-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HNyRJVd1m46iCRuiTPnAtrMKF7VfP6HYjVwmNv+VdWIBeQcjI+2iJh9s+c7NKVrx DRI7mEUpfT/N/zazHScJow== 0000950130-98-003814.txt : 19980805 0000950130-98-003814.hdr.sgml : 19980805 ACCESSION NUMBER: 0000950130-98-003814 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 39 FILED AS OF DATE: 19980804 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEREP NATIONAL RADIO SALES INC CENTRAL INDEX KEY: 0000796735 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 131865151 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-60575 FILM NUMBER: 98676787 BUSINESS ADDRESS: STREET 1: 100 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2129160700 MAIL ADDRESS: STREET 1: 100 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 S-4 1 PROXY/PROSPECTUS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 1998 REGISTRATION NO. 333-[ ] - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- INTEREP NATIONAL RADIO SALES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ---------------- NEW YORK 7313 13-1865151 (STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.) INCORPORATION OR CLASSIFICATION CODE ORGANIZATION) NUMBER) 100 PARK AVENUE NEW YORK, NY 10017 (212) 916-0700 (ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) RALPH C. GUILD INTEREP NATIONAL RADIO SALES, INC. 100 PARK AVENUE NEW YORK, NY 10017 (212) 916-0700 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ---------------- COPIES TO: WILLIAM J. MCENTEE, JR. LAURENCE S. MARKOWITZ, ESQ. INTEREP NATIONAL RADIO SALES, INC. CHRISTY & VIENER 2090 PALM BEACH LAKES BLVD. 620 FIFTH AVENUE SUITE 300 NEW YORK, NEW YORK 10020 WEST PALM BEACH, FL 33409 (212) 632-5500 ---------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities Act"), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] ---------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION REGISTERED REGISTERED PER NOTE PRICE(1) FEE(1) - ------------------------------------------------------------------------------- 10% Senior Subordinated Notes Due 2008, Series B..................... $100,000,000 $1,000.00 $100,000,000 $29,500 - ------------------------------------------------------------------------------- Guarantees of 10% Senior Subordinated Notes Due 2008, Series B(2)..... N/A N/A N/A N/A
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) The registration fee has been calculated pursuant to Rule 457(a) and Rule 457(f)(2) under the Securities Act. The Proposed Maximum Aggregate Offering Price is estimated solely for the purpose of calculating the registration fee. (2) Guarantees of the 10% Senior Subordinated Notes due 2008, Series B to be issued by subsidiaries of the Registrant. Pursuant to Rule 457(n), no additional registration fee is being paid in respect of the guarantees. The guarantees are not traded separately. ---------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO CHANGE, + +COMPLETION OR AMENDMENT WITHOUT NOTICE. A REGISTRATION STATEMENT RELATING TO + +THESE SECURITIES HAS BEEN FILED WITH THE COMMISSION. THESE SECURITIES MAY NOT + +BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION + +STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO + +SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF + +THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR + +SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE + +SECURITIES LAWS OF ANY SUCH JURISDICTION. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED AUGUST 4, 1998 PRELIMINARY PROSPECTUS INTEREP NATIONAL RADIO SALES, INC. OFFER TO EXCHANGE UP TO $100,000,000 OF 10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES B FOR ANY AND ALL OF THE OUTSTANDING 10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A OF INTEREP NATIONAL RADIO SALES, INC. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. Interep National Radio Sales, Inc., a New York corporation ("Interep" or the "Company"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying letter of transmittal (the "Letter of Transmittal" and, together with this Prospectus, the "Exchange Offer"), to exchange an aggregate of up to $100.0 million principal amount of 10% Senior Subordinated Notes due 2008, Series B (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for an identical face amount of the issued and outstanding 10% Senior Subordinated Notes due 2008 (referred to individually as the "144A Notes" and "Reg S Notes"; collectively as the "Series A Notes"; and, together with the Exchange Notes, the "Notes") of the Company from the Holders (as defined herein) thereof in integral multiples of $1,000 principal amount. The Series A Notes were issued on July 2, 1998 (the "Offering") by the Company. As of the date of this Prospectus, there are $100.0 million in aggregate principal amount of the Series A Notes outstanding. The terms of the Exchange Notes are identical in all material respects to the Series A Notes, except that the Exchange Notes will have been registered under the Securities Act, and therefore will not bear legends restricting their transfer described in the Registration Rights Agreement (as defined herein), the provisions of which generally will terminate as to all of the Notes upon the consummation of the Exchange Offer. The Exchange Notes will be obligations of the Company evidencing the same indebtedness as the Series A Notes and will be entitled to the benefits of the same Indenture (as defined herein). See "The Exchange Offer." Interest on the Exchange Notes will be payable semi-annually in arrears on July 1 and January 1 of each year, commencing on January 1, 1999. The Exchange Notes will mature on July 1, 2008. The Exchange Notes are redeemable at any time on or after July 1, 2003 at the option of the Company, in whole or in part, at the redemption prices set forth herein, together with accrued and unpaid interest and Liquidated Damages (as defined), if any, thereon to the redemption date. In addition, at any time prior to July 1, 2001, the Company may redeem up to 30% of the aggregate principal amount of the Notes originally issued under the Indenture (as defined) at a redemption price equal to 110.000% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net cash proceeds of one or more Equity Offerings (as defined); provided that at least 70% of the aggregate principal amount of the Notes originally issued under the Indenture remains outstanding immediately after giving effect to such redemption. Upon the occurrence of a Change of Control (as defined herein), each holder of the Exchange Notes may require the Company to purchase all or a portion of such holder's Exchange Notes at a purchase price equal to 101% of the principal amount thereof, together with accrued and unpaid interest and Liquidated Damages, if any, thereon to the repurchase date. See "Risk Factors-- Change of Control" and "Description of Exchange Notes." The Exchange Notes will be general unsecured obligations of the Company and, as such, will be subordinated in right of payment to all existing and future Senior Indebtedness (as defined) of the Company and senior to or pari passu with all other indebtedness of the Company. As of March 31, 1998, after giving pro forma effect to the Financing Transactions (as defined), the Company would have had approximately $0.4 million of Senior Indebtedness outstanding. In addition, the Company would have had a $10.0 million New Credit Facility (as defined). The Exchange Notes will be fully and unconditionally guaranteed (the "Subsidiary Guarantees") by all of the Company's future and existing Restricted Subsidiaries (as defined) (the "Guarantors") on a joint and several basis. The Subsidiary Guarantees will be general unsecured obligations of the Guarantors and will be subordinated in right of payment to all existing and future Senior Indebtedness and senior to or pari passu with all other indebtedness of such Guarantor. See "Description of Exchange Notes--Subsidiary Guarantees." SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION AND CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER. THE DATE OF THIS PROSPECTUS IS , 1998. The Company will accept for exchange any and all validly tendered Series A Notes on or prior to the Expiration Date (as defined herein). Tenders of Series A Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date; otherwise such tenders are irrevocable. The Exchange Offer is not conditioned upon any minimum principal amount of Series A Notes being tendered for exchange. The Series A Notes may be tendered only in integral multiples of $1,000. For certain conditions to the Exchange Offer, see "The Exchange Offer." The Series A Notes were offered and sold on July 2, 1998 in a transaction not registered under the Securities Act in reliance upon an exemption from the registration requirements thereof. In general, the Series A Notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act. The Exchange Notes are being offered hereby in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement. The Company has agreed to pay the expenses of the Exchange Offer. Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that the Exchange Notes issued pursuant to the Exchange Offer in exchange for Series A Notes may be offered for resale, resold or otherwise transferred by any person in whose name Series A Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder (a "Holder") thereof (other than any such Holder that is (i) an "affiliate" of the Company within the meaning of Rule 405 promulgated under the Securities Act, (ii) a broker-dealer which acquired the Series A Notes directly from the Company or (iii) a broker-dealer who acquired the Series A Notes as a result of market making or other trading activities) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such Holder's business and such Holder does not intend to participate and has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes. In some cases, certain broker-dealers may be required to deliver a prospectus in connection with the resale of such Exchange Notes. Any beneficial owner of Series A Notes whose Series A Notes are registered in the name of a broker, commercial bank, trust company or other nominee and who wishes to participate in the Exchange Offer should contact such registered Holder promptly and instruct such Holder to tender the Series A Notes on such beneficial owner's behalf. See "The Exchange Offer--Procedures for Tendering." This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with any resale of Exchange Notes received in exchange for such Series A Notes where such Series A Notes were acquired by such broker-dealer for its own account as a result of market- making activities or other trading activities (other than Series A Notes acquired directly from the Company). The Company has agreed that it will make this Prospectus available to any broker-dealer for use in connection with any such resale. The Series A Notes are eligible for trading in the Private Offerings, Resales and Trading through Automatic Linkages Market (the "PORTAL" market) of the National Association of Securities Dealers, Inc. Prior to this Exchange Offer, there has been no public market for the Exchange Notes. If a market for the Exchange Notes should develop, the Exchange Notes could trade at a discount from their principal amount. The Company does not intend to list the Exchange Notes on any securities exchange nor does the Company intend to apply for quotation of the Exchange Notes on The Nasdaq National Market or other quotation system. BancBoston Securities Inc. and Loewenbaum & Company Incorporated (together with SPP Hambro & Co., LLC "the Initial Purchasers") have indicated to the Company that they intend to make a market in the Notes, but are not obligated to do so and such market-making activities may be discontinued at any time without notice. As a result, no assurance can be given that an active trading market for the Exchange Notes will develop. The Exchange Notes issued pursuant to this Exchange Offer will be issued in the form of a Global Exchange Note (as defined herein), which will be deposited with, or on behalf of, The Depository Trust Company (the "Depository" or "DTC") and registered in its name or in the name of Cede & Co., its nominee. Beneficial interests in the Global Exchange Note representing the Exchange Notes will be shown on, and transfers thereof i will be effected through, records maintained by DTC and its participants. Notwithstanding the foregoing, Series A Notes held in certificated form will be exchanged solely for Certificated Exchange Notes (as defined herein). After the initial issuance of the Global Exchange Note, Certificated Exchange Notes will be issued in exchange for the Global Exchange Note only on the terms set forth in the Indenture. See "Description of the Exchange Notes--Book-Entry, Delivery and Form." DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT, INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION THE STATEMENTS UNDER "SUMMARY," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," ARE, OR MAY BE, FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). WITHOUT LIMITING THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "INTENDS," "EXPECTS," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. VARIOUS ECONOMIC AND COMPETITIVE FACTORS COULD CAUSE ACTUAL RESULTS OR EVENTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS, INCLUDING WITHOUT LIMITATION, THE COMPANY'S DEGREE OF LEVERAGE, THE COMPANY'S DEPENDENCE ON MAJOR CUSTOMERS AND KEY PERSONNEL, COMPETITION, AND THE OTHER FACTORS DISCUSSED IN THIS PROSPECTUS WITH RESPECT TO THE COMPANY'S BUSINESS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS." ACCORDINGLY, SUCH FORWARD-LOOKING STATEMENTS DO NOT PURPORT TO BE PREDICTIONS OF FUTURE EVENTS OR CIRCUMSTANCES AND MAY NOT BE REALIZED. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY ANY UPDATES OR ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY STATEMENT IS BASED. AVAILABLE INFORMATION The Company has filed with the Commission a Registration Statement on Form S-4 (the "Registration Statement," which term shall include all amendments, exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the rules and regulations promulgated thereunder, covering the Exchange Notes being offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission and to which reference is hereby made. Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. For further information with respect to the Company and the Notes, reference is made to such Registration Statement. A copy of the Registration Statement can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549, and at the Regional Offices of the Commission at 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661- 2511. Copies of such materials can be obtained from the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The address of such site is http://www.sec.gov. ii While any Series A Notes remain outstanding, the Company will make available, upon request, to any Holder and any prospective purchaser of Series A Notes the information required pursuant to Rule 144A(d)(4) under the Securities Act during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act. Any such request should be directed to the Company at 100 Park Avenue, New York, New York 10017, Attention: Chief Financial Officer (telephone number (212) 916-0700). Upon completion of the Exchange Offer, the Company will become subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith, will file reports and other information with the Securities and Exchange Commission. NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. iii SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. Market and market share data used throughout this Prospectus have been generated internally by the Company or obtained from independent market research companies and industry publications. Independent market research companies and industry publications generally indicate that the information provided by them or contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. The Company has not independently verified such information. Similarly, while the Company believes that the data it has generated internally is reliable, such data have not been verified by any independent source. Unless otherwise specified, all market share data contained in this Prospectus are estimates by the Company. All market share data is presented on an as adjusted basis for 1997 giving effect to the entry by the Company into certain representation contracts and the termination of certain other representation contracts as of January 1, 1997. See "Business--Recent Developments." Unless the context otherwise requires, references in this Prospectus to "Interep" or the "Company," are to Interep National Radio Sales, Inc. and its subsidiaries. THE COMPANY Interep is the largest independent national spot radio advertising representation firm ("rep firm") in the United States. The Company is the exclusive rep firm for over 1,900 radio stations, including, among others, all of the radio stations owned or operated by the Radio Group of CBS Corporation ("CBS"), Clear Channel Communications, Inc. ("Clear Channel") and the ABC Radio Division of ABC, Inc. ("ABC"). The Company serves radio stations in all 50 states and in 97 of the top 100 radio markets. The Company's client radio stations are diversified across all formats, including country, rock, sports, Hispanic, classical, urban, news and talk. Interep has built strong relationships with its clients, some of which date back 40 years. The Company represents its clients pursuant to exclusive representation contracts, with remaining terms ranging from 2 months to 11 years. The Company's commission revenue and EBITDA for the 12 months ended March 31, 1998 were $88.0 million and $13.7 million, respectively. The Company estimates that its Adjusted EBITDA (as defined) for the 12 months ended March 31, 1998 would have been approximately $16.5 million, after giving effect to the entry by the Company into certain representation contracts and the termination of certain representation contracts, in each case as of April 1, 1997. Further, giving effect to such new business and terminations as of January 1, 1997, the Company estimates that it would have had a 1997 national spot radio market share in excess of 50% (based on national spot radio advertising station gross billings). The Company's commission revenues and EBITDA grew at a compound annual growth rate of 10.0% and 21.5%, respectively from 1993 to 1997. See "Business--Recent Developments." Interep has become the national spot radio industry leader through strategic alignments with growing radio groups, acquiring new clients, acquiring other rep firms and by increasing client advertising revenues. The Company's growth has occurred during a period of significant consolidation in the radio broadcast industry fostered by deregulation. The Company has strategically aligned itself with radio station groups that it believes are well-positioned to capitalize on this consolidation, such as Clear Channel, which acquired the radio station assets of Paxson Communications Corp., Sinclair Communications, Inc. ("Sinclair"), which acquired the radio station assets of Heritage Media Group, Inc. ("Heritage") and CBS, which recently acquired the radio station assets of American Radio Systems Corporation ("ARS"). In addition, the Company has been a leader in the consolidation of the radio representation business. Consolidation in the representation business has reflected the competitive pressures on smaller radio rep firms and the decision by an increasing number of radio station groups to take advantage of the national presence and comprehensive services offered by large radio rep firms such as the Company. 1 Total national spot radio gross billings were approximately $1.6 billion in 1997 and grew at a compound annual growth rate of 9.1% from 1993 to 1997. National spot advertising is commercial air time sold by radio stations to advertisers located outside of their local markets and typically represents approximately 20% of a radio station's revenue. Radio stations typically retain rep firms like Interep on an exclusive basis to sell commercial air time to national and regional advertisers and sell air time to local advertisers through in-house sales forces. Interep was founded in 1953 and has been owned primarily by its Chief Executive Officer, Ralph C. Guild, and its management and employees since 1975. Since consummation of the Offering, Interep has been owned entirely by Mr. Guild and the Company's management and employees. Its principal executive offices are located at 100 Park Avenue, New York, New York 10017. The Company's telephone number is (212) 916-0700, and its internet address is www.interep.com. COMPETITIVE STRENGTHS The Company believes the following factors contribute to its leading position and provide the foundation for further growth: LEADING MARKET SHARE AND SIGNIFICANT CLIENTS. Interep is the leading independent national spot radio advertising rep firm and represents over 1,900 radio stations including key radio station groups such as ABC, CBS, Clear Channel, Emmis Broadcasting Corporation ("Emmis"), Entertainment Communications Inc. (also known as "Entercom"), Sinclair, Spanish Broadcasting Systems ("SBS") and Susquehanna Radio Corp. ("Susquehanna"). The Company believes that its market share and leadership enhance its value to advertisers and allow it to package radio stations creatively to meet advertisers' special needs, thereby increasing its ability to sell air time for clients. STRONG RELATIONSHIPS WITH ADVERTISERS; NATIONAL PRESENCE. Strong relationships with advertisers, advertising agencies and media buying services enable the Company to promote its client stations. Interep's sales force, strategically located in 15 cities across the United States, provides effective coverage of major media buying centers. The Company works closely with advertisers to help them develop and refine radio advertising strategies and to support their purchases of advertising time on the Company's client stations. HIGHLY MOTIVATED AND SKILLED SALES FORCE. The Company has developed a highly skilled, professional sales force. Through its Employee Stock Ownership Plan (the "ESOP") and Stock Growth Plan (the "Stock Growth Plan"), Interep is entirely employee-owned. This alignment of the interests of the Company and its employees is an integral part of the Company's strategy. Moreover, through incentive programs and the in-house training programs of the Interep Radio University, the Company's sales force is motivated to adopt a team-oriented approach to marketing and fulfilling client needs. EXPERIENCED SENIOR MANAGEMENT TEAM. The Company has an experienced and entrepreneurial management team, headed by Interep's Chief Executive Officer, Ralph C. Guild, who is recognized as a leader and innovator in the radio representation business. The Company's senior sales managers have an average of over 21 years of industry experience and significant equity ownership in the Company. The Company's executive officers include Marc G. Guild, President, Marketing Division, William J. McEntee, Jr., Chief Financial Officer, Stewart Yaguda, President of Radio 2000(R), and Charles Parra, Chief Information Officer. See "Business--The Company's Organization." INDEPENDENCE