rejection or termination and ending on the Expiration Date unless sooner terminated as in such lease provided, at the same Fixed Rent and then executory terrns, covenants and conditions as are contained in this Lease, except that (a) Tenant's rights under the new lease shad be subject to the pouessory rights of the assignee under this lease and the posseuory right of any person claiming through or under such assignee or by virtue of any statute or of any order of any court, and (b) such new lease shall require all defaults existing under this Lease to be cured by Tenant with due diligence, and (c) such new lease shall require Tenant to pay all increases in the Fixed Rent reserved in this Lease which, had this lease not been so disaffirmed, rejected or terminated, would have accrued under the provisions of Article 23 of this lease after the date of such disaffirmance, rejection or termination with respect to any period prior thereto. in the event Tenant shall default in its obligation to enter into said new lease for a period of ten (10) days next following Owner's request therefor, then, in addition to all other rights and remedies by reason of such default, either at law or in equity, Owner shall have the same rights and remedies against Tenant as if Tenant had entered into such new lease and such new lease had thereafter been terminated as at the commencement date thereof by reason of Tenant's default thereunder. Nothing 23 contained in this Section shall be deemed to grant to Tenant any right to assign Tenant's interest in this Lease. (See Article 42) ARTICLE 12 OWNER'S INITIAL CONSTRUCTION Section 12.01. Owner agrees to perform work and make installations in the Demised Premises as set forth in Schedule A. Such work: and installation (including, without limitation, all work shown on Tenant's Plan which as been approved by Owner in accordance with the provisions of Schedule A) are referred to as "Owner's Initial Construction". All of the terms, covenants and conditions of Schedule A are incorporated in this lease by reference and shall be deemed a part of this Lease as though fully set forth in the body of this Lease. ARTICLE 13 ACCESS TO DEMISED PREMISES Section l3.01. Owner and its agents shall have the following rights in and about the Demised Premises: (i) to enter the Demised Premises at all times to examine the Demised Premises or for any of the purposes set forth in this Article or for the purpose of performing any obligation of Owner under this Lease or exercising any right or remedy reserved to Owner in this Lease, and if Tenant, its officers, partners, agents or employees shall not be personally present or shall not open and permit an entry into the Demised Premises at any time when such entry shad be necessary or permissible, to use a master key or to forcibly enter the Demised Premises; (ii) to erect, instate use and maintain pipes, ducts and conduits in and through the Demised Premises; (iii) to exhibit the Demised Premises to others; (iv) to make such decorations, repairs, alterations, improvements or additions, or to perform such maintenance, including, but not limited to, the maintenance of all heating, air conditioning, elevator, plumbing, electrical and other mechanical facilities, as Owner may deem necessary or desirable; (v) to take all materials into and upon the Demised Premises that may be required in connection with any such decorations, repairs, alterations, improvements, additions or maintenance; and (vi) to alter, renovate and decorate the Demised Premises at any time during the Demised Term if Tenant shall have removed all or substantially all of Tenant's property from the Demised Premises. The lessors under any ground or underlying lease and the holders of any mortgages affecting any such ground or underlying leases or the Building or the Real Property 24 shall have the right to enter the Demised Premises from time to time through their respective employees, agents, representatives and architects to inspect the same or to cure any default of Owner or Tenant relating thereto. Owner shall have the right, from time to time, to change the name, number or designation by which the Building is commonly known which right shall include, without limitation the right to name the Building after any Tenant. Tenant acknowledges that Owner has advised Tenant that Owner presently intends to name the Building the "D'arcy Masius Benton & Bowles" or "DMB & B" Building. Section 13.02. All parts (except surfaces facing the interior of the Demised Premises) of all walls, windows and doors bounding the Demised Premises (including exterior Building walls, core corridor walls, doors and entrances), all balconies, terraces and roofs adjacent to the Demised Premises, all space in or adjacent to the Demised Premises used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air conditioning, plumbing, electrical, telecommunication and other mechanical facilities, closets, service closets and other Building facilities, and the use thereof, as well as access thereto through the Demised Premises for the purposes of operation, maintenance, alteration and repair, are hereby reserved to Owner. Owner also reserves the right at any time to change the arrangement or location of entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets and other public parts of the Building, provided any such change does not permanently ant unseasonably obstruct Tenant's access to the Demised Premises. Nothing contained in this Article shall impose any obligation upon Owner with respect to the operation, maintenance, alteration or repair of the Demised Premises or the Building. Section 13.03. Owner and its agents shall have the right to permit access to the Demised Premises, whether or not Tenant shall be present, to any receiver, trustee, assignee for the benefit of creditors, sheriff, marshal or court officer entitled to, or reasonably purporting to be entitled to, such access for the purpose of talking possession of, or removing, any property of Tenant or any other occupant of the Demised Premises, or for any other lawful purpose, or by any representative of the fire, police, building, sanitation or other department of the City, State or Federal Governments. Neither anything contained in this Section, nor any action taken by Owner under this Section, shall be deemed to constitute recognition by Owner that any person other than Tenant has any right or interest in this Lease or the Demised Premises. 25 Section 13.04. The exercise by Owner or its agents or by the lessor under any ground or underlying lease or the holder of any mortgage affecting the Building or the Real Property of any right reserved in this Article shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner, or its agents, or upon any lessor under any ground or underlying lease or upon the holder of any such mortgage, by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business, or otherwise. (See Article 43) ARTICLE 14 VAULT SPACE Section 14.01. The Demised Premises do not contain any vaults, vault space or other space outside the boundaries of the Real Property, notwithstanding anything contained in this Lease or indicated on any sketch, blueprint or plan. Owner makes no representation as to the location of the boundaries of the Real Property. All vaults and vault space and all other space outside the boundaries of the Real Property which Tenant may be permitted to use or occupy are to be used or occupied under a revocable license, and if any such license shall be revolted, or if the amount of such space shall be diminished or required by any Federal, State or Municipal Authority or by any public utility company, such revocation, diminution or requisition shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner. Any fee, tax or charge imposed by any governmental authority for any such vault, vault space when Tenant uses such vault, vault space or other space shall be paid by Tenant. ARTICLE 15 CERTIFICATE OF OCCUPANCY Section 15.01. Tenant will not at any time use or occupy, or permit the use or occupancy of, the Demised Premises in violation of any Certificate(s) of Occupancy covering the Demised Premises. Owner agrees that a temporary or permanent Certificate(s) of Occupancy covering the Demised Premises will be in force on the Commencement Date permitting the Demised Premises to be used as "offices". However, neither such agreement, nor any other provision of this Lease, nor any act or omission of Owner, its agents or contractors, shall be deemed to constitute a representation or warranty 26 that the Demised Premises or any part thereof, may be lawfully used or occupied for any particular purpose or in any particular manner, in contradistinction to mere "office" use. ARTICLE 16 DEFAULT Section 16.01. Upon the occurrence, at any time prior to or during the Demised Term, of any one or more of the following events (referred to as "Events of Default"): (a) if Tenant shall default in the payment when due of any installment of Fixed Rent or any increase in the Fixed Rent or in the payment when due of any additional rent, and such default shall continue for a period of seven (7) days after notice by Owner to Tenant of such default; or (b) if Tenant shall default in the observance or performance of any term, covenant or condition of this Lease on Tenant's part to be observed or performed (other than the covenants for the payment of Fixed Rent, any increase in the Fixed Rent and additional rent) and Tenant shall fail to remedy such default within ten (10) days after notice by Owner to Tenant of such default, or if such default is of such a nature that it cannot be completely remedied within said period of ten (10) days and Tenant shall not commence, promptly after receipt of such notice or shall not thereafter diligently prosecute to completion, all steps necessary to remedy such default; or (c) if Tenant shall file a voluntary petition in bankruptcy or insolvency, or shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law, or shall make an assignment for the benefit of creditors, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or of all or any part of Tenant's property; or (d) if, within ninety (90) days after the commencement of any proceeding against Tenant, whether by the filing of a petition or otherwise, seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act or any other present or future 27 applicable federal, state or other statute or law, such proceeding shall not have been dismissed, or if, within ninety (90) days after the appointment of any trustee, receiver or liquidator of Tenant, or of all or any part of Tenant's property, without the consent or acquiescence of Tenant, such appointment shall not have been vacated or otherwise discharged, or if any execution or attachment shall be issued against Tenant or any of Tenant's property pursuant to which the Demised Premises shall be taken or occupied or attempted to be taken or occupied; or (e) if Tenant shall default in the observance or performance of any term, covenant or condition on Tenant's part to be observed or performed under any other lease with Owner of space in the Building and such default shall continue beyond any grace period set forth in such other lease for the remedying of such default; or (f) if the Demised Premises shall become vacant for more than one hundred eighty (180) consecutive days, deserted or abandoned; or (g) if Tenant's interest in this Lease shall devolve upon or pass to any person, whether by operation of law or otherwise, except as expressly permitted under Article 11, then, upon the occurrence, at any time prior to or during the Demised Term, of any one or more such Events of Default, Owner, at any time thereafter, at Owner's option, may give to Tenant a five (5) days' notice of termination of this Lease and, in the event such notice is given, this Lease and the Demised Term shall come to an end and expire (whether or not said term shall have commenced) upon the expiration of said five (5) days with the same effect as if the date of expiration of said five (5) days were the Expiration Date, but Tenant shall remain liable for damages and all other sums payable pursuant to the provisions of Article 18. Section 16.02. If, at any time (i) Tenant shall be comprised of two (2) or more persons, or (ii) Tenant's obligations under this Lease shall have been guaranteed by any person other than Tenant, or (iii) Tenant's interest in this Lease shall have been assigned, the word "Tenant" as used in subsections (c) and (d) of Section 16.01, shall be deemed to mean any one or more of the persons primarily or secondarily liable for Tenant's obligations under this Lease. Any monies received by Owner from or on behalf of Tenant during the pendency of any proceeding of the types referred to in mid subsections (c) and (d) shall be deemed paid as compensation for the use and occupation of the Demised Premises and the acceptance of any such compensation by 28 Owner shall not be deemed an acceptance of rent or a waiver on the part of Owner of any rights under Section 16.01. ARTICLE 17 REMEDIES Section 17.01. If Tenant shall default in the payment when due of any installment of Fixed Rent or in the payment when due of any increase in the Fixed Rent or any additional rent and such default shall continue for a period of seven (7) days after notice by Owner to Tenant of such default, or if this Lease and the Demised Term shall expire and come to an end as provided in Article 16: (a) Owner and its agents and servants may immediately, or at any time after such default or after the date upon which this Lease and the Demised Term shall expire and come to an end, reenter the Demised Premises or any part thereof, without notice, either by summary proceedings or by any other applicable action or proceeding, or by force or otherwise (without being liable to indictment, prosecution or damages therefor), and may repossess the Demised Premises and dispossess Tenant and any other persons from the Demised Premises and remove any and all of their property and effects from the Demised Premises; and (b) Owner, at Owner's option, may relet the whole or any part or parts of the Demised Premises, from time to time, either in the name of Owner or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Expiration Date, at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Owner, in its sole discretion, may determine. Owner shall have no obligation to relet the Demised Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Demised Premises or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon any such reletting, and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise to affect any such liability; Owner, at Owner's option, may make such repairs replacements, alterations, additions, improvements, decorations and other physical changes in and to the Demised Premises as Owner, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability. 29 Section 17.02. Tenant hereby waives the service of any notice of intention to re-enter or to institute legal proceedings to that end which may otherwise be required to be given under any present or future law. Tenant, on its own behalf and on behalf of all persons claiming through or under Tenant, including all creditors, does further hereby waive any and all rights which Tenant and all such persons might otherwise have under any present or future law to redeem the Demised Premises, or to re-enter or repossess the Demised Premises, or to restore the operation of this Lease, after (i) Tenant shall have been dispossessed by a judgment or by warrant of any court or judge, or (ii) any re-entry by Owners or (iii) any expiration or termination of this Lease and the Demised Term, whether such dispossess, re-entry, expiration or termination shall be by operation of law or pursuant to the provisions of this Lease. The words "re-enter", "re-entry" and "re-entered" as used in this Lease shall not be deemed to be restricted to their technical legal meanings. In the event of a breach or threatened breach by Tenant, or any persons claiming through or under Tenant, of any term, covenant or condition of this Lease on Tenant's part to be observed or performed, Owner shall have the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re entry, summary proceedings and other special remedies were not provided in this Lease for such breach. The right to invoice the remedies hereinbefore set forth is cumulative and shall not preclude Owner from invoking any other remedy allowed by law or in equity. ARTICLE 18 DAMAGE Section 18.01. If this Lease and the Demised Term shall expire and come to an end as provided in Article 16, or by or under any summary proceeding or any other action or proceeding, or if Owner shall re-enter the Demised Premises as provided in Article 17, or by or under any summary proceeding or any other action or proceeding, then, in any of said events: (a) Tenant shall pay to Owner all Fixed Rent, additional rent and other changes payable under this Lease by Tenant to Owner to the date upon which this Lease and the Demised Term shall have expired and come to an end or to the date of reentry upon the Demised Premises by Owner, as the case may be; and (b) Tenant shall also be liable for and shall pay to 30 Owner, as damages, any deficiency (referred to as "Deficiency") between the Fixed Rent reserved in this Lease for the period which otherwise would have constituted the unexpired portion of the Demised Term and the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of Section 17.01 for any part of such period (first deducting from the rents collected under any such reletting all of Owner's expenses in connection with the termination of this Lease or Owner's reentry upon the Demised Premises and with such reletting including, but not limited to, all repossession costs, brokerage commissions, legal expenses, attorney's fees, alteration costs and other expenses of preparing the Demised Premises for such reletting). Any such Deficiency shall be paid in monthly installments by Tenant on the days specified in this Lease for payment of installments of Fixed Rent, Owner shall be entitled to recover from Tenant each monthly Deficiency as the same shall arise, and no suit to collect the amount of the Deficiency for any month shall prejudice Owner's right to collect the Deficiency for any subsequent month by a similar proceeding Solely for the purposes of this subsection (b), the term "Fixed Rent" shall mean the Fixed Rent in effect immediately prior to the date upon which this Lease and the Demised Term shall have expired and come to an end, or the date of re-entry upon the Demised Premises by Owner, as the case may be, adjusted, from time to time, to reflect any increases which would have been payable pursuant to any of the provisions of this Lease including, but not limited to, the provisions of Article 23 of this Lease if the term hereof had not been terminated; and (c) At any time after the Demised Term shall have expired and come to an end or Owner shall have re-entered upon the Demised Premises, as the case may be, whether or not Owner shall have collected any monthly Deficiencies as aforesaid, Owner shall be entitled to recover from Tenant, and Tenant shall pay to Owner, on demand, as and for liquidated and agreed final damages, a sum equal to the amount by which the Fixed Rent reserved in this Lease for the period which otherwise would have constituted the unexpired portion of the Demised Term exceeds the then fair and reasonable rental value of the Demised Premises for the same period, both discounted to present worth at the rate of eight (8%) per cent per annum. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, the Demised Premises, or any part thereof, shall have been relet by Owner for the period which otherwise would have constituted the unexpired portion of the Demised Term, or any part thereof, the amount of rent reserved upon such reletting shall be deemed, prima facie, to be the fair 31 and reasonable rental value for the part or the whole of the Demised Premises so relet during the term of the reletting. Solely for the purposes of this subsection (c), the term "Fixed Rent" shall mean the Fixed Rent in effect immediately prior to the date upon which this Lease and the Demised Term shall have expired and come to an end, or the date of re-entry upon the Demised Premises by Owner, as the case may be, adjusted to reflect any increases pursuant to the provisions of Article 23 for the Escalation Year and Tax Escalation Year immediately preceding such event. Section 18.02. If the Demised Premises, or any part thereof, shall be relet together with other space in the Building, the rents collected or reserved under any such reletting and the expenses of any such reletting shall be equitably apportioned for the purposes of this Article 18. Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents shall exceed the Fixed Rent reserved in this Lease. Nothing contained in Articles 16, 17 or this Article shall be deemed to limit or preclude the recovery by Owner from Tenant of the maximum amount allowed to be obtained as damages by any statute or rule of law, or of any sums or damages to which Owner may be entitled in addition to the damages set forth in Section 18 01. ARTICLE 19 FEES AND EXPENSES; INDEMNITY Section 19.01. If Tenant shall default in the observance or performance of any term, covenant or condition of this Lease on Tenant's part to be observed or performed, Owner, at any time thereafter and without notice in cases of emergency and after the expiration of applicable grace periods in all other cases, may remedy such default for Tenant's account and at Tenant's expense, without thereby waiving any other rights or remedies of Owner with respect to such default. Section 19.02. Tenant agrees to indemnify and save Owner and Owner's agents harmless of and from all loss, cost, liability, damage and expense including, but not limited to, reasonable counsel fees, penalties and fines incurred in connection with or arising from (i) any default by Tenant in the observance or performance of any of the terms, covenants or conditions of this Lease on Tenant's part to be observed or performed, or (ii) the breach or failure of any representation or warranty made by Tenant in this Lease, or (iii) the use or occupancy or manner of use or occupancy of the Demised Premises by Tenant or any person claiming 32 through or under Tenant, or (iv) any acts, omissions or negligence of Tenant or any such person, or the contraction, agents, servants, employees, visitors or licensees of Tenant or any such person, in or about the Demised Premises or the Building either prior to, during, or after the expiration of, the Demised Term, including, but not limited to, any acts, omissions or negligence in the making or performing of any Alterations. Tenant further agrees to indemnify and save harmless Owner, Owner's agents, and the lessor or lessors under all ground or underlying leases, of and from all loss, cost, liability, damage and expense, including, but not limited to, knowable counsel fees, incurred in connection with or arising from any claims by any persons by reason of injury to persons or damage to property occasioned by any use, occupancy, act, omission or negligence referred to in the preceding sentence. If any action or proceeding shall be brought against Owner or Owner's agents, or the lessor or lessors under any ground or underlying lease, based upon any such claim and if Tenant, upon notice from Owner, shall cause such action or proceeding to be defended at Tenant's expense by counsel acting for Tenant's insurance carriers in connection with such defense or by other counsel reasonably satisfactory to Owner, without any disclaimer of liability by Tenant or such insurance carriers in connection with such claim, Tenant shall not be required to indemnify Owner, Owner's agents, or any such lessor for counsel fees in connection with such action or proceeding. Tenant shall maintain comprehensive public liability and water legal liability insurance against any claims by reason of personal injury, death and property damage occurring in or about the Demised Premises covering, without limitation, the operation of any private air conditioning equipment and any private elevators, escalators or conveyors in or serving the Demised Premises or any part thereof, whether installed by Owner, Tenant or others, and shall furnish to Owner duplicate original policies or certificates of such insurance at least ten (10) days prior to the Commencement Date and at least ten (10) days prior to the expiration of the term of any such policy previously furnished by Tenant, in which policies Owner, its agents and any lessor under any ground or underlying lease shall be named as additional insured, which policies shall be issued by companies, and shall be in form and amounts reasonably satisfactory to Owner. Section 19.03. Tenant shall pay to Owner, within five (5) days next following rendition by Owner to Tenant of bills or statements therefor (i) sums equal to all reasonable expenditures made and monetary obligations incurred by Owner including, but not limited to, expenditures made and 33 obligations incurred for reasonable counsel fees, in connection with the remedying by Owner, for Tenant's account pursuant to the provisions of Section 19.01, of any default of Tenant, and (ii) sums equal to all losses, costs, liabilities, damages and expenses referred to in Section 19.02, and (iii) sums equal to all/expenditures made and monetary obligations incurred by Owner including, but not limited to, expenditures made and obligations incurred for reasonable counsel fees, in collecting or attempting to collect the Fixed Rent, any additional rent or any other sum of money accruing under this Lease or in enforcing or attempting to enforce any rights of Owner under this Lease or pursuant to law, whether by the institution and prosecution of summary proceedings or otherwise provided, however, Tenant shall not be required to reimburse Owner for the counsel fees referred to in this subdivision (iii) unless with respect to any such proceeding Owner shall prevail therein; and (iv) all other sums of money (other than Fixed Rent) accruing from Tenant to Owner under the provisions of this Lease. Any sum of money (other than Fixed Rent) accruing from Tenant to Owner pursuant to any provision of this Lease including, but not limited to, the provisions of Schedule A, whether prior to or after the Commencement Date, may, at Owner's option, be deemed additional rent, and Owner shall have the same remedies for Tenant's failure to pay any item of additional rent when due as for Tenant's failure to pay any installment of Fixed Rent when due. Tenant's obligations under this Article shall survive the expiration or sooner termination of the Demised Term. Section 19.04. If Tenant shall fail to make payment of any installment of Fixed Rent, or any increase in the Fixed Rent, or any additional rent within ten (10) days after the date when such payment is due, Tenant shall pay to Owner, in addition to such installment of Fixed Rent or such increase in the Fixed Rent or such additional rent, as the case may be, as a late charge and as additional rent, a sum equal to three (3%) percent per annum above the then current prime rate charged by Citibank (N.A.) or its successor of the amount unpaid computed from the date such payment was due to and including the date of payment. ARTICLE 20 ENTIRE AGREEMENT Section 20.01. This Lease contains the entire agreement between the parties and all prior negotiations and agreements are merged in this Lease. Neither Owner nor 34 Owner's agents have made any representations or warranties with respect to the Demised Premises, the Building, the Real Property or this Lease except as expressly set forth in this Lease and no rights, easements or licenses are or shall be acquired by Tenant by implication or otherwise unless expressly set forth in this Lease. This Lease may not be changed, modified or discharged, in whole or in part, orally and no executory agreement shall be effective to change, modify or discharge, in whole or in part, this Lease or any obligations under this Lease, unless such agreement is set forth in a written instrument executed by the party against whom enforcement of the change, modification or discharge is sought. All references in this Lease to the consent or approval of Owner shall be teemed to mean the written consent of Owner, or the written approval of Owner, as the case may be, and no consent or approval of Owner shall be effective for any purpose unless such consent or approval is set forth in a written instrument executed by Owner. ARTICLE 21 END OF TERM Section 21.01. On the date upon which the Demised Term shall expire and come to an end, whether pursuant to any of the provisions of this Lease or by operation of law, and whether on or prior to the Expiration Date, Tenant, at Tenant's sole cost and expense, (i) shall quit and surrender the Demised Premises to Owner, broom clean and in good order and condition, ordinary wear excepted, and (ii) shall remove all of Tenant's Personal Property and all other property and effects of Tenant and all persons claiming through or under Tenant from the Demised Premises and the Building, and (iii) shall repair all damage to the Demised Premises occasioned by such removal. Owner shall have the right to retain any property and effects which shall remain in the Demised Premises after the expiration or sooner termination of the Demised Term, and any net proceeds from the sale thereof, without waiving Owner's rights with respect to any default by Tenant under the foregoing provisions of this Section. Tenant expressly waives, for itself and for any person claiming through or under Tenant, any rights which Tenant or any such person may have under the provisions of Section 2201 of the New York Civil Practice Law and Rules and of any successor law of like import then in force, in connection with any holdover summary proceedings which Owner may institute to enforce the foregoing provisions of this Article. If said date upon which the Demised Term shall expire and come to an end shall fall on a Sunday or holiday, then Tenant's obligations under the first sentence of this Section shall be performed on or prior to the Saturday or 35 business day immediately preceding such Sunday or holiday. Tenant's obligations under this Section shall survive the expiration or sooner termination of the Demised Term. ARTICLE 22 QUIET ENJOYMENT Section 22.01. Owner covenants and agrees with Tenant that upon Tenant paying the Fixed Rent and additional rent reserved in this Lease and observing and performing all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed, Tenant may peaceably and quietly enjoy the Demised Premises during the Demised Term, subject, however, to the terms, covenants and conditions of this Lease including but not limited to, the provisions of Section 37.01, and subject to the ground and underlying leases and the mortgages referred to in Section 47.01. ARTICLE 23 TAX AND OPERATING PAYMENTS Section 23.01. In the determination of any increase in the fixed Rent under the provisions of this Article, Owner and Tenant agree as follows: A. The term "Tax Escalation Year" shall mean each fiscal year commencing July 1st and ending on the following June 30th which shall include any part of the Demised Term. B. The term "Escalation Year" shall mean each calendar year which shall include any part of the Demised Term. C. The term "Taxes" Shall be deemed to include all real estate taxes and assessments, special or otherwise, upon or with respect to the Real Property imposed by the City or County of New York or any other taxing authority. if, due to any change in the method of taxation, any franchise, income, profit, sales, rental, use and occupancy or other tax than be substituted for or leaned against Owner or any owner or lessee of the Building or the Real Property, in lieu of any real estate taxes or assessments upon or with respect to the Real Property, such tax shall be included in the term "Taxes" for the purposes of this Article. D. Owner has applied for a certificate of eligibility from the Department of Finance of the City of New York determining that Owner is eligible to apply for a deferral of tax payments for the Real Property pursuant to the 36 provisions of Chapter 56-A of the Administrative Code of the City of New York and the emulations promulgated pursuant to such Chapter. Any such tax deferral for the Real Property is referred to as "Tax Deferral" of such Tax Deferral is referred to as the "Tax Deferral Period". Owner agrees that Tenant shall not be required to (a) pay Taxes or charges which become due because of the willful neglect or fraud by Owner in connection with the program under which Owner shall receive the Tax Deferral or (b) otherwise relieve or indemnify Owner from any personal liability arising under Section 1319 of the Administrative Code of the City of New York, except where imposition of such Taxes, changes or liability is occasioned by actions of Tenant in violation of this Lease. Tenant agrees to report to Owner, as often as is necessary under such regulations, the number of workers engaged in employment in the Demised Premises the nature of each worker's employment and the residency of each worker and to provide access to the Demised Premises by employees and agents of the Department of Finance of the City of New York at all reasonable times at the request of Owner. Tenant represents to the Owner that, within the seven (7) years immediately preceding the date of this Lease, Tenant has not been adjudged by a court of competent jurisdiction to have been guilty of (x) an act, with respect to a building, which is made a crime under the provisions of Article 150 of the Penal Law of the State of New York or any similar law of another state, or (y) any act made a crime or violation by the provisions of Section 235 of the Real Property Law of the State of New York, nor is any charge for a violation of such laws presently pending against Tenant. Tenant further agrees to cooperate with Owner in compliance with such Chapter and regulations to aid Owner in obtaining and maintaining the Tax Deferral. Tenant shall not be required to pay any fees or charges or incur any expense or Obligation other than for providing reasonably required information in connection with Tenant's cooperation referred to in the foregoing sentence. E. The term "Tenant's Proportionate Share" shall mean three and 15/100 (3.15%) percent. F. The term "Owner's Tax Statement" shall mean a statement containing a computation of any increase in the Fixed Rent pursuant to the provisions of Section 23.02. G. The term "Owner's Operating Expense Statement" shall mean a statement containing a computation of any increase in the Fixed Rent pursuant to the provisions of Section 23.04. 37 H. The term "Operating Expenses" shall mean the aggregate cost and expense actually incurred and paid Owner in the operation, maintenance, management and security of the Real Property and any plazas, sidewalks and curbs adjacent thereto including, without limitation, the cost and expense of the following salaries, wages, medical, surgical and general welfare and other so-called "fringe" benefits (including group insurance and retirement benefits) for employees (including, but not limited to, employees who provide twenty-four (24) hour serviced seven (7) days per weeks throughout the year) of Owner or any contractor of Owner engaged in the cleaning, operation, maintenance or management of the Real Property or engaged for security purposes and/or for receiving or transmitting deliveries to and from the Building, and payroll taxes and workmen's compensation insurance premiums relating thereto, gas, steam (without giving effect to any repayment by the public utility supplying such steam to Owner on account of a prepayment made by Owner to such public utility for bringing steam service to the Real Property), water, sewer rental, electricity, utility taxes, rubbish removal, fire, casualty, liability, rent and other insurance carried by Owner, repairs, repainting, replacement, maintenance of grounds, Building supplies, uniforms and cleaning thereof, snow removal, window with independent contractors for any of the forgoing (including, but not limited to, elevator, air conditioning and fire alarm and communication equipment maintenance), management fees (whether or not paid to any person, firm or corporation having an interest in or under common ownership with Owner or any of the persons, firms or corporations comprising Owner, or to any firm or Corporation in which any partner of Owner has an interest), legal fees and disbursements and other expenses without limitation, legal fees and expenses incurred in connection with any application or proceeding brought for reduction of the assessed valuation of the Real Property or any part thereof, and legal fees for summary proceedings to dispossess tenants, and the enforcement of leases, auditing fees, all costs of compliance under the provisions of any present or future ground or underlying leases of the Real Property or any portion thereof other than the payment of rental and impositions thereunder and increases in the basic rent under such leases as a result of adjustments in such basic rent and any cost or expense specifically excluded from the definition of Operating Expenses as provided herein and all other costs and expenses actually incurred and paid in connection with the operation, maintenance, management and security of the Real Property, and any plazas, sidewalls and curbs adjacent thereto, but excluding, nevertheless, the cost and expense of the following (i) leasing commissions; 38 (ii) management fees in excess of generally prevailing rates in the Borough of Manhattan for buildings of like class and character in which the managing agent does not receive any leasing commissions; (iii) executives' salaries above the grade of building manager and superintendent; (iv) capital improvements and replacements which under generally accepted accounting principles and practice would be classified as capital expenditures, except the cost and expense of any improvement, alteration, replacement or installation made or performed after completion of the construction of the Building which is either (a) required by law or (b) results in savings or reductions in Operating Expenses (such improvements, alterations, replacements and installations are referred to as "Included Improvements"); the cost and expense of Included Improvements shall be included in Operating expenses for any Escalation Year to the extent of (x) the annual amortization or depreciation of the cost and expense to Owner of such Included Improvements, as amortized on a straight line basis over ten (l0) years, made during any such Escalation Year plus (y) an annual charge for interest upon the unamortized or undepreciated portions of such cost and expense at the average prime rate during the Escalation Year in question; provided, however, with respect to the Included Improvements under subdivision (b) above, the amount of such Included Improvements included in Operating Expenses for any such Escalation Year, plus such charge for interest for such Year allocable to such Included Improvement, shall not exceed the amount of such savings or reductions in Operating Expenses for such Escalation Year unless such savings or reductions in Operating Expenses for prior Escalation Years exceeded, in the aggregate, the amounts paid by Tenant to Owner with respect to such Included Improvements pursuant to said subsection (b) for such prior Escalation Years (any such excess is referred to as a 'Shortfall") in which event the amount of such Included Improvements included in Operating Expenses for such Escalation Year shall not exceed the total of the amount of such savings or reductions in Operating Expenses for such Escalation Year plus such Shortfall. any other item which under generally accepted accounting principles and practice would not be regarded as an operating, maintenance or management expense; (vi) any item for which Owner is compensated through proceeds of insurance/or Condemnation award (vii) any specific compensation which is charged to any tenant for services rendered to such tenant by Owner above and beyond those services generally rendered by Owner to tenants in the Building without specific compensation therefore; (viii) ground rent and any rent, additional rent or other charge under any ground lease, including, but not limited to, the Ground and Development Rights Lease; (ix) 39 debt service and other costs of financing or refinancing; (x) legal fees and disbursements in connection with disputes (including, without limitation, summary proceedings) with tenants of the Building unless such disputes relate to matters which affect Tenant s (or any other tenant s) use or occupancy, or enjoyment of, the Building, the Demised Premises or the space occupied by any such tenant and other legal fees and disbursements unless they are incurred in connection with the maintenance and security of the Real Property in accordance with generally accepted accounting principles (provided that in all events there shall always be included in Operating Expenses legal fees and expenses incurred in connection with any application or proceeding brought for reduction of the assessed valuation of the Real Property or any part thereof); (xi) advertising and promotion expenses; (xii) all costs of constructing any space in the Building for occupancy by a tenant or painting or repainting such space; (xiii) Taxes; (xiv) the cost of electric current or gas furnished to any tenanted space in the Building; (xv) auditing fees, other than those incurred in connection with the maintenance and operation of the Building and the preparation of statements required pursuant to this Lease and any other leases of space in the Building. 