AND RADIO INDUSTRY FOCUS. Interep is owned entirely by its employees and is focused exclusively on representing radio stations. The Company's only significant competitor, by comparison, is owned by a radio station group which competes with other radio stations and also represents television stations and cable 2 television systems. The Company believes that its independence and radio industry focus provide significant competitive advantages. SOPHISTICATED SALES SUPPORT. Over 85% of Interep's employees are in sales- related positions. The Company supports its sales force with sophisticated media research, including a proprietary national database. This database enables the Company to profile for advertisers the salient characteristics of the audiences of the Company's client stations to assist advertisers in reaching their target audiences. Interep has also enhanced the level of its services to clients and advertisers alike through the growing use of technology, such as networked and mobile computing and computerized databases with remote client access. OPERATING STRATEGY The Company's objectives are to continue to enhance its position as the leading national spot radio advertising rep firm in the United States and to increase revenue and EBITDA. The Company's strategy to attain these goals includes the following: SUPERIOR CLIENT SERVICE. The Company believes it has attained the leading position in its industry by consistently providing superior services to its clients with innovative features that differentiate it from its competitors. For example, Interep pioneered the use of dedicated rep firms, such as ABC Radio Sales, CBS Radio Sales and Clear Channel Radio Sales, for the representation of individual radio station groups. These dedicated rep firms allow a client to benefit from the comprehensive services offered by the Company while still projecting its corporate identity to advertisers. The Company also provides wide-ranging market research, sales planning and selling strategy consulting services to its clients. The Company has enhanced the level of its services to clients and advertisers alike through the growing use of technology, such as networked and mobile computing. The Company has recently opened its internet website, where clients and advertisers, on a secure basis, can access market research. Interep provides superior service by motivating its employees through incentives, including equity ownership and extensive in-house training. The Company intends to continue to develop innovative services and strategies in order to generate additional revenues. PROMOTION OF RADIO. Interep believes that radio advertising expenditures are not commensurate with consumer exposure time to radio and that this provides an opportunity for future growth. The Company uses its proprietary database of demographic and socioeconomic profiles of radio audiences in promoting the use of radio for advertising. In 1991, Interep introduced its Radio 2000 program to promote the ongoing growth of radio advertising by focusing on advertisers who do not use radio advertising or who underutilize this medium. The Radio 2000 sales force works with these advertisers to demonstrate how radio can help them achieve their goals and create marketing opportunities. The Company believes that Radio 2000 has contributed to the growth of radio advertising revenues in the aggregate and, by virtue of Interep's leading market position, its own growth. EXPANDING MARKET SHARE. Interep will seek to continue to expand its market share by (i) developing new clients, (ii) packaging and marketing portfolios of client stations as "unwired networks" of unaffiliated stations grouped together to meet advertisers' particular needs and (iii) developing innovative sales programs. The Company seeks to represent station groups that are acquirers of additional radio stations, such as CBS, Clear Channel, Sinclair and ABC, in order to accelerate the growth of its client base. The Company promotes unwired networks of its client stations to radio advertisers and advertising agencies to enable advertisers to place advertisements efficiently on as few as two stations or as many as all stations represented by Interep to target specific groups or markets. The Company believes that its innovations, such as Radio 2000 and dedicated rep firms, will continue to contribute to its growth. 3 RECENT DEVELOPMENTS On April 29, 1998, the Company entered into a National Radio Sales Master Representation Agreement with ABC, Inc. (the "ABC Agreement"). Under the ABC Agreement, as of June 1, 1998, Interep became the exclusive national spot radio rep firm for the 23 radio stations of ABC (all of which are in the top 15 radio markets), as well any radio stations acquired by that division in the future (subject to the Company arranging for the buyout of predecessor rep firms, if necessary). In order to service the ABC stations, the Company has established a dedicated rep firm named ABC Radio Sales. Giving effect as of April 1, 1997 to this new representation as well as to other significant representation contracts which Interep entered during the remainder of 1997 due to radio station acquisitions by Clear Channel, SBS and Emmis and the termination of the Company's representation contract with SFX Broadcasting, Inc. ("SFX") (when it was acquired by an affiliate of the Company's competitor), the Company's Adjusted EBITDA for the twelve months ended March 31, 1998 would have been $16.5 million. See "Risk Factors--New Representation Contracts" and "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." The Company's Adjusted EBITDA set forth in the prior sentence does not give effect to the recent acquisitions by CBS of certain radio stations of ARS and by Sinclair of certain radio stations of Heritage. There can be no assurance that the Company will enter into representation agreements with respect to any of these stations or as to the terms of any such agreements. THE FINANCING TRANSACTIONS The Offering was a part of a series of transactions (the "Financing Transactions") to refinance existing indebtedness, redeem preferred stock and associated shares of common stock, increase the availability of funds for working capital and general corporate purposes (including funds to acquire representation contracts) and to enhance the Company's operating and financial flexibility. The Financing Transactions included (i) the Offering and the sale of the Notes, (ii) the repayment of all outstanding obligations ($47.0 million as of May 31, 1998) under the Company's then current $55.0 million revolving credit facility (the "Old Credit Facility") and the establishment of a new credit facility (the "New Credit Facility") providing for working capital loans of up to $10.0 million, subject to the achievement of certain financial ratios and compliance with certain other covenants, (iii) the repurchase of all of the Company's outstanding shares of its Series A Preferred Stock (the "Series A Preferred Stock"), at face value plus accrued dividends, and certain associated shares of the Company's Common Stock (the "Common Stock") held by Providence Media Partners, L.P. ("Providence"), for a total purchase price of $14.1 million, and (iv) the repurchase of all of the Company's outstanding shares of its Series B Preferred Stock (the "Series B Preferred Stock"), at face value plus accrued dividends, and certain associated shares of Common Stock, from certain members of management, for a total purchase price of $2.6 million. Giving pro forma effect to the Financing Transactions as of March 31, 1998, the Company would have had an additional $36.8 million of cash available for working capital and general corporate purposes, primarily for the acquisition of representation contracts, plus the $10.0 million New Credit Facility. Following the Financing Transactions, the Company became owned entirely by Mr. Guild and the Company's management and employees, and there is currently no outstanding preferred stock. 4 THE SERIES A OFFERING The Series A Notes.......... The Series A Notes were sold by the Company in the Offering on June 29, 1998, and were subsequently resold to (i) Qualified Institutional Buyers (as defined herein) pursuant to Rule 144A under the Securities Act, and (ii) outside the United States in reliance on Regulation S under the Securities Act in a manner exempt from registration under the Securities Act. Registration Rights Agreement.................. In connection with the Offering, the Company entered into the Registration Rights Agreement, which grants Holders of the Series A Notes certain exchange and registration rights. The Exchange Offer is intended to satisfy such exchange and registration rights, which generally terminate upon the consummation of the Exchange Offer. THE EXCHANGE OFFER Securities Offered.......... $100.0 million in aggregate principal amount of 10% Senior Subordinated Notes due 2008, Series B. The Exchange Offer.......... $1,000 principal amount of the Exchange Notes in exchange for each $1,000 principal amount of Series A Notes. As of the date hereof, $100.0 million in aggregate principal amount of Series A Notes are outstanding. The Company will issue the Exchange Notes to Holders on or promptly after the Expiration Date. The terms of the Exchange Notes are substantially identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Series A Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes are freely transferable by holders thereof (other than as provided herein), and are not subject to any covenant regarding registration under the Securities Act. See "The Exchange Offer." Other than compliance with applicable federal and state securities laws, including the requirement that the Registration Statement be declared effective by the Commission, there are no material federal or state regulatory requirements to be complied with in connection with the Exchange Offer. Interest Payments........... The Exchange Notes will bear interest from June 29, 1998, the date of consummation of the issuance of the Series A Notes, or the most recent interest payment date to which interest on such Series A Notes has been paid, whichever is later. Accordingly, Holders of Series A Notes that are accepted for exchange will not receive interest on such Series A Notes that is accrued but unpaid at the time of tender, but such interest will be payable on the first interest payment date after the Expiration Date. Minimum Condition........... The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Series A Notes being tendered for exchange. 5 Expiration Date............. 5:00 p.m., New York City time, on , 1998 unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Exchange Date............... The date of acceptance for exchange of the Series A Notes will be the first business day following the Expiration Date. Withdrawal Rights........... Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date by providing the Exchange Agent (as defined) with a written or facsimile transmission of a notice of withdrawal. See "The Exchange Offer-- Withdrawal of Tenders." The Company will determine if a withdrawal is effective. Any Series A Notes withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer. Properly withdrawn Series A Notes may be retendered. See "The Exchange Offer-- Withdrawal of Tenders." Acceptance Of Series A Notes and Delivery of Exchange Offer Notes....... The Company will accept for exchange any and all Series A Notes that are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Notes issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date. See "The Exchange Offer--Terms of the Exchange Offer." Conditions To The Exchange Offer...................... The Exchange Offer is subject to certain customary conditions, which may be waived by the Company. See "The Exchange Offer--Conditions." Procedures For Tendering Series A Notes............. To tender pursuant to the Exchange Offer, a Holder must complete, sign and date the accompanying Letter of Transmittal, or a facsimile thereof, have the signatures therein guaranteed if required by instruction 4 of the Letter of Transmittal and mail or otherwise deliver such Letter of Transmittal, or such facsimile, or an Agent's message (as defined below) in the case of a book-entry transfer, together with the Series A Notes and any other required documentation to the Exchange Agent (as defined herein) at the address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange Offer-- Procedures for Tendering" and "Plan of Distribution." By executing the Letter of Transmittal, each Holder will represent to the Company that, among other things, the Holder or the person receiving such Exchange Notes, whether or not such person is the Holder, is acquiring the Exchange Notes in the ordinary course of business and that neither the Holder nor any such other person intends to participate or has any arrangement or understanding with any person to participate in the distribution of such Exchange Notes. In lieu of physical delivery of the certificates representing Series A Notes, tendering Holders may transfer Series A Notes pursuant to the procedure for book- 6 entry transfer as set forth under "The Exchange Offer--Procedures for Tendering." Special Procedures For Beneficial Owners.......... Any beneficial owner whose Series A Notes are registered in the name of a broker, commercial bank, trust company or other nominee and who wishes to tender in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such beneficial owner's own behalf, such beneficial owner must, prior to completing and executing the Letter of Transmittal and delivering the Series A Notes, either make appropriate arrangements to register ownership of the Series A Notes in such beneficial owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See "The Exchange Offer-- Procedures for Tendering." Guaranteed Delivery Procedures................. Holders of Series A Notes who wish to tender their Series A Notes and whose Series A Notes are not immediately available or who cannot deliver their Series A Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent (or comply with the requirements for book-entry transfer) prior to the Expiration Date must tender their Series A Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer-- Guaranteed Delivery Procedures." Federal Income Tax Consequences............... The issuance of the Exchange Notes to Holders pursuant to the terms set forth in this Prospectus will not constitute an exchange for federal income tax purposes. Consequently, no gain or loss would be recognized by Holders upon receipt of the Exchange Notes. See "The Exchange Offer--Certain Federal Income Tax Consequences of the Exchange Offer." Use Of Proceeds............. There will be no proceeds to the Company from the exchange of Series A Notes pursuant to the Exchange Offer. Exchange Agent.............. U.S. Bank Trust National Association as agent for Summit Bank is serving as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. See "The Exchange Offer--Exchange Agent." 7 SUMMARY OF TERMS OF THE EXCHANGE NOTES The form and terms of the Exchange Notes are the same as the form and terms of the Series A Notes (which they replace) except that (i) the Exchange Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof and (ii) the holders of Exchange Notes generally will not be entitled to further registration rights under the Registration Rights Agreement, which rights generally will be satisfied when the Exchange Offer is consummated. The Exchange Notes will evidence the same debt as the Series A Notes and will be entitled to the benefits of the indenture pursuant to which the Series A Notes were issued (the "Indenture"). See "Description of Exchange Notes." Company..................... Interep National Radio Sales, Inc. Securities Offered.......... $100.0 million aggregate principal amount of 10% Senior Subordinated Notes due 2008, Series B. Maturity.................... July 1, 2008. Interest Payment Dates...... The Exchange Notes will bear interest at the rate of 10% per annum, payable semiannually in arrears on January 1 and July 1 of each year, commencing on January 1, 1999. Subsidiary Guarantees....... The Exchange Notes will be fully and unconditionally guaranteed by all of the Company's existing and future Restricted Subsidiaries (the "Guarantors") on a joint and several basis. Ranking..................... The Exchange Notes and the Subsidiary Guarantees will be general unsecured obligations of the Company and the Guarantors, respectively, and will be subordinated in right of payment to all existing and future Senior Indebtedness of the Company and the Guarantors, respectively, and senior to or pari passu with all other Indebtedness of the Company or the Guarantors, as applicable. As of March 31, 1998, after giving pro forma effect to the Financing Transactions, the Company and the Subsidiary Guarantors would have had approximately $0.4 million of Senior Indebtedness attributable to capital leases outstanding. In addition, the Company would have had $10.0 million available under the New Credit Facility, subject to the achievement of certain financial ratios and compliance with certain other covenants. See "Risk Factors-- Subordination." Optional Redemption......... Except as set forth below, the Exchange Notes will not be redeemable at the option of the Company prior to July 1, 2003. Thereafter, the Exchange Notes will be subject to redemption at any time at the option of the Company, in whole or in part, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date. In addition, at any time and from time to time prior to July 1, 2001, the Company may redeem up to an aggregate of 30% in principal amount of Exchange Notes originally issued under the Indenture at a redemption price equal to 110.000% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, 8 if any, thereon to the redemption date, with the net cash proceeds of one or more Equity Offerings (as defined); provided that at least 70% of the aggregate principal amount of Exchange Notes originally issued under the Indenture remains outstanding immediately after giving effect to such redemption. Change of Control........... In the event of a Change of Control, the Company will be required to make an offer to each holder of Exchange Notes to repurchase all or any part of such holder's Exchange Notes at a repurchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the repurchase date. Covenants................... The Indenture contains certain covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to incur additional Indebtedness, pay dividends, repurchase Equity Interests (as defined) or make other Restricted Payments (as defined), create Liens (as defined), enter into transactions with Affiliates (as defined), sell assets or enter into certain mergers and consolidations. See "Description of Exchange Notes." Registration Rights......... The Registration Rights Agreement provides that if (i) the Company is not permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (ii) in certain circumstances, a Holder notifies the Company within 20 days following consummation of the Exchange Offer (a) that it is prohibited by law or Commission policy from participating in the Exchange Offer or (b) that it may not resell the Exchange Notes (including the Exchange Note Guarantees) acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales or (c) that it is a broker-dealer and owns Series A Notes acquired directly from the Company or an affiliate of the Company, the Company will file with the Commission a shelf registration statement (the "Shelf Registration Statement") to cover resales of the Series A Notes by the Holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. If the Company and the Guarantors do not comply with their obligations under the Registration Rights Agreement, they will be required to pay specified Liquidated Damages to the holders of the Notes under certain circumstances. See "Description of Exchange Notes--Registration Rights; Liquidated Damages." Lack Of Prior Market For The Exchange Notes......... The Exchange Notes will be a new class of securities for which there is currently no established trading market. The Company does not intend to apply for listing of the Exchange Notes on any national securities exchange or for quotation of the Exchange Notes on any automated dealer quotation system. The Company has been advised 9 by BancBoston Securities Inc. and Loewenbaum & Company Incorporated that they presently intend to make a market in the Exchange Notes, although they are under no obligation to do so and may discontinue any market-making activities at any time without notice. Accordingly, no assurance can be given as to the liquidity of the trading market for the Exchange Notes or that an active public market for the Exchange Notes will develop. If an active trading market for the Exchange Notes does not develop, the market price and liquidity of the Exchange Notes may be adversely affected. If the Exchange Notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, the performance of the Company and certain other factors. See "Risk Factors--Absence of Public Market for the Exchange Notes; Restrictions on Transfer." RISK FACTORS Prospective purchasers of the Exchange Notes should carefully consider the matters set forth under "Risk Factors," as well as the other information and financial statements and data included in this Prospectus, prior to making an investment in the Exchange Notes. 10 SUMMARY FINANCIAL DATA The following table sets forth summary historical consolidated data and summary unaudited pro forma consolidated data for the Company. The summary historical consolidated financial data for the years ended December 31, 1995, 1996 and 1997 was derived from audited consolidated financial statements of the Company. The summary historical consolidated financial data for the three month periods ended March 31, 1997 and 1998 and as of March 31, 1998 was derived from the unaudited consolidated financial statements of the Company. In the opinion of management, such interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the information presented for such periods. Due to the seasonal nature of the Company's business, the results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. The unaudited pro forma financial data for the twelve months ended March 31, 1998 has been derived from the unaudited pro forma condensed consolidated financial statements and gives effect to the Financing Transactions as if they had occurred on April 1, 1997 and the unaudited pro forma balance sheet data as of March 31, 1998 gives effect to the Financing Transactions as if they had occurred on March 31, 1998. See "--The Financing Transactions." The unaudited pro forma financial data does not purport to represent what the Company's financial position or results of operations actually would have been had the Financing Transactions been completed as of the date or at the beginning of the period indicated. The summary historical and unaudited pro forma financial data should be read in conjunction with the Company's audited consolidated financial statements and notes thereto, the unaudited pro forma condensed consolidated financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," all of which are included in this Prospectus.
PRO FORMA 12 MONTHS THREE MONTHS ENDED YEAR ENDED DECEMBER 31, ENDED MARCH 31, MARCH 31, ------------------------- ---------------- --------- 1995 1996 1997 1997 1998 1998 ------- ------- ------- ------- ------- --------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Commission revenue...... $70,306 $72,858 $87,096 $15,029 $15,898 $87,965 Operating expenses: Selling expenses....... 48,240 53,251 63,135 13,980 13,836 62,991 General and administrative expenses.............. 13,595 9,626 12,541 2,545 2,597 12,593 Depreciation and amortization(1)....... 4,694 8,187 14,983 322 2,715 17,707 Operating income (loss)................. 3,777 1,794 (3,563) (1,818) (3,250) (5,326) Interest expense, net(2)................. 3,385 3,911 3,779 831 1,005 10,000 OTHER FINANCIAL DATA: EBITDA(3)............... $ 8,471 $ 9,981 $12,770 $(1,496) $ (535) $13,731 EBITDA margin........... 12.0% 13.7% 14.7% -- -- 15.6% Payments (receipts) for representation contracts, net(4)...... 5,712 3,080 13,371 117 (7,150) 6,104 ADJUSTED CREDIT DATA: Adjusted EBITDA(5)...... $16,508 Adjusted EBITDA margin.. 18.2% Ratio of Adjusted EBITDA to interest expense, net.................... 1.7x Ratio of long-term debt to Adjusted EBITDA..... 6.1x
AT MARCH 31, 1998 -------------------- HISTORICAL PRO FORMA ---------- --------- (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Cash and cash equivalents................................. $ 4,441 $ 41,242 Total assets.............................................. 145,141 185,267 Long-term debt (including current portion)................ 42,884 100,384 Redeemable preferred stock................................ 7,389 -- Redeemable common stock................................... 4,522 -- Shareholders' deficit..................................... (33,098) (38,561)
11 - -------- (1) Includes amortization of contract acquisition costs and contract disposition revenue, net. (2) Interest expense is shown net of interest income of $109, $138, $109, $11, $12 and $110 during the years ended December 31, 1995, 1996, 1997 and three months ended March 31, 1997 and 1998 and the pro forma twelve months ended March 31, 1998, respectively. (3) EBITDA is defined as operating income, plus depreciation, amortization and expenses related to the relocation of the back office operations from New York City to Florida. EBITDA does not represent net income or cash flows from operations, as these terms are defined under generally accepted accounting principles, and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. The Company has included EBITDA information because it understands that such information is used by certain investors as one measure of an issuer's historical ability to service debt. (4) Payments for representation contracts, net, consists of the excess of payments made by the Company for the acquisition of representation contracts over receipts for terminated contracts. For the year ended December 31, 1995, payments for representation contracts includes $3,510 for the acquisition of a rep firm. (5) Adjusted EBITDA means EBITDA, giving effect as of April 1, 1997 to the ABC Agreement and the other significant representation contracts which became effective during the remainder of 1997 and in 1998 due to radio stations acquisitions by Clear Channel, SBS and Emmis, and the termination of the Company's representation contract with SFX (when it was acquired by an affiliate of the Company's competitor). See "Business--Recent Developments" and "Risk Factors--New Representation Contracts." 12 RISK FACTORS Prospective purchasers of Exchange Notes should carefully consider the following factors in addition to the other information contained herein in evaluating the Company before purchasing the Exchange Notes offered hereby. SIGNIFICANT LEVERAGE; LIQUIDITY, CAPITAL REQUIREMENTS The Company is highly leveraged. On March 31, 1998, after giving pro forma effect to the Financing Transactions, the Company would have had approximately $100.4 million of Indebtedness outstanding, $185.3 million of total assets, $93.7 million of total tangible assets and shareholders' deficit of $38.6 million. Also, after giving pro forma effect to the Financing Transactions, the Company's earnings would have been insufficient to cover its fixed charges by $13.6 million and $5.8 million for fiscal 1997 and for the three months ending March 31, 1998, respectively. The degree to which the Company will be leveraged following the Financing Transactions could have important consequences to holders of the Exchange Notes, including, but not limited to: (i) making it more difficult for the Company to satisfy its obligations with respect to the Exchange Notes, (ii) increasing the Company's vulnerability to general adverse economic and industry conditions, (iii) limiting the Company's ability to obtain additional financing to fund future working capital (including funds to acquire representation contracts), capital expenditures and other general corporate requirements, (iv) requiring the dedication of a substantial portion of the Company's cash flow from operations to the payment of principal of, and interest on, its indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures or other general corporate purposes, (v) limiting the Company's flexibility in planning for, or reacting to, changes in its business and the industry and (vi) placing the Company at a competitive disadvantage to less leveraged competitors. In addition, the Indenture and the New Credit Facility contain financial and other restrictive covenants that limit the ability of the Company to, among other things, borrow additional funds. Failure by the Company to comply with such covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on the Company. In addition, the degree to which the Company is leveraged could prevent it from repurchasing all of the Exchange Notes tendered to it upon the occurrence of a Change of Control. See "Description of Exchange Notes--Repurchase at the Option of Holders--Change of Control" and "Description of New Credit Facility." The Company believes that it will generate sufficient cash flow to fund its operations and required representation contract buyout payments and make required payments of principal and interest under the New Credit Facility and interest on the Exchange Notes. The Company may not, however, generate sufficient cash flow for these purposes or to repay the Exchange Notes at maturity. The Company's ability to fund its operations and required contract buyout payments and to make scheduled principal and interest payments will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. The Company may also need to refinance all or a portion of the Exchange Notes on or prior to maturity. There can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. See "Capitalization," "Description of New Credit Facility," "Description of Exchange Notes," "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Liquidity and Capital Resources." SUBORDINATION The Exchange Notes will be subordinated in right of payment to all current and future Senior Indebtedness of the Company and the Guarantors. However, the Indenture provides that the Company does not, and will not permit any of the Guarantors to, incur or otherwise become liable for any indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness and senior in any respect in right of payment to the Exchange Notes or any of the Subsidiary Guarantees. On any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar 13 proceeding relating to the Company or its property, the holders of Senior Indebtedness will be entitled to be paid in full before any payment may be made with respect to the Exchange Notes. In addition, the subordination provisions of the Indenture will provide that payments with respect to the Exchange Notes will be blocked in the event of a payment default on certain Senior Indebtedness and may be blocked for up to 179 days each year in the event of certain non-payment defaults on certain Senior Indebtedness. In the event of a bankruptcy, liquidation or reorganization of the Company, holders of the Exchange Notes will participate ratably with all holders of subordinated indebtedness of the Company that is deemed to be of the same class as the Exchange Notes, and potentially with all other general creditors of the Company, based on the respective amounts owed to each holder or creditor, in the remaining assets of the Company. In any of the foregoing events, there can be no assurance that there would be sufficient assets to pay amounts due on the Exchange Notes. As a result, holders of Exchange Notes may receive less, ratably, than the holders of Senior Indebtedness. As of March 31, 1998, after giving pro forma effect to the Financing Transactions, the aggregate amount of Senior Indebtedness of the Company and the Guarantors would have been $0.4 million attributable to capital leases, and $10.0 million available under the New Credit Facility, subject to the achievement of certain financial ratios and compliance with certain other covenants. The Indenture permits the incurrence of substantial additional indebtedness, including Senior Indebtedness, by the Company and the Guarantors in the future. LIMITATIONS IMPOSED BY CERTAIN INDEBTEDNESS The Indenture and the New Credit Facility contain significant covenants that limit the Company's and its subsidiaries' ability to engage in various transactions and, in the case of the New Credit Facility, require satisfaction of specified financial performance criteria. In addition, under each of the foregoing documents, the occurrence of certain events (including, without limitation, failure to comply with the foregoing covenants, material inaccuracies of representations and warranties, certain defaults under or acceleration of other indebtedness and events of bankruptcy or insolvency) would, in certain cases after notice and grace periods, constitute an event of default permitting acceleration of the indebtedness covered by such documents. The limitations imposed by the documents governing the outstanding indebtedness of the Company and its subsidiaries are substantial, and failure to comply with them could have a material adverse effect on the Company and its subsidiaries. See "Description of Exchange Notes" and "Description of New Credit Facility." HISTORY OF NET LOSSES; SHAREHOLDERS' DEFICIT The Company has historically experienced net losses, principally as a result of depreciation and amortization charges relating to the acquisition of radio station representation contracts, significant interest charges and certain non-recurring expenses. For the years ended December 31, 1997 and 1996, the Company had net losses of $7.8 million and $2.5 million, respectively. For the year ended December 31, 1995, the Company had net income of $0.1 million. For the three months ended March 31, 1998, the Company had a net loss of $4.3 million. At March 31, 1998, the Company had a shareholders' deficit of $33.1 million. The acquisition of radio station representation contracts is an integral part of the Company's operating strategy, and the Company expects that amortization charges relating to past and future acquisitions of radio station representation contracts will continue to have a significant adverse effect on the Company's reported net income or loss. DEPENDENCE ON MAINTENANCE AND BUYOUTS OF REPRESENTATION CONTRACTS; COMPETITION The Company's success depends on its ability to maintain and enter into new representation contracts with radio stations. Client representation contracts may be terminated prior to their stated expirations subject, in most cases, to the payment of buyout amounts or termination payments as provided in such contracts. The change of ownership of a client station frequently results in a change of representation firm. The pace of consolidation in the radio industry has increased as a result of the Telecommunications Act of 1996, resulting in larger station groups. In addition, the recent increase in the number of ownership changes of radio stations has increased the frequency of the termination or buyout of representation contracts. Further, as station groups have become larger, they have gained bargaining power with representation firms over rates and terms. As a result, the Company 14 continually competes for both the acquisition of new client stations as well as the maintenance of existing relationships. See "Business--Industry Overview--Representation Contracts." Due to the intense competition and volatility of the business, there can be no assurance that the Company will continue to acquire new contracts or that it will be able to maintain its existing representation contracts under their existing terms, if at all. The failure of the Company to acquire and maintain client representation contracts or to maintain the level of its commission rates would likely have an adverse effect on the Company's results of operations. In addition, the Company competes not only with other national representation firms but also with national radio networks, syndicators and other brokers of radio advertising. There can be no assurance that the Company's business will not be materially adversely affected by increased competition in the markets in which it operates. Further, other media compete with radio for advertising and promotion expenditures. These competing media include broadcast television and cable television, print media and outdoor advertising, among others. In addition, technological innovation and the resulting proliferation of advertising alternatives have created and will continue to create other types of competition for radio stations and, as a consequence, for representation firms. See "Business--Competition." NEW REPRESENTATION CONTRACTS On April 29, 1998, the Company entered into the ABC Agreement and, effective June 1, 1998, became the exclusive national rep firm for all 23 of ABC's radio stations. The Company estimates that its EBITDA for the 12 months ended March 31, 1998, adjusted to give effect to such new representation contracts and the termination of certain other representation contracts, in each case effective April 1, 1997, would have increased by approximately $2.8 million for a total Adjusted EBITDA of approximately $16.5 million. This estimate is based on the Company's estimates of such radio stations' 1997 advertising revenues and the application of the Company's commission rate structures. There can be no assurance that such radio stations would have contributed similar EBITDA had they been represented by the Company in 1997. Further, there can be no assurance as to any future level of the Company's commission revenues or EBITDA or as to future commission revenues from any existing or newly-acquired representation contracts, nor can there be any assurance that the Company will acquire additional representation contracts or retain existing representation contracts. DEPENDENCE ON DEMAND FOR ADVERTISING The Company's business is dependent on the level of demand for radio advertising time, which in turn depends on general and regional economic conditions, which are outside of the Company's control. In particular, the financial performance of the Company will depend in part on the radio broadcasting industry maintaining or increasing its current level of national advertising revenues. Any significant decline in national spot radio advertising billings could have a material adverse effect on the Company. While total expenditures for national spot radio advertising have generally increased over time, the rate of growth of such expenditures tends to decrease in times of economic downturn, and gross expenditures may actually decline, as they did in the recessionary years of 1991 and 1992. Accordingly, there can be no assurance as to the future levels of radio advertising or national spot radio advertising expenditures. DEPENDENCE ON KEY PERSONNEL The Company believes that, to a great extent, the success of the Company has been attributable to Ralph C. Guild, Chairman of the Board and Chief Executive Officer of the Company, who has been employed by the Company for 41 years. In addition, the Company is dependent on the efforts of Marc G. Guild, President, Marketing Division of the Company, who has been employed by the Company since 1974. The loss of the services of one or both of these individuals could materially and adversely affect the business of the Company and its future prospects and may, in the case of Ralph Guild and under certain circumstances, give some stations the right to terminate their representation contracts. The Company has a key man insurance policy on the life of Ralph Guild in the amount of $2.5 million. In addition, a limited number of the Company's representation contracts, including contracts with ABC and CBS, are conditioned upon the continued employment of certain key executives. 15 REPURCHASE OBLIGATIONS UNDER EMPLOYEE BENEFIT PLANS Under the terms governing the ESOP and the Stock Growth Plan, the Company is responsible for funding cash distributions to participating employees whose employment terminates. Such distributions are normally made in quarterly installments over a period of time ranging up to five years, depending on the size of a participant's account. Depending on the number of employees whose employment terminates during any period, the size of their accounts under these plans and the liquidity of the assets of such plans, such funding obligations could from time to time be substantial enough to have a material adverse effect on the Company's cash flow and liquidity. The Indenture restricts the Company's ability to meet any such funding obligations. The ESOP's liquidity needs have in recent years been met by purchases of stock from the ESOP by the Stock Growth Plan. There can be no assurance that such payments will be sufficient in the future. The failure by the Company to meet its funding obligations could adversely affect the tax-qualified status of the ESOP, which could have a material adverse effect on the Company. See "Description of Exchange Notes--Certain Covenants--Restricted Payments" and "Management--Executive Compensation." RELIANCE ON KEY CUSTOMERS Consolidation in the radio industry has resulted in representation firms competing for fewer larger station groups. Certain of the Company's customers are material to its business and operations. For the year ended December 31, 1997, CBS accounted for 28.3% of the total commission revenues of the Company. No other station or station group accounted for more than 10% of such commission revenues. The loss of, or a significant reduction in, revenues from CBS or other material customers could have a material adverse impact on the Company's business, financial condition or results of operations. See "Business--The Company's Clients." CHANGES IN RADIO INDUSTRY REGULATIONS AND OWNERSHIP OF CLIENT STATIONS The radio industry is subject to regulation by the Federal Communications Commission (the "FCC") under the Communications Act of 1934 (the "Communications Act"). The Telecommunications Act of 1996 amended the Communications Act in several key respects. It required the FCC to revise its ownership rules for radio stations to remove the national limit on the number of stations that any one single entity may own, or in which it could have an attributable interest, and to increase the number of stations that an entity may own, or in which it may have an attributable interest, in a local market. The FCC implemented these directives in March 1996 by revising its multiple ownership rules for radio stations. There is now no limit on the number of radio stations one entity may own, operate or control nationally. As to local market restrictions, in most circumstances, the revised rules permit an entity to own, or hold an attributable interest in, a maximum of between five and eight stations (a maximum of between three and five of which may be in the same service (e.g., AM or FM)) in the same market, depending on the size of the market (as determined in accordance with FCC regulations). The revised rules have led to significant growth in the concentration of ownership of radio stations among fewer owners. These changes have had the effect of increasing the level and frequency of buyouts of representation contracts, which has resulted in and may, in the future, result in the Company losing clients as well as gaining clients. In addition, as ownership groups become large enough, it is possible that this consolidation may result in more station groups forming in-house media representation units and foregoing the services provided by independent media representation firms such as the Company. Moreover, even if such groups continue to use the services of the Company, the level of commission rates that the Company is able to charge may be adversely affected. In addition, the United States Congress and the FCC regularly have under consideration, and may adopt in the future, new laws, regulations and policies regarding a wide variety of matters (including technological changes) that could affect the operations and ownership of the Company's clients and, as a result, the Company's business. In particular, in March 1998, the FCC issued a Notice of Inquiry soliciting comment on the effect of the revised rules on competition in radio. The Company is unable to predict if or when such laws, regulations or 16 policies might be adopted and implemented and, if implemented, the effect they will have on the radio representation industry or the future results of the Company's operations. Notwithstanding these considerations, the Company believes that it is also possible that larger station groups may be more likely than single station owners to pursue national spot advertising and to do so through rep firms. As individual stations become acquired by large station groups, additional commercial inventory would likely become available for a national spot rep firm to sell. The Company believes that, to date, it has benefitted from this concentration among broadcasters, in part because of a parallel concentration within the radio representation industry. There were 16 major national spot radio representation firms in 1980, and there are currently only two. FRAUDULENT CONVEYANCE CONSIDERATIONS A substantial portion of the proceeds