1. The term "Monthly Escalation Installment" shall mean a sum equal to one-twelfth (1/12) of the increase in the Fixed Rent payable pursuant to the provisions of subsection 23.04 A for the Escalation Year with respect to which Owner has most recently rendered an Owner's Operating Expense Statement, appropriately adjusted to reflect (i) in the event such Escalation Year is a partial calendar year, the increase in the Fixed Rent which would have been payable for such Escalation Year if it had been a full calendar year, and (ii) the amount by which current Operating Expenses as reasonably estimated by Owner exceed Operating Expenses as reflected in such Owner's Operating Expense Statement; and (iii) any net credit balance to which Tenant may be entitled pursuant to the provisions of subsection 23.05 C. J. The term "Monthly Escalation Installment Notice" shall mean a notice given by Owner to Tenant which sets forth the current Monthly Escalation installment; such Notice may be contained in a regular monthly rent bill, in an Owner's Operating Expense Statement or otherwise, and may be given from time to time, but not more than monthly, at Owner's election. Section 23.02. A. The Fixed Rent for each Tax Escalation Year shall be increased by a sum equal to Tenant's Proportionate Share of Taxes for such Tax Escalation Year. 40 B. Unless the Commencement Date shall occur on a July 1st, any increase in the Fixed Rent pursuant to the provisions of subsection A of this Section 23.02 for the Tax Escalation Year in which the Commencement Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to June 30th of such Tax Escalation Year, both inclusive, shall bear to the total number of days in such Tax Escalation Year. Unless the Demised Term shall expire on a June 30th, any income in the Fixed Rent pursuant to the provisions of said subsection A for the Tax Escalation Year in which the date of the expiration of the Demised Term shall occur shall be apportioned in that percentage which the number of days in the period from July 1st of such Tax Escalation Year to such date of expiration, both inclusive, shall bear to the total number of days in such Tax Escalation Year. Section 23.03. A. Owner shall render to Tenant, either in accordance with the provisions of Article 27 or by personal delivery at the Demised Premises, an Owners Tax Statement or Statements with respect to each Tax Escalation Year, either prior to or during such Tax Escalation Year./Owners failure to render an Owners Tax Statement with respect to any Tax Escalation Year shall not prejudice Owner's right to recover any sums due to Owner hereunder with respect to such Tax Escalation Year nor shall it deprive Tenant of any credit to which it otherwise might be entitled to for any Tax Escalation Year pursuant to the provisions of subsection C of this Section 23.03. Tenant acknowledges that under present law, Taxes are payable by Owner (i) with respect to a fiscal year commencing July 1st and ending on the following June 30th, and (ii) in two (2) installments, in advance, the first of which is payable on July 1st, and the second and final payment of which is payable on the following January 1st. Within ten (10) days next following rendition of the first Owner's Tax Statement which shows an increase in the Fixed Rent for any Tax Escalation Year, Tenant Shall pay to Owner one-half of the amount of the increase shown upon such Owner's Tax Statement for such Tax Escalation Year (including any apportionment pursuant to the provisions of subsection B of Section 23.02); and, subsequently, provided Owner shall have rendered to Tenant an Owner's Tax Statement, Tenant shall pay to Owner not later than thirty (30) days prior to the date on which the installment of Taxes is required to be paid by Owner a sum equal to one half (1/2) of Tenant's Proportionate Share of Taxes payable with respect to such Tax Expiation Year as shown on such Owner's Tax Statement, Tenant further acknowledges that it is the purpose and intent of this Section 23.03 to provide Owner with Tenant's Proportionate 41 Share of the increases in the Fixed Rent pursuant to the provisions of this subsection A thirty (30) days prior to the time such instrument of Taxes is required to be paid by Owner without penalty or interest. Accordingly, Tenant agrees if the number of such installments and/or the date of payment thereof and/or the fiscal year used for the purpose of Taxes shall change then (a) at the time that any such revised installment is payable by Owner, Tenant shall pay to Owner the amount which shall provide Owner with Tenant's Proportionate Share of the increase in the Fixed Rent pursuant to the provisions of Section 23.02A applicable to the revised installment of Taxes then required to be paid by Owner. and (b) this Article shall be appropriately adjusted to reflect such change and the time for payment to Owner of Tenant's Proportionate Share of any increase in Taxes as provided in this Article shall be appropriately revised so that Owner shall always be provided with Tenant's Proportionate Share of the increase in the Fixed Rent thirty (30) days prior to the installment of Taxes required to be paid by Owner. Notwithstanding the foregoing provisions of this subsection A to the contrary, in the event the holder of any mortgage affecting any ground or underlying lease, including, but not limited to, the Ground and Development Rights Lease, shall require Owner to make monthly deposits on account of real estate taxes, then this Article shall be appropriately adjusted to reflect the requirement that Owner make monthly deposits on account of real estate taxes so that Owner shall always be provided with one-twelfth (1/12th) of Tenant's Proportionate Share of such increase in the Fixed Rent with respect to any Tax Escalation Year thirty (30) days prior to the payment by Owner of such monthly deposits on account of real estate taxes. B. Tenant acknowledges that its obligations under the provisions of subsection 23.02.A. will be greater if Owner fails to obtain a Tax Deferral and agrees that Owner shall have no liability to Tenant nor shall Tenant be entitled to any abatement or diminution of rent if Owner fails to obtain a Tax Deferral. Tenant further acknowledges that its obligations under the provisions of subsection 23.02.A. shall increase during and at the expiration of the Tax Deferral Period as the law and regulations pursuant to which Owner may obtain a Tax Deferral provides for limited deferrals of tax payments for the first (1st) seven tax years following the issuance of a certificate of eligibility (100% for the first three years, 80% for the fourth year, 60% for the fifth year, 40% for the sixth year and 20% for the seventh year) and the payment by Owner of the total amount of tax payments deferred commencing in the eleventh tax year following the issuance of a certificate of 42 eligibility, through and including the twentieth tax year following such issuance, by adding an amount equal to 10% percent of the total amount of tax payments deferred to the amount of tax otherwise assessed and payable in each such tax year. C. If, as a result of any application or proceeding brought by or on behalf of Owner for reduction of the assessed valuation of the Real Property there shall be a decrease in Taxes for any Tax Escalation Year with respect to which Owner Shell have previously rendered an Owner's Tax Statement. the next monthly instalment or installments of Fixed Rent following such decrease shall include an adjustment of the Fixed Rent for such Tax Escalation Year reflecting a credit to Tenant equal to the amount by which (i) the Fixed Rent actually paid by Tenant with respect to such Tax Escalation Year (as increased pursuant to the operation of the provisions of subsection A of Section 23.02), shall exceed (ii) the Fixed Rent payable with respect to such Tax Escalation Year (as increased pursuant to the operation of the provisions of subsection A of Section 23.02) based upon such reduction of the assessed valuation. Section 23.04. A. The Fixed Rent for each Escalation Year shall be increased by a sum equal to Tenant's Proportionate Share of Operating Expenses for such Escalation Year. B. Unless the Commencement Date shall occur on a January 1st, any increase in the Fixed Rent pursuant to the provisions of subsection A of this Section 23.04 for the Escalation Year in which the Commencement Date shall occur shall be apportioned in that percentage which the number of days in the period from the Commencement Date to December 31st of such Escalation Year, both inclusive, shall bear to the total number of days in such Escalation Year. Unless the Demised Term shall expire on a December 31st, any increase in the Fixed Rent pursuant to the provisions of subsection A of this Section 23.04 for the Escalation Year in which the date of the expiration of the Demised Term shall occur shall be apportioned in that percentage which the number of days in the period from January 1st of such Escalation Year to such date of expiration, both inclusive, shall bear to the total number of days in such Escalation Year. C. In the determination of any income in the Fixed Rent pursuant to the foregoing provisions of this Section 23.04, if the Building shall not have been fully occupied during any Escalation Year, Operating Expenses for such Escalation Year shall be equitably adjusted (by including such 43 additional expenses as Owner would have incurred) to the extent, if any, required to reflect full occupancy. Section 23.05. A. Owner shall render to Tenant, either in accordance with the provisions of Article 27 or by personal delivery at the Demised Premises, an Owner's Operating Expense Statement with respect to each Escalation Year on or before the next succeeding October 1st. Owner's failure to render an Owner's Operating Expense Statement with respect to any Formation Year shall not prejudice Owner's right to recover any sums due to Owner hereunder with respect to such Escalation Year. B. Within thirty (30) days next following rendition of the first Owner's Operating Expense Statement which shows an increase in the Fixed Rent for any Escalation Year, Tenant shall pay to Owner the entire amount of such increase. In order to provide for current payments on account of future increases in the Fixed Rent payable by Tenant pursuant to the provisions of subsection 23.04 A, Tenant shall also pay to Owner at such time, provided Owner has given to Tenant a Monthly Escalation Installment Notice, a sum equal to the product of (i) the Monthly Escalation lnstallment set forth in such notice multiplied by (ii) the number of months or partial months which shall have elapsed between January 1st of the Escalation Year in which such payment is made and the date of such payment less any amounts theretofore paid by Tenant to Owner on account of increases in the Fixed Rent for such Escalation Year pursuant to the provisions of the penultimate sentence of this Section 23.05 B; thereafter Tenant shall make payment of a Monthly Escalation installment throughout each month of the Demised Term. Monthly Formation installments shall be added to and payable as part of each monthly installment of Fixed Rent. Notwithstanding anything to the contrary contained in the foregoing provisions of this Article, prior to the rendition of the first Owner's Operating Expense Statement which shows an increase in the fixed Rent for any Escalation Year, Owner may render to Tenant a pro-forma Owner's Operating Expense Statement containing a bona fide estimate of the increase in the Fixed Rent for the Escalation Year in which the Commencement Date shall occur. Following the rendition of such pro-forma Owner's Operating Expense Statement, Tenant shall pay to Owner a sum equal to one twelth (1/12) of the estimated increase in the Fixed Rent shown thereon for such Escalation Year multiplied by the number of months which may have elapsed between the Commencement Date and the month in which such payment is made and thereafter pay to Owner, on the first day of each month of the Demised Term (until the rendition by Owner of the first Owners Operating Expense 44 Statement) a sum equal to one-twelth (1/12) of the increase in the Fixed Rent shown on such pro-forma Owner's Operating Expense Statement. Any sums paid pursuant to the provisions of the immediately preceding sentence shall be credited against the sums required to be paid by Tenant to Owner pursuant to the Owner's Operating Expense Statement for the first Escalation Year for which there is an increase in the Fixed Rent pursuant to the provisions of subsection A. C. Following rendition of the first Owner's Operating Expense Statement and each subsequent Owner's Operating Expense Statement a reconciliation shall be made as follows: Tenant shall be debited with any increase in the Fixed Rent shown on such Owner's Operating Expense Statement and credited with the aggregate amount, if any, paid by Tenant in accordance with the provisions of subsection B of this Section on account of future increases in the Fixed Rent pursuant to subsection 23.04.A. which has not previously been credited against increases in the Fixed Rent shown on Owner Operating Expense Statements. Tenant shall pay any net debit balance to Owner within thirty (30) days next following rendition by Owner, either in accordance with the provisions of Article 27 or by personal delivery at the Demised Premises of an invoice for such net debit balance; any net credit balance shall be applied as an adjustment against the next accruing Monthly Escalation Installment. Section 24.02. No act or thing done by Owner or Owner's agents during the Demised Term shall constitute a valid acceptance of a surrender of the Demised Premises or any remaining portion of the Demised Term except a written instrument accepting such surrender, executed by Owner. No employee of Owner or of Owner's agents shall have any authority to accept the keys of the Demised Premises prior to the termination of this Lease and the Demised Term, and the delivery of such keys to any such employee shall not operate as a termination of this Lease or a surrender of the Demised Premises; however, if Tenant desires to have Owner sublet the Demised Premises for Tenant's account, Owner or Owner's agents are authorized to receive said keys for such purposes without releasing Tenant from any of its obligations under this Lease, and Tenant hereby relieves Owner of any liability for loss of, or damage to, any of Tenant's property or other effects in connection with such subletting. The failure of Owner to seek redress for breach or violation of, or to insist upon the strict performance of, any term, covenant or condition of this Lease on Tenant's part to be observed or performed, shall not prevent a subsequent act or omission which would have originally constituted a breach or violation of any such term, covenant 45 or condition from having all the force and effect of an original breach or violation. The receipt by Owner of rent with knowledge of the breach or violation by Tenant of any term, covenant or condition of this Lease on Tenant's part to be observed or performed shall not be deemed a waiver of such breach or violation. Owner's failure to enforce any Building Rule against Tenant or against any other tenant or occupant of the Building shall not be deemed a waiver of any such Building Rule. No provision of this Lease shall be deemed to have been waived by Owner unless such waiver shall be set forth in a written instrument executed by Owner. No payment by Tenant or receipt by Owner of a lesser amount than the aggregate of all Fixed Rent and additional rent then due under this Lease shall be deemed to be other than on account of the first accruing of all such items of Fixed Rent and additional rent then due, no endorsement or statement on any check and no letter accompanying any check or other rent payment in any such lesser amount and no acceptance of any such check or other such payment by Owner shall constitute an accord and satisfaction, and Owner may accept any such check or payment without prejudice to Owner's right to recover the balance of such rent or to pursue any other legal remedy. ARTICLE 25 MUTUAL WAIVER OF TRAIL BY JURY Section 25.01. Owner and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by Owner or Tenant against the other on any matter whatsoever arising out of or in any way connected with this lease, the relationship of landlord and tenant the use or occupancy of the Demised Premises by Tenant or any person claiming through or under Tenant, any claim of injury or damage, and any emergency or other statutory remedy, however, the foregoing waiver shall not apply to any action for personal injury or property damage. The provisions of the foregoing sentence shall survive the expiration or any sooner termination of the Demised Term. If Owner commences any summary proceeding for non-payment of rent. Tenant agrees not to interpose any non-compulsory counterclaim of whatever nature or description in any such proceeding. ARTICLE 26 INABILITY TO PERFORM Section 26.01. lf by reason of strikes or other labor disputes, fire or other casualty (or reasonable delays in 46 adjustment of insurance), accidents, orders or regulations of any Federal, State, County or Municipal authority, or any other cause beyond Owner's reasonable control, whether or not such other cause shall be similar in nature to those hereinbefore enumerated, Owner is unable to furnish or is delayed in furnishing any utility or service required to be furnished by Owner under the provisions of Article 29 or any other Article of this Lease or any collateral instrument, or is unable to perform or makes or is delayed in performing or making any installations, decorations, repairs, alterations, additions or improvements, whether or not required to be performed or made under this Lease or under any collateral instruments or is unable to fulfill or is delayed in fulfilling any of Owner's other obligations under this Lease or any collateral instruments no such inability or delay shall constitute an actual or constructive eviction, in whole or in part or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease. or impose any liability upon Owner or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interrupts of Tenants's businesses, or otherwise. (See Article 45). ARTICLE 27 NOTICES Section 27.01. Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by registered or certified mail (return receipt requested optional), addressed (a) to Tenant addressed to Charles Persing (i) at Tenant's address set forth in this Lease if mailed prior to Tenant's taking possession of the Demised Premises, or (ii) at the Building if mailed subsequent to Tenant's taking possession of the Demised Premises, or (iii) at any place where Tenant or any agent or employee of Tenant may be found if mailed subsequent to Tenant's vacating, deserting, abandoning or surrendering the Demised Premise (b) to Owner at Owner's address set forth in this Lease, with a copy to Goldfarb & Fleece, 345 Park Avenue, New York, New York 10154 or (c) addressed to such other address as either Owner or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Section. Any such bill, statement, notice, demand, request or other communication shall be deemed to have been rendered or given on the date when it shall have been mailed as provided in this Section. 47 ARTICLE 28 PARTNERSHIP TENANT Section 28.01 . If Tenant is a partnership (or is composed of two (2) or more persons, individually and as co-partners of a partnership) or if Tenant's interest in this Lease shall be assigned to a partnership (or to two (2) or more persons, individually and as co-partners of a partnership) pursuant to Article II (any such partnership and such persons are referred to in this Section as "Partnership Tenant"), the following provisions of this Section shall apply to such Partnership Tenant: (i) the liability of each of the persons comprising Partnership Tenant shall be joint and several, individually and as a partner, and (ii) each of the persons comprising Partnership Tenant, whether or not such person shall be one of the persons comprising Tenant at the time in question, hereby consents in advance to, and agrees to be bound by, any written instrument which may hereafter be executed, changing, modifying or discharging this Lease, in whole or in part, or surrendering all or any part of the Demised Premises to Owner, and by any notices, demands, requests or other communications which may hereafter be given by Partnership Tenant or by any of the persons comprising Partnership Tenant, and (iii) any bills, statements, notices, demands, requests or other communications given or rendered to Partnership Tenant or to any of the persons comprising Partnership Tenant shall be deemed given or rendered to Partnership Tenant and to all such persons and shall be binding upon Partnership Tenant and all such persons, and (iv) if Partnership Tenant shall admit new partners, all of such new Partners shall, by their admission to Partnership Tenant, be deemed to have assumed performance of all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed, and shall be liable for such performance, together with all other parties jointly or severally, individually and as a partner, and (v) Partnership Tenant shall give prompt notice to Owner of the admission of any such new partners, and, upon demand of Owner, shall cause each such new partner to execute and deliver to Owner an agreements in form satisfactory to Owner, wherein each such new partner shall so assume performance of all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed (but neither Owner's failure to request any such agreement nor the failure of any such new panther to execute or deliver any such agreement to Owner shall vitiate the provisions of subdivision (iv) of this Section). 48 ARTICLE 29 UTILITIES AND SERVICES Section 29.01. Owner, at Owner's expense, shall furnish necessary elevator facilities on business days from 8:00 A M. to 6:00 P.M. and shall have a passenger elevator subject to call at all other times. At any time or times all or any of the elevators in the Building may, at Owner's option, be automatic elevators, and Owner shall not be required to furnish any operator service for automatic elevators. If Owner shall, at any time, elect to furnish operator service for any automatic elevators, Owner shall have the right to discontinue furnishing such service with the same effect as if Owner had never elected to furnish such service. Tenant acknowledges that Owner has designated one (1) of the freight elevators for the exclusive use of another tenant of the Building and Tenant shall have no right to use such elevator without Owner's consent. Tenant shall not be Charged any fee for the use of the freight elevators in connection with Tenant's move into the Demised Premises. Section 29.02. Owner, at Owner's expense (subject to the provisions of this Section and Section 29.04), shall furnish and distribute to the Demised Premises through the Building heating, ventilating and air conditioning (referred to as "HVAC") systems, when required for the comfortable occupancy of the Demised Premises, heated, cooled ant outside air, at reasonable temperatures, pressures and degrees of humidity and in reasonable volumes and velocities, on a year round basis, from 8.00 a m. to 6.00 p.m. on business days. Tenant understands, however, that the equipment which will be employed in distributing air will be connected to Tenant's electric meter and Tenant shall be appropriate for payment of all electricity consumed by such equipment Notwithstanding the foregoing provisions of this Section, Owner Shall not be responsible if the normal operation of the HVAC systems shall fail to provide conditioned air at reasonable temperatures pressures or degrees of humidity or in reasonable volumes or velocities in ny portions of the Demised Premises (a) which shall have an electric load in excess of three and one-half (1/2) watts per square foot of usable area for all purposes (including lighting and power), or which shall have a human occupancy factor in excess of one person per 100 square feet of usable area (the average electrical load and human occupancy factors for which the HVAC systems have been designed) or (b) because of any rearrangement of partitioning or other Alterations made or performed by or on behalf of Tenant or any person claiming through or under Tenant Notwithstanding such design of the HVAC systems, Tenant acknowledges that Owner's Initial 49 Construction shall provide for an electrical load in the Demised Premises which than conform to the New York State Energy Conservation Construction Code, and which accordingly may be less than three and one-half (3 1/2) watts per square foot of usable area for all purposes (including lighting and power.) Whenever said HVAC systems are in operation, Tenant agrees to cause all the windows in the Demised Premises to be kept closed and to cause the venetian blinds in the Demised Premises to be kept closed if necessary because of the position of the sun. Tenant agrees to cause all the windows in the Demised Premises to be closed whenever the Demised Premises are not occupied. Tenant shall cooperate fully with Owner at all times and abide by all regulations and requirements which Owner may reasonably prescribe for the proper functioning and protection of the Building HVAC systems. Section 29. 03. A. Provided Tenant shall keep the Demised Premises in order, Owner, at Owner's expense, shall cause the of office areas of the Demised Premises to be cleaned substantially in accordance with the standards set forth in Schedule C, all of the terms, covenants and conditions of which are incorporated in this Lease by reference and shall be deemed a part of this Lease, as though fully set forth in the body of this Lease and shall cause Tenant's ordinary office waste paper refuse to be removed, provided that Owner shall not be required to empty garbage cans having a capacity in excess of nine (9) gallons. Tenant acknowledges that Owner's obligation to cause the office areas of the Demised Premises to be cleaned excludes any portions of the Demised Premises not used as office areas (e.g, storage, mail and computer areas, private lavatories in contradistinction to core toilets used for the storage, preparation, service or consumption of food or beverages and the broadcasting areas of the Demised Premises). Tenant shall pay Owner at Building standard rates or, if there are no such rates, at reasonable rates, for the removal of any of Tenant's refuge or rubbish other than ordinary office waste paper refuse, from the Building, and Tenant, at Tenant's expense, shall cause all portions of the Demised Promises not used as office areas to be cleaned daily in a manner/satisfactory to Owner. Tenant also shall cause all portions of the Demised Premises used for the storage preparation, service or consumption of food or beverages to be exterminated against infestation by vermin, roaches or rodents regularly and, in addition, whenever there shall be evidence of any infestation. Tenant shall contract independently with Owner or its cleaning services contractor for the removal of such other refuse and rubbish and for cleaning services in addition to those furnished by Owner 50 and for the purpose of providing extermination services required to be performed by Tenant. B. Tenant acknowledges and is aware that the cleaning services required to be furnished by Owner pursuant to this Section may be furnished by a contractor or contractors employed by Owner and agrees that Owner shall not be deemed in default of any of its obligations under this Section 29.03 unless such default shall continue for an unreasonable period of time after notice from Tenant to Owner setting forth the specific nature of such default. Section 29.04. A. Tenant shall make arrangements to supply all electricity in the Demised Premises, including, but not limited to, electricity to serve the Air conditioning and ventilating equipment and hot water heater to be installed by Owner as part of Owner's Initial Construction, by contracting directly with the public utility corporation furnishing electricity to the Building and shall pay said utility corporation for all current consumed in or about the Demised Premises. In connection with the purchase of electric energy by Tenant, Owner shall install on each floor comprising the Demised Premises a meter pan for one meter which measures both demand and consumption. Tenant shall arrange with such public utility corporation for the installation, at Tenant's sole cost and expense, of such meter. B. If either the quantity or character of electrical service is changed by the public utility corporation supplying electrical service to the Building or is no longer available or suitable for Tenants requirements, no such change, unavailability or unsuitability shall constitute an actual or constructive eviction, in whole or in part or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this lease, or impose any liability upon Owner, or its agents, by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business or otherwise. C. Owner represents that the electrical feeder or riser capacity serving the Demised Premises on the Commencement Date shall be adequate to serve the lighting fixtures and electrical receptacles installed in the Demised Premises initially by Owner pursuant, to the provisions of Paragraph II of Schedule A and HVAC equipment required to be installed in the Demised Premises initially by Owner pursuant to the provisions of Paragraph I of Schedule A. Any additional feeders or risers to supply Tenant's additional electrical requirements, and all other equipment proper and necessary 51 in connection with such feeders or risers, shall be installed by Owner upon Tenant's request, at the sole cost and expense of Tenant, provided that, in Owner' reasonable judgement, such additional feeders or risers are necessary and are permissible under applicable laws and insurance regulations and the installation of such feeders or risers will not cause permanent damage or injury to the Building or the Demised Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations or repairs to, interfere with, or disturb, other tenants or occupants of the Building. Tenant covenants that at no time shall the use of electrical energy in the Demised Premises exceed the capacity of the existing feeders or wiring installations then serving the Demised Premises. Tenant shall not make or perform or permit the making or performance of, any Alterations to wiring installations or other electrical facilities in or serving the Demised premises without the prior consent of Owner in each instance. Section 29.05. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory and drinking purposes, Owner may install a hot water meter and a cold water meter and thereby measure Tenant's consumption of water for all purposes. Tenant shall pay to Owner the cost of any such meters and their installation, and Tenant shall keep any such meters and any such installation equipment in good working order and repair, at Tenant's cost and expense. Tenant agrees to pay for water consumed as shown on said meters and sewer charges, taxes and any other governmental charges thereon, as and when bills are rendered. Tenant understands that the hot water heater will be connected to Tenant's electric meter and that Tenant shall be responsible for payment of all electricity consumed by such equipment For the purposes of determining the amount of any sums required to be paid by Tenant under this Section, all hot and cold water consumed during any period when such meters are not in good working order shall be deemed to have been consumed at the rate of consumption of such water during the most comparable period when such meters were in good working order. Section 29.06. The Fixed Rent does not reflect or include any charge to Tenant for the furnishing or distributing of any freight elevator or HVAC services to the Demised Premises during periods (referred to as "Overtime Periods") other than the hours and days set forth above in this Article for the furnishing and distributing of such services. Accordingly, if Owner Shall furnish any such freight elevator or HVAC services to the Demised Premises at 52 the request of Tenant during Overtime Periods, Tenant shall pay Owner for such services at the standard rates then fixed by Owner for the Building or, if no such rates are then fixed, at reasonable rates. Owner shall not be required to furnish any such services during Overtime Periods, unless Owner has received reasonable advance notice from Tenant requesting such services. If Tenant fails to give Owner reasonable advance notice requesting such services during any Overtime Periods, then, whether or not the Demised Premises are habitable during such Periods, failure by Owner to furnish or distribute any such services during such Periods shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business or otherwise. Section 29.07. Owner reserves the right to stop the service of the HVAC, elevator, plumbing, electrical or other mechanical systems or facilities in the Building when necessary by reason of accident or emergency, or for repairs alterations, replacements or improvements, which, in the judgment of Owner are desirable or necessary, until said repairs, alterations, replacements or improvements shall have been completed. The exercise of such right by Owner shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business, or otherwise. ARTICLE 30 CAPTIONS Section 30.01. The captions preceding the Articles of this Lease have been inserted solely as a matter of convenience and such captions in no way define or limit the scope or intent of any provision of this Lease. ARTICLE 31 MISCELLANEOUS DEFINITIONS AND SEVERABILITY PROVISIONS Section 31.01. The term "business days" as used in this Lease shall exclude Saturdays, Sundays and holidays, the 53 term "Saturdays" as used in this Lease shall exclude holidays and the term "holidays" as used in this Lease shall mean all days observed as legal holidays by either the New YorK State Government or the Federal Government. Section 31.02. The terms "person" and "persons" as used in this Lease shall be deemed to include natural persons, firms, corporations, associations and any other private or public amenities, whether any of the foregoing are acting on their own behalf or in a representative capacity. Section 31.03. The term "prime rate" shall mean the rate of interest announced publicly by Citibank, N.A., or its successor, from time to time, as Citibank, N.A.'s or such successor's base rate, or if there is no such base rate, then the rate of interest charged by Citibank, N.A. or its successor to its most creditworthy customers on commercial loans having a ninety (90) day duration. Section 31.04. If any term, covenant or condition of this Lease or any application thereof shall be invalid or unenforceable, the remainder of this Lease and any other application of such term, covenant or condition shall not be affected thereby. ARTICLE 32 ADJACENT EXCAVATION Section 32.01. If an excavation shall be made upon land adjacent to the Real Property, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation license to enter upon the Demised Premises for the purpose of doing such work as said person shall deem necessary to preserve the walls and other portions of the Building from injury or damage and to support the same by proper foundations and no such entry shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner or said person. ARTICLE 33 BUILDING RULES Section 33.01. Tenant shall observe faithfully, and comply strictly with, and shall not permit the violation of, the Building Rules set forth in Schedule B annexed to and made a part of this Lease and such additional reasonable Building 54 Rules as Owner may, from time to time, adopt all of the terms, covenants and conditions of Schedule B are incorporated in this lease by reference and shall be deemed part of this lease as though fully set forth in the body of this Lease The term "Building Rules" as used in this Lease shall include those set forth in Schedule B and those hereafter made or adopted as provided in this Section in case Tenant disputes the reasonableness of any additional Building Rule hereafter adopted by Owner, the parties hereto agree to submit the question of the reasonableness of such Building Rule for decision to the Chairman of the Board of Director of the Management Division of the Real Estate Board of New York, Inc., or its successor, or so such impartial person or persons as he may designate, whose determination shall be final and conclusive upon Owner and Tenant. Tenants right to dispute the reasonableness of any additional Building Rule shall be deemed waived unless asserted by service of a notice upon Owner within thirty (30) days after the date upon which Owner shall give notice to Tenant of the adoption of any such additional Building Rule. Owner shall have no duty or obligation to enforce any Building Rule, or any term, covenant or condition of any other lease, against any other tenant or occupant of the Building, and Owner's failure or refusal to enforce any Building Rule or any term, covenant or condition of any other lease against any other tenant or occupant of the Building shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Owner or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's business, or otherwise. Any Building Rule not enforced generally against other tenants of the Building shall not be enforced against tenant. ARTICLE 34 BROKER Section 34.01. Tenant represents and warrants to Owner that Cushman & Wakefield, Inc. is the sole broker with whom Tenant has negotiated or otherwise dealt with in connection with the Demised Premises or in bringing about this Lease. Owner represents and warrants to Tenant that Cushman & Wakefield, Inc. is the sole broker with whom Owner has negotiated or otherwise dealt with in connection with the Demised Premises or in bringing about this Lease. Each party shall indemnify the other from all loss, cost, liability, damage and expense, including, but not limited to, reasonable counsel fees and disbursements, arising from 55 any breach of the foregoing representation and warranty. Owner agrees to pay a brokerage commission to Cushman & Wakefield, Inc. in accordance with the provisions of a separate agreement between Owner and Cushman & Wakefield, Inc. ARTICLE 35 SECURITY Section 35.01. The sum of FOUR HUNDRED THOUSAND ($400,000.00) Dollars representing security (referred to as "Security") for the faithful performance and observance by Tenant of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed is due and payable at the time of the execution and delivery of this Lease in the event of any default by Tenant in the observance or performance of any of the terms, covenants or conditions of this lease on the part of Tenant to be observed or performed including, but not limited to, ny default in the payment when due of any monthly installment of the Fixed Rent or of any additional rent, Owner may use or apply all or any part of the Security for the payment to Owner for Tenant's account of any sum or amount due under this Lease, without thereby waiving any other rights or remedies of Owner with respect to such default Tenant agrees to replenish all or any part of the Security so used or applied during the Demised Term. After (i) the Expiration Date or any other date upon which the Demised Term shall expire and come to an end, and (ii) the full observance and performance by Tenant of all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed, including, but not limited to, the provisions of Article 21, Owner shall return to Tenant the balance of the Security then held or retained by Owner. Owner agrees that, unless prohibited by law or by the general policies of lending institutions in New York City, Owner shall deposit the Security in a money market account selected by Owner with Chase Manhattan Bank N.A. in New York City in which event all interest accruing therein shall be remitted to Tenant annually provided Tenant is not then in default in the observance or performance of any of terms, covenants or conditions of this Lease on Tenant's part to be observed or performed beyond the applicable grace period provided in this Lease for the curing of such default. Tenant agrees that Tenant shall not assign or encumber any part of the Security, and no assignment or encumbrance by Tenant of all or any part of the Security shall be binding upon Owner, whether made prior to, during, or after the Demised Term. Owner shall not be required to exhaust 56 its remedies against Tenant or against the Security before having recourse to any other form of security held by Owner and recourse by Owner to any form of security shall not affect any remedies of Owner which are provided in this Lease or which are available to Owner in law or equity. In the event of any sale, assignment or transfer by Owner named herein (or by any subsequent Owner) of its interest in the Building as owner or lessee, Owner (or such subsequent owner) shall have the right to assign or transfer the Security to its grantee, assignee or transferee and, in the event of such assignment or transfer, Owner named herein, (or such subsequent Owner) Shall have no liability to Tenant for the return of the Security and Tenant shall look solely to the grantee, assignee or transferee for such return. A lease of the entire Building shall be deemed a transfer within the meaning of the forming sentence. Section 35.02. Provided Tenant is not then in default in the observance or performance of any of the terms, covenants or conditions of this Lease on Tenant's part to be observed or performed beyond the applicable grace periods provided for the curing of such default, then Owner shall return to Tenant the sum of ONE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE ($133,333.00) DOLLARS of such Security on the second (2nd) anniversary of the Commencement Date. Section 35.03. Provided Tenant is not then in default in the observance or performance of any of the terms, covenants or conditions of this Lease on Tenant's part to be observed or performed beyond the applicable grace periods provided for the curing of such default then Owner shall return to Tenant the sum of ONE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE ($133,333.00) DOLLARS of such Security on the fourth (4th) anniversary of the Commencement Date. ARTICLE 36 ARBITRATION, ETC. Section 36.01. Any dispute (i) with respect to the reasonability of any failure or refusal of Owner to grant its consent or approval to any request for such consent or approval pursuant to the provisions of Sections 3.01 or 11.03 with respect to which request Owner has agreed, in such Sections, not unreasonably to withhold such consent or approval, or (ii) arising out of the application of the Operating Expenses provisions of Article 23, which is submitted to arbitration shall be finally determined by arbitration in the City of New York in accordance with the rules and regulations then obtaining of the American Arbitration Association or its successor. Any such 57 determination shall be final and binding upon the parties, whether or not a judgment shall be entered in any court. In making their determination, the arbitrators shall not subtract from, add to, or otherwise modify any of the provisions of this Lease. Owner and Tenant may, at their own expense, be represented by counsel and employ expert witnesses in any such arbitration. Any dispute with respect to the reasonability of any failure or refusal of Owner to grant its consent or approval to any request for such consent or approval pursuant to any of the provisions of this Lease (other than Sections 3.01 and 11.03) with respect to which Owner has covenanted not unreasonably to withhold such consent or approval, and any dispute arising with respect to the application of the tax payment provisions of Article 23 shall be determined by applicable legal proceedings. If the determination of any such legal proceedings, or of any arbitration held pursuant to the provisions of this Section with respect to disputes arising under Sections 3.01 and 11.03, shall be adverse to Owner, Owner shall be deemed to have granted the requested consent or approval, or be bound by any determination as to Taxes and the increases in Fixed Rent relating thereto, but that shall be Tenant's sole remedy in such event and Owner shall not be liable to Tenant for a breach of Owner's covenant not unreasonably to withhold such consent or approval, or otherwise. Each party shall pay its own counsel and expert witness fees and expense, if any, in connection with any arbitration held pursuant to the provisions of this Section and the parties will share all other expenses and fees of any such arbitration. ARTICLE 37 PARTIES BOUND Section 37.01. The terms, covenants and conditions contained in this Lease shall bind and inure to the benefit of Owner and Tenant and, except as otherwise provided in this Lease, their respective heirs, distributees, executors, administrators, successors and assigns. However, the obligations of Owner under this Lease shall no longer be binding upon Owner named herein after the sale, assignment or transfer by Owner named herein (or upon any subsequent Owner after the sale, assignment or transfer by such subsequent Owner) of its interest in the Building as owner or lessee, and in the event of any such sale, assignment or transfer, such obligations shall thereafter be binding upon the grantee, assignee or other transferee of such interests and any such grantees, assignee or transferee, by accepting such interest, shall be deemed to have assumed such obligations. A Lease of the entire Building shall be deemed 58 a transfer within the meaning of the foregoing sentence. Tenant shall look solely to the estate and interest of Owner, its successors and assigns, in the Real Property and Building for the collection or satisfaction of any judgment recovered against Owner based upon the breach by Owner of any of the terms, conditions or covenants of this Lease on the part of Owner to be performed, and no other property or assets of Owner shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to either this Lease, the relationship of landlord and tenant hereunder, or Tenant's use and occupancy of the Demised Premises. Schedule D, entitled "Addendum to Lease" is annexed hereto and all of the terms, covenants and conditions of Schedule D are incorporated in this Lease by reference and shall be deemed a part of this Lease as though fully set forth in the body of this Lease. 