from the sale of the Notes was used to refinance then outstanding indebtedness and to redeem preferred stock and associated shares of common stock. Under relevant federal and state fraudulent conveyance statutes, if a court in a bankruptcy, reorganization or rehabilitation case or similar proceeding or a lawsuit by or on behalf of unpaid creditors of the Company were to find that, at the time the Notes were issued, (i) the Company issued the Notes with the intent of hindering, delaying or defrauding current or future creditors or (ii) the Company received less than reasonably equivalent value or fair consideration for issuing the Notes and the Company (A) was insolvent or was rendered insolvent by reason of the Financing Transactions or such related transactions, (B) was engaged, or about to engage, in a business or transaction for which its assets constituted unreasonably small capital, (C) intended to incur, or believed that it would incur, debts beyond its ability to pay as such debts matured (as all of the following terms are defined in or interpreted under such fraudulent conveyance statutes) or (D) was a defendant in an action for money damages, or had a judgment for money damages docketed against it (if, in either case, after final judgment, the judgment is unsatisfied), such court could avoid or subordinate the Exchange Notes issued in exchange for the Notes to presently existing and future indebtedness of the Company and take other action detrimental to the rights of the holders of the Exchange Notes, including, under the certain circumstances, invalidating the Exchange Notes. The Company's obligations under the Exchange Notes will be guaranteed by all of its subsidiaries. In connection with the Financing Transactions, the Guarantors incurred substantial indebtedness, including the indebtedness under the Guarantors' guarantees of the Notes and guarantee of the obligations under the New Credit Facility. If, under relevant federal and state fraudulent conveyance statutes in a bankruptcy, reorganization or rehabilitation case or similar proceeding or a lawsuit by or on behalf of unpaid creditors of the Company or the Guarantors, a court were to find that, at the time such guarantees were issued, (i) the Guarantors issued such guarantees with the intent of hindering, delaying or defrauding current or future creditors or (ii) the Guarantors received less than reasonably equivalent value or fair consideration for issuing such guarantees and a Guarantor (A) was insolvent or was rendered insolvent by reason of the Financing Transactions and/or such related transactions, (B) was engaged, or about to engage, in a business or transaction for which its assets constituted unreasonably small capital, (C) intended to incur, or believed that it would incur, debts beyond its ability to pay as such debts matured (as all of the following terms are defined in or interpreted under such fraudulent conveyance statutes) or (D) was a defendant in an action for money damages, or had a judgment for money damages docketed against it (if, in either case, after final judgment, the judgment is unsatisfied), such court could avoid or subordinate the Subsidiary Guarantees issued in exchange for the original guarantees to presently existing and future indebtedness of the Guarantors and take other action detrimental to the rights of the holders of the Exchange Notes and the Subsidiary Guarantees, including, under certain circumstances, invalidating the Subsidiary Guarantees. Among other things, a legal challenge of a Subsidiary Guarantee on fraudulent conveyance grounds may focus on the benefits, if any, realized by such Guarantor as a result of the issuance by the Company of the Exchange Notes. To the extent the Subsidiary Guarantee is voided as a fraudulent conveyance or held unenforceable for any other reason, the holders of the Exchange Notes would cease to have any claim in respect of such Guarantor and would be creditors solely of the Company. The measure of insolvency for purposes of the foregoing considerations will vary depending upon the federal or local law that is being applied in any such proceeding. Generally, however, the Company or the 17 Guarantors would be considered insolvent if, at the time it incurred the indebtedness constituting the Notes or the original guarantees, either (i) the fair market value (or fair saleable value) of its assets was less than the amount required to pay its total existing debts and liabilities (including the probable liability on contingent liabilities) as they become absolute and matured or (ii) it was incurring debts beyond its ability to pay as such debts mature. The Company's Board of Directors and management believe that at the time of the issuance of the Notes and the original guarantees, as well as at the time of issuance of the Exchange Notes and the Subsidiary Guarantees, the Company and the Guarantors (i)(A) were and will be neither insolvent nor rendered insolvent thereby, (B) had and will have sufficient capital to operate their respective businesses effectively and (C) were and will be incurring debts within their respective abilities to pay as the same mature or become due and (ii) had and will have sufficient resources to satisfy any probable money judgment against them in any pending action. There can be no assurance, however, that such beliefs will prove to be correct or that a court passing on such questions would reach the same conclusions. CHANGE OF CONTROL The New Credit Facility prohibits the Company from purchasing any of the Exchange Notes and also provides that certain change of control events with respect to the Company would constitute a default under the New Credit Facility. Any future credit agreements or other agreements relating to indebtedness to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control (as defined in the Indenture) occurs at a time when the Company is prohibited from purchasing the Exchange Notes, the Company could seek the consent of its lenders to the purchase of the Exchange Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing the Exchange Notes by the relevant Senior Indebtedness agreements. In such case, the Company's failure to purchase the tendered Exchange Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the New Credit Facility and/or other Senior Indebtedness. In such circumstances, the subordination provisions in the Indenture would then restrict interest payments to the holders of the Exchange Notes. Furthermore, no assurance can be given that the Company will have sufficient resources to satisfy its repurchase obligation with respect to the Exchange Notes following a Change of Control. See "Description of Exchange Notes." ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES; RESTRICTIONS ON TRANSFER The Exchange Notes are being offered to the holders of the Series A Notes. The Series A Notes were offered and sold in June 1998 (i) to "Qualified Institutional Buyers" (as defined in Rule 144A under the Securities Act) and (ii) outside the United States in reliance on Regulation S under the Securities Act and are eligible for trading in the PORTAL market. The Exchange Notes will be a new class of securities for which there currently is no established trading market. Although the Exchange Notes will generally be permitted to be resold or otherwise transferred by non-affiliates of the Company without compliance with the registration requirements under the Securities Act, the Company does not intend to apply for listing of the Exchange Notes on any national securities exchange or for quotation of the Exchange Notes on any automated dealer quotation system. Although BancBoston Securities Inc. and Loewenbaum & Company Incorporated have informed the Company that they currently intend to make a market in the Exchange Notes, they are not obligated to do so, and any such market-making may be discontinued at any time without notice. The liquidity of any market for the Exchange Notes will depend upon the number of holders of the Exchange Notes, the interest of securities dealers in making a market in the Exchange Notes and other factors. Accordingly, there can be no assurance as to the development or liquidity of any market for the Exchange Notes. If an active trading market for the Exchange Notes does not develop, the market price and liquidity of the Exchange Notes may be adversely affected. If the Exchange Notes are traded, they may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities, the performance of the Company and certain other factors. The liquidity of, and trading 18 markets for, the Exchange Notes may also be adversely affected by general declines in the market for non-investment grade debt. Such declines may adversely affect the liquidity of, and trading markets for, the Exchange Notes independent of the financial performance of, or prospects for, the Company. RESTRICTIONS ON TRANSFER The Series A Notes were offered and sold by the Company in a private offering exempt from registration pursuant to the Securities Act and have been resold pursuant to Rule 144A and Regulation S and other exemptions under the Securities Act. As a result, the Series A Notes may not be reoffered or resold by purchasers except pursuant to an effective registration statement under the Securities Act or pursuant to an applicable exemption from such registration, and the Series A Notes are legended to restrict transfer as aforesaid. Each Holder (other than any Holder who is an affiliate or promoter of the Company) who duly exchanges Series A Notes for Exchange Notes in the Exchange Offer will receive Exchange Notes that are freely transferable under the Securities Act. Holders who participate in the Exchange Offer should be aware, however, that if they accept the Exchange Offer for the purpose of engaging in a distribution, the Exchange Notes may not be publicly reoffered or resold without complying with the registration and prospectus delivery requirements of the Securities Act. As a result, each Holder accepting the Exchange Offer will be deemed to have represented, by its acceptance of the Exchange Offer, that it acquired the Exchange Notes in the ordinary course of business and that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes. If existing Commission interpretations permitting free transferability of the Exchange Notes following the Exchange Offer are changed prior to consummation of the Exchange Offer, the Company will use its best efforts to register the Series A Notes for resale under the Securities Act. See "Summary--The Exchange Offer" and "Description of the Exchange Notes-- Registration Rights; Liquidated Damages." The Series A Notes currently may be sold pursuant to the restrictions set forth in Rule 144A, Rule 501(a) (1), (2), (3) or (7) or Regulation S under the Securities Act or pursuant to another available exemption under the Securities Act without registration under the Securities Act. To the extent that Series A Notes are tendered and accepted in the Exchange Offer, the trading market for the untendered and tendered but unaccepted Series A Notes could be adversely affected. EXCHANGE OFFER PROCEDURES Issuance of the Exchange Notes for Series A Notes pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of such Series A Notes, a properly completed, duly executed Letter of Transmittal and all other required documents. Therefore, Holders desiring to tender their Series A Notes in exchange for Exchange Notes should allow for sufficient-time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to the tenders of Series A Notes for exchange. Any Series A Notes that are not tendered or are tendered but not accepted will, following the consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof and, upon consummation of the Exchange Offer, the registration rights under the Registration Rights Agreement generally will terminate. In addition, any Holder who tenders pursuant to the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale. Each broker-dealer that receives Exchange Notes for its own account in exchange for Series A Notes, where such Series A Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "The Exchange Offer." 19 THE EXCHANGE OFFER The following discussion sets forth or summarizes what the Company believes are the material terms of the Exchange Offer, including those set forth in the Letter of Transmittal distributed with this Prospectus. This summary is qualified in its entirety by reference to the full text of the documents underlying the Exchange Offer, copies of which are filed as exhibits to the Registration Statement of which this Prospectus is a part, and are incorporated by reference herein. PURPOSE AND EFFECT OF THE EXCHANGE OFFER In connection with the sale of the Series A Notes pursuant to the Purchase Agreement, dated June 29, 1998 (the "Purchase Agreement"), among the Company, the Guarantors and the Initial Purchasers, the Initial Purchasers became entitled to the benefits of the Registration Rights Agreement, dated as of July 2, 1998, among the Company, the Guarantors and the Initial Purchasers (the "Registration Rights Agreement"). Under the Registration Rights Agreement, the Company and the Guarantors agreed to (a) file a registration statement in connection with a registered exchange offer within 60 days after July 2, 1998, the date the Series A Notes were issued (the "Issue Date"), (b) use best efforts to cause such registration statement to become effective under the Securities Act within 120 days of the Issue Date, (c) use best efforts to keep such registration statement effective until the closing of the Exchange Offer and (d) use best efforts to cause such registered Exchange Offer to be consummated within 30 days after the effective date of such registration statement. Subject to limited exceptions, the Exchange Offer being made hereby, if commenced and consummated within such applicable time periods, will satisfy those requirements under the Registration Rights Agreement. In such event, the Series A Notes which are not properly tendered for exchange would remain outstanding and would continue to accrue interest, but would not retain any rights under the Registration Rights Agreement. Holders of Series A Notes seeking liquidity in their investment would have to rely on exemptions to registration requirements under the securities laws, including the Securities Act. A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The term "Holder" with respect to the Exchange Offer means any person in whose name the Series A Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder. Because the Exchange Offer is for any and all Series A Notes, the principal amount of Series A Notes tendered and exchanged in the Exchange Offer will reduce the principal amount of Series A Notes outstanding. Following the consummation of the Exchange Offer, Holders who did not tender their Series A Notes generally will not have any further registration rights under the Registration Rights Agreement, and such Series A Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market, if any, for such Series A Notes could be adversely affected. The Series A Notes are currently eligible for sale pursuant to Rule 144A, Rule 501(a) (1), (2), (3) or (7) or Regulation S through the PORTAL Market. Because the Company anticipates that most Holders of Series A Notes will elect to exchange such Series A Notes for Exchange Notes due to the absence of restrictions on the resale of Exchange Notes under the Securities Act, the Company anticipates that the liquidity of any market for any Series A Notes remaining after the consummation of the Exchange Offer may be substantially limited. See "Description of Exchange Notes--Registration Rights; Liquidated Damages" and "Risk Factors--Absence of Public Market for the Exchange Notes; Restrictions or Transfer." TERMS OF THE EXCHANGE OFFER Upon the terms and conditions set forth in this Prospectus and in the accompanying Letter of Transmittal, the Company will accept all Series A Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The Company will issue $1,000 principal amount of Exchange Notes in exchange for each $1,000 principal amount of outstanding Series A Notes accepted in the Exchange Offer. Holders may tender some or all of their Series A Notes pursuant to the Exchange Offer. 20 The form and terms of the Exchange Notes are the same as the form and terms of the Series A Notes except that (i) the Exchange Notes have been registered under the Securities Act and thus will not bear legends restricting the transfer thereof and (ii) the holders of Exchange Notes generally will not be entitled to certain rights under the Registration Rights Agreement, which rights generally will terminate upon consummation of the Exchange Offer. The Exchange Notes will evidence the same debt as the Series A Notes and will be entitled to the benefits of the Indenture. Holders of Series A Notes do not have any appraisal or dissenters' rights in connection with the Exchange Offer. The Company shall be deemed to have accepted validly tendered Series A Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering Holders of Series A Notes for the purpose of receiving the Exchange Notes from the Company and delivering Exchange Notes to such Holders. If any tendered Series A Notes are not accepted for exchange because of an invalid tender or the occurrence of certain other events set forth herein, the certificate for any such unaccepted Series A Notes will be returned, without expense, to the tendering Holder thereof as promptly as practicable after the Expiration Date. Holders of Series A Notes who tender pursuant to the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Transmittal Letter, transfer taxes with respect to the exchange of Series A Notes pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than certain applicable taxes, in connection with the Exchange Offer. See "--Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The Exchange Offer shall remain open for acceptance for a period of not less than 20 business days (the "Exchange Period") . The Expiration Date will be 5:00 p.m., New York City time, on , 1998, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the Expiration Date will be the latest business day to which the Exchange Offer is extended. In order to extend the Expiration Date, the Company will notify the Exchange Agent of any extension by oral or written notice and will mail to the record Holders an announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Such announcement may state that the Company is extending the Exchange Offer for a specified period of time. The Company reserves the right (i) to delay accepting any Series A Notes, to extend the Exchange Offer or to terminate the Exchange Offer and not accept Series A Notes not previously accepted if any of the conditions set forth below under "Conditions" shall have occurred and shall not have been waived by the Company, by giving oral or written notices of such delay, extension or termination to the Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment in a manner reasonably calculated to inform the Holders of such amendment, and the Company will extend the Exchange Offer for a period of five to ten business days, depending upon the significance of the amendment and the manner of disclosure to Holders, if the Exchange Offer would otherwise expire during such five-to-ten business day period. Without limiting the manner in which the Company may choose to make public announcement of any extension, amendment or termination of the Exchange Offer, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a timely release to the Dow Jones News Service or other comparable service. 21 INTEREST ON THE EXCHANGE NOTES Interest on the Exchange Notes is payable semi-annually in arrears on January 1 and July 1 of each year at the rate of 10% per annum. The Exchange Notes will bear interest from July 2, 1998, the date of issuance of the Series A Notes, or the most recent interest payment date to which interest on such Series A Notes has been paid, whichever is later. Accordingly, Holders of Series A Notes that are accepted for exchange will not receive interest that is accrued but unpaid on the Series A Notes at the time of tender, but such interest will be payable in respect of the Exchange Notes delivered in exchange for such Series A Notes on the first interest payment date after the Expiration Date. PROCEDURES FOR TENDERING Only a Holder of Series A Notes may tender Series A Notes pursuant to the Exchange Offer. To tender pursuant to the Exchange Offer, a Holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by instruction 4 of the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile, or an Agent's Message (as defined below) in the case of a book- entry transfer, together with the Series A Notes and any other required documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. Delivery of the Series A Notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of such book-entry transfer must be received by the Exchange Agent prior to the Expiration Date. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Notes which are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that the Company may enforce such agreement against such participant. The tender by a Holder of Series A Notes and the acceptance thereof by the Company will constitute an agreement between such Holder and the Company in accordance with the terms and subject to the conditions set forth in the Letter of Transmittal. Holders of the Series A Notes that are tendering by book-entry transfer to the Exchange Agent's account at the Depository Trust Company ("DTC") can execute the tender through the DTC Automated Tender Offer Program ("ATOP") for which the transaction will be eligible. DTC participants should transmit their acceptance to DTC, which will verify the acceptance and execute a book-entry delivery to the Exchange Agent's account at DTC. DTC will then send an Agent's Message to the Exchange Agent for its acceptance. DTC participants may also accept the Exchange Offer by submitting a notice of guaranteed delivery through ATOP. THE METHOD OF DELIVERY OF SERIES A NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR SERIES A NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT SUCH TENDER FOR SUCH HOLDERS. Any beneficial Holder whose Series A Notes are registered in the name of such Holder's broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on his behalf. If such beneficial Holder wishes to tender on such beneficial Holder's behalf, such beneficial Holder must, prior to completing and executing the Letter of Transmittal and delivering his Series A Notes, either make appropriate arrangements to register ownership of the Series A Notes in such Holder's name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time. 22 Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution") unless the Series A Notes tendered pursuant thereto are tendered (i) by a registered Holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantees must be by an Eligible Institution. If the Letter of Transmittal is signed by a person other than the registered Holder of any Series A Notes listed therein, such Series A Notes must be endorsed or accompanied by appropriate bond powers and a proxy which authorizes such person to tender the Series A Notes on behalf of the registered Holder, in each case signed as the name of the registered Holder or Holders appears on the Series A Notes with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or any Series A Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, provide evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. The Company understands that the Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Series A Notes at the DTC for the purpose of facilitating the Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in the DTC may make book-entry delivery of the Series A Notes by causing the DTC to transfer such Series A Notes into the Exchange Agent's account with respect to the Series A Notes in accordance with the DTC's procedures for such transfers. Although delivery of the Series A Notes may be effected through book-entry transfer into the Exchange Agent's account at the DTC, a Letter of Transmittal properly completed and duly executed with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Exchange Agent at its address set forth below on or prior to the Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. Delivery of documents to the DTC does not constitute delivery to the Exchange Agent. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Series A Notes and withdrawal of tendered Series A Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Series A Notes not properly tendered or any Series A Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Series A Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including, the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Series A Notes must be cured within such time as the Company determines. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Series A Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Series A Notes will not be deemed to have been made until such irregularities have been cured or waived. Any Series A Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost to such Holder by the Exchange Agent to the tendering Holders of Series A Notes, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Series A Notes and (i) whose Series A Notes are not immediately available or (ii) who cannot deliver their Series A Notes, the Letter of Transmittal or any other required documents to the 23 Exchange Agent (or comply with the procedures for book-entry transfer) prior to the Expiration Date, may effect a tender if: (i) the tender is made through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder of the Series A Notes, the certificate or registration number or numbers of such Series A Notes and the principal amount of Series A Notes tendered, stating that the tender is being made thereby, and guaranteeing that, within three business days after the Expiration Date, the Letter of Transmittal (or facsimile thereof) together with the certificate(s) representing the Series A Notes to be tendered in proper form for transfer (or a confirmation of book-entry transfer of such Series A Notes into the Exchange Agent's account at the Depository) and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing all tendered Series A Notes in proper form for transfer (or a confirmation of book-entry transfer of such Series A Notes into the Exchange Agent's account at the Depository) and all other documents required by the Letter of Transmittal are received by the Exchange Agent within three business days after the Expiration Date. WITHDRAWAL OF TENDERS Except as otherwise provided herein, tenders of Series A Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Series A Notes, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at the address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Series A Notes to be withdrawn (the "Depositor"), (ii) identify the Series A Notes to be withdrawn (including the certificate or registration number(s) and principal amount of such Series A Notes, or, in the case of notes transferred by book-entry transfer, the name and number of the account at the DTC to be credited), (iii) be signed by the Depositor in the same manner as the original signature on the Letter of Transmittal by which such Series A Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee (as defined herein) with respect to the Series A Notes register the transfer of such Series A Notes into the name of the Depositor withdrawing the tender, (iv) specify the name in which any such Series A Notes are to be registered, if different from that of the Depositor and (v) include a statement that such Holder is withdrawing such Holder's election to have such Series A Notes exchanged. All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Series A Notes withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer, and no Exchange Notes will be issued with respect thereto unless the Series A Notes so withdrawn are validly retendered. Any Series A Notes which have been tendered but which are not accepted for payment will be returned to the Holder thereof without cost to such Holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Series A Notes may be retendered by following one of the procedures described under "Procedures for Tendering" at any time prior to the Expiration Date. CONDITIONS Notwithstanding any other term of the Exchange Offer, the Company shall not be required to accept for exchange, or to exchange Exchange Notes for, any Series A Notes, and may terminate or amend the Exchange Offer as provided herein before the acceptance of such Series A Notes, if: (i) any law, statute, rule, regulation or interpretation by the staff of the Commission is proposed, adopted or enacted, which, in the reasonable judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Company; or 24 (ii) any governmental approval has not been obtained, which approval the Company shall, in its reasonable judgment, deem necessary for the consummation of the Exchange Offer as contemplated hereby. If the Company determines in its reasonable judgment that any of the conditions are not satisfied, the Company may (i) refuse to accept any Series A Notes and return all tendered Series A Notes to the tendering Holders, (ii) extend the Exchange Offer and retain all Series A Notes tendered prior to the expiration of the Exchange Offer subject, however, to the rights of Holders to withdraw such Series A Notes (see "--Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer and accept all properly tendered Series A Notes which have not been withdrawn. If such waiver constitutes a material change to the Exchange Offer, the Company will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered Holders, and, depending upon the significance of the waiver and the manner of disclosure to the registered Holders, the Company will extend the Exchange Offer for a period of five to ten business days if the Exchange Offer would otherwise expire during such five to ten business-day period. EXCHANGE AGENT U.S. Bank Trust National Association as agent for Summit Bank has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance and requests for additional copies of this Prospectus or of the Letter of Transmittal should be directed to the Exchange Agent addressed as follows: By Mail Facsimile Transmission By Hand: (registered or certified (for eligible U.S. Bank Trust mail recommended): institutions only): National Association (612) 244-1537 Attn: Fourth Floor U.S. Bank Trust National Specialized Finance - Bond Drop Window Association 180 East Fifth Street P.O. Box 64485 To Confirm by Telephone St. Paul, Minnesota 55101 St. Paul, Minnesota or for Information Call: 55164-9549 (651) 244-1197 By Overnight Courier: U.S. Bank Trust National Association Attn: Specialized Finance 180 East Fifth Street St. Paul, Minnesota 55101 FEES AND EXPENSES The expenses of soliciting tenders pursuant to the Exchange Offer will be borne by the Company. The principal solicitation for tenders pursuant to the Exchange Offer is being made by mail. Additional solicitations may be made, however, by telegraph, telephone or in person by officers and regular employees of the Company and its affiliates. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or other persons soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for their services and will reimburse the Exchange Agent for their reasonable out-of-pocket expenses in connection therewith and pay other registration expenses, including fees and expenses of the Trustee, filing fees, blue sky fees and printing and distribution expenses. The Company will pay all transfer taxes, if any, applicable to the exchange of Series A Notes pursuant to the Exchange Offer. If, however, certificates representing Exchange Notes or Series A Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for 25 any reason other than the exchange of Series A Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other person) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. ACCOUNTING TREATMENT The Exchange Notes will be recorded at the same carrying value as the Series A Notes, which is the aggregate principal amount of the Series A Notes, as reflected in the Company's accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized in connection with the Exchange Offer. The cost of the Exchange Offer will be deferred and amortized over the term of the Exchange Notes. RESALE OF THE EXCHANGE NOTES Under existing Commission interpretations, the Exchange Notes will, in general, be freely transferable after the Exchange Offer by any holder (other than any such holder which is an "affiliate" of the Company within the meaning of Rule 405 of the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the Exchange Notes acquired pursuant to the Exchange Offer are obtained in the ordinary course of such holder's business, and such holder does not intend to participate, and has no arrangement or understanding to participate, in the distribution of such Exchange Notes. Any holder who tenders pursuant to the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the Exchange Notes may not rely on the position of the Staff of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) or Morgan Stanley & Co., Incorporated (available June 5, 1991) or similar interpretive letters, but rather must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. In addition, any such resale transaction should be covered by an effective registration statement containing the selling security holders information required by Item 507 of Regulation S-K of the Securities Act. Each broker-dealer that receives Exchange Notes for its own account in exchange for Series A Notes acquired by such broker-dealer as a result of market-making activities or other trading activities, may be a statutory underwriter and must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Company has agreed, if requested, for a period of one year from the date hereof, to make available a prospectus meeting the requirements of the Securities Act to any such broker- dealer for use in connection with any resale of any Exchange Notes acquired in the Exchange Offer. A broker-dealer which delivers such a prospectus to purchasers in connection with such resales will be subject to certain of the civil liability provisions under the Securities Act and will be bound by the provisions of the Registration Rights Agreement (including certain indemnification rights and obligations). By tendering pursuant to the Exchange Offer, each Holder will represent to the Company, among other things, that (i) the Exchange Notes acquired are being obtained in the ordinary course of its business, (ii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of the Exchange Notes, and (iii) the holder and any such other person acknowledge that if they participate in the Exchange Offer for the purpose of distributing the Exchange Notes (a) they must, in the absence of an exemption therefrom, comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes and cannot rely on the no-action letters referenced above and (b) failure to comply with such requirements in such instance could result in such holder incurring liability under the Securities Act for which such holder is not indemnified by the Company. Further, by tendering in the Exchange Offer, each holder that may be deemed an "affiliate" (as defined in Rule 405 of the Securities Act) of the Company will represent to the Company that such holder understands and acknowledges that the Exchange Notes may not be offered for resale, resold or otherwise transferred by that Holder without registration under the Securities Act or an exemption therefrom. 26 As set forth above, affiliates of the Company are not entitled to rely on the foregoing interpretations of the Staff of the Commission with respect to resales of the Exchange Notes without compliance with the registration and prospectus delivery requirements of the Securities Act. CONSEQUENCES OF FAILURE TO EXCHANGE As a result of the making of this Exchange Offer, the Company will have fulfilled one of its obligations under the Registration Rights Agreement, and Holders of Series A Notes who do not tender their Series A Notes generally will not have any further registration rights under the Registration Rights Agreement or otherwise. Accordingly, any Holder that does not exchange such Holder's Series A Notes for Exchange Notes will continue to hold the untendered Series A Notes and will be entitled to all the rights and limitations applicable thereto under the Indenture, except to the extent that such rights or limitations, by their terms, terminate or cease to have further effectiveness as a result of the Exchange Offer. The Series A Notes that are not exchanged for Exchange Notes pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Series A Notes may be resold only (i) to the Company (upon redemption thereof or otherwise), (ii) pursuant to an effective registration statement under the Securities Act, (iii) so long as the 144A Notes are eligible for resale pursuant to Rule 144A under the Securities Act, to a Qualified Institutional Buyer in a transaction meeting the requirements of Rule 144A, (iv) outside the United States to a foreign person pursuant to the exemption from the registration requirements of the Securities Act provided by Regulation S thereunder, (v) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or Rule 501 (a) (1), (2), (3) or (7) or (vi) to an Accredited Investor in a transaction exempt from the registration requirements of the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States or other applicable jurisdiction. See "Risk Factors--Restrictions on Transfer." OTHER Participation in the Exchange Offer is voluntary, and Holders should carefully consider whether to accept. Holders are urged to consult their financial and tax advisors in making their own decision on what action to take. The Company may in the future seek to acquire untendered Series A Notes, to the extent permitted by applicable law, in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Company has no present plans to acquire any Series A Notes that are not tendered in the Exchange Offer or to file a registration statement to permit resales of any untendered Series A Notes. In any state where the Exchange Offer does not fall under a statutory exemption to the blue sky rules, the Company has filed the appropriate registrations and notices, and has made the appropriate requests, to permit the Exchange Offer to be made in such state. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER The following discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury Department regulations (the "Regulations") and existing administrative interpretations and court decisions. There can be no assurance that the Internal Revenue Service (the "IRS") will not take a contrary view, and no ruling from the IRS has been or will be sought. Legislative, judicial or administrative changes or interpretations may be forthcoming that could alter or modify the statements and conditions set forth herein. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences to Holders. Certain Holders of the Series A Notes (including insurance companies, tax-exempt organizations, financial institutions, broker- dealers, foreign corporations and persons who are not citizens or residents of the United States) may be subject to special rules not discussed below. Each Holder of Series A Notes should consult his, her or its own tax advisor as to the particular tax consequences of exchanging such Holder's Series A Notes for Exchange Notes, including the applicability and effect of any state, local or foreign tax laws. 27 The issuance of the Exchange Notes to Holders of the Series A Notes pursuant to the terms set forth in this Prospectus will not constitute an exchange for United States federal income tax purposes because such exchange does not represent a significant modification of the debt instruments. Consequently, no gain or loss would be recognized by Holders of the Series A Notes upon receipt of the Exchange Notes, and ownership of the Exchange Notes will be considered a continuation of ownership of the Series A Notes. For purposes of determining gain or loss upon the subsequent sale or exchange of the Exchange Notes, a Holder's basis in the Exchange Notes should be the same as such Holder's basis in the Series A Notes exchanged therefor. A Holder's holding period for the Exchange Notes should include the Holder's holding period for the Series A Notes exchanged therefor. The issue price, original issue discount inclusion and other tax characteristics of the Exchange Notes should be identical to the issue price, original issue discount inclusion and other tax characteristics of the Series A Notes exchanged therefor. See also "Certain United States Federal Tax Considerations for Non-United States Holders." USE OF PROCEEDS The Company will not receive any cash proceeds from the issuance of the Exchange Notes. In consideration for issuing the Exchange Notes as contemplated in this Prospectus, the Company will receive in exchange Notes in like principal amount, which will be canceled and as such will not result in any increase in indebtedness of the Company. The net proceeds to the Company from the Offering were approximately $96.0 million after deducting commissions and other expenses payable by the Company. The Company applied the largest portion of the net proceeds of the Offering to fund the Financing Transactions, and the balance will be used for working capital, primarily for the acquisition of additional representation contracts, and general corporate purposes. The Financing Transactions included (i) the Offering and the sale of the Notes, (ii) the repayment of all outstanding obligations under the Old Credit Facility ($47.0 million outstanding as of May 31, 1998) and the establishment of the New Credit Facility providing for working capital loans of up to $10.0 million, subject to the fulfillment of certain financial ratios and compliance with certain other covenants, (iii) the repurchase of all of the Company's outstanding shares of its Series A Preferred Stock, at face value plus accrued dividends, and certain associated shares of its Common Stock held by Providence, for a total purchase price of $14.1 million, and (iv) the repurchase of all of the Company's outstanding shares of its Series B Preferred Stock, at face value plus accrued dividends, and certain associated shares of Common Stock, from certain members of management, for a total purchase price of $2.6 million. Giving pro forma effect to the Financing Transactions as of March 31, 1998, the Company would have had an additional $36.8 million of cash available for working capital and general corporate purposes, primarily for the acquisition of representation contracts, plus the $10.0 million New Credit Facility. As a result of the Financing Transactions, the Company is owned by Mr. Guild and the Company's management and employees, and there is no outstanding preferred stock. The Old Credit Facility bore interest at various rates (8.8% per annum on a weighted average basis at December 31, 1997) and was scheduled to mature at various times through December 31, 2003. The Series A Preferred Stock and the Series B Preferred Stock accrued dividends at the rate of 10.0% per annum, which were payable by the Company in cash or in kind in the form of additional shares of such preferred stock with a face value equal to the cash amount of the accrued dividend. The Company paid all dividends on the Series A Preferred Stock and the Series B Preferred Stock in kind. Providence had the right to require the Company to repurchase all of the Series A Preferred Stock and the 57,117 shares of the Company's Common Stock held by Providence on May 1, 1999. The Series B Preferred Stock was mandatorily redeemable on the earlier of the date on which all of the Series A Preferred Stock is redeemed or November 1, 2003. See "Certain Transactions and Relationships." 28 CAPITALIZATION The following table sets forth the historical consolidated capitalization of the Company at March 31, 1998, and such capitalization on a pro forma basis as if the Financing Transactions occurred on that date. The table should be read in conjunction with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements, including the notes thereto included elsewhere in this Prospectus.
AT MARCH 31, 1998 UNAUDITED -------------------- PRO ACTUAL FORMA -------- -------- (DOLLARS IN THOUSANDS) Cash and cash equivalents................................. $ 4,441 $ 41,242 ======== ======== Long-term debt (including current portion): Old Credit Facility..................................... $ 42,500(1) $ -- New Credit Facility(2).................................. -- -- Notes offered hereby.................................... -- 100,000 Capitalized lease obligations........................... 384 384 -------- -------- Total long-term debt (including current portion)...... 42,884 100,384 -------- -------- Redeemable securities Series A preferred stock................................ 6,589 -- Series B preferred stock................................ 800 -- Common stock subject to redemption...................... 4,522 -- -------- -------- Total redeemable securities........................... 11,911 -- -------- -------- Shareholders' deficit Common stock............................................ 14 14 Additional paid-in-capital.............................. 228 -- Accumulated deficit..................................... (31,142) (36,377) Treasury stock.......................................... (2,198) (2,198) -------- -------- Total shareholders' deficit........................... (33,098) (38,561) -------- -------- Total capitalization.................................. $ 21,697 $ 61,823 ======== ========
- -------- (1) As of May 31, 1998, the aggregate indebtedness outstanding under the Old Credit Facility was $47.0 million. (2) The New Credit Facility provides for up to $10.0 million in borrowing availability. 29 SELECTED CONSOLIDATED FINANCIAL DATA The following table presents selected consolidated financial data of the Company as of and for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 was derived from audited consolidated financial statements of the Company. The summary historical consolidated financial data as of and for the three months ended March 31, 1997 and 1998 was derived from the unaudited consolidated financial statements of the Company. In the opinion of management, such interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the information presented for such periods. Due to the seasonal nature of the Company's business, the results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. The following data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's Consolidated Financial Statements and the notes thereto included elsewhere herein.
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ------------------------------------------- ---------------- 1993 1994 1995 1996 1997 1997 1998 ------- ------- ------- ------- ------- ------- ------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Commission revenue...... $59,505 $66,559 $70,306 $72,858 $87,096 $15,029 $15,898 Operating expenses: Selling expenses...... 43,330 47,130 48,240 53,251 63,135 13,980 13,836 General and administrative expenses............. 10,315 11,186 13,595 9,626 12,541 2,545 2,597 Depreciation and amortization(1)...... 4,100 5,030 4,694 8,187 14,983 322 2,715 ------- ------- ------- ------- ------- ------- ------- Total operating expenses........... 57,745 63,346 66,529 71,064 90,659 16,847 19,148 ------- ------- ------- ------- ------- ------- ------- Operating income (loss)................. 1,760 3,213 3,777 1,794 (3,563) (1,818) (3,250) Interest expense, net(2)................. 3,006 3,280 3,385 3,911 3,779 831 1,005 ------- ------- ------- ------- ------- ------- ------- Income (loss) before provision for income taxes.................. (1,246) (67) 392 (2,117) (7,342) (2,649) (4,255) Provision for income taxes.................. 327 422 320 400 412 131 49 ------- ------- ------- ------- ------- ------- ------- Net income (loss)....... (1,573) (489) 72 (2,517) (7,754) (2,780) (4,304) ------- ------- ------- ------- ------- ------- ------- Preferred stock dividend requirements........... 138 903 1,159 1,364 1,590 398 465 ------- ------- ------- ------- ------- ------- ------- Net loss applicable to common shareholders.... $(1,711) $(1,392) $(1,087) $(3,881) $(9,344) $(3,178) $(4,769) ======= ======= ======= ======= ======= ======= ======= Other Financial Data: EBITDA(3)............... $ 5,860 $ 8,243 $ 8,471 $ 9,981 $12,770 $(1,496) $ (535) EBITDA margin........... 9.8% 12.4% 12.0% 13.7% 14.7% -- -- Capital expenditures.... 1,745 1,283 1,689 1,021 792 101 177 Ratio of earnings to fixed charges(4)....... -- -- 1.06x -- -- -- -- Payments (receipts) for station representation contracts, net(5)...... (226) 3,322 5,712 3,080 13,371 117 (7,150) Balance Sheet Data (at end of period): Cash and cash equivalents............ $ 1,852 $ 5,208 $ 1,752 $ 2,653 $ 1,419 $ 793 $ 4,441 Total assets............ 41,934 56,375 77,069 94,185 141,212 98,251 145,141 Long-term debt (including current portion)............... 24,135 24,227 35,221 34,235 44,425 33,955 42,884 Redeemable preferred stock.................. 1,636 2,639 3,970 5,334 6,924 5,732 7,389 Redeemable common stock.................. 3,502 3,678 4,132 4,662 4,522 4,662 4,522 Shareholders' deficit... (9,172) (11,685) (12,652) (18,407) (28,073) (21,384) (33,098)
30 - -------- (1) Includes amortization of contract acquisition costs and contract disposition revenue, net. (2) Interest expense is shown net of interest income of $185, $99, $109, $138, $109, $11 and $12 during the years ended December 31, 1993, 1994, 1995, 1996 and 1997 and the three months ended March 31, 1997 and 1998, respectively. (3) EBITDA is defined as operating income, plus depreciation, amortization and expenses related to the relocation of the back office operations from New York City to Florida. EBITDA does not represent net income or cash flows from operations, as these terms are defined under generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. The Company has included EBITDA herein because it understands that such information is used by certain investors as one measure of an issuer's historical ability to service debt. (4) The ratio of earnings to fixed charges is computed by dividing pretax income from operations before fixed charges by interest expense and the imputed interest factor of rent expense. Earnings were insufficient to cover fixed charges (i) for the years ended December 31, 1993, 1994, 1996 and 1997 by $1,431, $166, $2,255 and $7,451 respectively, and (ii) for the three months ended March 31, 1997 and 1998 by $2,660 and $4,267, respectively. (5) Payments for station representation contracts, net, consists of the excess of payments made by the Company for the acquisition of representation contracts over receipts for terminated contracts. For the year ended December 31, 1995, payments for representation contracts includes $3,510 for the acquisition of a rep firm. 31 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion is based upon and should be read in conjunction with "Selected Consolidated Financial Data" and the Consolidated Financial Statements, including the notes thereto, included elsewhere in this Prospectus. Certain statements contained in this Prospectus, including without limitation, statements containing the words "believes," "anticipates," "intends," "expects" and words of similar import, constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both domestic and foreign; industry capacity; demographic changes; existing government regulations and changes in, or the failure to comply with, government regulations; liability and other claims asserted against the Company; competition; the loss of any significant customers; changes in operating strategy or development plans; the ability to attract and retain qualified personnel; the significant indebtedness of the Company after the Financing Transactions; and other factors referenced in this Prospectus. Certain of these factors are discussed in more detail elsewhere in this Prospectus, including, without limitation, under the captions "Summary," "Risk Factors" and "Business." Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. GENERAL The Company derives substantially all of its revenues from commissions generated by sales of national spot radio advertising air time on behalf of radio stations represented by the Company. Generally, national spot advertising time is purchased by advertising agencies or media buying services retained by advertisers to create advertising campaigns and to place advertising with radio stations and other media. The Company receives commissions from its client radio stations based on the national spot radio advertising billings of the station, net of the standard advertising agency and media buying services commissions (typically 15%). The commission rates are negotiated and set forth in a client's representation contract. Since commissions are based on the price paid to the radio station for spots, the Company's revenue base is constantly adjusted for inflation. The Company's operating results generally are dependent on (i) increases and decreases in the size of the total national spot radio advertising market, (ii) changes in the Company's share of this market due to, among other things, acquisitions and terminations of representation contracts and (iii) the Company's operating expense levels. The effect of these factors on the Company's financial condition and results of operations has varied from period to period. Total United States national spot radio advertising annual revenues have grown from approximately $1.1 billion to approximately $1.6 billion during the five-year period ended December 31, 1997. The performance of the national spot radio advertising market is influenced by a number of factors, including, but not limited to, general economic conditions, consumer attitudes and spending patterns, the share of total advertising spent on radio and the share of total radio advertising represented by national spot radio. The Company's share of the national spot advertising market increases or decreases as a result of the amount of national spot advertising broadcast on the Company's client stations. Additionally, the Company's revenue increases as the Company enters into representation contracts with new client stations. Conversely, the loss of client stations to competing rep firms will adversely impact revenue. The Company's ability to attract new clients while retaining existing clients significantly affects its market share. In recent years, the Company has spent a significant amount of its resources acquiring representation contracts. The decision to acquire a representation 32 contract is based on the market share opportunity presented and an analysis of the costs and net benefits to be derived. The Company continuously seeks opportunities to acquire additional representation contracts on attractive terms, while maintaining its current clients. In addition, the recent consolidation of ownership in the radio broadcast industry has increased the frequency of the acquisition and termination of representation contracts. The Company's ability to acquire and maintain representation contracts has had and will continue to have a significant impact on its revenues and cash flows. The Company's selling and corporate expense levels are dependent on management decisions regarding operating and staffing levels and on inflation. Selling expenses represent all costs associated with the Company's marketing, sales and sales support functions. Corporate expenses include items such as corporate management, corporate communications, financial services, advertising and promotion expenses and employee benefit plan contributions. The Company's business normally follows the pattern of advertising expenditures in general and is seasonal to the extent that radio and television advertising spending increases during the fourth calendar quarter in connection with the Christmas season and tends to be relatively weaker during the first calendar quarter. Radio advertising generally increases during the second and third quarters due to holiday-related advertising, school vacations and back-to-school sales. In addition, radio also tends to experience increases in the amount of advertising revenues as a result of special events such as Presidential election campaigns. Furthermore, the level of advertising revenues of radio stations, and therefore the level of revenues of the Company, is susceptible to prevailing general and local economic conditions and the corresponding increases or decreases in the budgets of advertisers, as well as market conditions and trends affecting advertising expenditures in specific industries. RESULTS OF OPERATIONS The following table presents operating data of the Company, expressed as a percentage of total commission revenues for the periods indicated:
THREE MONTHS YEAR ENDED ENDED MARCH DECEMBER 31, 31, ------------------- ------------ 1995 1996 1997 1997 1998 ----- ----- ----- ----- ----- STATEMENT OF OPERATIONS DATA: Commission revenue......................... 100.0% 100.0% 100.0% 100.0% 100.0% Operating expenses, excluding depreciation and amortization.......................... 88.0 86.3 86.9 110.0 103.4 Depreciation and amortization.............. 6.7 11.2 17.2 2.1 17.1 Operating income (loss).................... 5.4 2.5 (4.1) (12.1) (20.4) Interest expense, net...................... 4.8 5.4 4.3 5.5 6.3 Income (loss) before provision for income taxes..................................... 0.6 (2.9) (8.4) (17.6) (26.8) OTHER DATA: EBITDA..................................... 12.0% 13.7% 14.7% -- --
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997 COMMISSION REVENUE. Traditionally the first calendar quarter of the year is the weakest, with only about 17.3% of annual revenues recognized during this period. Commission revenue increased $0.9 million, or 5.8%, to $15.9 million for the first quarter of 1998 as compared with the first quarter of 1997. The increase was primarily attributable to the addition of new representation contracts with (i) CBS stations and Jefferson-Pilot Corp. stations previously represented by a subsidiary of CBS, Inc. during the first quarter of 1997, (ii) stations owned by Susquehanna during the second quarter of 1997 and (iii) radio stations acquired by Clear Channel during the fourth quarter of 1997, including stations formerly owned by Paxson Communications Corp., partially offset by the loss of the Company's representation contract with SFX (which was acquired by an affiliate of a competitor of the Company). 33 OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTIZATION. Operating expenses, excluding depreciation and amortization, exceeded revenue in the first quarter due to the Company's fixed costs and the seasonal depression of commission revenue noted above. Nevertheless, operating expenses, excluding depreciation and amortization, decreased $0.1 million in the first quarter of 1998 to $16.4 million from $16.5 million during the first quarter of 1997. This decrease was primarily the result of cost savings realized from the relocation of the accounting and finance functions from New York to Florida (see "Certain Relationships and Transactions"), offset in part by the increased variable costs attributable to the increased revenues of the Company discussed above. Operating expenses, excluding depreciation and amortization, as a percentage of revenue decreased by 6.6% from the first quarter of 1997. EBITDA. The Company's EBITDA for the first quarter of 1998 increased by $1.0 million in 1998 to ($0.5) million compared to ($1.5) million for the first quarter of 1997, as a result of the factors discussed above. DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased by $2.4 million in the first quarter of 1998 to $2.7 million. This increase was due to the amortization of new station representation contracts offset in part by the loss of the SFX representation contract. OPERATING INCOME. Operating income declined by $1.4 million in the first quarter of 1998 compared with the first quarter of 1997 as a result of increased depreciation and amortization partially offset by the increased revenue and lower operating expenses discussed above. INTEREST EXPENSE, NET. Interest expense, net increased approximately $0.2 million from $0.8 million in the first quarter of 1997 to $1.0 million in the first quarter of 1998 due to increased borrowings to fund the representation contract buyouts discussed above. LOSS BEFORE PROVISION FOR INCOME TAXES. Loss before provision for income taxes increased by $1.6 million for the reasons discussed above. YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996 COMMISSION REVENUES. Commission revenue increased $14.2 million, or 20.0%, to $87.1 million for 1997 from $72.9 million for 1996. The increase was primarily attributable to the addition during 1997 of new representation contracts with: (i) CBS stations and Jefferson-Pilot Corp. stations previously represented by a subsidiary of CBS, Inc.; (ii) stations owned by Susquehanna; and (iii) radio stations acquired by Clear Channel, including stations formerly owned by Paxson Communications Corp. OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTIZATION. Operating expenses in 1997, excluding depreciation and amortization, increased $12.8 million to $75.7 million from $62.9 million in 1996. This increase was primarily attributable to the expense associated with servicing new representation contracts and one-time costs (including moving, severance compensation and training) incurred in out-sourcing the Company's accounting and financial functions. Operating expenses excluding depreciation and amortization as a percentage of revenue increased to 86.9% in 1997 from 86.3% in 1996. Excluding $1.4 million of relocation costs, however, operating expenses as a percentage of revenue declined from 86.3% in 1996 to 85.3% in 1997. EBITDA. For the reasons discussed above, EBITDA was $12.8 million in 1997, a $2.8 million increase over 1996. EBITDA increased to 14.7% in 1997 of revenue from 13.7% in 1996. DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased by $6.8 million in 1997 to $15.0 million from $8.2 million in 1996. This increase was due to the amortization of new representation contracts. OPERATING INCOME. The reduction of $5.4 million in operating income from 1997 to 1996 was primarily attributable to the increased depreciation and amortization in connection with new representation contracts. 