59 In witness whereof, Owner and Tenant have respectively signed and sealed this Lease as of the day and year first above written. BROADWAY 52ND ASSOCIATES By /s/ Lewis Rudin _____________________ Witness: Lewis Rudin a partner /s/ Philip A. Glantz ___________________ Philip A. Glantz UNISTAR COMMUNICATIONS GROUP, INC. By /s/ N. J. Verbitsky ______________________ N.J. Verbitsky Tenant Attest: /s/ Charles N. Pershing _____________________ Charles N. Persing (Corporate Seal) 60 SCHEDULE D ADDENDUM TO LEASE Article 38 RENT HOLIDAY Section 38.01. Provided this Lease is not terminated by reason of a default by Tenant in the observance and performance of any of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed, Tenant shall be entitled to a conditional rent holiday and shall not be required to pay any portion of the Fixed Rent with respect to the period from the day next following the end of the Initial Rent Period to and including the date which is two hundred seventy (270) days next following the end of the Initial Rent Period but during such period of two hundred seventy (270) days Tenant shall otherwise be required to comply with all of the other terms, covenants and conditions of this Lease on Tenant's part to be observed and performed, including, but not limited to, the provisions of Article 23. If at any time during the Demised Term Tenant shall be in default in the observance and performance of any of the terms, covenants and conditions of this Lease on Tenant s part to be observed and performed and this Lease is terminated by reason thereof, then the total sum of the Fixed Rent so conditionally excused by operation of the foregoing provisions of this Section shall become immediately due and payable by Tenant to Owner. If, as of the Expiration Date, Tenant shall not then be in default in the observance and performance of any of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed beyond the applicable grace periods provided in this Lease for the curing of any such default, Owner shall waive payment of all such Fixed Rent so conditionally excused. ARTICLE 39 SATELLITE RECEIVING DISH Section 39.01. Tenant shall have the right to install, maintain, operate, repair and replace the equipment listed on Schedule E to this Lease on the roof and roof penthouse of the Building, the exact location and size of which shall be reasonably designated by Owner, and cables connecting such equipment to equipment in the Demised Premises running through conduits, pipes or shafts in the Building, the exact location of which shall be reasonably designated by Owner provided that such equipment shall be designed, and at all times during the Demised Term be operated, in accordance 61 with FCC requirements and in such a manner that it will not physically (i) interfere in any way with the rights of any existing tenant in the Building either to (a) maintain and use any satellite or telecommunications transmitting and/or receiving antenna or dish or similar equipment or (b) use any portions of the roof granted to it whether or not such rights have been exercised by any existing tenant at the time that Tenant installs such equipment in accordance with the provisions of this Section and (ii) unreasonably interfere with any reasonable rights of any future tenant in the Building either to (x) maintain and use any satellite or telecommunications transmitting and/or receiving antenna or dish or similar equipment or (y) use any reasonable portions of the roof reasonably granted to it whether or not such rights have been exercised by any future tenant at the time that Tenant installs such equipment in accordance with the provisions of this Section. The foregoing installations shall be made at Tenant's sole cost and expense and in accordance with all the provisions of this Lease, including, but not limited to, the provisions of Article 3 and Article 6. Owner shall have no responsibility for the maintenance and repair of any such installations and Tenant, at Tenant's sole cost and expense, shall keep all said installations in good condition and make all necessary repairs and replacements thereto and to the Building occasioned thereby. Upon the Expiration Date or sooner termination of the Demised Term, or if required by any applicable governmental authorities, or if any rights of any existing tenant are so physically interfered with by Tenant or if any reasonable rights of any future tenant are so physically interfered with by Tenant, (and Tenant does not cease such physical interference within ten (10) days following Owner notice thereof) Tenant, at Tenant's sole cost and expense, shall, upon request of Owner, remove such installations or relocate such installations to another portion of the roof where designated by Owner, at Owner's election, and make all repairs to the Building occasioned by such removal or relocation, as the case may be. The foregoing installations shall be subject to such conditions with respect to such installations and the maintenance thereof as may reasonably be imposed by Owner. Tenant shall not be charged for such use of the roof, penthouse or any Building cables or similar equipment and shall be entitled to have twenty four (24, hour unrestricted access thereto, subject to the provisions of Articles 13 and 26 of this Lease. Section 39.02. Owner agrees that Owner shall not grant any rights to install any satellite or telecommunications transmitting or receiving antenna or dish or similar equipment on the roof of the Building to any tenants in the 62 Building which will physically interfere in any way with the rights granted to Tenant in this Article. ARTICLE 40 ADDENDUM TO ARTICLE 4 Section 40.01. Notwithstanding anything contained in Article 4 to the contrary, any fixtures, improvements, additions and other property installed at the sole expense of Tenant with respect to which Tenant shall not have been granted any credit or allowance by Owner may be removed by Tenant at or prior to the expiration of the Demised Term provided Tenant is not in default hereunder beyond the applicable grace periods for the curing of such defaults and further provided that Tenant, at Tenant's sole cost and expense, shall repair any damage caused by such removal and, in those instances where Tenant may have replaced fixtures or installations installed at the sole cost and expense of Owner or at the joint cost and expense of Owner and Tenant with other fixtures and installations which Tenant elects to remove, Tenant shall restore the fixtures and installations so replaced. All fixtures and installations not so removed shall become the property of Owner at the expiration of the Demised Term. Section 40.02. Nothing contained in the provisions of this Lease shall prevent Tenant from removing from the Demised Premises at any time during the Demised Term Tenant s furniture, trade fixtures and business equipment, including, but not limited to, Tenant s broadcasting equipment provided that Tenant, at Tenant s sole cost and expense, shall repair any damage to the Demised Premises and the Building caused by such removal. ARTICLE 41 ADDENDUM TO ARTICLE 9 Section 41.01. Notwithstanding the provisions of subdivision (i) of Section 9.01, if prior to or during the Demised Term the Demised Premises, in contradistinction to the Building, shall be totally destroyed or rendered wholly untenantable and there shall be less than two (2) years of the Demised Term remaining at that time, then if Owner does not exercise its right to terminate this Lease in accordance with the provisions of subdivision (i) of said Section 9.01, then Tenant shall have the right to terminate this Lease as of the date of such fire or casualty by notice to Owner within thirty (30) days of the date of such fire or casualty and in the event Tenant shall timely give such notice of 63 termination, this Lease and the Demised Term shall come to an end and expire on such date with the same effect as if such date were the Expiration Date and the Fixed Rent shall be apportioned as of such date, and any prepaid portion of Fixed Rent for any period after such date shall be refunded by Owner to Tenant. Section 41.02. Notwithstanding the provisions of subdivision (i) of subsection A of this Section 9.01, if during the Demised Term the Demised Premises, in contradistinction to the Building, shall be totally damaged or rendered wholly untenantable by fire or other casualty, and there shall be at least two (2) years of the Demised Term remaining at the time, Owner hereby waives the right to terminate this Lease in accordance with the provisions of subdivision (i) of said Subsection A. The provisions of the foregoing sentence shall be deemed to relate solely to the operation of the provisions of subdivision (i) of said Subsection A and shall not in any way be deemed to relate to the provision of subdivision (ii) of said Subsection A. ARTICLE 42 ADDENDUM TO ARTICLE 11 Section 42.01. A. Supplementing the provisions of Article 11, as long as Tenant is not in default under any of the terms, covenants or conditions of this Lease on Tenant's part to be observed and performed beyond the applicable grace periods provided in this Lease for the curing of such default, Unistar Communications Group Inc., Tenant named herein, shall have the right, without the prior consent of Owner, to assign its interest in this Lease, for the use permitted in this Lease, to any subsidiary or affiliate of Tenant named herein, which is in the same general line of business as Tenant named herein and only for such period as it shall remain such subsidiary or affiliate. For the purposes of this Article: (a) a "subsidiary" of Tenant named herein shall mean any corporation not less than fifty-one (51% percent of whose outstanding voting stock at the time shall be owned by Tenant named herein, and (b) an "affiliate" of Tenant named herein shall mean any corporation, partnership or other business entity which controls or is controlled by, or is under common control with Tenant. For the purpose of the definition of "affiliate the word "control" (including, "controlled by" and "under common control with") as used with respect to any corporation, partnership or other business entity, shall mean the possession of the power to direct or cause the 64 direction of the management and policies of such corporation, partnership or other business entity, whether through the ownership of voting securities or contract. No such assignment shall be valid or effective unless, within ten (10) days after the execution thereof, Tenant shall deliver to Owner: (I) a duplicate original instrument of assignment, in form and substance reasonably satisfactory to Owner, duly executed by Tenant, in which Tenant shall (a) waive all notices of default given to the assignee, and all other notices of every kind or description now or hereafter provided in this Lease, by statute or rule of law, and (b) acknowledge that Tenant's obligations with respect to this Lease shall not be discharged, released or impaired by (i) such assignment, (ii) any amendment or modification of this Lease, whether or not the obligations of Tenant are increased thereby, (iii) any further assignment or transfer of Tenant's interest in this Lease, (iv) any exercise, non-exercise or waiver by Owner of any right, remedy, power or privilege under or with respect to this Lease, (v) any waiver, consent, extension, indulgence or other act or omission with respect to any other obligations of Tenant under this Lease, (vi) any act or thing which, but for the provisions of such assignment, might be deemed a legal or equitable discharge of a surety or assignor, to all of which Tenant shall consent in advance, it being the purpose and intent of Owner and Tenant that the obligations of Tenant hereunder as assignor shall be absolute and unconditional under any and all circumstances, and (II) an instrument, in form and substance satisfactory to Owner, duly executed by the assignee, in which such assignee shall assume the observance and performance of, and agree to be personally bound by, all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed. B. Further supplementing the provisions of Article 11, as long as Tenant is not in default under any of the terms, covenants or conditions of this Lease on Tenant's part to be observed and performed beyond the applicable grace periods provided in this Lease for the curing of such default, Unistar Communications Group,Inc., Tenant named herein, shall have the right without the prior consent of Owner, to sublet to, or permit the use or occupancy of, all or any part of the Demised Premises by any subsidiary or affiliate (as said terms are defined in Section 42.01.A.) of Tenant named herein for the use permitted in this Lease provided that such subsidiary or affiliate is in the same general line of business as the Tenant named herein and only for such period as it shall remain such subsidiary or affiliate and in the same general line of business as the Tenant named herein. 65 However, no such subletting shall be valid unless, prior to the execution thereof, Tenant shall give notice to Owner of the proposed subletting, and within ten (10) days after the execution thereof, Tenant shall deliver to Owner an agreement, in form and substance satisfactory to Owner, duly executed by Tenant and said subtenant, in which said subtenant shall assume performance of and agree to be personally bound by, all of the terms, covenants and conditions of this Lease which are applicable to said subtenant and such subletting. Tenant shall give prompt notice to Owner of any such use or occupancy, and such use or occupancy shall be subject and subordinate to all of the terms, covenants and conditions of this Lease. No such use or occupancy shall operate to vest in the user or occupant any right or interest in this Lease or the Demised Premises. For the purposes of determining the number of subtenants or occupants in the Demised Premises, the occupancy of any such permitted subsidiary or affiliate of Tenant shall be deemed the occupancy of Tenant and such subsidiary or affiliate shall not be counted as a subtenant or occupant for the purposes of Section 11.03, and the provisions of Section 11.03 relating to Owner's options to terminate this Lease or recapture the Demised Premises, as the case may be, and Subletting Profit shall not be applicable to any proposed subletting to any such subsidiary or affiliate of Tenant pursuant to the provisions of this Section. Section 42.02. Supplementing the provisions of Article 11, as long as Tenant is not then in default under any of the terms, covenants or conditions of this Lease on Tenant's part to be observed or performed beyond the applicable grace periods provided in this Lease for the curing of such default, Tenant shall have the privilege, without the consent of Owner, to assign its interest in this Lease for the use permitted in this Lease to any entity which is a successor to Tenant either by merger, consolidation, purchase of all or substantially all of its stock, purchase of all or substantially all of its assets, business and goodwill or like transaction, provided that such successor shall continue to operate in the Demised Premises the business conducted by Tenant in the Demised Premises on or about the Commencement Date and the interest of Tenant in this Lease is not the sole or principal asset of Tenant and such assignment is made for a good business purpose. However, no such assignment shall be valid unless, within ten (10) days after the execution thereof, Tenant shall deliver to Owner (i) a duplicate original instrument of assignment in form and substance reasonably satisfactory to Owner, duly executed by Tenant, and (ii) an instrument in 66 form and substance reasonably satisfactory to Owner, duly executed by the assignee, in which such assignee shall assume observance and performance of, and agree to be personally bound by, all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed. Section 42.03. Supplementing the provisions of Section 11.02, so long as Owner shall maintain a directory in the lobby of the Building, Owner shall make available to Tenant space for the listing of Tenant's name and the names of any of the officers or employees of Tenant and any permitted occupants of the Demised Premises provided that the names so listed shall not require more than Tenant's Proportionate Share of the space of such directory, provided further, however that Tenant shall be provided with at least ten (10) spaces on such directory. ARTICLE 43 ADDENDUM TO ARTICLE 13 Section 43.01. Supplementing the provisions of Sections 13.01 and 13.02, Owner agrees that except in cases of emergency, any entry upon the Demised Premises pursuant to the provisions of said Sections shall be made at reasonable times, and only after reasonable advance notice (which may be mailed, delivered or left at the Demised Premises, notwithstanding any contrary provisions of Article 27), and any work performed or installations made pursuant to said Section shall be made with reasonable diligence and any such entry, work or installations shall be made in a manner designed to minimize interference with Tenant s normal business operations (however, nothing contained in this Section shall be deemed to impose upon Owner any obligation to employ contractors or labor at overtime or other premium pay rates). Section 43.02. Further supplementing the provisions of Section 13.01, Owner's right to exhibit the Demised Premises to others shall be limited to insurance carriers and representatives, prospective purchasers of the Real Property or the Building, holders or prospective holders of any mortgage affecting the Real Property or the Building or any ground or underlying lease, and other legitimate business visitors, and, during the last year of the Demised Term, any prospective tenants of the Demised Premises. Section 43.03. Further supplementing the provisions of 67 Section 13.01, Owner agrees that any pipes, ducts or conduits installed in or through the Demised Premises during the Demised Term pursuant to the provisions of Section 13.01, shall either be concealed behind, beneath or within partitioning, columns, ceilings or floors, or completely furred at points immediately adjacent to partitioning, columns or ceilings, and that when the installation of such pipes, ducts or conduits shall be completed, such pipes, ducts or conduits shall not reduce the usable area of the Demised Premises by more than a de minimis amount. Section 43.04. Further supplementing the provisions of Section 13.02, Owner shall not restrict the reasonable decoration of Tenant's entry doors on the seventeenth (17th) floor. ARTICLE 44 ADDENDUM TO ARTICLE 23 Section 44.01. Tenant shall have the right to examine those portions of Owner's records which pertain to Operating Expenses and which are required to verify the accuracy of the amounts shown on any Owner's Operating Expense Statement, provided Tenant shall notify Owner of its desire to so examine such records within sixty (60) days next following the rendition of such Owner's Operating Expense Statement. If Tenant shall fail to (a) notify Owner of its desire to so examine such records within said sixty (60) day period next following the rendition of such Owner's Statement or (b) so examine such records within ninety (90) days next following rendition of such Owner's Operating Expense Statement then the increase in the Fixed Rent as shown on such Owner's Operating Expense Statement shall be final and binding upon Tenant. Any such examination shall be conducted at the office of Owner's accountants during the normal office hours of such accountants and Tenant shall reimburse Owner's accountants for their reasonable out of pocket expenses in connection with such examination by Tenant. ARTICLE 45 ADDENDUM TO ARTICLE 26 Section 45.01. Supplementing the provisions of Section 26.01, Owner agrees to use reasonable diligence to attempt to eliminate the cause of any inability or delay, referred to in said Section 26.01, on the part of Owner to fulfill 68 its obligations under this Lease. (However, nothing contained in this Section shall be deemed to impose upon Owner any obligation to employ labor at so-called "overtime" or other premium pay rates). ARTICLE 46 TENANT'S ACCESS Section 46.01. Owner agrees that Tenant shall be entitled to access to the Demised Premises twenty four (24) hours per day, seven (7) days per week, subject to the provisions of this Lease. ARTICLE 47 SUBORDINATION, ATTORNMENT, ETC. Section 47.01. This Lease and all rights of Tenant under this Lease are, and shall remain unconditionally subject and subordinate in all respects to the presently existing mortgages affecting the indenture of lease dated as of March 13, 1985 between The Shubert Organization, Inc., as Landlord. and Owner, as tenant (referred to as the "Ground and Development Rights Lease") and to all advances made or hereafter to be made under said mortgages, and to all renewals, modifications, replacements and extensions of and substitutions for, such mortgages, as well as to any consolidations or correlations of such mortgages with other mortgages. Owner agrees to obtain and deliver to Tenant not later than one hundred eighty (180) days after the date of this Lease, an agreement substantially to the effect that in the event of any foreclosure of said mortgages such holder or holders of said mortgages will not make Tenant a party defendant to such foreclosure nor disturb its possession under this Lease so long as there shall be no default by Tenant under this lease beyond the applicable grace periods provided for the curing of such default (any such agreement, or any agreement of similar import, is referred to in this Lease as a "Non-Disturbance Agreement"). If Owner shall fail to make timely delivery to Tenant of such Non-Disturbance Agreement, Tenant, as Tenant's sole remedy for such failure, shall have the right, exercisable within one-hundred ninety (190) days after the date of this Lease, to cancel and terminate this Lease by notice given to Owner. Upon the giving of such notice of cancellation and termination, this Lease shall terminate and come to an end and neither party shall have any further rights or liabilities under this lease. It is agreed that time is of the essence with respect to any such notice of cancellation and termination, that 69 Tenant shall not have the right to give any such notice after the one-hundred ninety ( 190) day period hereinabove referred to, and that any such notice given after the expiration of such period shall have no force or effect. Section 47.02. This Lease and all rights of Tenant under this Lease shall be and remain, unconditionally subject and subordinate in all respects to all other mortgages which may, from time to time, affect the Ground and Development Rights Lease, any future ground or underlying lease referred to in Section 47.04 or the Real Property and to all advances to be made under such mortgages, and to all renewals modifications, consolidations, correlations, replacements and extensions of and substitutions for, any such mortgage or mortgages, provided that (i) the holder of any such mortgage shall execute and deliver a Non-Disturbance Agreement to Tenant, or (ii) any such mortgage shall contain provisions substantially to the same effect as thou contained in a Non-Disturbance Agreement (any such provisions are referred to in this Lease as "Non-Disturbance Provisions"). Section 47.03. This Lease and all rights of Tenant under this Lease are, and shall remain, unconditionally subject and subordinate in all respects to the Ground and Development Rights Lease and to all renewals, modifications, replacements and extensions of, and substitutions for, such lease. Owner agrees that until such time as Owner has delivered to Tenant a Tenant Recognition Agreement (as hereinafter defined). Owner will not enter into any agreement to modify the provisions of Section 14.04 of the Ground and Development Rights Lease. An agreement from the lessor under the Ground and Development Rights Lease substantially to the effect that, in the event of the termination of the Ground and Development Rights Lease for any reason other than a termination by operation of the provisions of Articles 8 (entitled "Damage to or Destruction of the Building") and 9 (entitled "Condemnation") of such Lease such lessor will permit Tenant to attorn to such lessor and will not disturb its possession under this Lease, so long as there shall be no default by Tenant under this Lease, beyond the applicable grace period provided in this Lease for the cunng of such default, or any agreement of similar import is referred to in this Lease as a "Tenant Recognition Agreement". Owner agrees, within thirty (30) days next following the date of this Lease, to request from the lessor under the Ground and Development Rights Lease a tenant Recognition Agreement in favor of Tenant with respect to this Lease and to take all reasonable steps to obtain the same. 70 Section 47.04. This lease and all rights of Tenant under this Lease shall be and remain, unconditionally subject and subordinate in all respects to all future ground or underlying leases affecting the Real Property or any portion thereof or the Building and to all renewals, modifications, replacements and extensions of, and substitutions for, such ground or underlying leases, provided that (i) any such ground or underlying lease shall contain provisions substantially to the same effect as those contained in a Tenant Recognition Agreement. (and such provisions are referred to in this lease as "Tenant Recognition Provisions"), or (ii) the lessor under any such ground or underlying lease shall execute and deliver to Tenant a Tenant Recognition Agreement. Section 47.05.A. At Owner's request, Tenant shall execute and deliver promptly any certificate or other instrument which Owner may request, subordinating this Lease and all rights of Tenant under this Lease to any mortgages which may now or hereafter affect the Real Property and/or the real property from which the development rights demised in the Ground and Development Rights Lease accrue and/or any ground or underlying lease affecting such real property, and to all advances made or hereafter to be made under such mortgages and to all renewals, modifications. consolidations, correlations, replacements and extensions of, and substitutions for, any such mortgage or mortgages, provided that (i) the holder of any such mortgage shall execute and deliver a Non-Disturbance Agreement to Tenant. or (ii) any such mortgage shall contain Non-Disturbance Provisions in the event Tenant shall fail to execute or deliver any such certificate or other instrument which may be requested pursuant to the foregoing provisions of this subsection within a reasonable time after Owner's request therefor, Tenant hereby irrevocably constitutes and appoints Owner as Tenant's agent and attorney-in-fact to execute any such certificate or other instrument for or on behalf of Tenant. B. The subordination provisions of this Article (with the exception of the provisions of subsection A of this Section 47.05) shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall execute and deliver promptly any certificate or other instrument which Owner, or any lessor under any ground or underlying lease or any holder of any such mortgage may reasonably request, and if Tenant shall fail to execute and deliver any such certificate or other instrument within a reasonable time after Owner's request therefor, Tenant hereby irrevocably constitutes and appoints Owner and all such lessors and 71 holders, acting jointly or severally, as Tenant's agent and attorney-in-fact to execute any such certificate or other instrument for or on behalf of Tenant. If, in connection with obtaining financing with respect to the Building, the Real Property, the real property from which the development rights demised in the Ground and Development Rights Lease accrue or the interest of the lessee under any ground or underlying lease, any recognized lending institution shall request reasonable modifications of this Lease as a condition of such financing. Tenant covenants not unreasonably to withhold or delay its agreement to such modifications, provided that such modifications do not increase the obligations, or materially and adversely affect the rights, of Tenant, under this Lease. No act or failure to act on the pan of Owner which would entitle Tenant under the terms of this Lease, or by law, to be relieved of Tenant's obligations hereunder or to terminate this Lease shall result in a release or termination of such obligations or a termination of this Lease unless (i) Tenant shall have first given written notice of Owner's act or failure to act to the holder or holders of any mortgage of whom Tenant has been given written notice specifying the act or failure to act on the pan of Owner which could or would give basis to Tenant's rights, and (ii) the holder or holders of such mortgages, after receipt of such notice, have failed or refused to correct or cure the condition complained of within a reasonable time thereafter, but nothing contained in this sentence shall be deemed to impose any obligation on any such holder to correct or cure any such condition. "Reasonable time" as used above means and includes a reasonable time to obtain possession of the Building if any such holder elects to do so and a reasonable time to correct or cure the condition if such condition is determined to exist. Section 47.06. If, at any time prior to the expiration of the Demised Term, any ground or underlying lease under which Owner then shall be the lessee shall terminate or be terminated for any reason, Tenant agrees at the election and upon request of any owner of the Real Property, or of the holder of any mortgage in possession of the Real Property or the Building, or of any lessee under any other ground or underlying lease covering premises which include the Demised Premised to attorn, from time to time, to any such owner, holder, or Lessee, upon the then executory terms and conditions of this Lease, for the remainder of the term originally demised in this Lease, provided that such owner, holder or lessee, as the case may be, shall then be entitled to possession of the Demised Premises The provisions of this 72 Section shall ensure to the benefit of any such owner, holder, or lessee, shall apply notwithstanding that. as a matter of law, this Lease may terminate upon the termination of any such ground or underlying lease, shall be self-operative upon any such request, and no further instrument shall be required to give effect to said provisions. Tenant, however, upon request of any such owner, holder, or lessee, agrees to execute, from time to time, instruments in confirmation of the foregoing provisions of this Section, satisfactory to any such owner, holder, or lessee, acknowledging such attornment and setting forth the terms and conditions of its tenancy. Nothing contained in this Section shall be construed to impair any right otherwise exercisable by any such owner, holder, or Lessee. Notwithstanding anything to the contrary set forth in this Article no such owner, holder or lessee shall be bound by (i) any payment of any installment of Fixed Rent or increases therein or any additional rent which may have been made more than thirty (30) days before the due date of such installment, or (ii) any amendment or modification to this Lease which is made without its consent if required. Section 47.07. Nothing contained in this Article or in any Non-Disturbance Provision, Non-Disturbance Agreement, Tenant Recognition Provision or Tenant Recognition Agreement shall, however, affect the prior rights of the holder of any existing or future mortgage or of the lessor under any ground or underlying lease with respect to the proceeds of any award in condemnation or of any fire insurance policies affecting the Building, or impose upon any such holder or lessor any liability (i) for the erection or completion of the Building. or (ii) in the event of damage or destruction to the Building or the Demised Premises, for any repairs, replacements, rebuilding or restoration except as can reasonably be accomplished from the net proceeds of insurance actually received by, or made available to, such holder or lessor, or (iii) for any default by Owner under this Lease occurring prior to any date upon which such holder or lessor shall become Tenant's landlord, or (iv) for any credits, offsets or claims against the rent under this Lease as the result of any acts of Owner committed prior to such date, and any such Provision or Agreement may so state. Any such Provision or Agreement may also be conditioned upon the existence of any one or more of the following circumstances at the time of the commencement of any foreclosure of any such mortgage or at the time of the termination of any such ground or underlying lease as the case may be: A. The Demised Term shall have commenced or Tenant 73 shall have taken possession of the Demised Premises; B. Tenant shall not be in default in the observance or performance of any of the covenants of this Lease on the part of Tenant to be observed or performed beyond the applicable grace period provided in this Lease for the curing of such default; C. Tenant shall not have paid rent in advance beyond the rent period next following the current rent period, and there shall be no offsets then accrued against future rent chargeable against the holder of any such mortgage after foreclosure or against the lessor under such ground or underlying lease after termination, as the case may be. D. Any circumstance substantially similar to B or C; or E. Tenant shall have furnished to the then holder of any such mortgage or the then lessor under any such ground or underlying lease, as the case may be, a statement, in writing, as to the status of this Lease with respect to the above circumstances A, B and C or any circumstance substantially similar to B or C, within ten (10) days after such holder or lessor shall have made written demand for such statement by registered or certified mail addressed to Tenant. Section 47.08. A. At the request of Owner, Tenant shall promptly execute and deliver any instrument or Instruments requested by Owner for the benefit of the holder of any mortgage to which this Lease shall then be subordinate as hereinabove provided, or for the benefit of the lessor under any ground or underlying lease to which this Lease shall then be subordinate as hereinabove provided, in which Tenant shall covenant and agree with such holder or lessor that (a) Tenant will not enter into any agreement to cancel or modify this Lease without the written approval of such holder or lessor, and (b) Tenant will not take any action or institute any proceeding against Owner to cancel or modify this Lease without giving to such holder or lessor at least thirty (30) days' prior written notice of such action or proceedings except that the provisions of any such instrument shall not apply to any modifications of this Lease contemplated in any of the provisions of this Lease, or to any right or option to cancel or modify this Lease expressly reserved or granted to Tenant pursuant to any of the provisions of this Lease. B. If required by the holder of any mortgage or by the lessor under any ground or underlying lease, Tenant shall promptly join in any Non-Disturbance Agreement or Tenant 74 Recognition Agreement to indicate its concurrence with the provisions thereof provided such agreement shall substantially comply with the provisions of this Article. Section 47.09 A. From time to time, within ten (10) days next following Owner's request, Tenant shall deliver to Owner a written statement executed and acknowledged by Tenant, in form reasonably satisfactory to Owner, (i) stating that this Lease is then in full force and effect and has not been modified (or if modified, setting forth the specific nature of all modifications), and (ii) setting forth the date to which the Fixed Rent has been paid, and (iii) stating whether or not, to the best knowledge of Tenant, Owner is in default under this Lease, and, if Owner is in default setting, forth the specific nature of all such defaults and (iv) stating that Tenant has accepted and occupied the Demised Premise and all improvements required to be made by Owner pursuant to the provisions of this Lease, have been made, if such be the case. Tenant acknowledges that any statement delivered pursuant to this subsection may be relied upon by any purchaser or owner of the Building, or the Real Property or any part thereof, or Owner's interest in the Building or the Real Property or any ground or underlying lease, or by any mortgagee, or by any assignee of any mortgagee, or by any lessee under any ground or underlying lease. B. From time to time, within 1 (1) day next following Tenant's request, Owner shall deliver to Tenant a written statement executed by Owner, in form reasonably satisfactory to Tenant and prepared at Tenant's expense (i) stating that this Lease is in full force and effect and has not been modified (and if modified, that this Lease is then in full force and effect as so modified and the specific nature of all modifications), and (ii) setting from the date to which the Fixed Rent has been paid, and (iii) stating whether or not, to the best knowledge of Owner, Tenant is in default under this Lease and, if Tenant is in default, setting forth the specific nature of all such defaults. Owner acknowledges that any statement delivered pursuant to this subsection may be relied upon by any institutional lender making loans to Tenant, or any prospective assignee of Tenant's interest in this Lease (whether pursuant to the provisions of Section 11.06 or otherwise) or by any prospective subtenants or by any entity which acquires all or substantially all of the issued and outstanding capital stock of Tenant, provided, however, the foregoing provisions of this sentence shall not be deemed to give Tenant any rights of assignment and subletting which are not expressly provided for in this Lease. 75 Section 47.10. If Owner assigns its interest in this Lease, or the rents payable hereunder, to the holder of any mortgage or the lessor under any ground or underlying lease, whether the assignment shall be conditional in nature or otherwise, Tenant agrees that (a) the execution thereof by Owner and the acceptance by such holder or lessor shall not be deemed an assumption by such holder or lessor of any of the obligations of the Owner under this Lease unless such holder or lessor shall, by written notice sent to Tenant, specifically otherwise elect, and (b) except as aforesaid, such holder or lessor shall be treated as having assumed Owner's obligations hereunder only upon the foreclosure of such holder's mortgage or the termination of such lessor's lease and the taking of possession of the Demised Premises by such holder or lessor, as the case may be. Section 47.11. Tenant agrees to cooperate with Owner in Owner's obtaining any Non-Disturbance Agreement and Tenant Recognition Agreement and Tenant shall provide Owner and the holder of any mortgage and lessor under any ground or underlying lease with any information reasonably required by them in connection with obtaining any such Non-Disturbance Agreement or Tenant Recognition Agreement, including, without limitation, financial statements of Tenant. ARTICLE 48 ADDENDUM TO ARTICLE 1 Section 48.01. Notwithstanding anything in Section 1.02 to the contrary, in the event the Commencement Date shall not have occurred on or prior to April 1, 1991, Tenant shall have a single option to cancel this Lease and the Demised Term by giving notice to Owner of such cancellation within ten (10) days next following said date, as said date may be extended pursuant to the following provisions of this Section 48.01. Upon the giving of such notice this Lease and Demised Term shall expire and come to an end as of the date of the giving of such notice, and security deposited by Tenant hereunder shall be promptly returned to Tenant, and Owner and Tenant shall be released and discharged of and from any and all further liability under the provisions of this Lease. Time is of the essence with respect to the exercise by Tenant of such option. If Tenant shall fail to give timely notice exercising the foregoing option to cancel this Lease and the Demised Term, then the Demised Term shall commence and end in accordance with the provisions of Section 1.02. Owner shall have the right to extend the date April 1, 1991 set forth above in this Section by a period equal to the aggregate of (i) the number of days, if any, 76 which may have elapsed between the date upon which Tenant is required to submit to Owner a Tenant s Plan pursuant to paragraph II of Schedule A and the date of submission by Tenant to Owner of a Tenant's Plan which shall have met with Owner's approval as provided in said paragraph II plus (ii) the number of days, if any, of delay or delays in substantial completion of Owner s Initial Construction occasioned by reason of Tenant s delays in submitting any other plans and specifications or in supplying information, or in approving plans, specifications or estimates, or in giving authorizations or by reason of any Change Work as defined in Schedule A or by reason of Tenant s delay in exercising the option to supply the modular systems for the broadcasting studio portion of the Demised Premises or by reason of any delays in the delivery of such modular systems supplied by Tenant or by reason of any similar acts or omissions of Tenant plus (iii) the number of days, if any, of delay or delays in substantial completion of Owner's Initial Construction occasioned by reason of strikes or other labor disputes, fire or other casualty (or reasonable delays in adjustment of insurance), accidents, orders or regulations of any Federal, State, County or Municipal authority, or by any other cause beyond Owner's control, whether or not such other cause shall be similar in nature to those hereinbefore enumerated. The provisions of subparagraph II (2) of Schedule A shall not be affected by the provisions of this Section. Notwithstanding anything to the contrary contained in the foregoing provisions of this Section, in the event Tenant shall use or occupy all or any part of the Demised Premises for the conduct of business prior to the Commencement Date, the foregoing option to terminate this Lease in accordance with the provisions of this Section shall be of no further force or effect. ARTICLE 49 ADDENDUM TO ARTICLE 5 Section 49.01. As long as Tenant is not in default under any of the terms, covenants and conditions of this Lease beyond the applicable grace periods provided herein for the curing of such default, Owner at Owner's sole cost and expense, shall make (i) all structural repairs and replacements to the Demised Premises (including, without limitation, the core toilets) as and when required, (ii) all repairs necessary to furnish the utilities and services required to be furnished by Owner to Tenant under the provisions of Article 29, with the exception of repairs to any special 77 HVAC equipment installed to serve the Demised Premises (in contradistinction to the Building HVAC systems), and (iii) all repairs and replacements to the public portions of the Building necessary to Tenant's use of the Demised Premises, except that Owner shall not be required to make any repairs referred to in subdivisions (i) (ii) and (iii) of this sentence if Tenant is obligated to make such repairs pursuant to the provisions of Section 5.01. Notwithstanding the foregoing provisions of this Section, Owner shall have no obligation to make any repairs or replacements unless and until specific notice of the necessity therefor shall have been given by Tenant to Owner. Section 49.02. If (i) Owner shall default in its obligations to make repairs solely in the Demised Premises, in accordance with the provisions of Section 49.01, and (ii) Tenant shall notify Owner of the existence of such default and (iii) Owner shall (x) fail to start to cure such default within ten (10) business days after said notice or shall fail thereafter to prosecute to completion with reasonable diligence the work necessary to cure such default or (y) fail to notify Tenant within ten (10) business days after said notice that Owner is unable to start to cure such default because of inability to obtain materials, or strikes or other labor disputes, fire or other casualty (or reasonable delays in adjustment of insurance), accidents, orders or regulations of any Federal, State, County or Municipal authority or by any other cause beyond Owner's reasonable control, whether or not such cause shall be similar in nature to those hereinbefore enumerated, and thereafter fail to commence curing such default within ten (10) business days after such inability or other cause no longer exists and to complete such curing in a reasonably diligent manner, then Tenant may take action to cure such default. In the event Tenant cures any such default in accordance with the foregoing provisions of this Section, any reasonable expenditures made by Tenant to cure such default shall be repaid by Owner to Tenant within twenty (20) days after demand and, if Owner fails to pay any such sum within such twenty (20) day period, Tenant may offset and deduct such sum from the next accruing monthly installments of Fixed Rent. ARTICLE 50 NO RE-ENTRY OR CROSS-OVER FLOOR Section 50.01. Owner agrees that during the Demised Term the seventeenth (17th) floor of the Building shall not be 78 designated as a re-entry floor or cross-over floor or used as such. ARTICLE 51 SECURITY Section 51.01. A. Tenant shall have the right to require Owner to return to Tenant that portion of the security deposited by Tenant and then held by Owner pursuant to the provisions of Article 35 in the event that prior to the return by Owner to Tenant of such security, or the unapplied portion thereof, Tenant shall deposit with Owner an irrevocable, unconditional letter of credit issued by Chase Manhattan Bank N.A. or any other bank having assets of at least ONE BILLION ($1,000,000,000.00) DOLLARS and which is a member of the New York Clearing House Association (Chase Manhattan Bank N.A. or any such other bank meeting the foregoing requirements and issuing the initial or any replacement letter of credit is referred to as the "Bank") in favor of Owner in a sum equal to FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS, as security for the faithful observance and performance by Tenant of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed. From and after the receipt by Owner of such letter of credit and the receipt by Tenant of such security or the unapplied portion thereof, the provisions of Article 35 shall be of no further force and effect. Such letter of credit shall be in form and substance satisfactory to Owner. Owner agrees that a letter of credit which is in the form annexed hereto as Exhibit 1 shall be deemed satisfactory to Owner. Tenant agrees to cause the Bank to renew such letter of credit, from time to time, during the Demised Term, at least ninety (90) days prior to the expiration of said letter of credit or any renewal or replacement, upon the same terms and conditions. In the event of any transfer of said letter of credit pursuant to Section 51.05, and notice of such transfer to Tenant, Tenant, within twenty (20) days thereafter, shall cause a new letter of credit to be issued by said Bank to the transferee, upon the same terms and conditions, in replacement of the letter of credit so transferred and Owner agrees that, simultaneously with the delivery of such new letter of credit, it will return to said Bank the letter of Credit being replaced. The letter of credit deposited hereunder, and all renewals and replacements, are referred to, collectively, as the "Letter of Credit". The Letter of Credit shall be held in trust by Owner for the purposes set forth in this Article and shall 79 not be transferred except for transfer (a) to an agent for collection, or (b) pursuant to the provisions of Section 51.05. In the event Tenant defaults beyond any applicable grace period hereunder in the performance of its obligations to issue a replacement Letter of Credit, or in the observance or performance of Tenant's agreement to cause the Bank to renew the Letter of Credit, Owner, in addition to all rights and remedies which Owner may have under this Lease or at law, shall have the right to require the Bank to make payment to Owner of the entire sum of FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS or the undrawn portion thereof, as the case may be, represented by the Letter of Credit, which sum shall be held by Owner as Cash Security in the same manner as if said sum had been deposited with Owner pursuant to the provisions of subsection B of this Section. If said payment of the entire sum of FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS is made to Owner by reason of Tenant's failure to renew or replace the Letter of Credit in accordance with the foregoing provisions of this subsection, such default by Tenant shall be deemed cured by such payment, with the effect that Owner shall not have the right to terminate this Lease or the term hereof by reason of such default, but the foregoing provision shall not apply to any other default under this Lease. The Letter of Credit provides for partial drawings. In the event Tenant defaults in the payment when due of an installment of Fixed Rent or in the payment when due of any additional rent and such default shall continue for a period of ten (10) days after notice by Owner to Tenant of such default or if this Lease and the Demised Term shall expire and come to an end as provided in Article 16 or by or under any summary proceeding or any other action or proceeding, or if Owner shall re-enter the Demised Premises as provided in Article 17, or by or under any summary proceeding or any other action or proceeding, then Owner, in addition to all rights and remedies which Owner may have under this Lease or at law, may from time to time, draw on the Letter of Credit in one or more drawings for the amount of any Fixed Rent or additional rent then due and for any amount then due and payable to Owner under Article 18 or Article 19. In the event of a partial drawing, as provided in the immediately preceding sentence, Tenant shall, within five (5) days after demand, cause the Bank to issue an amendment to the Letter of Credit restoring the amount available thereunder to FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS. B. At any time during the term of this Lease, Tenant may require that Owner return the Letter of Credit by depositing with Owner, in lieu thereof, as security for the faithful observance and performance by Tenant of the terms, 80 covenants and conditions of this Lease on Tenant's part to be observed and performed, the sum of FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS, in cash or by a cashier's check, drawn by or on a bank, which is a member of the New York Clearing House Association, and payable to the order of Owner, which sum is referred to as the "Cash Security . Any Cash Security shall be held subject to the provisions of Section 7-103 of the General Obligations Law or any similar statute successor thereto. C. At any time during the term of this Lease, Tenant may require that Owner return any Cash Security by delivering to Owner in lieu thereof, as security for the faithful observance and performance by Tenant of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed an irrevocable, unconditional Letter of Credit in the Slim of FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS, provided such Letter of Credit is issued by the Bank in the form annexed hereto as Exhibit l. Section 51.02. In the event Tenant defaults in the observance or performance of any term, covenant or condition of this Lease on Tenant's part to be observed or performed, including, but not limited to, the covenant for the payment of Fixed Rent and additional rent, beyond the applicable grace period provided under this Lease for curing such default, Owner may use, apply or retain the whole or any part of any Cash Security held by Owner under any of the provisions of Section 51.01, to the extent required for the payment of any Fixed Rent, additional rent or any other sum with respect to which Tenant is in default, or for the payment of any sum which Owner may expend or incur because of Tenant's default in the observance or performance of any such term, covenant or condition, including, but not limited to, the payment of any damages or deficiency in the reletting of the Demised Premises, whether such damage or deficiency accrued before or after summary proceedings or other re-entry by Owner, without thereby waiving any other rights or remedies of Owner with respect to such default, and Owner shall hold the remainder of such Cash Security as security for the faithful performance and observance by Tenant of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed with the same rights as hereinabove set forth to use, apply or retain all or any part of such remainder in the event of any further default by Tenant under this Lease. Section 51.03. If Owner uses, applies or retains the whole or any part of the Cash Security held by Owner under any of the provisions of Section 51.01, Tenant, promptly after 81 notice thereof, shall deliver to Owner, in cash or by a cashier s check drawn by or on a bank which is a member of the New York Clearing House Association and payable to the order of Owner, the sum necessary to restore the Cash Security to the sum of FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS. Section 51.04. The Letter of Credit and/or any remaining portion of any Cash Security then held by Owner for the performance of Tenant's obligations under this Lease as security shall be returned to Tenant after (i) the Expiration Date and (ii) delivery of the entire possession of the Demised Premises to Owner and (iii) payment by Tenant for any costs of repairs or restoration required to be paid by Tenant pursuant to this Lease and (iv) payment by Tenant of any other sum or charge required to be paid to fully discharge Tenant's obligations under this Lease to and including the Expiration Date. Section 51.05. In the event of a sale or other transfer of the Land and/or Building, or Owner's interest in this Lease, Owner shall transfer the Letter of Credit and/or any remaining portion of any Cash Security then held by Owner as security for the performance of Tenants obligations under this Lease to the transferee, and Owner shall thereupon be released from all liability for the return of such security; Tenant agrees to look solely to the transferee for the return of any such security and it is agreed that the provisions of this sentence shall apply to every sale or transfer of the Land and/or Building by Owner named herein or its successors, and to every transfer or assignment made of any such security. Any transferee shall be deemed to have agreed that any Letter of Credit or Cash Security transferred to such transferee pursuant to this Section shall be held in trust for the purposes of this Article. A lease of the entire Building pursuant to which the lessee shall be entitled to collect the rents hereunder shall be deemed a transfer within the meaning of this Section. Section 51.06. Owner agrees that, if not prohibited by law or the general policies of lending institutions in New York City, Owner shall deposit any Cash Security held by Owner in a money market account selected by Owner with Chase Manhattan Bank N.A. in New York, New York, and all interest accruing thereon shall be remitted to Tenant annually, provided Tenant is not then in default beyond the applicable grace periods provided in this Lease for the curing of such default. Section 51.07. Tenant agrees that it will not assign, mortgage or encumber, or attempt to assign, mortgage or encumber, the Letter of Credit or any Cash Security held 82 by Owner under this Lease, and that neither Owner nor its successors or assigns shall be bound by any such assignment, mortgage, encumbrance, attempted assignment, attempted mortgage or attempted encumbrance. Owner shall not be required to exhaust its remedies against Tenant before having recourse to the Letter of Credit, the Cash Security or any other security held by Owner. Recourse by Owner to the Letter of Credit, the Cash Security or any other security held by Owner shall not affect any remedies of Owner which are provided in this Lease or which are available in law or equity. Section 51.08. A. Owner has agreed that Owner shall return to Tenant the sum of ONE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE ($133,333.00) DOLLARS of such security on the date (referred to as the "Initial Partial Return Date") two (2) years next following the Commencement Date provided Tenant is not then in default under any of the terms, covenants or conditions of this Lease on Tenant's part to be observed and performed beyond the applicable grace period for the curing of such default. Accordingly, if on the Initial Partial Return Date Tenant shall not so be in default Tenant may replace the Letter of Credit with a Letter of Credit in a sum reduced by ONE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE ($133,333.00) DOLLARS. In the event that at any time Tenant shall be entitled to reduce such Letter of Credit as provided in the foregoing provisions of this Article the security shall be held as Cash Security then, in lieu of Tenant replacing any such Letter of Credit, Owner shall return sums to Tenant equal to the amount by which the Letter of Credit would have been reduced if it were in existence; however, in no event shall the Letter of Credit or Cash Security ever be reduced below the sum of TWO HUNDRED SIXTY SIX THOUSAND SIX HUNDRED SIXTY SEVEN ($266,667.00) DOLLARS, subject to the provisions of subsection B hereof. The sum of FOUR HUNDRED THOUSAND ($400,000.00) DOLLARS referred to in the previous Sections of this Article shall be deemed reduced as the provisions of this subsection B of this Section 51.08 shall operate to so reduce the Letter of Credit and/or Cash Security, as the case may be. B. Owner has agreed that Owner shall return to Tenant the sum of ONE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE ($133,333.00) DOLLARS of such security on the date (referred to as the "Partial Return Date") four (4) years next following the Commencement Date, provided Tenant is not then in default under any of the terms, covenants or conditions of this Lease on Tenant's part to be observed and performed beyond the applicable grace period for the curing 83 of such default. Accordingly, if on the Partial Return Date Tenant shall not so be in default, Tenant may replace the Letter of Credit with a letter of credit in a sum reduced by ONE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE ($133,333.00) DOLLARS. In the event that at any time Tenant shall be entitled to reduce such Letter of Credit as provided in the foregoing provisions of this Article the security shall be held as Cash Security then, in lieu of Tenant replacing any such Letter of Credit, Owner shall return sums to Tenant equal to the amount by which the Letter of Credit would have been reduced if it were in existence; however, in no event shall the Letter of Credit or Cash Security ever be reduced below the sum of ONE HUNDRED THIRTY THREE THOUSAND DOLLARS. The sum of TWO HUNDRED SIXTY SIX THOUSAND SIX HUNDRED SIXTY SEVEN ($266,667.00) DOLLARS referred to in the previous Sections of this Article shall be deemed reduced as the provisions of this subsection B of this Section 51.08 shall operate to so reduce the Letter of Credit and/or Cash Security, as the case may be. C. Owner and Tenant acknowledge that the provisions of Sections 35.02 and 35.03 are intended to be comparable to the provisions of subsections A and B of this Section 51.08 and are designed to apply in the event that Tenant initially deposits Cash Security in accordance with the provisions of Article 35. Accordingly, in the event that Owner has returned to Tenant any portions of the security deposited by Tenant with Owner pursuant to the provisions of Article 35 in accordance with the provisions of Sections 35.02 and 35.03 of said Article 35, then the initial sum of the Letter of Credit referred to in Section 51.01.A shall be reduced to the amount of security then permitted to be held by Owner pursuant to the provisions of Article 35 and the applicable provisions of subsections A and/or B of this Section 51.08 which correspond with the applicable provisions of Sections 35.02 and 35.03, as the case may be, shall be deemed deleted from this Lease and of no further force and effect. ARTICLE 52 ADDENDUM TO ARTICLE 6 Section 52.01. Notwithstanding anything contained in Section 6.02 to the contrary, Tenant shall not be deemed to have caused any increase in the fire insurance rates applicable to the Building or property located therein at the beginning of the Demised Term or at any time thereafter, 84 nor shall Tenant be required to make any Alterations in order to comply with any rules, orders, regulations or requirements of the New York Board of Fire Underwriters and the New York Fire Insurance Rating Organization or any similar body, unless such rates are increased, or such Alterations shall be necessitated or occasioned, in whole or in part, by the acts, omissions or negligence of Tenant or any person claiming through or under Tenant, or any of their servants, employees, contractors, agents, visitors or licensees, or by the manner of use or occupancy of the Demised Premises by Tenant or any such persons (in contradistinction to the mere use or occupancy of the Demised Premises for the purposes set forth in Section 2.01). 85 EX-10.21 10 EXHIBIT 10.21 TO FORM 10-K STANDARD OFFICE LEASE--GROSS AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION [LOGO OF INDUSTRIAL AIR APPEARS HERE] 1. BASIC LEASE PROVISIONS ("Basic Lease Provisions") 1.1 PARTIES: This Lease dated for reference purposes only December 18, ------------ 1991 is made by and between VALENCIA PARAGON ASSOCIATES, LTD., a California ---- ----------------------------------------------- Limited Partnership (herein called "Lessor") and UNISTAR COMMUNICATIONS GROUP, ------------------- ----------------------------- INC., a Delaware corporation (herein called "Lessee"). ---- -------- 1.2 PREMISES: Suite Number(s) The entire ground floor of Building No. 5 ----------------------------------------- consisting of approximately 31,529 rentable square feet, more or less, as --------------------------- defined in paragraph 2 and as shown on Exhibit "A" hereto (the "Premises"). 1.3 BUILDING: Commonly described as being located at 25060 Avenue Stanford --------------------- in the City of Valencia ---------- County of Ventura --------- State of California as more particularly described in Exhibit B hereto, ----------- --- and as defined in paragraph 2. 1.4 USE: executive and general offices, broadcasting and production of -------------------------------------------------------------- programming and any lawful related activities subject to paragraph 6. --------------------------------------------- 1.5 TERM: Approximately ten (10) years Commencing on the "Commencement ---------------------------- ------ ------------ Date" (as defined in Addendum Paragraph 50(c)) and ending the "Expiration ---------------------------------------------- ---------------- Date" (as defined in Addendum Paragraph 50(c)). ---------------------------------------------- 1.6 BASE RENT: $42,835.30 per month, payable on the 1st day of -------------------- --- each month, per paragraph 41 . --------------------------------------------------- 1.7 BASE RENT INCREASE: The monthly Base Rent payable under paragraph 1.6 1 above shall be adjusted as provided in Addendum Paragraph 53. 1.8 RENT PAID UPON EXECUTION: $42,835.30 as Base Rent for the first month --------------------------------------------- of the Term for . ------------- ------------------------------------------------------------- 1.9 SECURITY DEPOSIT: None . ---------------------------------------------------- 1.10 LESSEE'S SHARE OF OPERATING EXPENSE INCREASE: 19.19% as defined ----- in paragraph 4.2. Lessor and Lessee agree that the number of rentable square feet of the Premises is 31,529 rentable square feet and the number of rentable square feet of the Office Building Project is 164,292 rentable square feet. ------- 2. PREMISES, PARKING AND COMMON AREAS . ------------------- 2.1 PREMISES: The Premises are a portion of a building, herein sometimes referred to as the "Building" identified in paragraph 1.3 of the Basic Lease Provisions. "Building" shall include adjacent parking structures used in connection therewith. The Premises, the Building, the Common Areas, the land upon which the same are located, along with all other buildings and improvements thereon or thereunder, are herein collectively referred to as the "Office Building Project." Lessor hereby leases to Lessee and Lessee leases from Lessor for the term, at the rental, and upon all of the conditions set forth herein, the real property referred to the Basic Lease Provisions, paragraph 1.2, as the "Premises," including rights to the Common Areas as hereinafter specified. 2.2 VEHICLE PARKING: So long as Lessee is not in default and subject to the rules and regulations attached hereto and as reasonably established by Lessor from time to time, Lessee shall be entitled to rent and use four (4) -------- parking spaces per 1,000 rentable square feet (or part thereof) of the Premises in the area shown on Exhibit "B" as Lessor's parking, free during the initial term hereof and thereafter at the monthly rate applicable from time to time for monthly parking as set by Lessor and/or its licensee. 2.2.1 If Lessee commits, permits or allows any of the prohibited activities described in the Lease or the rules then in effect, then Lessor shall have the right, with oral notice to Lessee's designated representative at the Premises, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor. 2.2.2 During the term following the initial term the monthly parking 2 rate per parking space will be the fair market value for such spaces. Monthly parking fees shall be payable one month in advance prior to the first day of each calendar month. 2.3 COMMON AREAS--DEFINITION. The term "Common areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Office Building Project that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and of other lessees of the Office Building Project and their respective employees, suppliers, shippers, customers and invitees, including but not limited to common entrances, lobbies, corridors, stairways and stairwells, public restrooms, elevators, escalators, parking areas to the extent not otherwise prohibited by this Lease, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways, land-scaped areas and decorative walls. 2.4 COMMON AREAS--RULES AND REGULATIONS. Lessee agrees to abide by and conform to the rules and regulations attached hereto as Exhibit B with respect to the Office Building Project and Common Areas, and to cause its employees, suppliers, shippers, customers, and invitees to so abide and conform. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to modify, and amend and enforce said rules and regulations. Lessor shall not be responsible to Lessee for the non-compliance with said rules and regulations by other lessees, their agents, employees and invitees of the Office Building Project. 2.5 COMMON AREAS--CHANGES: Lessor shall have the right, in Lessor's sole discretion, from time to time: (a) To make changes to the Building interior and exterior and Common Areas, but without unreasonably affecting Lessee's use and enjoyment of the Premises or Common Areas and without permanently relocating Lessee's parking spaces to an area not comparative to Lessee's current parking spaces including, without limitation, changes in the location, size, shape, number, and appearance thereof, including but not limited to the lobbies, windows, stairways, air shafts, elevators, escalators, restrooms, driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, decorative walls, landscaped areas and walkways: provided, however, Lessor shall at all times provide the parking facilities required by applicable law: (b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available. (c) To designate other land and improvements outside the boundaries of the Office Building Project to be a part of the Common Areas, provided that such other land and improvements have a reasonable and functional relationship to the Office Building Project without substantially increasing Lessee's costs in comparison to any extra benefits Lessee may receive thereby. 3 (d) To add additional buildings and improvements to the Common Areas without substantially increasing Lessee's costs in comparison to any extra benefits Lessee may receive thereby. (e) To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Office Building Project, or any portion thereof, but without unreasonably affecting Lessee's use and enjoyment of the Premises or Common Areas and without permanently relocating Lessee's parking spaces to an area not comparative to Lessee's current parking spaces. (f) To do and perform such other acts and make such other changes in to or with respect to the Common Areas and Office Building Project as Lessor may, in the exercise of sound business judgement deem to be appropriate but without unreasonably affecting Lessee's use and enjoyment of the Premises or Common Areas and without permanently relocating Lessee's parking spaces to an area not comparative to Lessee's current parking spaces. 3. TERM. 3.1 TERM. The term and Commencement Date of this Lease shall be as specified in paragraph 1.5 of the Basic Lease Provisions. 4. RENT. 4.1 BASE RENT. Subject to adjustment as hereinafter provided in paragraph 4.3 and except as may be otherwise expressly provided in this Lease. Lessee shall pay to Lessor the Base Rent for the Premises set forth in paragraph 1.6 of the Basic Lease Provisions, without offset or deduction except as set forth in this Lease. Lessee shall pay Lessor upon execution hereof the advance Base Rent described in paragraph 1.8 of the Basic Lease Provisions. Rent for any period during the term hereof which is for less than one month shall be prorated based upon the actual number of days of the calendar month involved. Rent shall be payable in lawful money of the United States to Lessor at the address stated herein or to such other persons or at such other places as Lessor may designate in writing. 4.2 OPERATING EXPENSE INCREASE. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter defined, of the amount by which all Operating Expenses, as hereinafter defined, for each Comparison Year exceeds the amount of all Operating Expenses for the Base Year, such excess being hereinafter referred to as the "Operating Expense Increase," in accordance with the following provisions (a) "Lessee's Share" is defined, for purposes of this Lease, as the percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which percentage has been determined by dividing the approximate square footage of the Premises by the total approximate square footage of the rentable space contained in the Office Building Project. It is understood and agreed that the square footage figures set forth in the Basic Lease Provisions are 4 approximations which Lessor and Lessee agree are reasonable and shall not be subject to revision except in connection with an actual change in the size of the Premises or a change in the space available for lease in the Office Building Project due to a cause outside the reasonable control of Lessor. (b) "Base Year" is defined as the first twelve months following the Commencement Date. (c) "Comparison Year" is defined as each period of twelve months during the term of this Lease subsequent to the Base Year; provided, however, Lessee shall have no obligation to pay a share of the Operating Expense increase applicable to the first twelve (12) months of the Lease Term. Lessee's Share of the Operating Expense increase for the first and last Comparison Years of the Lease Term shall be prorated according to that portion of such Comparison Year as to which Lessee is responsible for a share of such increase. (d) Subject to Addendum Paragraph 54, "Operating Expenses" is defined, for purposes of this Lease, to include the following costs: (i) The operation, repair, maintenance, and replacement, in neat, clean, safe, good order and condition, of the Office Building Project, including but not limited to, the following: (aa) The Common Areas, including their surfaces, coverings, decorative items, carpets, drapes and window coverings, and including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, stairways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, building exteriors and roofs, fences and gates. (bb) All heating, air conditioning, plumbing, electrical systems, life safety equipment, telecommunication and other equipment used in common by, or for the benefit of, lessees or occupants of the Office Building Project, including elevators and escalators, tenant directories, fire detection systems including sprinkler system maintenance and repair. (ii) Trash disposal; (iii) Any other service to be provided by Lessor that is elsewhere in this Lease stated to be an "Operating Expense"; (iv) The cost of the premiums for the liability and property insurance policies to be maintained by Lessor under paragraph 8 hereof; (v) The amount of the real property taxes to be paid by Lessor under paragraph 10.1 hereof (See Paragraph 54(b) of the Addendum); (vi) The cost of water, sewer, gas, electricity, and other publicly mandated services to the Office Building Project. 5 (vii) Replacing and/or adding improvements to the Building or Common Areas mandated by any governmental agency and any repairs or removals necessitated thereby amortized over its useful life according to Federal income tax regulations or guidelines for depreciation thereof (including interest on the unamortized balance as is then reasonable in the judgment of Lessor's accountants). (e) Operating Expenses shall not include any expenses paid by any lessee directly to third parties, or as to which Lessor is otherwise reimbursed by any third party, other tenant, or by insurance proceeds, or any casualty losses, whether or not covered by any insurance proceeds (except to the extent of any commercially reasonable deductible). 6. USE 6.1 USE. The Premises shall be used and occupied only for the purpose set forth in paragraph 1.4 of the Basic Lease Provisions or any other use which is reasonably comparable to that use and for no other purpose. 6.2 COMPLIANCE WITH LAW. (a) Lessor warrants to Lessee that, to Lessor's actual knowledge, the Premises, in the state existing on the date that the Lease term commences, but without regard to alterations or improvements made by Lessee or the use for which Lessee will occupy the Premises, does not violate any covenants or restrictions of record or any applicable building code, regulation or ordinance in effect on such Lease term Commencement Date. In the event it is determined that such a violation exists on the Commencement Date, then it shall be the obligation of the Lessor, after written notice from Lessee, to promptly, at Lessor's sole cost and expense, rectify any such violation. (b) Except as provided in paragraph 6.2(a) Lessee shall, at Lessee's expense, promptly comply with all applicable statutes, ordinances, rules, regulations, orders, covenants and restrictions of record, and requirements of any fire insurance underwriters or rating bureaus, now in effect or which may hereafter come into effect, whether or not they reflect a change in policy from that now existing, during the term or any part of the term hereof, relating to Lessee's particular use of the Premises. Lessee shall conduct its business in a lawful manner and shall not use or permit the use of the Premises or the Common Areas in any manner that will tend to create waste or a nuisance or shall tend to disturb other occupants of the Office Building Project. 6.3 CONDITION OF PREMISES. (a) Lessor shall deliver the Premises to Lessee in a clean condition on the Lease Commencement Date (unless Lessee is already in possession) and Lessor warrants to Lessee that the plumbing, lighting, air conditioning, and 6 heating system in the Premises shall be in good operating condition. In the event that it is determined that this warranty has been violated, then it shall be the obligation of Lessor, after receipt of written notice from Lessee setting forth with specificity the nature of the violation, to promptly, at Lessor's sole cost, rectify such violation. (b) Except as otherwise provided in this Lease, Lessee hereby accepts the Premises and the Office Building Project in their condition existing as of the Lease Commencement Date, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any easements, covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto Lessor represents that to the best of its knowledge, none of the foregoing prohibit Lessee's use and occupancy of the Premises in accordance with the terms of this Lease. Lessee acknowledges that it has satisfied itself by its own independent investigation that the Premises are suitable for its intended use, and that neither Lessor nor Lessor's agent or agents has made any representation or warranty as to the present or future suitability of the Premises, Common Areas, or Office Building Project for the conduct of Lessee's business, except as set forth herein. 7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES. 7.1 LESSOR'S OBLIGATIONS. Lessor shall keep the Office Building Project, including the Premises, interior and exterior walls, roof, and common areas, and the equipment and all utility and other Building systems (except as expressly set forth to the contrary herein) whether used exclusively for the Premises or in common with other premises, in good condition and repair; provided, however, Lessor shall not be obligated to paint, repair or replace the floor coverings, wall coverings, or to repair or replace any improvements that are not ordinarily a part of the Building or are above then Building standards unless they were part of the Lessee Improvements or as otherwise expressly set forth herein. Except as expressly set forth herein, there shall be no abatement of rent or liability of Lessee on account of any injury or interference with Lessee's business with respect to any improvements, alterations or repairs made by Lessor to the Office Building Project or any part thereof. Lessee expressly waives the benefits of any statute now or hereafter in effect which would otherwise afford Lessee the right to make repairs at Lessor's expense or to terminate this lease because of Lessor's failure to keep the Premises in good order, condition and repair. 