34 INTEREST EXPENSE, NET. Interest expense, net declined approximately $0.1 million from $3.9 million in 1996 to $3.8 million in 1997 due to slightly lower average borrowings for the year. LOSS BEFORE PROVISION FOR INCOME TAXES. Loss before provision for income taxes increased in 1997 by $5.2 million from 1996 for the reasons discussed above. YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995 COMMISSION REVENUE. Commission revenue increased 3.6%, or $2.6 million, to $72.9 million for 1996 from $70.3 million for 1995. This net increase was attributable to the general increase in national spot advertising and the addition of representation contracts with respect to Clear Channel stations entered into by the Company during 1996 which was partially offset by the termination of the Company's representation contract with Shamrock Broadcasting Inc. earlier in the year. OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTIZATION. Operating expenses in 1996, excluding depreciation and amortization, increased $1.1 million to $62.9 million from $61.8 million in 1995. This increase was primarily the result of the increased costs attributable to the addition of the representation contracts described above. Operating expenses excluding depreciation and amortization as a percentage of revenue decreased to 86.3% from 88.0%. EBITDA. For the reasons discussed above, EBITDA increased to $10.0 million in 1996, a $1.5 million increase over 1995. EBITDA increased to 13.7% of revenue in 1996 from 12.0% in 1995. DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased by $3.5 million in 1996 to $8.2 million from $4.7 million in 1995. This increase was due to the amortization of the new station representation contracts discussed above. OPERATING INCOME. The reduction of $2.0 million in operating income was primarily attributable to increased depreciation and amortization in connection with the new representation contracts discussed above. INTEREST EXPENSE, NET. Interest expense, net increased $0.5 million to $3.9 million in 1996 from $3.4 million in 1995 due to higher borrowings partially offset by lower interest rates. LOSS BEFORE PROVISION FOR INCOME TAXES. Loss before provision for income taxes increased in 1996 by $2.5 million from 1995 for the reasons enumerated above. LIQUIDITY AND CAPITAL RESOURCES The Company's cash requirements have been primarily funded by cash provided from operations and bank debt. Cash used in operating activities for the first quarter 1998 increased by $0.8 million to $2.2 million primarily as the result of a reduction in payables. Operating activities in 1997 provided cash of $3.2 million as compared with $7.6 million in 1996. This $4.4 million decrease in cash was primarily attributable to an increase in receivables resulting from the higher revenue generated during the fourth quarter of 1997. Net cash provided by investing activities during the first quarter of 1998, is attributable to receipts for representation contracts which exceeded payments by approximately $7.2 million, primarily due to the acquisition of the SFX radio properties by an affiliate of a competing rep firm. Net cash used in investing activities during 1997 was $14.2 million compared to $4.1 million in 1996. This increase of $10.1 million was primarily attributable to net buyout payments associated with new representation contacts entered in 1997. Following industry practice, the Company acts as the exclusive national rep firm for each of its client radio stations pursuant to a written contract. If a station terminates its contract prior to the scheduled termination date, the station is obligated to pay the Company, as required by the contract or in accordance with industry practice, an amount approximately equal to the commissions the Company would have earned during the unexpired term 35 of the canceled contract, plus an additional two months of "spill over" commissions (representing commissions earned on advertising placed or committed to prior to the contract termination but broadcast thereafter). In practice, these amounts are usually paid by the successor rep firm which signs a new contract with the station and assumes the responsibility for payment to the former rep firm. Such payments, or buyouts, are usually made in equal monthly installments over a period consisting of one-half the number of months remaining under the terminated contract. For example, if the Company acquires the representation contract of a station which is terminating its contract with a competing rep firm with a remaining unexpired term of 12 months, the total buyout obligation would be 14 months of commissions payable in seven equal monthly installments. The Company amortizes the cost of any buyouts incurred in connection with its entry into a representation contract with a new client station in equal monthly installments over the life of the new contract. The Company records in income as a reduction to amortization the proceeds received as a result of buyouts by competitors of terminated contracts with former radio station clients in equal monthly installments over the remaining life of the terminated contract. As a result, the Company's operating income can be significantly affected, negatively or positively, by the acquisition or loss of client stations. During the three years ended December 31, 1997, 1996 and 1995, the Company's net payments to acquire new representation contracts (including the acquisition of a rep firm) were $13.4 million, $3.1 million and $5.7 million, respectively. As of March 31, 1998, giving effect to the Company's entry into the ABC Agreement as of such date, the Company had assets associated with representation contract buyouts of approximately $27.1 million and liabilities associated with representation contract buyouts of approximately $47.0 million. Capital expenditures of $0.2 million, $0.1 million, $0.8 million and $1.0 million for the first quarters of 1998 and 1997, and the 1997 and 1996 years, respectively, were primarily for computer equipment and upgrades. Overall cash used in financing activities increased by $1.8 million and $0.3 million during the first quarter 1998 and 1997, respectively. These increases are a result of cash applied to reduce debt. Cash provided from financing activities during 1997 aggregated $9.7 million primarily from increased borrowings during the fourth quarter. Overall cash used for financing activities of $2.6 million during 1996 was due to net debt repayments of $0.5 million and treasury stock purchases of $1.3 million. During 1997 the Company entered into the Old Credit Facility Agreement which provided for up to $55.0 million of borrowings, subject to the fulfillment of certain financial ratios and compliance with certain other covenants and was scheduled to mature on December 31, 2003. Fleet National Bank was the agent for the lenders. The Old Credit Facility provided for mandatory reductions in the lenders loan commitments on a quarterly basis, commencing October 1, 1998. Interest was payable on borrowings at various rates, as selected by the Company, based on either a "Base Rate" or a "Eurodollar Rate" (each as defined in the Old Credit Facility), plus a margin ranging from 5/8% to 2 5/8%, depending on the selected rate and the Company's "Total Leverage" (as defined in the Old Credit Facility). At March 31, 1998, $42.5 million in borrowings were outstanding under the Old Credit Facility. The proceeds of the Offering were used, in part, to repay the Old Credit Facility. As part of the Financing Transactions, on July 2, 1998, the Company has entered into a $10.0 million revolving credit facility (the "New Credit Facility") with BankBoston, N.A. ("BankBoston") and Summit Bank ("Summit"). The term of the New Credit Facility is six years. The lenders under the New Credit Facility are BankBoston, Summit and any other lenders reasonably acceptable to the Company, with BankBoston acting as administrative agent. The Company's and the Subsidiary Guarantors' obligations under the New Credit Facility are secured by a first priority perfected lien on all property and assets, tangible and intangible, of the Company and the Guarantors, including a pledge by the Company of all capital stock and membership interests held by it in the Guarantors. See "Description of New Credit Facility." The Company believes that it will generate sufficient cash flow to fund its operations and required representation contract buyout payments and make required payments of principal and interest under the New Credit Facility and interest on the Notes. The Company may not, however, generate sufficient cash flow for these purposes or to repay the Notes at maturity. The Company's ability to fund its operations and required contract 36 buyout payments and to make scheduled principal and interest payments will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. The Company may also need to refinance all or a portion of the Notes on or prior to maturity. There can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. YEAR 2000 COMPLIANT INFORMATION SYSTEMS Many computer systems experience problems handling dates beyond the year 1999. Therefore, some computer hardware and software will need to be modified prior to the year 2000 in order to remain functional. The Company currently utilizes software systems developed by third parties or which the Company developed using third party software development tools. These third parties have advised the Company that such systems are Year 2000 compliant or, in some cases, will be made Year 2000 compliant through the installation of software patches or upgrades. The Company expects to implement successfully all necessary programming changes needed to address Year 2000 issues on or about the end of 1998 and does not believe that the related cost will have a material adverse effect on the Company. There can be no assurance, however, that there will not be a delay in, or increased costs associated with, the implementation of such changes, and any inability to implement such changes could have a material adverse effect on the Company. 37 BUSINESS GENERAL Interep is the largest independent national spot radio advertising rep firm in the United States. The Company is the exclusive rep firm for over 1,900 radio stations, including, among others, all of the radio stations owned or operated by CBS, Clear Channel and ABC. The Company serves radio stations in all 50 states and in 97 of the top 100 radio markets. The Company's client radio stations are diversified across all formats, including country, rock, sports, Hispanic, classical, urban, news and talk. Interep has built strong relationships with its clients, some of which date back 40 years. The Company represents its clients pursuant to exclusive representation contracts, with remaining terms ranging from 2 months to 11 years. The Company's commission revenue and EBITDA for the 12 months ended March 31, 1998 were $88.0 million and $13.7 million, respectively. The Company estimates that its Adjusted EBITDA for the 12 months ended March 31, 1998 would have been approximately $16.5 million after giving effect to the entry by the Company into certain representation contracts and the termination of certain representation contracts, in each case as of April 1, 1997. Further, giving effect to such new business and terminations as of January 1, 1997, the Company estimates that it would have had a 1997 market share in excess of 50% (based on national spot radio advertising station gross billings). The Company's commission revenues and EBITDA grew at a compound annual growth rate of 10.0% and 21.5%, respectively from 1993 to 1997. Interep has become the national spot radio industry leader through strategic alignments with growing radio groups, acquiring new clients, acquiring other rep firms and by increasing client advertising revenues. The Company's growth has occurred during a period of significant consolidation in the radio broadcast industry fostered by deregulation. The Company has strategically aligned itself with radio station groups that it believes are well-positioned to capitalize on this consolidation, such as Clear Channel, which acquired the radio station assets of Paxson Communications Corp., Sinclair, which acquired the radio station assets of Heritage and CBS, which recently acquired the radio station assets of ARS. In addition, the Company has been a leader in the consolidation of the radio representation business. Consolidation in the representation business has reflected the competitive pressures on smaller radio rep firms and the decision by an increasing number of radio station groups to take advantage of the national presence and comprehensive services offered by large radio rep firms such as the Company. Total national spot radio gross billings were approximately $1.6 billion in 1997 and grew at a compound annual growth rate of 9.1% from 1993 to 1997. National spot advertising is commercial air time sold by radio stations to advertisers located outside of their local markets and typically represents approximately 20% of a radio station's revenue. Radio stations typically retain rep firms like Interep on an exclusive basis to sell commercial air time to national and regional advertisers, and sell air time to local advertisers through in-house sales forces. Interep was founded in 1953 and has been owned primarily by its Chief Executive Officer, Ralph C. Guild, and its management and employees since 1975. Since consummation of the Offering, Interep has been owned entirely by Mr. Guild and the Company's management and employees. Its principal executive offices are located at 100 Park Avenue, New York, New York 10017. The Company's telephone number is (212) 916-0700 and its internet address is www.interep.com. COMPETITIVE STRENGTHS The Company believes the following factors contribute to its leading position and provide the foundation for further growth: LEADING MARKET SHARE AND SIGNIFICANT CLIENTS. Interep is the leading independent national spot radio advertising rep firm and represents over 1,900 radio stations including key radio station groups such as ABC, CBS, Clear Channel, Emmis, Entercom, Sinclair, SBS and Susquehanna. The Company believes that its market 38 size and leadership enhances its value to advertisers and allows it to package radio stations creatively to meet advertisers' special needs, thereby increasing its ability to sell air time for clients. STRONG RELATIONSHIPS WITH ADVERTISERS; NATIONAL PRESENCE. Strong relationships with advertisers, advertising agencies and media buying services enable the Company to promote its client stations. Interep's sales force, strategically located in 15 cities across the United States, provides effective coverage of major media buying centers. The Company works closely with advertisers to help them develop and refine radio advertising strategies and to support their purchases of advertising time on the Company's client stations. HIGHLY MOTIVATED AND SKILLED SALES FORCE. The Company has developed a highly skilled, professional sales force. Through its ESOP and its Stock Growth Plan, Interep is owned primarily by its management and employees, and after application of the proceeds of the Offering, will be entirely employee-owned. This alignment of the interests of the Company and its employees is an integral part of the Company's strategy. Moreover, through incentive programs and the in-house training programs of the Interep Radio University, the Company's sales force is motivated to adopt a team-oriented approach to marketing and fulfilling client needs. EXPERIENCED SENIOR MANAGEMENT TEAM. The Company has an experienced and entrepreneurial management team, headed by the Interep's Chief Executive Officer, Ralph C. Guild, who is recognized as a leader and innovator in the radio representation business. The Company's senior sales managers have an average of over 21 years of industry experience and significant equity ownership in the Company. The Company's executive officers include Marc G. Guild, President, Marketing Division, William J. McEntee, Jr., Chief Financial Officer, Stewart Yaguda, President of Radio 2000, and Charles Parra, Chief Information Officer. INDEPENDENCE AND RADIO INDUSTRY FOCUS. Interep is owned primarily by its employees and is focused exclusively on representing radio stations. The Company's only significant competitor, by comparison, is owned by a radio station group which competes with other radio stations and also represents television stations and cable television systems. The Company believes that its independence and radio industry focus provide significant competitive advantages. SOPHISTICATED SALES SUPPORT. Over 85% of Interep's employees are in sales- related positions. The Company supports this sales force with sophisticated media research, including a proprietary national database. This database enables the Company to profile for advertisers the salient characteristics of the audiences of the Company's client stations to assist advertisers in reaching their target audiences. Interep has also enhanced the level of its services to clients and advertisers alike through the growing use of technology, such as networked and mobile computing and computerized databases with remote client access. OPERATING STRATEGY The Company's objectives are to continue to enhance its position as the leading national spot radio advertising rep firm in the United States and to increase revenue and EBITDA. The Company's strategy to attain these goals includes the following: SUPERIOR CLIENT SERVICE. The Company believes it has attained the leading position in its industry by consistently providing superior services to its clients with innovative features that differentiate it from its competitors. For example, Interep pioneered the use of dedicated rep firms, such as ABC Radio Sales, CBS Radio Sales and Clear Channel Radio Sales, for the representation of individual radio station groups, which allows a client to benefit from the comprehensive services offered by the Company while still projecting its corporate identity to advertisers. The Company also provides wide-ranging market research, sales planning and selling strategy consulting services to its clients. The Company has enhanced the level of its services to clients and advertisers alike through the growing use of technology, such as networked and mobile computing. The Company has recently opened its internet website, where clients and advertisers, on a secure basis, can access market research. Interep provides superior service by motivating its employees through incentives, including 39 equity ownership and extensive in-house training. The Company intends to continue to develop innovative services and strategies in order to generate additional revenues. PROMOTION OF RADIO. Interep believes that radio advertising expenditures are not commensurate with consumer exposure time to radio and that this provides an opportunity for future growth. The Company uses its proprietary database of demographic and socioeconomic profiles of radio audiences in promoting the use of radio for advertising. In 1991, Interep introduced its Radio 2000 program to promote the ongoing growth of radio advertising by focusing on advertisers who do not use radio advertising or who are underutilizing the medium. The Radio 2000 sales force works with these advertisers to demonstrate how radio can help them achieve their goals and create marketing opportunities. The Company believes that Radio 2000 has contributed to the growth of radio advertising revenues in the aggregate and, by virtue of Interep's leading market position, its own growth. EXPANDING MARKET SHARE. Interep will seek to continue to expand its market share by (i) developing new clients, (ii) packaging and marketing portfolios of client stations as "unwired networks" of unaffiliated stations grouped together to meet advertisers' particular needs and (iii) developing innovative sales programs. The Company seeks to represent station groups that are acquirers of additional radio stations, such as CBS, Clear Channel, Sinclair and ABC, in order to accelerate the growth of its client base. The Company promotes unwired networks of its client stations to radio advertisers and advertising agencies to enable advertisers to place advertisements efficiently on as few as two stations or as many as all stations represented by Interep to target specific groups or markets. The Company believes that its innovations, such as Radio 2000 and dedicated rep firms, will continue to contribute to its growth. INDUSTRY OVERVIEW THE RADIO REPRESENTATION BUSINESS. Radio stations generally retain national rep firms, such as the Company, on an exclusive basis, to sell national spot commercial air time to advertisers located outside of the stations' local markets. Sales of air time to local advertisers are usually handled by a station's own sales force. National spot radio advertising is so named because it is placed or "spotted" in one or more broadcast markets, in contrast to network advertising, which is broadcast simultaneously throughout the United States on network-affiliated