7.2 LESSEE'S OBLIGATIONS. (a) Notwithstanding Lessor's obligation to keep the Premises in good condition and repair, Lessee shall be responsible for payment of the cost thereof to Lessor as additional rent for that portion of the cost of any maintenance and repair of the Premises, or any equipment (wherever located) that serves only Lessee or the Premises, to the extent such cost is attributable to Lessee's negligence. Except as set forth herein, Lessee shall be responsible for the cost of painting, repairing or replacing wall 7 coverings, and to repair or replace any Premises improvements that are not ordinarily a part of the Building or that are above then Building standards. Lessor may, at its option, upon reasonable notice, elect to have Lessee perform any particular such maintenance or repairs, the cost of which is otherwise Lessee's responsibility hereunder. (b) On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the Premises to Lessor in the same condition as received, ordinary wear and tear excepted, clean and free of debris. Any damage or deterioration of the Premises shall not be deemed ordinary wear and tear if the same could have been prevented by good maintenance practices by Lessee. Lessee shall repair any damage to the Premises occasioned by the installation or removal of Lessee's trade fixtures, alterations, furnishings and equipment. Except as otherwise stated in this Lease. Lessee shall leave the air lines, power panels, electrical distribution systems, lighting fixtures, air conditioning, window coverings, wall coverings, carpets, wall panelling, ceilings and plumbing on the Premises and in good operating condition. 7.3 ALTERATIONS AND ADDITIONS (a) Lessee shall not, without Lessor's prior written consent make alterations, improvements, additions, Utility Installations or repairs in, on or about the Premises, or the Office Building Project. As used in this paragraph 7.3 the term "Utility Installation" shall mean carpeting, window and wall coverings, power panels, electrical distribution systems, lighting fixtures, air conditioning, plumbing, and telephone and telecommunication wiring and equipment. At the expiration of the term by providing notice to Lessee at the time of its consent to such item(s), Lessor may require the removal of any or all of said alterations, improvements, additions or Utility Installations, (but not the Lessee Improvements), and the restoration of the Premises and the Office Building Project to their prior condition, at Lessee's expense. When making its own alterations, improvements, additions or Utility Installations, Lessee shall use only such contractor as has been expressly approved by Lessor. Should Lessee make any alterations, improvements, additions or Utility Installations without the prior approval of Lessor, or use a contractor not expressly approved by Lessor, Lessor may, at any time during the term of this Lease, require that Lessee remove any part or all of the same. (b) Any alterations, improvements, additions or Utility Installations in or about the Premises or the Office Building Project that Lessee shall desire to make shall be presented to Lessor in written form, with proposed detailed plans. If Lessor shall give its consent to Lessee's making such alteration, improvement, addition or Utility Installation, the consent shall be deemed conditioned upon Lessee acquiring a permit to do so from the applicable governmental agencies, furnishing a copy thereof to Lessor prior to the commencement of the work, and compliance by Lessee with all conditions of said permit in a prompt and expeditious manner. 8 (c) Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use in the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises, the Building or the Office Building Project or any interest therein. (d) Lessee shall give Lessor not less than ten (10) days notice prior to the commencement of any work in the Premises by Lessee and Lessor shall have the right to post notices of non-responsibility in or on the Premises or the Building as provided by law. If Lessee shall in good faith contest the validity of any such lien claim or demand, then Lessee shall at its sole expense defend itself and Lessor against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises, the Building or the Office Building Project, upon the condition that if Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to such contested lien claim or demand indemnifying Lessor against liability for the same and holding the Premises, the Building and the Office Building Project free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor's reasonable attorneys' fees and costs in participating in such action if Lessor shall decide it is to Lessor's best interest so to do. (e) All alterations, improvements, additions and Utility Installations (whether or not such Utility Installations constitute trade fixtures of Lessee), which may be made to the Premises by Lessee, including but not limited to, floor coverings, panelings, doors, drapes, built-ins, moldings, sound attenuation and lighting and telephone or communications systems, conduit, wiring and outlets, shall be made and done in a good and workmanlike manner and of good and sufficient quality and materials and shall be the property of Lessor and remain upon and be surrendered with the Premises at the expiration of the Lease term, unless Lessor requires their removal pursuant to paragraph 7.3(a). Provided Lessee is not in default, notwithstanding the provisions of this paragraph 7.3(e), Lessee's personal property, trade fixtures and equipment, other than Utility Installations, shall remain the property of Lessee and may be removed by Lessee subject to the provisions of paragraph 7.2, and provided that Lessee repairs all damage caused by such removal. (f) Lessee shall provide Lessor with as-built plans and specifications for any alterations, improvements, additions or Utility Installations. 7.4 UTILITY ADDITIONS. Lessor reserves the right to install new or additional utility facilities throughout the Office Building Project for the benefit of Lessor or Lessee, or any other lessee of the Office Building Project, including, but not by way of limitation, such utilities as plumbing, 9 electrical systems, communication systems, and fire protection and detection systems, so long as such installations do not unreasonably interfere with Lessee's use of the Premises or reduce the size of the Premises. 8. INSURANCE: INDEMNITY. 8.1 LIABILITY INSURANCE-LESSEE. Lessee shall, at Lessee's expense, obtain and keep in force during the term of this Lease a policy of Comprehensive General Liability insurance utilizing an Insurance Services Office standard form with Broad Form General Liability Endorsement (GL0404), or equivalent, in an amount of not less than $2,000,000 per occurrence of bodily injury and property damage combined and shall insure Lessee with Lessor as an additional insured against liability arising out of the use, occupancy or maintenance of the Premises. Compliance with the above requirement shall not, however, limit the liability of Lessee hereunder. 8.2 LIABILITY INSURANCE-LESSOR. Lessor shall obtain and keep in force during the term of this Lease a policy of Combined Single Limit Bodily Injury and Broad Form Property Damage Insurance, plus coverage against such other risks Lessor deems advisable from time to time, insuring Lessor and Lessee, against liability arising out of the ownership, use, occupancy or maintenance of the Office Building Project in an amount not less than $2,000,000 per occurrence with a commercially reasonable umbrella. 8.3 PROPERTY INSURANCE-LESSEE. Lessee shall, at Lessee's expense, obtain and keep in force during the term of this Lease for the benefit of Lessee, replacement cost fire and extended coverage insurance, with vandalism and malicious mischief, earthquake sprinkler leakage and earthquake sprinkler leakage endorsements, in an amount sufficient to cover not less than 100% of the full replacement cost, as the same may exist from time to time, of all of Lessee's personal property, fixtures, equipment and tenant improvements. 8.4 PROPERTY INSURANCE-LESSOR. Lessor shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Office Building Project improvements, but not Lessee's personal property, fixtures, equipment or tenant improvements, in the amount of the full replacement cost thereof, as the same may exist from time to time, utilizing Insurance Services Office standard form, or equivalent, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, plate glass, and such other perils as Lessor deems advisable or may be required by a lender having a lien on the Office Building Project. In addition, Lessor shall obtain and keep in force, during the term of this Lease, a policy of rental value insurance covering a period of one year, with loss payable to Lessor, which insurance shall also cover all Operating Expenses for said period. Lessee will not be named in any such policies carried by Lessor and shall have no right to any proceeds therefrom. The policies required by these paragraphs 8.2 and 8.4 shall contain such reasonable deductibles as Lessor or the aforesaid lender may determine. In the event that the Premises shall suffer an insured loss as defined in paragraph 9.1(f) hereof, the deductible amounts under the 10 applicable insurance policies shall be deemed an Operating Expense. Lessee shall not do or permit to be done anything which shall invalidate the insurance policies carried by Lessor. Lessee shall pay the entirety of any increase in the property insurance premium for the Office Building Project over what it was immediately prior to the commencement of the term of this Lease if the increase is specified by Lessor's insurance carrier as being caused by the nature of Lessee's occupancy or any act or omission of Lessee. 8.5 INSURANCE POLICIES. Lessor and Lessee shall deliver to the other copies of liability insurance policies required under paragraph 8.1 and 8.2 or certificates evidencing the existence and amounts of such insurance within seven (7) days after the Commencement Date of this Lease. No such policy shall be cancellable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to each party. Lessor and Lessee shall, at least thirty (30) days prior to the expiration of such policies, furnish the other with renewals thereof. 8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and relieve the other, and waive their entire right of recovery against the other, for direct or consequential loss or damage arising out of or incident to any insurable perils whether or not covered by property insurance carried by such party or required to be carried hereunder, whether due to the negligence of Lessor or Lessee or their agents, employees, contractors and/or invitees. If necessary all property insurance policies required under this Lease shall be endorsed to so provide. 8.7 INDEMNITY. Lessee shall indemnify and hold harmless Lessor and its agents, Lessor's master or ground lessor, partners and lenders, from and against any and all claims for damage to the person or property of anyone or any entity arising from Lessee's use of the Office Building Project, or from the conduct of Lessee's business or from any activity, work or things done, permitted or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless Lessor from and against any and all claims, costs and expenses arising from any breach or default in the performance of any obligation on Lessee's part to be performed under the terms of this Lease, or arising from any act or omission of Lessee, or any of Lessee's agents, contractors, employees, or invitees, and from and against all costs, attorneys' fees, expenses and liabilities incurred by Lessor as the result of any such use, conduct, activity, work, things done, permitted or suffered, breach, default or negligence, and in dealing reasonably therewith, including but not limited to the defense or pursuit of any claim or any action or proceeding involved therein; and in case any action or proceeding be brought against Lessor by reason of any such matter, Lessee upon notice from Lessor shall defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor (unless required by Lessee's insurer) and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be so indemnified. Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to property of Lessee or injury to persons, in, upon or about the Office Building Project arising from any cause and Lessee hereby waives all claims in respect thereof 11 against Lessor. 8.8 EXEMPTION OF LESSOR FROM LIABILITY. Subject to Paragraph 70 of the Addendum, Lessee hereby agrees that Lessor shall not be liable for injury to Lessee's business or any loss of income therefrom or for loss of or damage to the goods, wares, merchandise or other property of Lessee. Lessee's employees, invitees, customers, or any other person in or about the Premises or the Office Building Project, nor shall Lessor be liable for injury to the person of Lessee, Lessee's employees, agents or contractors, whether such damage or injury is caused by or results from theft, fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said damage or injury results from conditions arising upon the Premises or upon other portions of the Office Building Project, or from other sources or places, or from new construction or the repair, alteration or improvement of any part of the Office Building Project, or of the equipment, fixtures or appurtenances applicable thereto, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible. Lessor shall not be liable for any damages arising from any act or neglect of any other lessee, occupant or user of the Office Building Project, nor from the failure of Lessor to enforce the provisions of any other lease of any other lessee of the Office Building Project. 8.9 NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no representation that the limits or forms of coverage of insurance specified in this paragraph 8 are adequate to cover Lessee's property or obligations under this Lease. 9. DAMAGE OR DESTRUCTION. 9.1 DEFINITIONS. (a) "Premises Damage" shall mean if the Premises are damaged or destroyed to any extent. (b) "Premises Building Partial Damage" shall mean if the Building of which the Premises are a part is damaged or destroyed to the extent that the cost to repair is less than fifty percent (50%) of the then Replacement Cost of the Building. (c) "Premises Building Total Destruction" shall mean if the Building of which the Premises are a part is damaged or destroyed to the extent that the cost to repair is fifty percent (50%) or more of the then Replacement Cost of the Building. (d) "Office Building Project Buildings" shall mean all of the buildings on the Office Building Project site. (e) "Office Building Project Buildings Total Destruction" shall mean 12 if the Office Building Project Buildings are damaged or destroyed to the extent that the cost of repair is fifty percent (50%) or more of the then Replacement Cost of the Office Building Project Buildings. (f) "Insured Loss" shall mean damage or destruction which was caused by an event required to be covered by the insurance described in paragraph 8. The fact that an Insured Loss has a deductible amount shall not make the loss an uninsured loss. (g) "Replacement Cost" shall mean the amount of money necessary to be spent in order to repair or rebuild the damaged area to the condition that existed immediately prior to the damage occurring, excluding all improvements made by lessees, other than those installed by Lessor at Lessee's expense 9.2 PREMISES DAMAGE: PREMISES BUILDING PARTIAL DAMAGE. (a) Insured Loss: Subject to the provisions of paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is damage which is an Insured Loss and which falls into the classification of either Premises Damage or Premises Building Partial Damage, then Lessor shall, as soon as reasonably possible and to the extent the required materials and labor are readily available through usual commercial channels, at Lessor's expense (if Lessor has received insurance proceeds), repair such damage (but not Lessee's fixtures, equipment or tenant improvements originally paid for by Lessee) to its condition existing at the time of the damage, and this Lease shall continue in full force and effect. (b) Uninsured Loss: Subject to the provisions of paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is damage which is not an Insured Loss and which falls within the classification of Premises Damage or Premises Building Partial Damage, unless caused by a willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), which damage prevents Lessee from making any substantial use of the Premises, Lessor may at Lessor's option either (i) repair such damage as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after the date of the occurrence of such damage of Lessor's intention to cancel and terminate this Lease as of the date of the occurrence of such damage, in which event this Lease shall terminate as of the date of the occurrence of such damage and Lessee shall vacate the Premises within 180 days. 9.3 PREMISES BUILDING TOTAL DESTRUCTION: OFFICE BUILDING PROJECT TOTAL DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is damage, whether or not it is an Insured Loss, which falls into the classifications of either (i) Premises Building Total Destruction, or (ii) Office Building Project Total Destruction, then Lessor shall repair such damage or destruction as soon as reasonably 13 possible at Lessor's expense (to the extent the required materials are readily available through usual commercial channels) to its condition existing at the time of the damage, but not Lessee's fixtures, equipment or tenant improvements, and this Lease shall continue in full force and effect or, (iii) either Lessor or Lessee may elect to terminate this Lease upon sixty (60) days prior written notice to the other party (which termination shall be effective as of the date of such total destruction). 9.4 DAMAGE NEAR END OF TERM. (a) Subject to paragraph 9.4(b), if at any time during the last twelve (12) months of the term of this Lease there is substantial damage to the Premises, Lessor or Lessee may cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to the other of its election to do so within 30 days after the date of occurrence of such damage. (b) Notwithstanding paragraph 9.4(a), in the event that Lessee has an option to extend or renew this Lease, and the time within which said option may be exercised has not yet expired, Lessee shall exercise such option, if it is to be exercised at all, no later than twenty (20) days after the occurrence of an Insured Loss falling within the classification of Premises Damage during the last twelve (12) months of the term of this Lease, and only if, Lessee duly exercises such option during said twenty (20) day period. Lessor shall, at Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or tenant improvements, as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option during said twenty (20) day period, then Lessor may at Lessor's option terminate and cancel this Lease as of the expiration of said twenty (20) day period by giving written notice to Lessee of Lessor's election to do so within ten (10)days after the expiration of said twenty (20) day period, notwithstanding any term or provision in the grant of option to the contrary. 9.5 ABATEMENT OF RENT: LESSEE'S REMEDIES. (a) In the event Lessor repairs or restores the Building or Premises pursuant to the provisions of this paragraph 9, and any part of the Premises are not usable (including loss of use due to loss of access or essential services), the rent payable hereunder (including Lessee's Share of Operating Expense Increase) for the period during which such damage, repair or restoration continues shall be abated, provided the damage was not the result of the willful act of Lessee. Except for said abatement of rent, if any, Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair or restoration. (b) If Lessor shall be obligated to repair or restore the Premises or the Building under the provisions of this Paragraph 9 and shall not commence such repair or restoration within ninety (90) days after such occurrence (as such date is extended by any force majeure or unavoidable delays), or if Lessor shall not complete the restoration and repair within six (6) months after such occurrence, Lessee may at Lessee's option cancel and terminate this 14 Lease by giving Lessor written notice of Lessee's election to do so at any time prior to the commencement or completion, respectively, of such repair or restoration. In such event this Lease shall terminate as of the date of such notice. (c) Lessee agrees to cooperate with Lessor in connection with any such restoration and repair, including but not limited to the approval and/or execution of plans and specifications required. 9.6 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease pursuant to this paragraph 9, an equitable adjustment shall be made concerning advance rent and any payments made by Lessee to Lessor. 9.7 WAIVER. Lessor and Lessee waive the provisions of any statute which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease. 10. REAL PROPERTY TAXES 10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax, as defined in paragraph 10.3, applicable to the Office Building Project subject to reimbursement by Lessee of Lessee's Share of such taxes in accordance with the provisions of paragraph 4.2, expect as otherwise provided in paragraph 10.2. 10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for paying any increase in real property tax specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Office Building Project by other lessees or by Lessor for the exclusive enjoyment of any other lessee. Lessee shall, however, pay to Lessor at the time that Operating Expenses are payable under paragraph 4.2(c) the entirety of any increase in real property tax if assessed solely by reason of additional improvements placed upon the Premises by Lessee or at Lessee's request. 10.3 DEFINITION OF "REAL PROPERTY TAX." As used herein, the term "real property tax" shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed on the Office Building Project or any portion thereof the type of which are generally applicable to other buildings by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Lessor in the Office Building Project or in any portion thereof, as against Lessor's right to rent or other income therefrom, and as against Lessor's business of leasing the Office Building Project. The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the 15 definition of "real property tax", or (ii) the nature of which was hereinbefore included within the definition of "real property tax," or (iii) which is imposed for a service or right not charged prior to June 1, 1978, or, if previously charged, has been increased since June 1, 1978, or (iv) subject to Paragraph 54(b) of the Addendum, which is imposed as a result of a change in ownership, as defined by applicable local statutes for property tax purposes, of the Office Building Project or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such change of ownership, or (v) which is imposed by reason of this transaction, any modifications or changes hereto, or any transfers hereof. (See Addendum Paragraph 54(b)) 10.4 JOINT ASSESSMENT. If the improvements or property, the taxes for which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not separately assessed, Lessee's portion of that tax shall be equitably determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information (which may include the cost of construction) as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive. 10.5 PERSONAL PROPERTY TAXES. (a) Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Lessee contained in the Premises or elsewhere. (b) If any of Lessee's said personal property shall be assessed with Lessor's real property, Lessee shall pay to Lessor the taxes attributable to Lessee within ten (10) days after receipt of a written statement setting forth the taxes applicable to Lessee's property. 11. UTILITIES. 11.1 SERVICES PROVIDED BY LESSOR. Subject to Lessee's obligations as set forth in Paragraph 4.2 and Addendum Paragraph 54, Lessor shall provide heating, ventilation, air conditioning, and janitorial service as reasonably required, reasonable amounts of electricity for normal lighting and office machines, water for reasonable and normal drinking and lavatory use, and replacement light bulbs and/or fluorescent tubes and ballasts for standard overhead fixtures. 11.2 SERVICES EXCLUSIVE TO LESSEE. Lessee shall pay for all electricity, water, gas, heat, light, power, telephone and other utilities and services specially or exclusively supplied and/or metered exclusively to the Premises or to Lessee, together with any taxes thereon, to the extent (i) such services are used after normal business hours (8:00 a.m. to 6:00 p.m., Monday through Friday) or (ii) the cost of such services used during normal business hours on a per square foot basis exceeds the Per Foot Rate (as defined in Addendum Paragraph 54 (e)). 16 11.3 HOURS OF SERVICE. Said services and utilities shall be provided 24 hours per day, 7 days per week, except that air conditioning shall be provided during generally accepted business days and hours or such other days or hours as may hereafter be set forth. Air conditioning required at other times shall be subject to advance request and reimbursement by Lessee to Lessor of the cost thereof. Lessee shall have access to the Premises 24 hours per day, 7 days per week. 11.4 EXCESS USAGE BY LESSEE. Lessee shall not, without Lessor's consent which shall not be unreasonably withheld, make connection to the utilities except by or through existing outlets and except for normal office use and Lessee's production and broadcasting use and shall not install or use machinery or equipment in or about the Premises that uses excess water, lighting or power or suffer or permit any act that causes extra burden upon the utilities or services, including but not limited to security services, over standard office usage for the Office Building Project. Lessor shall require Lessee to reimburse Lessor for any excess expenses or costs that may arise out of breach of this subparagraph by Lessee. Lessor may in its sole discretion install at Lessee's expense supplemental equipment and/or separate metering applicable to Lessee's excess usage or loading. 11.5 INTERRUPTIONS. Subject to Addendum Paragraph 73, there shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable control or on in cooperation with governmental request or directions. 12. ASSIGNMENT AND SUBLETTING. 12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee's interest in the Lease or in the Premises, without Lessor's prior written consent, which Lessor shall not unreasonably withhold. Lessor shall respond to Lessee's request for consent hereunder in a timely manner and any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a material default and breach of this Lease without the need for notice to Lessee under paragraph 13.1. "Transfer" within the meaning of this paragraph 12 shall include the transfer or transfers aggregating (a) if Lessee is a corporation, more than twenty-five percent (25%) of the voting stock of such corporation, except if the stock is transferred to a purchaser of all or substantially all of the stock or pursuant to a registered offering, or (b) if Lessee is a partnership, more than twenty-five percent (25%) of the profit and loss participation in such partnership. 12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1 17 hereof, Lessee may assign or sublet the Premises, or any portion thereof without Lessor's consent, to any corporation which controls, is controlled by or is under common control with Lessee, or to any corporation resulting from the merger or consolidation with Lessee, or to any person or entity which acquires all the assets of Lessee as a going concern of the business that is being conducted on the Premises, all of which are referred to as "Lessee Affiliate," provided that before such assignment shall be effective, (a) said assignee shall assume, in full, the obligations of Lessee under this Lease and (b) Lessor shall be given written notice of such assignment and assumption. Any such assignment shall not, in any way, affect or limit the liability of Lessee under the terms of this Lease even if after such assignment or subletting the terms of this Lease are materially changed or altered without the consent of Lessee, the consent of whom shall not be necessary. 12.3 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING. (a) Regardless of Lessor's consent, no assignment or subletting shall release Lessee of Lessee's obligations hereunder or alter the primary liability of Lessee to pay the rent and other sums due Lessor hereunder including Lessee's Share of Operating Expense increase, and to perform all other obligations to be performed by Lessee hereunder. (b) Lessor may accept rent from any person other than Lessee pending approval or disapproval of such assignment. (c) Neither a delay in the approval or disapproval of such assignment or subletting, nor the acceptance of rent, shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for the breach of any of the terms or conditions of this paragraph 12 or this Lease. (d) If Lessee's obligations under this Lease have been guaranteed by third parties, then an assignment or sublease, and Lessor's consent thereto, shall not be effective unless said guarantors give their written consent to such sublease and the terms thereof. (e) The consent by Lessor to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting by Lessee or to any subsequent or successive assignment or subletting by the sublessee. However, Lessor may consent to subsequent sublettings and assignments of the sublease or any amendments or modifications thereto without notifying Lessee or anyone else liable on the Lease or sublease and without obtaining their consent and such action shall not relieve such persons from liability under this Lease or said sublease; however, such persons shall not be responsible to the extent any such amendment or modification enlarges or increases the obligations of the Lessee or sublessee under this Lease or such sublease. (f) In the event of any default under this Lease, Lessor may proceed directly against Lessee, any guarantors or any one else responsible for the performance of this Lease, including the sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefor to 18 Lessor, or any security held by Lessor or Lessee. (g) Lessor's written consent to any assignment or subletting of the Premises by Lessee shall not constitute an acknowledgement that no default then exists under this Lease of the obligations to be performed by Lessee nor shall such consent be deemed a waiver if any then existing default, except as may be otherwise stated by Lessor at the time. (h) The discovery of the fact that any financial statement relied upon by Lessor in giving its consent to an assignment or subletting was materially false shall, at Lessor's election, render Lessor's said consent null and void. 12.4 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. Regardless of Lessor's consent, the following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: (a) Lessor shall not, by reason of this or any other assignment of such sublease to Lessor nor by reason of the collection of the rents from a sublessee, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee under such sublease. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor (a copy of which shall be sent to Lessee) stating that a default exists in the performance of Lessee's obligations under this Lease, to pay to Lessor the rents due and to become due under the sublease. Lessee agrees that such sublessee shall have the right to rely upon any such statement and request from Lessor, and that such sublessee shall pay such rents to Lessor without any obligation or right to inquire as to whether such default exists and notwithstanding any notice from or claim from Lessee to the contrary. Lessee shall have no right or claim against said sublessee or Lessor for any such rents so paid by said sublessee to Lessor. (b) No sublease entered into by Lessee shall be effective unless and until it has been approved in writing by Lessor. In entering into any sublease, Lessee shall use only such form of sublessee as is satisfactory to Lessor, and once approved by Lessor, such sublease shall not be changed or modified in any material manner without Lessor's prior written consent. Any sublease shall, by reason of entering into a sublease under this Lease, be deemed, for the benefit of Lessor, to have assumed and agreed to conform and comply with each and every obligation herein to be performed by Lessee other than such obligations as are contrary to or inconsistent with provisions contained in a sublease to which Lessor has expressly consented in writing. (c) In the event Lessee shall default in the performance of its obligations under this lease, Lessor at its option and without any obligation to do so, may require any sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of Lessee under such sublease from the time of 19 the exercise of said option to the termination of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to Lessee or for other prior defaults of Lessee under such sublease. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent or as otherwise provided herein. (e) With respect to any subletting to which Lessor has consented, Lessor agrees to deliver a copy of any notice of default by Lessee to the sublessee. Such sublessee shall have the right to cure a default of Lessee within three (3) days after service of said notice of default upon such sublessee, and the sublessee shall have a right of reimbursement and offset from and against Lessee for any such defaults cured by the sublessee. 12.5 LESSOR'S EXPENSES. In the event Lessee shall request the consent of Lessor to any assignment or subletting or if Lessee shall request the consent of Lessor for any act Lessee proposes to do, then Lessee shall pay Lessor's reasonable costs and expenses incurred in connection therewith, including attorneys', architects', engineers', or other consultants' fees. 12.6 CONDITIONS TO CONSENT. Lessor reserves the right to condition any approval to assign or sublet upon Lessor's determination that (a) the proposed assignee or sublessee shall conduct a business on the Premises of a quality substantially equal to that of Lessee and consistent with the general character of the other occupants of the Office Building Project and not in violation of any exclusives or rights then held by other tenants, and (b) the proposed assignee or sublessee be at least as financially responsible as Lessee was expected to be at the time of the execution of this Lease or of such assignment or subletting, whichever is greater. 13. DEFAULT: REMEDIES. 13.1 DEFAULT. The occurrence of any one or more of the following events shall constitute a material default of this Lease by Lessee: (a) The abandonment of the Premises by Lessee. (c) The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due where such failure shall continue for a period of ten (10) days after written notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes. such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph. 20 (d) The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee other than those referenced in subparagraphs (b) and (c), above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Lessor to Lessee; provided, however, that if the nature of Lessee's noncompliance is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said thirty (30) day period and thereafter diligently pursues such cure to completion. To the extent permitted by law, such thirty (30) day notice shall constitute the sole and exclusive notice required to be given to Lessee under applicable Unlawful Detainer statutes. (e) (i) The making by Lessee of any general arrangement or general assignment for the benefit of creditors: (ii) Lessee becoming a "debtor" as defined in 11 U.S.C. (S)101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days;(iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of the Lessee's assets located at the Premises or of Lesses's interest in this Lease, where such seizure is not discharged within thirty (30) days. In the event that any provision of this paragraph 13.1(e) is contrary to any applicable law, such provision shall be of no force or effect. (f) The discovery by Lessor that any financial statement given to Lessor by Lessee, or its successor in interest or by any guarantor of Lessee's obligation hereunder, was materially false. 13.2 REMEDIES. In the event of any material default or breach of this Lease by Lessee, Lessor may at any time thereafter, with or without notice or demand and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such default: (a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee's default including, but not limited to, the cost of recovering possession of the Premises: expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and any real estate commission actually paid; the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided: that portion of the leasing commission paid by Lessor pursuant to paragraph 15 applicable to the unexpired term of this Lease. (b) Exercise the remedy described in California Civil Code Section 21 1951.4 or any successor section. (c) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. Unpaid installments of rent and other unpaid monetary obligations of Lessee under the terms of this Lease shall bear interest from the date five (5) days after such payment is due at the lesser of 2% over the prime rate of Citibank, N.A. or the maximum rate then allowable by law. 13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Lessee in writing, specifying wherein Lessor has failed to perform such obligation; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if Lessor commences performance within such 30-day period and thereafter diligently pursues the same to completion. (See Addendum Paragraph 72.) 13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee to Lessor of Base Rent, Lessee's Share of Operating Expense increase or other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, late charges which may be imposed on Lessor by the terms of any mortgage or trust deed covering the Office Building Project. Accordingly, if any installment of Base Rent, Operating Expense Increase, or any other sum due from Lessee shall not be received by Lessor or Lessor's designee within ten (10) days after notice that such amount shall be due, then Lessee shall pay to Lessor a late charge equal to 6% of such overdue amount. The parties hereby agree that such late charges represent a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. 14. CONDEMNATION. If the Premises or any portion thereof or the Office Building Project are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs; provided that if the Premises or any portion thereof are taken such that Lessee is unable to continue to operate Lessee's business in the Premises (which shall be defined as a "material" portion of the Premises), Lessee shall the option, to be exercised only in writing within thirty (30) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within thirty (30) days after the condemning authority shall have taken possession), to terminate this Lease as of the date 22 condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent and Lessee's Share of Operating Expense Increase shall be reduced in the proportion that the floor area of the Premises taken bears to the total floor area of the Premises. Common Areas taken shall be excluded from the Common Areas usable by Lessee and no reduction of rent shall occur with respect thereto or by reason thereof. If the portion of the Project taken is so much as to render the Project a not viable office project then Lessor shall have the option in its sole discretion to terminate this Lease as of the taking of possession by the condemning authority, by giving written notice to Lessee of such election with thirty (30) days after receipt of notice of a taking by condemnation of any part of the Premises or the Office Building Project. Any award for the taking of all or any part of the Premises or the Office Building Project under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any separate award for loss of or damage to Lessee's trade fixtures, removable personal property and unamortized tenant improvements that have been paid for by Lessee. For that purpose the cost of such improvements shall be amortized over the original term of this Lease excluding any options. In the event that this Lease is not terminated by reason of such condemnation. Lessor shall to the extent of severance damages received by Lessor in connection with such condemnation, repair any damage to the Premises caused by such condemnation except to the extent that Lessee has been reimbursed thereof by the condemning authority. 15. BROKER'S FEE. (a) The brokers involved in this transaction are CB Commercial as "listing broker" licensed real estate broker(s). A "cooperating broker" is defined as any broker other than the listing broker entitled to a share of any commission arising under this Lease. Upon execution of this Lease by both parties, Lessor shall pay to said brokers jointly, or in such separate shares as they may mutually designate in writing, a fee as set forth in a separate agreement between Lessor and said broker(s). 16. ESTOPPEL CERTIFICATE. (a) Each party (as "responding party") shall at any time upon not less than ten (10) business days' prior written notice from the other party ("requesting party") execute, acknowledge and deliver to the requesting party a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date 23 to which the rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to the responding party's knowledge any uncured defaults on the part of the requesting party, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Office Building Project or of the business of Lessee. (b) At the requesting party's option, the failure to deliver such statement within such time shall be a material default of this Lease by the party who is to respond, without any further notice to such party, or it shall be conclusive upon such party that (i) this Lease is in full force and effect, without modification except as may be represented by the requesting party, (ii) there are no uncured defaults in the requesting party's performance, and (iii) if Lessor is the requesting party, not more than one month's rent has been paid in advance. (c) If Lessor desires to finance, refinance, or sell the Office Building Project, or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser designated by Lessor such financial statements of Lessee as may be reasonably required by such lender or purchaser; provided, however, that prior to such delivery Lessee shall have received from Lessor, and such lender or buyer, as applicable, a commercially reasonable confidential agreement executed by such party or parties. Such statements shall include the past three (3) years financial statements of Lessee. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the owner or owners at the time in question of the fee title or a lessee's interest in a ground lease of the Office Building Project, and except as expressly provided in paragraph 15, in the event of any transfer of such title or interest. Lessor herein named (and in case of any subsequent transfers then the grantor) shall be relieved from and after the date of such transfer of all liability as respects Lessor's obligations thereafter to be performed, provided that any funds in the hands of Lessor or the then grantor at the time of such transfer, in which Lessee has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Lessor shall, subject as aforesaid, be binding on Lessor's successors and assigns, only during their respective periods of ownership. 18. SEVERABILITY. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in no way affect the validity of any other provision hereof. 20. TIME OF ESSENCE. Time is of the essence with respect to the obligations to be performed under this Lease. 21. ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the terms of this Lease, including but not limited to Lessee's Share of Operating 24 Expense increase and any other expenses payable by Lessee hereunder shall be deemed to be rent. 22. INCORPORATION OF PRIOR AGREEMENTS: AMENDMENTS. This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior or contemporaneous agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the real estate broker listed in paragraph 15 hereof nor any cooperating broker on this transaction nor the Lessor or any employee or agents or any of said persons has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of the Premises or the Office Building Project and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety Health Act, the legal use and adaptability of the Premises and the compliance thereof with all applicable laws and regulations in effect during the term of this Lease. 23. NOTICES. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal delivery or by certified or registered mail. Mailed notices shall be deemed given upon actual receipt at the address required, or forty-eight hours following deposit in the mail, postage prepaid, whichever first occurs. Either party may by notice to the other specify a different address. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by notice to Lessee. 24. WAIVERS. No waiver by Lessor of any provision hereof shall be deemed a waiver of any other provision hereof of any subsequent breach by Lessee of the same or any other provision. Lessor's consent to, or approval of, any act shall not be deemed to rendered necessary the obtaining of Lessor's consent to or approval of any subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent. 25. RECORDING. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a "short form" memorandum of this Lease for recording purposes. 27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by Lessee shall be deemed both a covenant and a condition. 29. BINDING EFFECT: CHOICE OF LAW. Subject to any provisions hereof 25 restricting assignment or subletting by Lessee and subject to the provisions of paragraph 17, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the State where the Office Building Project is located and any litigation concerning this Lease between the parties hereto shall be initiated in the county in which the Office Building Project is located. 30. SUBORDINATION. (a) This Lease, and any Option or right of first refusal granted hereby, at Lessor's option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the Office Building Project and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Lessee's right to quiet possession of the Premises in accordance with this Lease shall not be disturbed if Lessee is not in default and so long as Lessee shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee or ground lessor shall elect to have this Lease and any Options granted hereby prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Lessee, this Lease and such Options shall be deemed prior to such mortgage, deed of trust or ground lease, whether this Lease or such Options are dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof. (b) Lessee agrees to execute any documents required to effectuate an attornment, a subordination, or to make this Lease or any Option granted herein prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Lessee's failure to execute such documents within ten (10) business days after written demand shall constitute a material default by Lessee hereunder without further notice to Lessee or, at Lessor's option. Lessor shall execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to execute such documents in accordance with this paragraph 30(b). 31. ATTORNEYS' FEES. 31.1 If either party or the broker(s) named herein bring an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, trial or appeal thereon, shall be entitled to his reasonable attorneys' fees to be paid by the losing party as fixed by the court in the same or a separate suit, and whether or not such action is pursued to decision or judgment. The provisions of this paragraph shall inure to the benefit of the broker named herein who seeks to enforce a right hereunder. 31.2 The attorneys' fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred in good faith. 26 32. LESSOR'S ACCESS. 32.1 Lessor and Lessor's agents shall have the right to enter the Premises at reasonable times on reasonable notice for the purpose of inspecting the same, performing any service required of Lessor, showing the same to prospective purchasers, lenders, or lessees, taking such safety measures, erecting such scaffolding or other necessary structures, making such alterations, repairs, improvements or additions to the Premises or to the Office Building Project as Lessor may reasonably deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no unreasonable adverse effect to Lessee's use of or any decrease in the size of, the Premises. Lessor may at any time place on or about the Building any ordinary "For Sale" signs and Lessor may at any time during the last 120 days of the term hereof place on or about the Building any ordinary "For Lease" signs. Lessors shall minimize interfering with Lessee's use of the Premises in the exercise of its rights under this Paragraph. 32.2 All activities of Lessor pursuant to this paragraph shall be without abatement of rent, nor shall Lessor have any liability to Lessee for the same. 32.3 Lessor shall have the right to retain keys to the Premises and to unlock all doors in or upon the Premises other than to files, vaults and sales, and in the case of emergency to enter the Premises by any reasonably appropriate means, and any such entry shall not be deemed a forceable or unlawful entry or detainer of the Premises or an eviction. Lessee waives any charges for damages or injuries or interference with Lessee's property or business in connection therewith. 33.AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily any auction upon the Premises or the Common Areas without first having obtained Lessor's prior written consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent. The holding of any auction on the Premises or Common Areas in violation of this paragraph shall constitute a material default of this Lease. 34.SIGNS. Subject to Paragraph 63 of the Addendum, Lessee shall not place any sign upon the Premises or the Office Building Project without Lessor's prior written consent. Under no circumstances shall Lessee place a sign on any roof of the Office Building Project. 35.MERGER. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing subtenancies or may, at the option of Lessor, operate as an assignment to Lessor of any or all of such subtenancies. 27 36.CONSENTS. Except as otherwise provided herein, wherever in this Lease the consent of one party is required to an act of the other party such consent shall not be unreasonably withheld or delayed. 37.GUARANTOR. In the event that there is a guarantor of this Lease, said guarantor shall have the same obligations as Lessee under this Lease. 38.QUIET POSSESSION. Upon Lessee paying the rent for the Premises and observing and performing all of the covenants, conditions and provisions on Lessee's part to be observed and performed hereunder. Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease. The individuals executing this Lease on behalf of Lessor represent and warrant to Lessee that they are fully authorized and legally capable of executing this Lease on behalf of Lessor and that such execution is binding upon all parties holding an ownership interest in the Office Building Project. 40.SECURITY MEASURES--LESSOR'S RESERVATIONS. 40.1 Lessee hereby acknowledges that Lessor shall have no obligation whatsoever to provide guard service or other security measures for the benefit of the Premises or the Office Building Project. Lessee assumes all responsibility for the protection of Lessee, its agents, and invitees and the property of Lessee and of Lessee's agents and invitees from acts of third parties. Nothing herein contained shall prevent Lessor, at Lessor's sole option, from providing security protection for the Office Building Project or any part thereof, in which event the cost thereof shall be included within the definition of Operating Expenses, as set forth in paragraph 4.2(b). 40.2 Lessor shall have the following rights: (a) To change the name, address or the title of the Office Building Project or building in which the Premises are located upon not less than 90 days prior written notice; (b) To provide and install Building standard graphics on the door of such portions of the Common Areas as Lessor shall reasonably deem appropriate; (c) To permit any lessee the exclusive right to conduct any business as long as such exclusive does not conflict with any rights expressly given herein; (d) To place such signs, notices or displays as Lessor reasonably deems necessary or advisable upon the roof, exterior of the buildings or the Office Building Project or on pole signs in the Common Areas; 40.3 Lessee shall not: (b) Suffer or permit anyone, except in emergency, to go upon the roof of the Building except as permitted by this Lease. 28 41. EASEMENTS. 41.1 Lessor reserves to itself the right, from time to time, to grant such easements, rights and dedications that Lessor deems necessary or desirable, and to cause the recordation of Parcel Maps and restrictions, so long as such easements, rights, dedications, Maps and restrictions do not unreasonably interfere with the use of the Premises or the Common Areas by Lessee. Lessee shall sign any of the aforementioned documents (provided same shall create no obligations or liability of Lessee) upon request of Lessor and failure to do so shall constitute a material default of this Lease by Lessee without the need for further notice to Lessee. 41.2 The temporary obstruction of Lessee's view, air, or light by any structure erected in the vicinity of the Building by third parties, shall in no way affect this Lease or impose any liability upon Lessor. 42.PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum if it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease. Initials:_____________ C 1984 American Industrial Real Estate Association FULL SERVICE-GROSS _____________ 29 43. AUTHORITY. If Lessee is a corporation, trust or general or limited partnership, Lessee represents and warrants that such individual signing this Lease is duly authorized to execute and deliver this Lease on behalf of said entity if Lessee is a corporation trust or partnership. Lessee shall, within thirty (30) days after execution of this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor. 44. CONFLICT. Any conflict between the printed provisions, Exhibits or Addenda of this Lease and the typewritten or handwritten provisions, if any, shall be controlled by the typewritten or handwritten provisions. 45. NO OFFER. Preparation of this Lease by Lessor or Lessor's agent and submission of same to Lessee shall not be deemed an offer to Lessee to lease. This Lease shall become binding upon Lessor and Lessee only when executed by both parties. 46. LENDER MODIFICATION. Lessee agrees to make such reasonable modifications to this Lease as may be reasonably required by an institutional lender in connection with the obtaining of normal financing or refinancing of the Office Building Project provided same shall not increase Lessee's obligations, decrease Lessee's rights or remedies, increase Lessor's rights or remedies or decrease Lessor's obligations. 47. MULTIPLE PARTIES. If more than one person or entity is named as either Lessor or Lessee herein, except as otherwise expressly provided herein, the obligations of the Lessor or Lessee herein shall be the joint and several responsibility of all persons or entities named herein as such Lessor or Lessee, respectively. 48. WORK LETTER. This Lease is supplemented by that certain Work Letter of even date executed by Lessor and Lessee, attached hereto as Exhibit C, and incorporated herein by this reference. 49. ATTACHMENTS. Attached hereto are the following documents which constitute a part of this Lease: Addendum Paragraph 50 through 82 -- -- Exhibit "A" - Floor Plan 30 Exhibit "B" - Site Plan Exhibit "C" - Final Plans Exhibit "D" - Notice of Lease Term Dates Exhibit "E" - Rules and Regulations LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. LESSOR LESSEE VALENCIA PARAGON ASSOCIATES, LTD., a UNISTAR COMMUNICATION GROUP, INC., California Limited Partnership a Delaware corporation ------------------------------------ ---------------------------------------- By /s/ Jeremy B. Fletcher By /s/ William B. Lockett ---------------------------------- ------------------------------------- Jeremy B. Fletcher William B. Lockett Its General Partner Its Sr. V.P. Administration ---------------------------- ----------------------------- By /s/ J.B. Allen By /s/ William J. Hogan ---------------------------------- ------------------------------------- Jeffrey B. Allen William J. Hogan Its General Partner Its President ---------------------------- ----------------------------- 31 Executed at Executed at Unistar -------------------------- ----------------------------- on on January 9, 1992 ---------------------------------- -------------------------------------- Address Address 1675 Broadway New York, NY 10019 ----------------------------- --------------------------------- c 1984 American Industrial Real Estate Association FULL SERVICE--GROSS PAGE 10 OF 10 PAGES For these forms write or call the American Industrial Real Estate Association, 350 South Figueroa Street, Suite 275, Los Angeles CA 90071 (213) 687-8777 c 1984 -By American Industrial Real Estate Association All rights reserved. No part of these words may be reproduced in any form without permission in writing. 32 ADDENDUM TO STANDARD OFFICE LEASE - GROSS THIS ADDENDUM TO STANDARD OFFICE LEASE - GROSS ("Addendum") is made and entered into by and between VALENCIA PARAGON ASSOCIATES, LTD., a California Limited Partnership ("Lessor"), and UNISTAR COMMUNICATIONS GROUP, INC., a Delaware corporation ("Lessee"), as of the date set forth on the first page of that certain Standard Office Lease - Gross (the "Lease") between Lessor and Lessee to which this Addendum is attached and incorporated. The terms, covenants and conditions set forth herein are intended to and shall have the same force and effect as if set forth at length in the body of the Lease. To the extent that the provisions of this Addendum are inconsistent with any provisions of the Lease, the provisions of this Addendum shall supersede and control. 50. Improvements by Lessor. (a) Scope of Improvements. Lessor and Lessee hereby acknowledge and agree that the Premises shall be constructed by Lessor on a "turn-key" basis, at Lessor's expense (the "Lessee Improvements"), in accordance with the procedures set forth herein. (b) Space Plans and Final Plans. If the plans and specifications attached hereto, if any, are the final plans for the Lessee Improvements, as approved by Lessor in writing, such final plans and specifications shall be hereinafter referred to as the "Final Plans" and the remainder of this Paragraph shall be inoperative. Otherwise, Lessee shall cause Lessee's architect to prepare, at Lessee's cost (which cost shall be reimbursed by Lessor up to a total of Three Thousand Seven Hundred Eighty-Three and 48/100 Dollars ($3,783.48), a detailed space plan sufficient to convey the architectural design of the Premises, including without limitation, the location of doors, partitions, electrical and telephone outlets, plumbing fixtures, heavy floor loads and other special requirements, together with reflective ceiling plans ("Lessee's Space Plans"). If Lessor shall disapprove of any portion of Lessee's Space Plans, Lessor shall advise Lessee of those revisions, and the reasons therefor, reasonably required by Lessor. Lessee shall then submit to Lessor, for Lessor's approval, a redesign of Lessee's Space Plans, incorporating the revisions required by Lessor, as modified by Lessee, which modifications must be approved by Lessor. Based upon such approved Lessee's Space Plans, Lessor at its cost shall prepare specifications and working drawings for the construction of any Lessee Improvements (the "Final Plans"). Thereafter, Lessor shall deliver the Final Plans to Lessee, and within six (6) business days after Lessee's receipt thereof, Lessee shall notify Lessor in writing of either Lessee's approval or disapproval thereof, including any corrections or changes required by Lessee to the Final Plans. Lessor shall cause Lessor's architect to prepare and deliver to Lessee, at Lessor's cost, revised Final Plans which incorporate Lessee's proposed changes, provided such proposed changes (i) are reasonable, and (ii) are made in good-faith and with 33 particularity and precision. In the event Lessor does not receive written notice from Lessee for any requested changes to the Final Plans within the time period specified herein, the Final Plans shall be conclusively deemed approved by Lessee. (c) Procedure for Construction of Lessee Improvements. Following final approval of the Final Plans, Lesser shall rely upon the Final Plans and use Lessor's commercially reasonable efforts to complete the Lessee Improvements described in the Final Plans prior to March 15, 1992. Notwithstanding anything to the contrary set forth in this Lease, the "Commencement Date" shall be the later of March 15, 1992 or the date which is three (3) days following Lessor's notice to Lessee that the Lessee Improvements have been "substantially completed" (as defined below) and Lessor tenders possession of the Premises to Lessee. The Term of this Lease shall expire on the last day of the month in which occurs the tenth (10th) anniversary of the Commencement Date (the "Expiration Date"). For the purposes of this Paragraph only, the Lessee Improvements shall be conclusively deemed "substantially completed" when all Lessee Improvements described in the Final Plans are completed as certified by Lessor's architect, except for minor items (e.g., "punch-list" items) which can be completed by Lessor after the Commencement Date of the Term with only minor interference with the conduct of Lessee's business in the Premises. In the event that Lessor has not substantially completed the Lessee Improvements by the "Outside Date", which shall br March 15, 1992, as such date may be extended by the number of days of Force Majeure delays (as defined below) (up to a maximum of sixty (60) days of Force Majeure Delays) or Lessee Delays, which number(s) shall be disclosed to Lessee in a written notice from Lessor's contractor promptly upon learning of the delay, then Lessee shall be entitled to receive one additonal day of free Base Rent for every day that the Lessee Improvements are not substantially completed thereafter, and furthur, if the Lessee Improvements are not substantially completed by the "Outside Date", as such date is extended by the number of days of Force Majeure Delays and/or Lessee Delays, then the sole remedy of Lessee shall be the right to deliver a notice to the Lessor (the "Termination Notice") electing to terminate this Lease effective upon receipt of the Termination Notice by Lessor (the "Effective Date"). Except as provided herein below, the Termination Notice must be delivered by Lessee to Lessor, if at all, not earlier than the Outside Date , as extended, and not later than ten (10) business days after the Outside Date, as extended, and upon the effective termination of this Lease any money paid by Lessee to Lessor with respect to this Lease shall be refunded to Lessee. If Lessee elects not to terminate this Lease, as set forth above (i) Lessor shall continue to construct the Lessee Improvements to completion, (ii) Lessee shall be entitled to receive the Base Rent abatement set forth above in this Paragraph 50(c) and (iii) if the Lessee Improvements are not substantially completed by the forty-fifth (45th) day following the Outside Date as extended, Lessee shall again have the right to terminate this Lease within ten (10) business days following that forty-fifth (45th) day. "Force Majeure Delays" shall mean and refer to a period of delay or delays encountered by Lessor affecting the work of construction of the Lessee Improvements because of delays due to excess time in obtaining governmental 34 permits or approvals beyond the time period normally required to obtain such permits or approvals for similar space similarly improved in comparable buildings (if not caused by Lessor's act or failure to act); fire, earthquake or other acts of God; acts of public enemy; riot; insurrection; governmental regulations of the sales of materials and supplies or the transportation therof; strikes or boycotts; shortages of material or labor or any other cause beyond a reasonable control of Lessor. (d) Changes. If Lessee requests any change, addition or alteration to the Final Plans or in Lessor's construction and completion of the Lessee Improvements ("Changes"), Lessor shall promptly give Lessee an estimate of the cost of such Changes and the resulting delay (if any) in the delivery of the Premises to Lessee. Within three (3) business days after Lessee's receipt of such written estimate from Lessor, Lessee shall give Lessor written notice indicating whether or not Lessee elects to proceed with any such Changes. If Lessee elects to proceed with such Changes Lessor shall, at Lessee's sole cost and expense, promptly make such Changes. If Lessee elects not to proceed with such Changes or fails to timely notify Lessor of Lessee's election within such three (3) business day period, Lessor shall complete the Lessee Improvements in the Premises without making such Changes. Any delay caused by Lessee's request for such Changes or the construction of such Changes, shall not, in any event, delay the Commencement Date, which shall occur on the date it would have occurred but for such Changes. (e) Unavoidable Delays. If the performance by Lessor of any act required herein or elsewhere in the Lease is prevented or delayed by reason of strikes, lockouts, labor disputes, governmental delays, acts of God, fire, floods, earthquake, epidemics, freight embargoes; unavailability of materials and supplies, development moratoriums imposed by any governmental authority, or any other cause beyond the reasonable control of Lessor (including any "Lessee Delay" (as hereinafter defined)), Lessor shall be excused from performance for the time period equal to the time period of the prevention or delay. (f) Lessee Delays. To the extent that the Commencement Date has not occurred because Lessor was delayed in substantially completing the Lessee Improvements as a result of the following (collectively, "Lessee Delays"): (i) Lessee's failure to complete any action item on or before the due date which is the responsibility of Lessee to complete, or (ii) Lessee's request for Changes or the construction of such Changes by Lessor, or (iii) Lessee's untimely request for materials, finishes, or installations requiring long lead times, or (iv) Any delay by Lessee in making any payment(s) to Lessor, or (v) Any act or failure to act by Lessee, Lessee's employees, agents, architects, independent contractors, consultants and/or any other person 35 performing or required to perform services on behalf of Lessee, then as soon as reasonably possible following the Commencement Date, Lessor shall deliver to Lessee a reasonably detailed statement of the net number of days of Lessee Delays, determined on a critical path basis, and Lessee shall pay to Lessor, as additional rent under the Lease, the product of the per diem monthly rent payable by Lessee for the Premises multiplied by the number of days that such Lessee Delays caused the Commencement Date to be delayed, such payment to be made to Lessor within thirty (30) days after Lessee's receipt of Lessor's written demand therefor. (g) Schedule for Improvements. Action Responsibility Due Date (i) Submission of Lessee's Lessee 10/24/91 Space Plans to Lessor (ii) Delivery of written notice Lessor 10/31/91 approving or disapproving Lessee's Space Plans (iii) Submission of Final Plans Lessor 11/29/91 to Lessee (iv) Delivery of written notice Lessee 12/1/91 approving or disapproving Final Plans (v) Commencement of construction Lessor 1/15/92 (vi) Substantial completion of Lessor 3/15/92 Lessee Improvements and obtaining temporary Certificate of Occupancy for Premises (h) Access. Lessor agrees that prior to substantial completion of the Lessee Improvements, if any portion of the Premises may be entered by Lessee or Lessee's employees without interfering with Lessor's work of construction of the Lessee Improvements, then Lessee shall be entitled reasonable access to such portion of the Premises in order to install Lessee's furniture, fixtures, equipment and personal property for use in the Premises ("Lessee's Fixturizing Work"). Such access by Lessee and Lessee's Fixturizing Work shall be subject to all the following terms and conditions: (i) Lessee and Lessee's employees shall be subject to and shall work under the rules and direction of Lessor and Lessor's general contractor. If in the reasonable judgment of Lessor or Lessor's general contractor such 36 access or work shall or may interfere with construction of the Lessee Improvements, detrimentally affect Lessor's ability to comply with its commitments for substantially completing the Lessee Improvements, or cause labor difficulties, Lessor and/or Lessor's general contractor shall have the right to order any or all Lessee's Fixturizing Work to cease upon twenty-four (24) hours notice, and Lessee shall immediately comply with such order, and if necessary, remove from the Premises all of its tools, equipment and materials. (ii) Lessee shall: (A) furnish Lessor with sufficient evidence that Lessee and its contractors are carrying workmen's compensation insurance in statutory required amounts, together with general liability insurance naming Lessor, Lessor's lender and managing agent as additional insureds, in accordance with the Lease; (B) comply with all applicable laws, regulations, permits and other approvals applicable to such access and Lessee's Fixturizing Work; and (C) not interfere with or delay in any manner the construction of the Lessee Improvements. Lessee shall not be required to pay rent to Lessor by reason of lessees access or Lessens Fixturizing Work pursuant to this Subparagraph 51(h) (iii) Lessee indemnifies and agrees to protects defend and hold Lessor, its constituent partners, and their respective agents, Officers and employees, harmless from and against any and all losses, costs, liabilities, damages, demands, claims, causes of action and expenses (including attorneys fees and court costs) by reason of damage to the Project, Building, Premises or the property of others Indoor personal injury, including death, which may arise from Lessee's access and Lessee's fixturizing Work pursuant to this Subparagraph 50(h), whether caused by Lessee, Lessee's contractor or any subcontractor, or anyone directly or indirectly employed by any of them. The provisions of Paragraphs 8.7 of the Lease and Addendum Paragraph 70 regarding indemnification are expressly incorporated herein by this reference. (i) Cleaning. Lessor agrees to thoroughly clean, as necessary, the Premises before and immediately after Lessee's move into the Premises. (j) Notice of Lease Term Dates. Once the actual Commencement Date is determined, the parties shall execute a Notice of Lease Term Dates setting forth such date in the form shown in Exibit "D". (k) Deposit for Tennant Improvements. Notwithstanding anything to the contrary set forth in this Lease, upon execution hereof, Lessee shall deposit Two Hundred Twenty Thousand and No/100 Dollars ($220,000.00) ("Initial Tenant Improvement Deposit") in cash into an escrow account ("Escrow Account") with an escrow agent ("Escrow Agent") and pursuant to an escrow agreement mutually acceptable to Lessor and Lessee, which Initial Tenant Improvement Deposit amount is an estimate of the cost to be incurred by Lessor for construction of the Tenant Improvements, and related occupancy costs, through and including January 31, 1992. If, and only if, Lessee and that certain banking group headed by Chase Manhattan Bank, N.A. ("Bank Group"), with which Lessee is currently negotiating a restructuring of Lessee's debt, have not executed an agreement evidencing such restructuring (the "Restructuring Agreement") on or 37 before February 1, 1992, Lessee shall deposit in the Escrow Account commencing February 1, 1992, and every fourteen (14) days thereafter, an amount equal to one-half (1/2) of the estimated costs to be incurred by Lessor in construction of the Tenant Improvements, as reasonably determined by Lessor and communicated to Lessee in writing, for the fourteen (14) day period immediately following the applicable deposit date (collectively, "Secondary Tenant Improvement Deposit"); provided that in no event shall the Secondary Tenant Deposit exceed the aggregate amount of $259,205.00. The Initial Tenant Improvement Deposit and the Secondary Tenant Improvement Deposit shall hereinafter be referred to as the "Total Tenant Improvement Deposit". In the event Lessee and the Bank Group execute the Restructuring Agreement on or before March 31, 1992, then, in such event, Lessor and Lessee shall each deliver written instructions to the Escrow Agent directing the Escrow Agent to release the Total Tenant Improvement Deposit to Lessee. In the event, however, that the Restructuring Agreement is not mutually executed on or before March 31, 1992, Lessor and Lessee shall deliver written instructions to the Escrow Holder directing the Escrow Holder to release the Total Tenant Improvement Deposit to Lessor, and Lessor shall thereafter hold the Total Tenant Improvement Deposit as security for Lessee's timely performance of its obligations under this Lease until such time as Lessor receives written notice from Lessee and confirmation from the Bank Group that the Restructuring Agreement has been executed by Lessee and the Bank Group. Within three (3) business days following receipt of such notice, Lessor shall deliver to Lessee the Total Tenant Improvement Deposit, including any interest accrued thereon, to Lessee; provided, however, if at any time during the then remaining Term Lessee defaults under the Restructuring Agreement, whether material or otherwise, Lessee shall deliver to Lessor written notice of such default within three (3) business days of the date of the default, and shall deliver to Lessor within seven (7) additional business days an amount equal to six (6) times the then current monthly Base Rent due under this Lease, which amount shall be held by Lessor as security for Lessee's timely performance of its obligations under this Lease until such time as Lessor receives written notice from the Bank Group (or an agent of the Bank Group) that said default has been cured or waived, at which time Lessor shall, within ten (10) business days of such notice, return such amount to Lessee. The failure of Lessee to perform any of its obligations under this Paragraph 50(k) shall constitute a material default under this Lease. 51. Abatement of Base Rent. Notwithstanding anything to the contrary set forth in Paragraph 1 of this Lease, and provided that Lessee has performed all of the terms and conditions of this Lease, following the giving of any required notice and the expiration of the applicable cure period, Lessor hereby agrees to abate Lessee's obligation to pay Base Rent for months two (2), three (3), four (4), five (5), six (6), seven (7), eight (8), and nine (9) of the Term. Lessee shall still be responsible for the payment of all other amounts payable by Lessee under this Lease. In the event of a default by Lessee pursuant to the terms of this Lease, and Landlord's subsequent termination of this Lease, as part of the recovery permitted by Lessee, Lessor shall be entitled to recover the Base Rent which is abated hereunder. 38 52. Parking. Notwithstanding anything to the contrary set forth in Paragraph 2.2 of the Lease, in addition to the space allocated to Lessee, Lessee may be entitled to use, during the Term, the parking areas associated with the Premises for parking by Lessee, and Lessee's employees, visitors and customers, subject to any rules and regulations promulgated by or parking fees charged by Lessor (which fees for Lessee shall be free during the initial term of this Lease), as the same may be established from time to time. All responsibility for damage and theft to vehicles is assumed by Lessee and Lessee's employees, visitors and customers. Lessee shall repair or cause to be repaired, at Lessee's sole cost and expense, any and all damage to the Building and the Office Building Project caused by Lessee's, or Lessee's employees', visitors', or customers' use of such parking areas therein. 53. Base Rent Increase. Notwithstanding anything to the contrary set forth in Paragraphs 1.6 and 1.7 of the Lease and commencing and effective upon the first day of the sixtieth (60th) month after the Commencement Date (the "Rent Adjustment Date") the Base Rent payable by Lessee to Lessor (in accordance with Paragraph 4.1 of the Lease) shall be adjusted to $52,294.00 per month (i.e.,$1.6586 per rentable square foot on the Premises). 54. Operating Expenses. Notwithstanding anything to the contrary set forth in the Lease: (a) Lessee shall pay Lessee's Share of the Operating Expense Increase for each calendar year of the Term (as estimated by Lessor); provided, however, that Lessee's Share of Operating Expense Increase shall not increase by more than thirteen percent (13%), cumulative and compounded, from year to year. Lessor shall notify Lessee of such estimate at the outset of each calendar year of the Term, and such estimate shall be payable by Lessee in monthly installments concurrently with Lessee's monthly payments of Base Rent (in accordance with the Lease). Lessor may increase such estimate (not more often than once in any given year of the Term), in good-faith, and Lessee shall pay the difference between what Lessee would have paid had such estimate been in effect from the outset of such calendar year and what Lessee actually paid, and Lessee's subsequent monthly installments of such payments shall likewise be adjusted to reflect such increase. Following the end of each calendar year of the Term, Lessor shall determine and notify Lessee in writing of the actual Operating Expenses incurred by Lessor for the Building and for the Office Building Project. If the actual Operating Expenses exceed the estimated expenses, Lessee shall pay the difference to Lessor concurrent with Lessee's next monthly installment of Base Rent. If the estimated expenses exceed the actual Operating Expenses, Lessor shall credit the difference against Lessee's next monthly installment of Rent. Lessor's failure to notify Lessee of Lessee's estimate of the Operating Expenses prior to the Commencement Date of the Term or prior to the commencement of any calendar year of the Term, shall not foreclose Lessor from collecting, following such notification, those estimated Operating Expenses, which expenses (or balance) shall be due concurrently with Lessee's next monthly installment of rent; provided, however, that if Lessor fails to notify Lessee of Lessee's estimated Operating 39 Expenses for the upcoming calendar year, Lessee shall continue to pay such Operating Expenses in effect for the prior calendar year until such time as Lessee is notified in writing of Lessor's estimate for the then-current calendar year. Operating Expenses for a partial month shall be prorated based on a three hundred sixty (360) day calendar year. (b) "Operating Expenses" shall be defined to include all expenses set forth in Paragraph 4.2(d) of the Lease and all reasonable expenses incurred by Lessor in operating, maintaining and repairing the Building and the Office Building Project, as determined by standard accounting practices, including, but not limited to: rent taxes, gross receipts taxes (whether assessed against Lessor or assessed against Lessee and paid by Lessor, or both); water and sewer charges; the cost of janitorial services, security and labor; surcharges or any other costs levied, assessed or imposed by, or at the direction of, or resulting from statutes or regulations promulgated by any federal, state or local governmental authority in connection with the use or occupancy of the Building or the Office Building Project; the cost (amortized over the reasonably anticipated useful life of the asset, together with interest at the prevailing prime rate plus two percent (2%) on the unamortized balance) of (i) any capital improvements made to the Building or the Office Building Project by Lessor to the extent such capital improvements reduce Operating Expenses or which are made to the Building or the Office Building Project by Lessor after the commencement date of the Term as required pursuant to any law or regulation that was not applicable at the time they were constructed, or (ii) replacement of any equipment needed to operate the Building at a consistent level or quality, but only in the event that such equipment (A) is malfunctioning or non-functioning and the repair of such equipment would not be economically feasible when compared to the cost of replacement, or (B) is otherwise due for replacement in the ordinary course of its reasonably anticipated useful life; costs incurred in the management of the Building or the Office Building Project, if any, including a fair market management fee, supplies, wages and salaries of employees used in the management, operation and maintenance of the Building and the Office Building Project, and payroll taxes and similar governmental charges with respect thereto; the cost of air-conditioning, waste disposal, heating and ventilating; the cost of elevator maintenance, supplies, materials, equipment and tools; the reasonable costs of repair and maintenance of the Building and the Office Building Project, including payroll expenses and rental of personal property used in connection therewith; reasonable costs of gardening and landscaping; reasonable costs of maintaining signs; personal property taxes levied on or attributable to personal property used in connection with the operation, maintenance and repair of the Building or the Office Building Project; reasonable audit or verification fees; and the costs of lighting, cleaning, refuse removal and similar items, including appropriate reserves, of the Building and the Office Building Project. Operating Expenses shall not include depreciation on the Building or the Office Building Project or any equipment therein, Lessor's executives' salaries or any real estate brokers commissions, legal fees, judgments, financing expenses, debt service or ground rent. Furthermore, real property taxes shall not include increases in real property taxes attributable to the sale, refinance or other transfer of 40 ownership of the Building prior to the second (2nd) anniversary of the Commencement Date. (c) Notwithstanding the foregoing, the following shall not be included in Operating Expenses: (i) Costs associated with the operation of the business of the ownership or entity which constitutes "Lessor", as distinguished from the costs of building operations, including, but not limited to partnership, accounting and legal matter, costs of defending any lawsuit with mortgagee (except as the actions of Lessee may be an issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of Lessor's interest in the Building, costs of any disputes between Lessor and its employees (if any) not engaged in Office Building Project, disputes of Landlord with Building management, or outside fees paid in connection with disputes with other tenants; (ii) Costs incurred in connection with the original construction of the Office Building Project, or in connection with any major change in the Office Building Project, including but not limited to the addition or deletion of floors; (iii) Costs of alterations or improvements to the Premises or the Premises or other tenants; (iv) Depreciation, interest and principal payments on mortgages, and other debts, if any; (v) Expenses directly resulting from the negligence of Lessor, its agent, servants or employees, legal fees, space planner's fees, real estate broker's leasing commissions and advertising expenses incurred in connection with the original development or original leasing of the Office Building Project, or future leasing of the Office Building Project; (vi) Costs for which Lessor is reimbursed by its insurance carrier or any tenant's insurance carrier; (vii) Any bad debt loss, rent loss or reserves for bad debts or rent loss; (viii) The expenses of extraordinary services provided to other tenants in the Office Building Project; (ix) Amounts paid as ground rental by Lessor; (x) Any Operating Costs in connection with the ground floor and the mezzanine levels, or any other floor in the Building devoted to any retail operating; (xi) Costs incurred by Lessor with respect to goods and services 41 (including utilities and sold and supplied to tenants and occupants of the Office Building Project) to the extent that Lessor is reimbursed for such costs. (xii) Costs, including permits, license and inspection costs, incurred with respect to the installation of tenant improvements made for new tenants in the building or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Office Building Project. (xiii) Expenses in connection with services or other benefits which are not provided to Lessee or for which Lessee is charged directly but which are provided to another tenant or occupant of the Office Building Project. (xiv) Overhead and profit increment paid to Lessor or to subsidiaries or affiliates of Lessor for services in the Office Building Project to the extent the same exceeds the costs of such services rendered by unaffiliated third parties on a competitive basis. (xv) Rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment ordinarily considered to be part of a capital nature, except equipment not affixed to any building in the Office Building Project which is used in providing janitorial or similar services. (xvi) All items and services for which Lessee or any other tenant in the Office Building Project reimburses Lessor or which Lessor provides selectively to one or more tenants (other than Lessee) without reimbursement. (xvii) Electric power costs for which any tenant directly contracts with the local public service company. (xviii) Legal fees, space planner's fees, real estate broker's leasing commissions and advertising expenses incurred in connection with the original development or original leasing of the Office Building Project or future leasing of the Office Building Project. (xix) Capital expenditures required by Lessor's failure to comply with laws enacted on or before the date the Building's temporary certificate of occupancy is validly issued. (xx) Expenses in connection with third party landlord/tenant disputes in the Office Building Project. (xxi) Fines, penalties or interest charges within the reasonable control of Lessor. (xxii) All capital expenses other than as expressly included in Operating Expenses pursuant to the terms of this Lease. 42 It is understood that Operating Costs shall be adjusted for 95% occupancy in the Base Year and each Comparison Year, and shall be reduced by all cash discounts, trade discounts or quantity discounts received by Lessor or Lessor's managing agent in the purchase of any goods, utilities or services in connection with the operation of the Office Building Project. Lessor shall make payments for goods, utilities or services in connection with the operation of the Office Building Project. Lessor shall make payments for goods, utilities and services in a timely manner to obtain the maximum possible discount. If Capital items which are customarily purchased by Lessee of first class office buildings in Los Angeles County are leased, rather than purchased by Lessor the decision by Lessor to lease the item in question shall not serve to increase Lessee's proportionate share of Operating costs beyond that which would have applied had the item in question been purchased. In the calculation of any expense hereunder it is understood that no expense shall be charged more than once. Lessor shall use its best efforts to effect an equitable proration of bills for services rendered to the Office Building Project and to any other property owned by Lessor. Lessor agrees to keep books and records showing the Operating Costs in accordance with a systems of accounts and accounting practices consistently maintained on a year to year basis. (d) In the event Lessee shall dispute the amount set forth on any statement, Lessee shall have the right, by providing notice not later than ninety (90) days following receipt of such statement and commencing such audit within 180 days after receipt of such statement, to cause Lessor's books and records with respect to the preceding calendar year to be audited by a certified public accountant mutually acceptable to Lessor and Lessee. (e) Notwithstanding anything to the contrary set forth in the Lease, because of Lessee's seven days per week, twenty-four hours per day operations in the Premises, the amount payable by Lessee for utilities and other services pursuant to Paragraph ll of the Lease shall be determined as follows: (i) Since (A) the Tenant on the second (2nd) floor of the Building has a normal business installation and uses its premises only during normal business hours (8:00 a.m. to 6:00 p.m., Monday through Friday) and (B) the Building will, other than for that Tenant, be vacant during the period of January l, 1992 through March 1, 1992, the utility usage during that period, as measured by the utility meters for the Building, shall be determined and divided by the rentable square feet occupied by such second (2nd) floor tenant to determine normal hours utility usage per square foot (Per Foot Rate"). (ii) For each month of the Term, Lessee shall pay to Lessor, pursuant to Paragraph 11 of the Lease, the costs of all such utilities and services 43 attributable to the Building which are in excess of the product of the total square footage of the Building multiplied by the Per Foot Rate. Lessor acknowledges and agrees that any utility or service charges paid for by Lessee pursuant to the terms of this Paragraph 54(e) shall be excluded from the definition of Operating Expenses payable by Lessee pursuant to Paragraph 54(a) of this Addendum. (iii) If in any year during the Term, the nature of other occupants of the Building changes so that the utilities or services included within the Per Foot Rate concept described above are used beyond normal business hours or for other than a normal office installation by any other occupant of the Building, or the rates charged for such utilities or services change from the rates reflected in the Per Foot Rate, then prior to Lessee's continuation of its payment for utilities and services in accordance with this Paragraph 54, Lessor and Lessee shall agree on a reasonable adjustment to the procedure for calculating Lessee's obligations with respect to such utility and service charges in order to take into account such extra usage or rate changes. Such adjustment shall be determined in accordance with generally accepted accounting principles. (f) Notwithstanding anything to the contrary set forth in this Lease, Lessor shall use its good faith efforts, in accordance with generally accepted accounting principles, to allocate the costs of over-standard Operating Expenses directly to third-party tenants of the Office Building Project, when such over-standard usage, in Lessor's reasonable judgment, is attributable to such third-party tenants. 55. Lessee's Environmental Compliance. Notwithstanding anything to the contrary set forth in Paragraph 6.1 of the Lease, Lessee hereby agrees to use the Premises in accordance with the following: (a) "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which is regulated by any local, state or federal authority, including, but not limited to, petroleum; radioactive material; any material or substance designated or defined as a 'Hazardous Substance", "Toxic Substance" or "Hazardous Waste" in Section 25117 of the Health and Safety Code of the State of California, or under any successor or other provision of California law, Section 311 of the Clean Water Act (33 U.S.C., Section 1251 et seq.), the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Hazardous Materials Transportation Act, and all other laws and ordinances governing similar matters now or hereinafter enacted, or any regulations adopted or publications promulgated pursuant thereto (hereinafter collectively referred to as the "Regulations")."Hazardous Materials Activities" shall mean the use, generation, storage, disposal and/or transportation of Hazardous Materials by Lessee, or Lessee's employees, agents, contractors, licensees or invitees. (b) Lessee shall not conduct or cause to be conducted any Hazardous Materials Activities on, under or about the Premises without receiving Lessor's prior written consent, which consent Lessor may withhold in Lessor's sole and 44 absolute discretion or revoke at any time. If Lessor consents to any such Hazardous Materials Activities, Lessee shall conduct such Hazardous Materials Activities in strict compliance (at Lessee's sole cost and expense) with all applicable Regulations, using all necessary and appropriate precautions. (c) Lessee shall indemnify, protect and defend Lessor, with counsel acceptable to Lessor, against and hold Lessor harmless from any claims, damages, costs and liability (including actual attorneys' fees and costs, and court costs) arising out of any Hazardous Materials Activities. Lessor and Lessor's representatives and employees may enter the Premises, at any time, during the Term in order to inspect Lessee's compliance herewith. The foregoing indemnification of Lessor shall survive the expiration or any earlier termination of the Lease. (d) Lessor hereby represents that Lessor does not know of, nor does Lessor have reasonable cause to believe, that any release of Hazardous Materials has come to be located on or beneath the Premises, Building, or Office building Project. 56. Maintenance. Repair and Alterations. (a) Notwithstanding anything to the contrary set forth in Paragraph 7.2 of the Lease, all repair and maintenance of the Premises required by Lessee under the Lease shall be paid for solely by Lessee and shall be performed by contractors and other personnel approved by Lessor, and all costs and expenses incurred by Lessor for Lessor's performance of any of Lessee's obligations hereunder shall constitute "additional rent" under the Lease, payable by Lessee in accordance with Paragraph 7.2(b) of the Lease. (b) Notwithstanding anything to the contrary set forth in Paragraph 7.1 of the Lease, Lessor shall be responsible for the maintenance and repair of the foundation, exterior walls, roof structure and other structural portions of the Building. The costs of such maintenance and repair by Lessor (except as the result of any negligence or willful misconduct of Lessee, for which Lessee shall assume all costs) shall be included within the definition of Operating Expenses. Lessee shall not be entitled to any abatement of rent (except as otherwise provided herein) as the result of Lessor's performance of such maintenance and repair, and Lessee hereby waives any right to make repairs at Lessor's expense under any law, statute or ordinance now or hereafter in effect. (c) In the event that Lessee fails to obtain and maintain any insurance required under the Lease for any reason whatsoever, Lessee shall be conclusively deemed to have self-insured such insurance obligations with the full waiver of subrogation set forth in the Lease. 57. Damage and Destruction. Notwithstanding anything to the contrary set forth in Paragraph 9 of the Lease, Lessee hereby waives the provisions of California Civil Code Sections 1932 and 1933, and any successor sections and any other statutes which are inconsistent with the provisions of the Lease and 45 which relate to the termination of leases when leased property is destroyed, and agree that such event shall be governed by the terms of the Lease. 58. Assignment and Subletting (a) In connection with any proposed assignment of the Lease or sublease of all or any portion of the Premises Lessee shall deliver to Lessor, for Lessor's review and written approval, all such information concerning the proposed assignee or sublessee as Lessor may reasonably require or request, including, but not limited to, any financial statements or other financial information and all terms of the proposed assignment or sublease. (b) Notwithstanding anything to the contrary set forth in Paragraph 12.4 of the Lease, Lessor may collect any rent and other consideration received from an assignee or sublessee and apply same toward Lessee's obligations under the Lease; provided, however, that until a default shall occur in the performance of Lessee's obligations under the Lease, Lessee may receive and collect such rent and other consideration accruing under any assignment or sublease. Lessee hereby irrevocably authorizes and directs any assignee or sublessee, upon receipt of written notice from Lessor stating that a default exists in the performance of Lessee's obligations under the Lease, to pay to Lessor the rent due and to become due under the assignment or sublease. Lessee agrees that any assignee or sublessee shall have the right to rely upon any such written notice from Lessor, and that such assignee or sublessee shall pay such rent to Lessor without any obligation or right to inquire as to whether a default exists, and notwithstanding any notice from or claim from Lessee to the contrary, Lessee shall have no right or claim against such assignee or sublessee or Lessor for any rent and other consideration so paid by such assignee or sublessee to Lessor. 59. Brokers. Lessee warrants and represents that Lessee has not dealt with any real estate broker or agent in connection with the Lease or its negotiation, except for the brokers identified in Paragraph 15 of the Lease (if any). Lessee shall indemnify and hold Lessor and the Premises harmless from and against any and all costs, expenses and liability (including actual attorneys' fees and court costs) for any compensation, commission or fees claimed by any other real estate broker or agent in annection with the Lease or its negotiation based upon any act Lessee. Lessor warrants and represents to Lessee that Lessor has not dealt with any real estate broker or agent in connection with the Lease or its negotiation, except for the brokers identified in Paragraph 15 of the Lease (if any). Lessor shall indemnify and hold Lessee harmless from and against any and all costs, expenses and liability (including actual attorneys' fees and court costs) for any compensation, commission or fees claimed by any other real estate broker or agent in connection with the Lease or its negotiation based upon any act of Lessor. 60. Limitation on Liability. Notwithstanding anything to the contrary set forth in the Lease, the obligations of Lessor, and Lessor's partners (either general or limited), directors, officers and shareholders, under the Lease do 46 not constitute personal obligations. Lessee, and Lessee's successors and assigns, hereby agree not to seek recourse against the personal assets of Lessor, or Lessor's partners (either general or limited), directors, officers and shareholders, for satisfaction of any actual or alleged liability of Lessor to Lessee under the Lease, but Lessee shall look only to Lessor's interest in the Building for the satisfaction of any liability of Lessor to Lessee hereunder. 61. Notices. Copies of all notices or any other documents required to be delivered to either Lessor or Lessee, or both, pursuant to the terms of the Lease (including any changes to the addresses of either Lessor or Lessee), shall be delivered to the parties, in accordance with Paragraph 23 of the Lease, at the following addresses: If to Lessee: 1675 Broadway New York, NY 10010 Attn: Mr. Charles Persing with a copy to: Morgan, Lewis & Bockius 101 Park Avenue New York, NY 10178 Attn: Mitchell N. Baron, Esq. If to Lessor: The Paragon Group 523 West Sixth Street, Suite 515 Los Angeles, California 90014 Attn: Mr. Jeremy Fletcher with a copy to: Allen, Matkins, Leck, Gamble and Mallory 515 South Figueroa Street, 8th Floor Los Angeles, California 90071 Attn: Matthew W. Koart, Esq. 62. Holding Over. If Lessee fails to surrender the Premises upon the expiration or earlier termination of the Term without the express written consent of Lessor, Lessee shall become a tenant-at-sufferance at a rental rate equal to one hundred fifty percent (150%) of the monthly Rent payable by Lessee for the month immediately preceding such expiration or earlier termination, and Lessee shall remain responsible for the payment of all other monetary obligations due and payable by Lessee under the Lease. Acceptance by Lessor of Rent after such expiration or earlier termination of the Term shall not result in any renewal of the Term. The foregoing provisions are in addition to and do not affect Lessor's right of re-entry or any other rights or remedies of Lessor hereunder or as otherwise provided at law or in equity, or both. If Lessee fails to surrender the Premises upon the expiration or earlier termination of the Term despite Lessor's demand to do so, Lessee shall indemnify and hold Lessor harmless from and against any and all losses, costs, 47 damages and liability (including actual attorneys' fees and costs, and court costs), direct or indirect, which Lessor may suffer as a result of Lessee's failure to surrender the Premises. 63. Signage. (a) Lessee shall have the right to install identification signage on the parapet near the front of the Building, the exact location of which shall be mutually agreed upon by Lessor and Lessee, which signage shall comply with all applicable recorded covenants, conditions and restrictions, and all federal, state and local laws, zoning regulations, permits, approvals and other limitations affecting the Building and/or the Office Building Project. All of Lessee's signage shall be installed and maintained, at Lessee's sole cost and expense, pursuant to an installation and maintenance program approved and supervised by Lessor. At the expiration or earlier termination of the Lease, Lessee shall, at Lessee's sole cost and expense, cause such signage to be removed from the Premises and/or the Building, and the Premises and/or the Building to be restored to the condition existing prior to Lessee's placement of such signage. If Lessee fails to remove such signage and restore the Premises and/or the Building within thirty (30) days after Lessor's written request therefor, then Lessor may perform such work, and all costs and expenses incurred by Lessor shall be reimbursed by Lessee within ten (10) days after Lessee's receipt of Lessor's written demand therefor. The signage rights of Lessee hereunder shall be personal to the original Lessee and may not be assigned or transferred to any other person or entity. Lessor shall not authorize or permit any third-party tenant in the Building to construct a sign on the front doors of the Building. (b) Lessee, at Lessor's expense, shall also be entitled to one-half of the space on the directory board in the lobby of the Building. 64. Modification for Lender. Lessee hereby consents to any changes or amendments to the Lease requested by any lender of Lessor having a security interest in the Lease or the Premises or the Building, so long as such changes do not materially alter the terms of the Lease or otherwise materially diminish any rights or materially increase any obligations of Lessee therein. 65. Options to Extend. (a) Notwithstanding anything to the contrary set forth in the Lease, Lessor hereby grants to Lessee two options (the "Options") to extend the Term of the Lease for periods of five (5) years each (the "Option Terms"). The Options must be exercised, if at all, by written notice (the "Option Notice") delivered by Lessee to Lessor not later than nine (9) months prior to the end of the then-current Term. Further, the Option shall not be deemed to be properly exercised if, as of the date of the Option Notice, Lessee is in default under the Lease. Provided Lessee has properly and timely exercised the Option, the initial Term shall be extended by the Option Term, and all terms, covenants and conditions of the Lease shall remain unmodified and in full force and effect, except that the Rent shall be modified as set forth 48 below. (b) If Lessee timely and properly exercises the Option(s), all of the terms and conditions of the Lease shall apply during the Option Term(s), except that the Base Year shall be the first twelve (12) months of each respective Option Term, and the Base Monthly Rent for each respective Option Term shall be ninety-five percent (95%) of the "fair market" rental rate (as defined in Addendum Paragraph 65(c) below) for the Premises at the time of the commencement of the applicable Option Term. Furthermore, Lessor agrees to provide new carpet to the Premises and to repaint the Premises at the beginning of each Option Term. (c) For the purposes of this Addendum 65 only, "fair-market" rental rate shall mean the projected prevailing rental rate as of the commencement date of the then applicable Option Term, for similar rentable space situated in similar buildings located in the Valencia, California area. Lessor shall use its commercially reasonable efforts to provide written notice ("Rent Notice") of such fair-market rental rate not later than one (1) month after receipt of Option Notice from Lessee. In the event Lessee objects to the "fair-market" rental rate submitted by Lessor, Lessor and Lessee shall attempt in good-faith to agree upon such "fair-market" rental rate, using good-faith efforts. If Lessor and Lessee fail to reach agreement on such "fair-market" rental rate within thirty (30) days following Lessee's receipt of the Rent Notice (the "Outside Agreement Date"), then each party's determination shall be submitted to appraisal in accordance with the following: (i) Lessor and Lessee shall each appoint one (1) independent appraiser who shall by profession be a real estate broker active over the previous five (5) year period ending on the date of such appointment in the leasing of commercial properties in the Valencia, California area. The determination of the appraiser shall be limited solely to the issue of whether Lessor's or Lessee's submitted "fair-market" rental rate for the Premises is closest to the actual "fair-market" rental rate for the Premises as determined by the appraisers, taking into account the requirements set forth above. Such decision shall be based upon the projected prevailing fair-market rental rate as of the commencement date of the applicable Option Term. Each such appraiser shall be appointed within fifteen (15) days after the Outside Agreement Date. (ii) The two (2) appraisers so appointed shall within fifteen (15) days after the date of the appointment of the last appointed appraiser agree upon and appoint a third appraiser who shall be qualified under the same criteria set forth above for the initial two (2) appraisers. (iii) The three (3) appraisers shall, within thirty (30) days after the appointment of the third appraiser, reach a decision as to whether the parties shall use Lessor's or Lessee's submitted "fair-market" rental rate, and shall notify Lessor and Lessee in writing thereof. (iv) The decision of a majority of the three (3) appraisers shall be 49 binding upon Lessor and Lessee. If either Lessor or Lessee fails to appoint an appraiser within the time period specified hereinabove, the appraiser appointed by one of them shall reach a decision based upon the same procedure set forth above (i.e., by selecting either Lessor's or Lessee's submitted "fair-market" rental rate), and shall notify Lessor and Lessee thereof, and such appraiser's decision shall be binding upon Lessor and Lessee. (v) If the two (2) appraisers fail to agree upon and appoint a third appraiser, both appraisers shall be dismissed and the matter to be decided shall be submitted to arbitration under the provisions of the American Arbitration Association based upon the same procedures set forth above (i.e., by selecting only Lessor's or Lessee's submitted "fair-market" rental rate). (vi) The costs of appraisal hereunder, and arbitration if necessary, shall be paid by the party whose rental rate is not selected. (d) In no event shall the Base Monthly Rent during any Option Term fall below the Base Monthly Rent in effect for the month immediately preceding the commencement of such Option Term. (e) Lessor and Lessee hereby agree to execute an amendment to the Lease promptly after Lessee's exercise of the Option in order to incorporate the extension of the initial Term and the lease terms thereof into the Lease. 66. Right of First Offer. (a) Notwithstanding anything to the contrary set forth in the Lease and provided that there is then no default by Lessee under this Lease, Lessor hereby grants to Lessee the right of first offer to lease any additional, available space located in the Building (the "First Offer Space") as and when such First Offer Space becomes available for lease to third parties and so long as any existing lessee of such First Offer Space elects to vacate same. Lessor shall notify Lessee of (a) the availability of the First Offer Space, (b) the anticipated date on which the First Offer Space shall be available to Lessee, and (c) the then-current economic terms, including, but not limited to, Lessor's determination of the Rent, for the First Offer Space (except that for any First Offer Space leased during the first five (5) years following the Commencement Dates the rent shall be the same as under this Lease). For a period of ten (10) days following Lessee's receipt of Lessor's written notice containing such information, Lessee shall have the right of first offer to lease the First Offer Space (i) upon the same economic terms and conditions set forth in Lessor's written notice, and (ii) provided such election is made four (4) years or more from the end of the Term, including the option terms, if then exercised, upon the same non-economic terms of the Lease (including the Expiration Date). If Lessee fails to elect to lease the First Offer Space upon Lessor's terms and conditions within such thirty (30) day period, Lessor shall be entitled to lease the First Offer Space to any third party upon any terms, and this right of first offer with respect to that space only shall 50 terminate and be of no further force and effect. Lessor and Lessee hereby agree to execute an amendment to the Lease promptly after Lessee s exercise of the Right of First Offer in order to incorporate the First Offer Space and the leased terms thereof into the Lease. (b) Notwithstanding the foregoing, Lessee may, from time to time, request notice from Lessor of all additional available space in the project, and within five (5) days thereafter Lessor shall provide to Lessee a list of such available space. Lessee may then elect to lease such space at the prevailing rates and terms then being offered by Lessor for such space to third parties and, provided such election is made four (4) years or more from the end of the Term, including the option terms, if then exercised, such lease shall be on the same non-economic terms as the Lease and the term of such lease shall terminate on the Expiration Date of this Lease, as extended. If this election is not made within four (4) years or more from the end of the Term, as extended, the term of such lease, and the non-economic terms of such lease, shall be subject to mutual negotiation. (c) Nothing contained in this paragraph 66 shall prevent Lessee from at any time leasing available space in the Building or granting any other rights with respect thereto. 67. Default. The term "default" whenever used in this Lease shall mean a default after the giving of the required notice by Lessor to Lessee, and the expiration of the cure period. 68. Consent. In each instance where Lessor's consent or approval is required, it shall not be unreasonably withheld or delayed and shall be deemed given if Lessor shall not respond to Lessee's written request within seven (7) days following Lessee's written request. All matters which must be to Lessor's satisfaction, or performed in Lessor's judgment, shall be to Lessor's reasonable satisfaction or in Lessor's reasonable judgment. All sums incurred by Lessor on Lessee's behalf, for which reimbursement is required, shall only be reimbursed if those sums are reasonable. 69. Alterations. Notwithstanding the provisions of Article 7, Lessee shall have the right, without Lessor's consent, to make interior, nonstructural alterations to the Premises, provided same do not adversely affect the Building's systems and do not affect the exterior of the Building. 70. Reciprocal Indemnity. Notwithstanding the provisions of Paragraphs 8.7 and 8.8 of the Lease, Lessee shall not be required to indemnify and hold Lessor harmless from any such loss, costs, liability, damage and expense to any person or property (including but not limited to penalties, fines and actual attorneys' fees and costs) resulting from the negligent acts or omissions or the willful misconduct of Lessor or those of its agents, contractors, servants or employees, in connection with Lessor's activities on the Premises or the Building to the extent not covered by insurance required to be maintained by Lessee hereunder, and Lessor hereby so indemnifies, defends and saves Lessee harmless from any such loss, costs, liability, damage 51 and expense (including but not limited to penalties, fines and actual attorneys' fees and costs). In the case of any action or proceeding brought against Lessor by reason of any such claim, Lessor upon notice from Lessee hereby agrees to defend the same at Lessor's expense with counsel to which Lessee does not reasonably reject. Further, Lessee's agreement to indemnify and hold Lessor harmless pursuant to Paragraphs 8.7 and 8.8 and the exclusion from Lessee's indemnity and the agreement by Lessor to indemnify and hold Lessee harmless pursuant to this Subparagraph (b) are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Lessor or Lessee, respectively, pursuant to the provisions of this Lease to the extent that such policies cover the results of such negligence or omissions or such willful misconduct. If either party breaches this agreement by its failure to carry required insurance, such failure shall automatically be deemed to be the covenant and agreement by Lessor or Lessee, respectively, to self-insure such required coverage, with full waiver of subrogation. Each party's indemnification obligations under this Lease shall not be limited to the amount of insurance coverage carried by such party hereunder. 71. Lessee's Continuous Operation. Lessor acknowledges that Lessee's intended use of the Premises requires uninterrupted twenty-four (24) hours a day, seven (7) days a week utility service throughout the term of this Lease. As such, Lessor agrees that Lessee shall be entitled to establish the requisite electrical connections to a backup electrical generator located adjacent to the Building (the "Backup Generator") to be installed pursuant to the Final Plans and as part of the Lessee Improvements, which shall be for Lessee's exclusive use. Furthermore, Lessor agrees to provide Lessee with reasonable advance notice of the times during which Lessor knows that the flow of electricity or air conditioning to the Premises will be interrupted so that Lessee may plan accordingly. Subject to the foregoing, however, Lessee's twenty-four (24) hour use of the Premises shall be subject to all of the other provisions of this Lease, and Lessor shall not be liable for the failure of Lessee to receive uninterrupted flow of electricity or air conditioning to the Premises except as otherwise expressly provided in this Lease. 72. Lessee's Right to Make Repairs. If Lessee provides notice to Lessor of an event or circumstance which requires the action of Lessor with respect to repair, providing of services, and/or utilities and/or maintenance as set forth in this Lease, and Lessor fails to provide such action within a reasonable period of time, given the circumstances, after the receipt of such notice, but in any event not later than thirty (30) days after receipt of such notice, then Lessee may proceed to take the required action upon delivery of an additional ten (10) business days notice to Lessor specifying that Lessee is taking such required action, and if such action was required under the terms of this Lease to be taken by Lessor, then Lessee shall be entitled to prompt reimbursement by Lessor of Lessee's reasonable costs and expenses in taking such action. In the case of an emergency Lessee shall be entitled to take whatever minimum steps as are commercially reasonable under the circumstances until Lessor can address such emergency. In the event Lessee takes such action, and such work will affect the Building's systems and 52 equipment, the structural integrity of the Building and/or the exterior appearance of the Building or Project, Lessee shall use only those contractors used by Lessor for work on the Building's systems and equipment or structure and/or the exterior appearance of the Building or Project, unless such contractors are unwilling or unable to perform such work, in which event Lessee may utilize the services of any other qualified contractor which normally and regularly performs similar work in Comparable Buildings. Further, if Lessor does not deliver a detailed written objection to Lessee, within thirty (30) days after receipt of an invoice by Lessee of its costs of taking action which Lessee claims should have been taken by Lessor, and if such invoice from Lessee sets forth a reasonably particularized breakdown of its costs and expenses in connection with taking such action on behalf of Lessor, then Lessee shall be entitled to deduct from Rent payable by Lessee under this Lease, the amount set forth in such invoice. If, however, Lessor delivers to Lessee within thirty (30) days after receipt of Lessee's invoice, a written objection to the payment of such invoice, setting forth with reasonable particularity Lessor's reasons for its claim that such action did not have to be taken by Lessor pursuant to the terms of this Lease or that the charges are excessive (in which case Lessor shall pay the amount it contends would not have been excessive), then Lessee shall not be entitled to such deduction from Rent, but as Lessee's sole remedy, Lessee may proceed to institute legal proceedings against Lessor to collect such amount. 73. Interruption of Services. Notwithstanding anything contained in the Lease to the contrary, in the event that Lessee is prevented from using, and does not use, the Premises or any portion thereof for five (5) consecutive days, or any ten (10) days in any calendar year ("Eligibility Period") as a result of any failure of Lessor to provide services, repairs or access to the Premises, then Lessee's rent shall be abated or reduced, as the case may be, during the period after the Eligibility Period for such time that Lessee continues to be so prevented from using the Premises or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Lessee is prevented from using, and does not use, bears to the total rentable area of the Premises. However, in the event that Lessee is prevented from conducting, and does not conduct, its business in any portion of the Premises for a period in excess of the Eligibility Period, and the remaining portion of the Premises is not sufficient to allow Lessee to effectively conduct its business therein, and if Lessee does not conduct it business from such remaining portion, then for such time after the Eligibility Period during which Lessee is so prevented from effectively conducting its business therein, the rent for the entire Premises shall be abated; provided, however, if Lessee reoccupies and conducts its business from any portion of the Premises during such period, the rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Lessee from the date such business operations commence. 74. Satellite Antenna. Notwithstanding anything to the contrary in this Lease, Lessee shall have the right to install, operate and maintain up to six (6) microwave and earth station dishes or similar antennae ("Antenna") on a 53 location on the roof of the Building to be mutually determined by Lessor and Lessee and shall have access to the roof for purposes related to the Antenna. Lessee's installation and operation of the antenna shall be governed by the following terms and conditions: (a) Lessee's right to install, operate and maintain the Antenna shall be subject to all governmental laws, rules and regulations and Lessor makes no representation that such laws, rules and regulations permit such installation and operation; Lessee, in conjunction with Lessor, shall obtain all necessary governmental approvals and permits prior to installation; (b) all costs of installation, operation and maintenance of the antenna and the connecting cable (including, without limitation, costs of obtaining any necessary permits) shall be borne by Lessee; (c) it is expressly understood that Lessor retains the right to use the roof of the Building for any purpose whatsoever provided that Lessor shall not interfere with the use of the Antenna; (d) Lessee shall use the Antenna so as not to cause any interference to other tenants in the Building or with any other tenant's communication equipment and not to damage or interfere with the normal operation of the Building, including any mechanical system thereof, and Lessor shall not permit any tenant to interfere with the Antenna; (e) Lessor shall not have any obligations with respect to the Antenna nor shall Lessor be responsible for any damage that may be caused to Lessee or the Antenna by any other tenant in the Building. Lessor makes no representation that the Antenna will be able to receive or transmit communication signals without interference or disturbance (whether or not by reason of the installation or use of similar equipment by others on the roof) and Lessee agrees that Lessor shall not be liable to Lessee therefor; (f) Lessee shall (i) be solely responsible for any damage caused by the Antenna, including, but not limited to, any damage caused to the roof of the Building during the installation or maintenance of the Antenna, or caused by the Antenna itself, (ii) promptly pay any tax, license or permit fees charged pursuant to any laws or regulations in Connection with the installation, maintenance or use of the Antenna and comply with all precautions and safeguards recommended by all governmental authorities, (iii) pay for all necessary repairs, replacements to or maintenance of the Antenna, and (iv) not bore into any structural elements of the Building in connection with the installation of the antenna; (g) Lessee shall remove the Antenna and connecting cable at Lessee's expense upon the expiration or sooner termination of the Lease or upon the imposition of any governmental law or regulation which may require removal, and shall repair the roof of the building upon such removal to the extent required by such work of removal; and 54 (h) the size of each of the Antenna shall not exceed thirty (30) inches in diameter and the appearance of the antenna shall be subject to all governmental rules and regulations. 75. Cancellation Option. Lessee shall have the one time right to terminate this Lease ("Option to Terminate") at the end of the sixtieth (60th) month following the Commencement Date by providing to Lessor at least six (6) months' prior written notice of Lessee's election to terminate this Lease and by paying to Lessor Nine Hundred Sixty-Four Thousand One Hundred Fifty-Three and 31/100 Dollars ($964,153.31) (the "Termination Consideration") as consideration for terminating this Lease. Lessee shall pay to Lessor the Termination Consideration on the first (1st) day of the fifty-ninth (59th) month of the Term of this Lease and if Lessee has timely provided the Termination Notice and timely paid the Termination Consideration within ten (10) days following notice that the same is due, then this Lease shall terminate and be of no further force and effect on the last day of the sixtieth (60th) month of the Term of this Lease. If Lessee notifies Lessor of its exercise of the Option to Terminate but fails to pay the Termination Consideration within ten (10) days following notice that the same is due, then at Lessor's election Lessor may either terminate the Lease or keep the Lease in full force and effect (in which case Lessee's exercise of the Option to Terminate shall be null and void). 76. Refurbishment. Provided that Tenant does not exercise the Option to Terminate set forth in paragraph 75 above, and provided further that Tenant utilizes at least 50% of the carpeting currently existing in the Premises for Lessee's initial occupancy of the Premises, then Lessor agrees to recarpet and repaint the Premises within two (2) months after the 60th month following the Sublease Commencement Date. 77. Moving Allowance. Lessor agrees to provide to Lessee a moving allowance in the amount of $31,529.00 to be payable to Lessee within one month following Lessee's move in to the Premises. 78. Non-Disturbance Agreement. Lessor hereby agrees that concurrently with its execution and delivery of this Lease, Lessor will provide Lessee with commercially reasonable non-disturbance agreements from any ground lessors, mortgage holders or lien holders of Lessor now in existence. In addition, Lessor will provide Lessee with such agreements as soon as reasonably possible from ground lessors, mortgage holders or lien holders of Lessor who later come into existence during the term of the Lease. Lessor's covenant contained herein shall be in consideration of and as a condition precedent to Lessee's agreement to be bound by Paragraph 28 of the Lease. Lessee further waives the provisions of any current or future statute, rule or law which may give or purport to give Lessee any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Lessee hereunder in the event of any foreclosure proceeding or sale, and agrees that this Lease shall not be affected in any way whatsoever by any such proceeding or sale, except that this sentence shall not affect Lessor's obligation to provide commercially reasonable nondisturbance agreements to Lessee. 55 79. Security. Lessor agrees that Lessee shall be permitted to install its own security system in the Premises which security system shall be subject to Landlord's prior written consent, which consent shall not be unreasonably withheld 80. Actual Costs. If Lessee is required to pay any amounts pursuant to this Lease other than Basic Rent, any parking fee and Operating Expenses, including, but not limited to after hours utility service, such amount shall be the actual cost incurred by Lessor (including a ten percent (10%) overhead and profit element for the property) as such amount is reasonably determined by Lessor. In the event that more than one lessee of the Building orders such item, or if any cost item is applicable to more than one lessee, such costs shall be apportioned among all lessees in accordance with the ratios that such utility is used, and if that is not able to be determined, then it shall be apportioned in accordance with the ratio of the rentable square footage of each lessee's respective premises. 81. Storage Space. Lessor shall make available to Lessee at such times as any space becomes available (and after considering the needs of other tenants in the Project), storage space throughout portions of the project as required by Lessee at the prevailing rate for such storage space then being offered by Lessor to other tenants of the project. 82. Lease Assumption. Lessee is the present tenant under a lease with Copperfield Investment & Development Company dated December 1, 1983, and the user under a License Agreement dated June 7, 1984, amended by agreements dated October 16, 1989, March 13, 1987 and March 10, 1988 (the "Existing Lease"), covering premises outside the Office Building Project. Lessee shall remain in possession and pay rent under the Existing Lease until May 31, 1992. Lessee represents and warrants that the rent obligation (including additional rent) for the period June 1, 1992 through the expiration of the term of the Existing Lease is $305,248.66 and that the Existing Lease is scheduled to expire on May 31, 1993. Lessor shall use its good faith efforts to arrange for a cancellation of the Existing Lease, and the release of Lessee from all liability under the Existing Lease from and after May 31, 1992, and Lessee hereby appoints Lessor as its limited agent for the sole purpose of arranging such cancellation. The cost of obtaining that cancellation shall be paid as follows: (i) the first $190,780.43 shall be paid by Lessor ("Lessor's Maximum Obligation"), (ii) any payment in excess of the above amount up to $114,468.23 ("Lessee's Maximum Obligation") shall be paid by Lessee, and (iii) any Security Deposit held by the Landlord under the Existing Lease shall be payable to Lessee. In no event shall either party be obligated to pay an amount in excess of the applicable limit set forth above, and in no event shall Lessor enter into an agreement with the landlord under the Existing Lease obligating Lessee to pay a lease cancellation fee in excess of Lessee's Maximum Obligation or creating any other obligation or liability of Lessee without Lessee's prior written consent. In the event Lessor is able to cancel the Existing Lease and release Lessee from liability thereunder without expending all of Lessor's Maximum Obligation, Lessee acknowledges and agrees that Lessee shall 56 have no right to receive any portion of such savings in the form of cash, rent credit or otherwise. If Lessor is unable to obtain that cancellation and release upon terms which are within the parties' maximum commitments described above using Lessor's good faith efforts on or before March 1, 1992, Lessee shall, at its option, either attempt to arrange for same (and the payments therefore shall be made as provided in this paragraph) or continue to pay rent under the Existing Lease, in which case the first $190,780.43 of rent and additional rent from and after May 1, 1992 shall be paid by Lessor, (and if Lessee fails to make such payment within ten (10) days after notice from Lessee that such amount is due, Lessee shall be entitled to pay same and deduct it from the rent due under this Lease). IN WITNESS WHEREOF, Lessor and Lessee have executed this Addendum concurrently with the Lease of even date herewith. "LESSOR" VALENCIA PARAGON ASSOCIATES, LTD., a California Limited Partnership By: /s/ JEREMY B. FLETCHER Its: General Partner By: /s/ JEFFREY B. ALLEN Its: General Partner "LESSEE" UNISTAR COMMUNICATIONS GROUP, INC., a Delaware Corporation By: /s/ WILLIAM J. HOGAN Its: President By: /s/ WILLIAM B. LOCKETT Its: Senior V.P. Administration 57 58 EX-10.23 11 EXHIBIT 10.23 TO FORM 10-K TRANSMISSION SERVICE AGREEMENT This Agreement, when executed by authorized representatives of each party will supersede a contract dated November 1, 1989 that currently exists between IDB Communications Group, Inc., a Delaware corporation having its principal office at 10525 West Washington Boulevard, Culver City, California 90232-1922 ("IDB"), and Unistar Radio Networks, Inc., a Delaware Corporation, having a principal office at 1675 Broadway, 17th Floor, New York, NY 10019 ("Customer"). For and in consideration of the promises and covenants set forth in this Agreement, the parties hereby agree as follows: This contract will take effect on June 1, 1993. 1. Primary IDB Services. Los Angeles Formats a) IDB will provide full-time uplink and space segment of seven (7) stereo pairs and 2 mono audio channels, and the associated data channels. The current delivery method(s) (Attachment A), hereinafter referred to as "Formats - Current Distribution" will be maintained until such time as IDB is able to provide items in Paragraphs 1 (b) through 1 (e) as specified below. At such time when items in Paragraphs 1 (b) through 1 (e) have been provided, IDB will discontinue delivery as specified in Paragraph 1 (a). b) IDB will provide to Customer full-time uplink and space segment of 6 - 20 kHz Sedat 4 Audio Channels (3 stereo pairs), 8 - 20 kHz Sedat 1 Audio Channels (4 stereo pairs) and 2 mono Sedat 3 audio channels on Satcom C5, hereinafter referred to as "Formats - Sedat Distribution" on Satcom C5. Sedat definitions are included in Attachment B. c) IDB will provide to Customer full-time uplink and space segment of one (1) data channel with up to 32 kbps of data. d) IDB will provide to Customer a quantity of 900 Scientific Atlanta Receivers Model # DSR3610-modified. Specifications are delineated in Attachment C. e) IDB will arrange for installation of the receivers specified in Paragraph 1 (d) at the locations with existing Satcom C5 downlinks as designated by Customer. The work statement is detailed in Attachment D. 1 f) IDB will provide terminal equipment, as specified in Attachment E, to support audio paths between IDB's Culver City location and Customer's Valencia location. At the request of Customer, IDB will provide additional equipment at a price to be negotiated at the time of purchase of said equipment. g) IDB will provide 24 hour network monitoring and troubleshooting of all paths and audio channels that are provided by IDB or terminate at IDB's Culver City location. New York Programming h) IDB will provide to Customer full-time uplink and space segment of five (5) audio channels, one (1) voice cue channel, and occasional uplink and space segment for specified programs. The current channel breakdown and delivery method(s) (Attachment F), hereinafter referred to as "NY - Dats" will be maintained until such time as IDB is able to provide items Paragraphs 1 (i) through 1 (l). At such time when items in Paragraphs 1 (i) through 1 (l) have been provided, IDB will discontinue delivery as specified in Paragraph 1 (h). i) IDB will provide to Customer full-time uplink and space segment of three (3) 10 kHz Sedat 3 Audio Channels and two (2) 20 kHz Sedat 1 Audio Channels on Satcom C5, hereinafter referred to as "NY Sedat". j) IDB will provide to Customer one (1) Sedat 1 voice cue channel equivalent. A voice cue channel equivalent is defined as a channel with a minimum frequency response of 50 hz - 3.4 kHz and the ability to pass DTMF tones. k) IDB will provide to Customer a quantity of 850 Sedat Digital Audio Decoder Cards, 595 will be Model # AD4226 and compatible with the DAT32 chassis, and 255 will be Model # AD4227 and compatible with the DART 384 chassis. l) IDB will provide shipment of the cards specified in 1 (k) and written installation instructions to the radio stations as designated by Customer. Cards will be delivered to stations a minimum of two (2) weeks prior to the conversion date to "NY Sedat". m) IDB will provide primary T-1 path routing from the designated demarcation point at Customer's Arlington, VA location (telephone room at 2000 15th Street North, Arlington, VA) to IDB's demarcation point (telephone closet at 5 Teleport Drive, 2 Staten Island, NY). Routing detail, to be agreed upon by Customer and IDB, shall be included as Attachment G to this contract within 60 days of contract signature. n) IDB will provide primary digital encode/decode and CSU hardware to support four (4) duplex 15 kHz audio paths for the T- 1 path specified in 1 (m). o) IDB will provide the following backup hardware at Customer's Arlington location and IDB's Staten Island location to support the four (4) 15 kHz duplex path for the T-1 path specified in 1 (n): 1 power supply, 2 transmit cards, 2 receive cards. Backup hardware at IDB's Staten Island location can be part of IDB's general "pool of spares". p) Within 60 days of contract signature, IDB will provide fully diverse backup routing, defined as path(s) that have no duplication in routing from Customer's Arlington demarcation point (telephone closet at 2000 15th Street North, Arlington, VA) to IDB's demarcation point (telephone closet at 5 Teleport Drive, Staten Island, NY) of a minimum of a second T-1. Routing detail, to be agreed upon by Customer and IDB, shall be included as Attachment G to this contract within 60 days of contract signature. q) IDB will provide backup digital encode/decode and CSU hardware to support four (4) duplex 15 kHz audio paths for the T-1 path specified in 1 (p). r) IDB will provide primary digital encode/decode and CSU hardware to support four (4) duplex 15 kHz audio paths for the T- 1 path provided by Customer between Customer's New York, NY facility and IDB's Staten Island, NY location. s) IDB shall be responsible for delivery of Customer's audio channels from the IDB demarc point to the uplink location on a primary and a fully diversely routed backup path. IDB is responsible for providing equipment on these paths as required. Routing detail, to be agreed upon by Customer and IDB, shall be included as Attachment H to this contract within 60 days of contract signature. t) IDB shall be responsible for, and shall bear all costs associated with, the troubleshooting, maintenance and repair of its owned T-1 related equipment located within Customer's premises. 3 u) IDB will provide 24 hour network monitoring, alarming where reasonable, and troubleshooting of all paths and audio channels that are provided by IDB or terminate at IDB's Staten Island location. 2. Additional IDB Services Los Angeles Formats a) IDB will provide, at the request of Customer, additional stereo pairs (128 kbps or 192 kbps stereo dependent). IDB guarantees availability of two (2) additional 128 kbps or 192 kbps stereo pairs (4 channels), with 90 days notice from Customer. Additional channels beyond this number are subject to availability. b) IDB will provide Customer with ninety (90) days written notification of the anticipated date for the conversion to "Formats - Sedat Distribution". c) IDB will provide Customer with thirty (30) days written notification of the exact date for the conversion to "Formats - Sedat Distribution". d) IDB will have a 24 hour hotline service available to Customer's affiliates for technical support during the transition from the "Formats - Current Distribution" to the "Formats - Sedat Distribution". Engineering personnel will be available during business hours from the date that equipment ships until the final conversion is done. During non-business hours, operations personnel will be available for support. In addition, for the entire period of the contract, IDB will become the initial point of contact for Customer's Format stations with technical problems. Once IDB identifies that the problem is on the station end, the call will be redirected to Customer personnel for troubleshooting. e) At Customer's request, IDB will upgrade Customer's "Formats - Sedat Distribution" system to support the "Store and Forward Capability". IDB will provide the SA hardware and software as delineated in Attachment I. f) At Customer's request IDB will work with Customer in search of alternate vendors for the Store and Forward capability. The digital interface information required to allow development of the Store/Forward capability by alternate vendors will be provided to IDB by Scientific Atlanta and attached to this contract as soon as the specification is published. Prices quoted in this contract for Store/Forward are not valid for any other vendor at this time. 4 g) At Customer's request, IDB will upgrade Customer's three (3) stereo pairs of Sedat 4 quality channels to Sedat 2 quality channels. This upgrade refers only to the channels specifically referred to in Paragraph 1 (b) of this contract. h) At Customer's request, IDB will provide one (1) 10 kHz Sedat 3 quality channel for Newslink. New York Channels i) IDB will provide to Customer uplink and space segment for two (2) - 20 kHz Sedat 1 channels (one stereo pair) for satellite distribution of "Super Gold Saturday Night" on Satcom C5 from 1800 - 0200 ET. j) IDB will provide to Customer uplink and space segment for two (2) - 20 kHz Sedat 1 channels (one stereo pair) for satellite distribution of "Country Gold Saturday Night" on Satcom C5, from 1850 - 0300 ET. k) IDB will provide Customer with as much written notification as possible of the anticipated date for the "NY - Sedat" conversion. l) IDB will provide Customer with thirty (30) days written notification of the exact date for the "NY - Sedat" conversion. m) IDB will have a 24 hour hotline service available to Customer's affiliates for technical support during the transition from "NY - Dats" to "NY - Sedat". Engineering personnel will be available during business hours from the date that equipment ships until the final conversion is done. During non-business, operations personnel will be available for support. n) Any additional Sedat cards requested by Customer within thirty (30) days of the conversion to "NY - Sedat" date will be made available at the contract rate of $ 12.71 per card for the term of the contract. Additional Sedat cards requested by Customer more than thirty (30) days after the conversion to "NY - Sedat" will be made available to customer subject to time frames and rates to be negotiated at the time of that request. o) Customer has the option to return unused cards to IDB within sixty (60) days of the conversion date to "NY - Sedat". A per card decrease of $ 12.71 per card in cost will be reflected in Customer's monthly bill. p) At the request of the Customer, IDB will be responsible for the operation of an automated program logger that will record the Unistar Program Channels and cue channel. 5 q) IDB's provision of the Gentner Automation System (Dawn Model) in January of 1992 to Customer fulfills IDB's previous contractual commitments to provide tape recording and playback of Customer's programming. r) IDB will provide adequate Sedat receive cards at IDB's Staten Island facility to monitor Customer's audio channels on a full-time basis. Los Angeles Formats and New York Channels s) IDB will furnish discrepancy reports to Customer concerning the operation of the transmission system on an "as needed" basis. 3. Customer Responsibilities. Los Angeles Formats a) Customer shall be responsible for provision and installation of audio paths, as needed, between Customer's location(s) and IDB, Culver City. b) Customer shall be responsible for all hardware, except as specifically stated otherwise in Attachment E, required on the audio paths specified in Paragraph 3 (a). c) Customer shall be responsible for providing a list of locations, contacts, phone #s, and addresses for IDB shipment and installation of receivers. This list should be provided to IDB a minimum of sixty (60) days prior to the anticipated conversion date. Customer will also provide the information to IDB in label form or computer text file form. New York Channels d) With the exception of the primary and backup paths specified in Paragraphs 1 (m) and 1 (p), Customer is responsible for provision and installation of audio paths, as needed, between Customer's location(s) and IDB, Staten Island. Specifically, Customer is responsible for provision of T-1 path referred to in Paragraph 1 (r). e) Customer is responsible for all programming, maintenance and repair of the Gentner Automation System referred to in Paragraph 2 (q). f) Customer shall be responsible for providing a list of locations, contacts, phone #s, and addresses for IDB shipment of 6 Sedat cards. This list should be provided to IDB a minimum of forty-five (45) days prior to the anticipated conversion date. Customer will also provide the information to IDB in label form or computer text file form. g) Customer will be responsible for all equipment, maintenance, repair and tape associated with the program logger that will record the Customer's Program Channels and cue channel referred to in Paragraph 2 (p). h) Customer will provide and maintain digital receive equipment at the Teleport for full-time monitoring of the Customer's Signals. This will consist of 1 downconverter shelf and 1 demodulator shelf with the appropriate hardware, with the exception of the Sedat audio channel cards referenced in Paragraph 2 (r). Los Angeles Formats and New York Channels i) Customer will provide an air conditioned environment and power with generator backup as available at Customer locations where all IDB equipment is installed. IDB's equipment will be hooked up to the backup power. j) Customer's technicians, when available, will use their reasonable efforts to assist IDB in troubleshooting and replacement of modules as requested by IDB on any IDB owned equipment at Customer's locations. If a Customer provided technician incurs and is paid overtime for the primary purpose of assisting IDB, IDB shall reimburse Customer for its costs associated with the troubleshooting. k) Customer is responsible for the origination of all programming material to be fed to Customer's channels, except as specifically agreed upon between Customer and IDB. 4. Charges and Payments a) The charges for the Primary Services described in Paragraph 1 and Secondary Services described in Paragraph 2, except for the items listed in Paragraphs 2 (a), 2 (e), 2 (g), 2 (h), 2 (n), and 2 (o) will be as follows: From June 1, 1993 until NY Sedat Conversion Date: $ 258,035.60 per month From NY Sedat Conversion Date - November 31, 1993: $ 198,842.00 per month From December 1, 1993 - May 31, 2003 $ 121,000.00 per month 7 A breakdown of the December 1, 1993 - May 31, 2003 price is included in Attachment J. This breakdown is for informational purposes only. b) In addition, the following services listed in Paragraphs 1 and 2, upon request by Customer, will necessitate the following changes in the monthly billing. Paragraph 2 (a) $ 5,161.30 increase per 128 kbps stereo pair $ 7,741.94 increase per 192 kbps stereo pair Paragraph 2 (e) $ 17,000 per month increase; this price is valid for the quantity and type of unit specified within Attachment I; a written and formal request for service must be made by Customer to IDB prior to May 30, 1994. Paragraph 2 (g) $ 6,250 increase per month Paragraph 2 (h) $ 2,580.64 increase per month Paragraph 2 (n) $ 12.71 increase per card requested within thirty (30) days of the conversion to "NY - Sedat" date; price for cards requested after that period will be provided at a price to be negotiated. Paragraph 2 (o) $ 12.71 decrease per card c) Charges for the Services described in Paragraphs 1 and 2 of this Agreement (collectively "the Services") shall be invoiced by IDB to Customer thirty (30) days in advance of the first day of each service month. All invoices are due Net Thirty (30) days from date of invoice. Any payments not received when due will be assessed a finance charge of 1 1/2 % per month until paid. In addition, if any payment is not received when due, IDB shall be entitled to give written notice to Customer of IDB's intention to discontinue service. If Customer fails to bring its account with IDB current within thirty (30) days after the date of receipt of such written notice, IDB shall have the right to discontinue all service to Customer without further notice and without liability or penalty of any kind on account of such termination. If service under this Agreement is terminated due to Customer nonpayment, service will be restored only when those invoices which are overdue, regardless of due date, have been paid, and continued service thereafter will require that charges for the 8 Services be paid in advance and invoices for all other services will be due net thirty (30) days, subject at all times to IDB's rights to assess late charges and to discontinue service for nonpayment as provided above. All payments for the Primary and Secondary Services will be made when scheduled as provided in this Paragraph 4 (c), regardless of whether there exists any dispute between the parties concerning IDB's performance under this Agreement. 5. Most Favored Nation IDB acknowledges that Customer is guaranteed "most favored nation" status relative to the pricing of the uplink and satellite channels in Paragraphs 1 (b) and 1 (i). These prices are $ 2,580.64 per 64 kbps channel, based on the Sedat compression algorithms which are referred to in this contract. In the event that IDB contracts with another customer at a lower price for channels and services of the same quantity and bandwidth as specified in this contract, IDB will provide written notification to Customer, and extend those lower rates to Customer effective the same date as commencement of the third party service. 6. Term and Termination. a) Service under this Agreement shall commence on June 1, 1993 and shall continue for a term of ten (10) years. b) If at anytime Customer wishes to cancel this agreement, Payment according to Paragraph 4 (c) of the agreement will be made according to one of the following: i) Payment of 1/120th of the total value of the contract each month until such time Customer or IDB finds a replacement customer(s) for the space segment in Paragraphs 1 (a) or 1 (b) and 1 (c) and Paragraphs 1 (h) or 1 (i) and 1 (j), and the hardware specified in Paragraphs 1 (d) and 1 (k). At that time and on a monthly basis the payment of 1/120th owed to IDB by Customer will be reduced by the monies collected by resale of such space segment and receive hardware. or ii) When both parties agree to a liquidated settlement. or iii) When IDB or Customer find a customer(s) to fully replace revenue previously generated to IDB by Customer. c) Not withstanding Customer's obligations set forth in Paragraph 6 (b), should Customer cancel this agreement, IDB shall use its best efforts to find a replacement Customer and mitigate its damages hereunder as a result of such cancellation. 9 d) If IDB cancels this Agreement, because of non-payment or a material breach by the Customer, IDB shall be entitled to all monies referred to in Paragraph 6 (b). If IDB cancels this Agreement, it shall, nonetheless, be subject to the limitations set forth in Paragraph 6 (c). 7. Programming IDB shall have no responsibility to monitor the transmission of Customer's programming signals for content or compliance with FCC rules and regulations or for any other purpose other than transmission integrity assurance. 8. Ownership of Receive Equipment a) At all times during this contract, IDB shall maintain ownership of the receive equipment provided by IDB. At the end of the contract term, Customer has the right to purchase all of the receive equipment provided by IDB in Paragraphs 1 (d) and 1 (k) for a price of $ 1.00. b) Within the time frame of the contract term, IDB shall be responsible for all maintenance and repair of receive equipment specifically provided by IDB in this contract. Procedures and standards for this maintenance and repair are included in Attachment K. c) Customer is responsible for determining the allocation of the receive equipment to the affiliated radio stations. IDB will be responsible for delivery and installation of this hardware as specified in Paragraphs 1 (e) and 1 (l) for all equipment shipped prior to and within thirty (30) days of the Sedat conversion dates. After that point, Customer will be responsible for the cost of shipment and installation. d) Customer will be responsible for notifying IDB of any changes in the location of the equipment. 9. Maintenance of Customer Equipment Except for negligence (which for purposes of this Agreement shall include mutually agreed upon practices and procedures on the part of IDB or its employees), IDB shall not be liable for any failure of the Customer Equipment, nor the cost of Customer's parts or Customer's third party service, Customer's freight or any other Customer costs as may be incurred in maintaining such equipment. At the request of Customer, IDB will obtain maintenance service 10 for the Customer Equipment and will invoice Customer directly for all direct costs incurred thereby. Customer may add, remove or change its equipment as Customer deems necessary. All such changes at IDB facilities must be made while accompanied by IDB personnel so as not to cause service outages or other interference with IDB operations. IDB will provide Customer and its representatives and contractors with access to the Customer Equipment on reasonable notice and as may be required in emergencies. 10. Technical Specifications re: Uplink and Space Segment a) Technical specifications of the satellite uplink transmission system will be those specifications given to IDB by GE Americom which will be referred to as "Attachment L" to this Agreement. b) IDB will continue to be a party to the existing Agreement (A copy of said agreement is attached hereto as Attachment M"), among GE, ABC, CBS, NBC, Unistar, and the Associated Press that provides for reciprocal voice and news wire announcements should any party thereto suffer a catastrophe. c) IDB will provide Customer with a schedule, as prepared and provided by GE Americom, of predicted sun outages for the satellite in use at least four (4) weeks prior to the beginning of those outages for the 50 locations designated by Customer that are provided to IDB by the satellite carrier. d) The uplink multiplex and transmission equipment shall be fully redundant with one set of equipment maintained in a "hot standby" condition. It shall be monitored and switched as required. A redundant antenna need not be maintained, but, in case of failure of the uplink antenna or its transmission lines, IDB will arrange to re-route, pre-empt or make provisions for another antenna to be brought into service as soon as possible. e) Restoration provisions are attached as "Attachment N" and incorporated into this Agreement. These restoration procedures are those currently being provided by GE Americom. f) IDB will not schedule outages for maintenance or other purposes, including equipment reconfiguration on any equipment or transmission service which could cause a service outage to the satellite or otherwise materially impair Customer's operations without prior authorization of Customer's personnel. Customer will not unnecessarily withhold testing permissions if the Customer's channels are not in use. 11 g) IDB agrees not to change or modify the satellite system without the prior written approval, which shall not unreasonably withheld, by Customer. h) All IDB's satellite, transponder, and channel assignments are subject to the "restoral" provisions designated by the satellite carrier. 11. Service Availability and Liability. a) IDB guarantees to Customer service availability of 99.8% for the services described in Paragraphs 1 and 2 of this Agreement, with the exception of those items specified in Paragraphs 1 (a), 1 (b), 1 (c), 1 (h), 1 (i), 1 (j), 1 (m), 1(p) and 1 (s), and those services as detailed below. IDB guarantees to Customer service availability as described in Attachment I for all items specified in Paragraphs 1 (a), 1 (b), 1 (c), 1 (h), 1 (i) and 1 (j). IDB guarantees to Customer service availability of 99.95% error-free seconds measured over 24 consecutive hours and 99.96% availability measured over 12 consecutive months for items specified in Paragraphs 1 (m) and 1 (p) and 1 (s). Exceptions also apply for interruptions or other problems in such services due in whole or in part to any of the following: (i) Customer failing to provide program material and/or schedules; (ii) Any downtime or other interruption of facilities or services not provided by IDB in this contract; (iii) The Customer Equipment, and acts or failures to act on the part of Customer and its employees, agents and contractors other than IDB; and (iv) Acts of God or third parties, other than those for which IDB is responsible per this contract, or other causes beyond the reasonable control of IDB. b) If, for reasons other than those described in Paragraph 11 (a), IDB fails to transmit Customer's programming for the amounts specified in Paragraph 11 (a), IDB's sole and total liability and Customer's exclusive remedy shall be limited to Customer receiving, as liquidated damages and not as a penalty, the prorated amount of actual charges for each hour or portion thereof that Customer's programming is not transmitted. IDB shall not be liable for any and all claims, losses, liabilities, direct or consequential damages, costs and expenses, including attorneys` fees, arising out of IDB's failure to transmit 12 customer's programming, except when such failure is the result of negligence on the part of IDB, it agents or employees. c) Customer shall have the right to terminate this agreement for non performance if IDB's performance falls below the amounts specified above for a period of three (3) consecutive months or if IDB's performance falls below the amounts specified above during any five (5) months in a calendar year, notwithstanding anything contrary set forth in this Agreement. Customer shall not have any payment obligation or other obligation or liability to IDB hereunder and upon such termination, IDB shall, at Customer's request and with GE Americom's approval, reassign free and clear of any encumbrances all of IDB's rights and privileges to the channels specified in Paragraphs 1 (a) or 1 (b) and 1 (c), and 1 (h) or 1 (i) and 1 (j) under the agreement with GE Americom or any successor agreement. 12. Sales of Excess Capacity a) Customer may sell the excess channel capacity only as specifically stated herein Paragraph 6 and Paragraph 12 of this contract. b) Except as specified in Paragraph 6 and Paragraph 12 (c), Customer may not sell excess capacity on the "New York Dats" or "New York Sedat" through June 30, 2001. c) If at anytime, Customer has a decrease in the need for the quantity of full time channels provided for under this contract, and IDB and Customer do not wish to renegotiate the channel quantity and pricing, then Customer has the right to sell these channels specifically for the purpose of covering the cost of those channels. The "right to sell" only applies to the quantity of channels which Customer currently has as specified in Attachments A & D. Those channels referred to in Paragraph 2 (a) of this contract are not included. d) If Customer wishes to resell occasional channels, it may be done by reselling to IDB at a rate to be negotiated in good faith by both parties. IDB has the right to resell those channels at a rate which provides IDB with its standard markup. e) Unless specifically agreed to otherwise in writing by IDB, any channels which are sold by Customer to a client other than IDB must be routed through Customer controlled facilities to IDB and/or IDB's uplink location. 13 13. Changes in Channels In the event that new technologies become available and competitive, neither IDB nor Customer will deny the other the opportunity to evaluate conversion of the satellite channel capacity to the new technology. In the event that IDB is unwilling to convert the "headend", and with the addition of Customer's affiliates over 2/3rds of the existing US commercial radio stations would be able to receive the new technology, then IDB will release Customer from the commitment to this contract for the capacity which IDB will not convert, with nine (9) months written notice. 14. Third Party Requirements. a) The parties acknowledge and agree that, in providing satellite transmission services, IDB will be required to operate in accordance with the practices and procedures of the carrier from whom satellite transponder space or other transmission facilities are utilized, and to the extent carrier practices and procedures are inconsistent with the terms of this Agreement, such practices and procedures will control IDB's performance hereunder. b) The satellite uplink transmission services to be provided by IDB under this Agreement are subject to regulation by the Federal Communications Commission (the "FCC"). Throughout the term of this Agreement, IDB will obtain and keep current all licenses, permits and other approvals of the FCC or other governmental bodies required to perform such services. IDB's performance under this Agreement will at all times comply with the rules and regulations of the FCC, and to the extent they are inconsistent with the terms of this Agreement, such rules and regulations will control IDB's performance hereunder. 15. Miscellaneous. a) Payment of the charges set forth in this Agreement entitles Customer to receive only the services expressly described in this Agreement as being covered by such charges, and all other extra or additional services which Customer may wish to obtain from IDB shall only be supplied to Customer at prices and on such other terms as may be agreed to between the parties. b) Except for negligence on the part of IDB or its Employees, Customer will indemnify and hold IDB harmless from and against any and all claims, losses, liabilities, direct or consequential damages, costs and expenses, including reasonable attorneys' fees, arising out of or related to the content of 14 Customer's programming or other material furnished by Customer hereunder, including without limitation any claim for libel, slander or infringement of copyright. This indemnification shall survive any termination of this Agreement. c) Insofar as not inconsistent with paragraph 15 (b) above, IDB will indemnify and hold Customer harmless from and against any and all claims, losses, liabilities, damages, costs and expenses, including reasonable attorneys' fees, arising out of or relating to the negligence or willful actions of IDB or its agents and employees in transmitting Customer's programming, including but not limited to failure to maintain necessary licenses or interference with a third party's transmissions. This indemnification extends only to IDB's actions in transmitting Customer's programming, and does not in any way affect the limitation on IDB's liability for failure to transmit Customer's programming set forth in paragraph 11 (b). This indemnification shall survive any termination of this Agreement. d) Neither party has any authority to make any statement, representation, warranty or other commitment on behalf of the other party, and this Agreement does not create any agency, employment, partnership, joint venture or similar relationship between the parties. e) Neither party may assign any rights or obligations under this Agreement without the prior written consent of the other party, such consent not to be unreasonably withheld, provided, however, that either party may assign its rights hereunder without the consent of the other party to any entity with which it may be merged or consolidated or which acquires all or substantially all of its assets, provided that such entity agrees to writing to assume all of the obligations of Customer or IDB, as the case may be, under this Agreement. f) All notices which either party may be required or desire to give to the other party under this Agreement shall be given by personal service or by registered or certified mail, return receipt requested, addressed to such party at its respective address as set forth at the beginning of this Agreement, or to such other address as a party may hereafter designate by proper written notice to the other party. 15 g) No waiver of any breach of this Agreement shall constitute a waiver of any other breach of the same or any other provision of this Agreement, and no waiver shall be effective unless made in writing. In the event that any provisions of this Agreement shall be judged illegal or unenforceable by a court of competent jurisdiction, such provision shall be severed and the entire Agreement shall not fail but the balance of this Agreement shall continue in full force and effect. h) It is mutually acknowledged and agreed that this Agreement shall be construed in accordance with the laws of the State of California. i) Customer and IDB acknowledge that they have read this entire Agreement and that this Agreement constitutes the entire understanding and contract between the parties hereto, and supersedes any and all prior or contemporaneous oral or written communications with respect to the subject matter hereof, all of which are merged herein. This Agreement shall not be modified, amended or any way altered except by an instrument in writing signed by both of the parties hereto. WHEREFORE, this Agreement shall take effect as of the date first written above when it has been executed below on each of two copies of duly authorized representatives of each party hereto. IDB COMMUNICATIONS GROUP, INC. UNISTAR RADIO NETWORKS, INC. IDB COMMUNICATIONS GROUP, UNISTAR RADIO NETWORKS, INC. INC. /s/ Jill S. Jameson /s/ Farid Suleman ______________________ __________________________ Signature Signature Jill S. Jameson Farid Suleman ______________________ ___________________________ Print Name Print Name Director of Audio Sales Vice President of Finance _______________________ ____________________________ Title Title 5-28-93 5-28-93 _______________________ ____________________________ Date Date 16 EX-22 12 EXHIBIT 22 TO FORM 10-K WESTWOOD ONE, INC. LIST OF SUBSIDIARIES WESTWOOD ONE RADIO, INC. MUTUAL BROADCASTING SYSTEM, INC. UNISTAR RADIO NETWORKS, INC. WESTWOOD NATIONAL RADIO CORPORATION, INC. NATIONAL RADIO NETWORK, INC. THE SOURCE, INC. TALKNET, INC. WESTWOOD ONE SATELLITE SYSTEMS, INC. KM RECORDS, INC. WESTWOOD ONE STATIONS GROUP, INC. WESTWOOD ONE STATIONS - L.A., INC. WESTWOOD ONE STATIONS - NYC, INC. EXHIBIT 22 EX-24 13 EXHIBIT 24 TO FORM 10-K CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-8 (No.33-57637, No. 33-28849 and No. 33-64666) of Westwood One, Inc., of our report dated February 24, 1995 appearing on page F-2 of this Form 10-K. PRICE WATERHOUSE LLP Century City, California February 24, 1995 EXHIBIT 24 EX-27 14 EXHIBIT 27 TO FORM 10-K FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1994 JAN-01-1994 DEC-31-1994 2,439 0 37,631 0 0 46,157 16,748 0 260,112 38,472 115,443 311 0 0 95,454 260,112 0 136,340 0 105,389 24,969 0 8,802 (2,530) 200 (2,730) 0 (590) 0 (3,320) (.11) (.11) REFLECTED NET OF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS. REFLECTED NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION. COMPRISED OF COMMON STOCK AND CLASS B STOCK. COMPRISED OF NET REVENUES. COMPRISED OF OPERATING COSTS AND EXPENSES EXCLUDING DEPRECIATION AND AMORTIZATION. COMPRISED OF DEPRECIATION AND AMORTIZATION, CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES, AND RESTRUCTURING COSTS.
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