stations. Although it varies by station, national spot radio advertising is believed to typically account for approximately 20% of a radio station's revenue. Generally, national spot radio advertising time is purchased by advertising agencies or media buying services hired by advertisers to place advertising. The Company believes that a product or service can be advertised efficiently through spot purchases of radio air time. Because of its national presence, large market share, established relationships with advertising agencies and media buying services and extensive marketing resources, the Company can sell national spot air time more effectively than its client stations could on their own. A rep firm seeks to promote the interests of each individual radio station client that it represents to facilitate the purchase of national spot air time on that station. This is accomplished, in part, by identifying advertiser needs and matching those needs with the demographic profile and other relevant characteristics typical of the particular station's audience. According to an independent industry report, total U.S. radio advertising revenues were $13.2 billion in 1997 and grew at a compound annual growth rate of 8.8% from 1993 to 1997. The radio advertising market is divided into two parts: (i) local advertising, which is sold by each radio station's own sales force ($10.3 billion in 1997) and (ii) national advertising, which includes network and national spot advertising ($2.9 billion in 1997). The Company believes that the growth in national advertising is due in part to an overall increase in U.S. advertising expenditures and in part to the Company's efforts to promote radio as a low-cost and effective advertising medium. The ability to target specific groups is important because an advertiser's given product may appeal to a specific socioeconomic or demographic group, and different radio programming formats are usually designed to appeal to specific audiences. There are approximately two dozen major radio programming formats in the United States, including country, rock, sports, Hispanic, classical, urban, news and talk. Within each format there are sub-formats that tend to attract an audience with similar characteristics and the differences 40 between the audiences can be significant. Where research can show a correlation between the target market for an advertiser's product and the audience attracted to a particular radio programming format, the Company believes that it can demonstrate to advertisers that radio can be a highly effective advertising medium. REPRESENTATION CONTRACTS. Rep firms generate revenues by earning commissions on the sale of advertising time on client stations. Revenues are based on radio station "net billings," that is, gross advertising billings less customary advertising agency and media buying service commissions (which are typically 15% in the aggregate). The Company's representation contracts are exclusive and generally provide for an initial term ranging in duration from 3 years to 8 years followed by an evergreen period. During the evergreen period, the contract term continues unless and until notice of cancellation is given in accordance with the provisions of the contract, typically involving at least 12 months' notice. Representation contracts generally provide for termination payments to be made to a rep firm if the client terminates the contract without cause. The amount of such damages is typically equal to the estimated commissions that would have been payable to the rep firm during the remaining portion of the initial term and the evergreen period, plus two months. For example, if a contract with an initial term of five years and a one-year evergreen period is canceled after three years, the Company would be compensated in an amount equal to 38 months of commissions (that is, 24 months for the remaining term, 12 months for the evergreen notice period, plus two months). It is customary in the industry for the successor rep firm to make this payment. The Company generally amortizes the cost of acquiring a new representation contract over the initial term of such contract, although contracts are expected to provide significantly longer-term revenue beyond this initial period. The Company also amortizes the income associated with the buyout by another rep firm of an existing client's contract over the remaining life of such contract. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--General." THE COMPANY'S ORGANIZATION The Company is organized into seven rep firms and five geographic regions. The rep firms focus on servicing client stations while the regional offices coordinate selling efforts to advertisers. Some of the rep firms, such as McGavren Guild, Allied Radio Partners and D&R Radio, have long histories and are the product of mergers or consolidations of two or more smaller rep firms. Others, such as CBS Radio Sales, Clear Channel Radio Sales and ABC Radio Sales, were recently established for the purpose of representing a single station group as a dedicated unit. The Company's rep firms are:
NUMBER OF YEAR STATIONS ACQUIRED NAME REPRESENTED OR FORMED ---- ----------- --------- McGavren Guild....................................... 604 1953 D&R Radio............................................ 245 1981 CBS Radio Sales...................................... 92 1997 Allied Radio Partners................................ 684 1977 Clear Channel Radio Sales............................ 191 1996 Caballero Spanish Media.............................. 141 1995 ABC Radio Sales...................................... 23 1998
The rep firms operate through the Company's 15 strategically-located offices in Atlanta, Boston, Chicago, Dallas, Detroit, Los Angeles, Miami, Minneapolis, New York, Philadelphia, Portland, St. Louis, San Antonio, San Francisco and Seattle. The Company believes that its clients are best served by having its rep firms collaborate on the marketing of radio to advertisers and advertising agencies. Once advertisers or agencies decide to use radio, each firm is responsible for selling the strengths of their client stations. The presidents of the rep firms, as well as the senior management of the Company, concentrate on expanding the Company's market share by developing new clients and maintaining service relationships with existing clients. The activities of the rep firms' respective marketing 41 and sales forces are coordinated through the Company's regional executives, working with the rep firm presidents. The regional executives are responsible for the overall sales effort to advertisers and for managing the Company's relationships with advertisers within their regions. Between the rep firm presidents and the regional executives, relationships with radio station and advertising agencies are closely coordinated. Senior management of the Company is responsible for planning firm-wide strategy, establishing policies and procedures, operating the Radio 2000 program and providing research and technology resources and financial and accounting services for all of the rep firms and offices. The Company employs marketing, research and sales support personnel to facilitate its overall sales efforts on behalf of its client stations as well as employees in the information services, corporate communications, administrative and financial areas. THE COMPANY'S CLIENTS The Company represents many of the largest and most successful radio station groups in the United States. The 15 largest U.S. radio markets, measured by gross billings, accounted for 55% of all spot radio advertising in 1997. On an as adjusted basis, giving effect as of April 1, 1997 to the client acquisitions described in "Recent Developments" below, the Company's 1997 market share in these markets would have been over 60%. The Company represents over 1,900 radio stations. For the year ended December 31, 1997, CBS accounted for 28.3% of the total commission revenues of the Company. No other station or station group accounted for more than 10% of such commission revenues. The Company's clients include the following prominent radio broadcast companies: ABC Cumulus Mondosphere Broadcasting Alexander Broadcasting Curtis Media Group Mt. Wilson Broadcasting Co. Emmis MyStar Communications Barnstable Broadcasting Entercom New Century Beasley Broadcast Group Excl Communications Paul Communications, Bloomington Broadcast Goodrich Broadcasting Inc. Blue Chip Broadcasting Inc. Pilot Communications Group Co. Great Empire Radio One Buckley Broadcasting Broadcasting Saga Communications Caribou Communications Greater Media Sinclair Carter Broadcasting Hall Communications SBS Corp. Hearst Broadcasting Susquehanna CBS Group Wicks Broadcast Group Citadel Communications Inner City Broadcasting Z-Spanish Radio Network, Corp. Corp. Inc. Clear Channel Jefferson-Pilot Corp. Zapis Communications Connoisseur Lotus Communications Communications Corp. Corp. McDonald Broadcasting Co. The Company will attempt to expand its market share by increasing its representation of stations in the top 100 radio markets, where the Company already has a significant presence, and by selectively expanding into smaller markets where appropriate. RECENT DEVELOPMENTS On April 29, 1998, the Company entered into the ABC Agreement. Under this agreement, as of June 1, 1998, Interep became the exclusive national spot radio rep firm for the 23 radio stations (all of which are in the top 15 radio markets) of ABC (as defined), as well any radio stations acquired by that division in the future (subject to the Company arranging for the buyout of the predecessor rep firm, if necessary). In order to service the ABC stations, the Company established ABC Radio Sales. The ABC Agreement has a term of eight years. ABC has the option to renew the term for an additional eight years. ABC would have the right to terminate the ABC Agreement if majority control of the Company was obtained by a competitor of ABC or a competitor of Interep or if changes occurred in the senior management of ABC Radio Sales which were not acceptable to ABC. Giving effect as of April 1, 1997 to this new representation as well as to other significant representation contracts which became effective during the remainder of 1997 as a result of radio station acquisitions by Clear 42 Channel, SBS and Emmis and the termination of the Company's representation contract with SFX (when it was acquired by an affiliate of the Company's competitor), the Company's Adjusted EBITDA for the twelve months ended March 31, 1998 would have been $16.5 million. See "Risk Factors--New Representation Contracts" and "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." The Company's Adjusted EBITDA set forth in the prior sentence does not give effect to the recent acquisitions by CBS of certain radio stations of ARS and by Sinclair of certain radio stations of Heritage. There can be no assurance that the Company will enter into representation agreements with respect to any of these stations or as to the terms of any such agreements. SALES SUPPORT Interep's sales force is strategically located in 15 cities across the United States to provide effective coverage of the major media buying centers. In order to sell air time for its clients, the Company has established strong relationships with advertisers, advertising agencies and media buying services. The Company has also implemented the Radio 2000 program and established a sales force of Radio Marketing Specialists dedicated to the promotion of radio advertising for this purpose. These specialists assist advertisers, through their advertising agencies or media buying services, in developing effective radio advertising strategies with the objective of influencing and facilitating their purchases of radio advertising air time. The Company supports its sales efforts with sophisticated media research, using a proprietary database of demographic and socioeconomic profiles of every major U.S. radio market to help advertisers refine their radio advertising strategies. This database is compiled from a wide array of industry information and data services (e.g., The Arbitron Company, Scarborough, AdSpender, and Simmons Market Research). The Company provides advertisers with profiles of the audiences of the Company's client stations in specific geographic areas, and, by showing correlations between buying patterns for various products and services and specific demographic and socioeconomic characteristics, helps advertisers reach their target audiences. The information may also be used to recommend specific promotions, the appropriate blending of media for an advertising campaign or the most effective programming vehicles for a particular advertising campaign. In this way, the Company's sales force helps advertisers plan radio advertising schedules using selected stations represented by the Company. The Company also provides sales promotion support through concept development and sales promotion programs. These programs blend advertising support, merchandising and sales incentive programs to enable the Company to suggest promotional campaigns, including partnerships with other advertising media. The Company believes that the overall demand for national radio advertising is enhanced by its packaging and selling of advertising time on various "unwired networks," which are unaffiliated groups of client stations grouped together to meet advertisers' particular needs. By placing advertising with these networks, an advertiser can reach a large, targeted audience more efficiently than if it were to place advertising with many stations one at a time. Due to the Company's leading market share and diverse client station base, it is well-positioned to offer unwired networks. An advertising agency or media buying service derives additional benefits from the Company's unwired networks as the Company often performs research, scheduling, billing, payment and pre-analysis and post-analysis functions relating to the advertising time purchase. The Company has an extensive computer network with over 600 computer terminals. Each employee has his or her own desktop or mobile computer equipped with e-mail and internet capability linked directly to many client stations and advertising agencies. EMPLOYEE MOTIVATION AND TRAINING The Company believes one of its competitive advantages is derived from the in-house training of its work force through a program called the Interep Radio University. This program was established to help ensure the 43 continuing effectiveness of the Company's staff. The Company requires most of its professional employees to spend approximately two weeks each year in the Company's in-house training programs, which use its own personnel as well as instructors from some of the leading marketing and management education programs in the United States, including Harvard Business School and The Wharton School. Since 1975, the Company has been owned primarily by its management and employees directly and indirectly through the ESOP and the Stock Growth Plan. After consummation of the Offering, Interep became owned entirely by Mr. Guild and the Company's management and employees. The Company believes that employee ownership, together with its commitment to intensive employee training and continuing employee education, have resulted in a highly motivated, team- oriented and well-trained workforce. COMPETITION The Company's success depends on its ability to acquire and retain representation contracts with radio stations. The media representation business is highly competitive, both in terms of competition for clients and to sell air time to advertisers. The Company competes not only with other independent and network media representatives but also with direct national advertising. The Company also competes on behalf of its clients for advertising dollars with other media such as broadcast and cable television, newspapers, magazines, outdoor and transit advertising, Internet advertising, point-of-sale advertising and yellow pages directories. Certain of the Company's competitors have greater financial and marketing resources than does the Company, and such resources may provide them with a competitive advantage in competing for client stations. The Company's only significant competitor in the national spot radio representative industry is Katz Media Group, Inc., a subsidiary of a major radio station group owner. By comparison, Interep is independent and, on consummation of the Financing Transactions, will be owned 100% by its employees. Further, Interep is the only national firm which is dedicated solely to the representation of radio stations. Management believes that the Company's independence and dedication to radio provide it with a competitive advantage. The Company believes that its ability to compete successfully is based on its ability to acquire and retain representation contracts, the number of stations and the inventory of air time it represents, its ability to offer unwired networks, its strong relationships with advertisers, its research and marketing services to clients and advertisers, its use of technology, the experience of its management and the training and motivation of its sales personnel. The Company believes that it competes effectively, in part, through its employees' knowledge of, and experience in, the Company's business and industry and their long standing relationships with clients. EMPLOYEES As of March 31, 1998, the Company employed approximately 600 employees, of which approximately 570 sales-related personnel. None of the Company's employees are represented by a union. The Company believes that its relations with its employees are excellent. PROPERTIES The Company leases approximately 145,000 square feet of office space in 16 cities throughout the United States. The Company's principal executive offices are located at 100 Park Avenue, New York, New York, where the Company occupies 66,700 square feet under a lease which expires in March 2005. The Company believes that its office premises are adequate for its foreseeable needs. LITIGATION The Company from time to time is involved in litigation incidental to the conduct of its business. The Company is not a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on the Company. 44 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth certain information regarding the directors and the executive officers (the "Executive Officers") of the Company:
NAME AGE POSITIONS ---- --- --------- Ralph C. Guild.......... 69 Chairman of the Board and Chief Executive Officer; Director Marc G. Guild........... 47 President, Marketing Division; Director William J. McEntee, Jr.. 55 Vice President and Chief Financial Officer Stewart Yaguda.......... 42 President, Radio 2000 Charles Parra........... 34 Chief Information Officer Leslie D. Goldberg...... 55 Director Jerome S. Traum......... 62 Director
All directors are elected, and all Executive Officers are appointed, for terms of one year. Ralph C. Guild has been Chairman of the Board and Chief Executive Officer of the Company since 1986, and has served as a director of the Company since 1967. He has been employed by the Company or its predecessors since 1957 in various capacities. In November 1991, Mr. Guild became one of the first inductees into the Broadcasting Hall of Fame. Mr. Guild serves on the Boards of Trustees of the Museum of Television & Radio, the Center for Communications and the University of the Pacific. In April 1998, Mr. Guild received the Golden Mike Award from the Broadcasters Foundation for outstanding contributions to the radio industry. Marc G. Guild has been President, Marketing Division, of the Company since November 1989, and has served as a director of the Company since 1989. He was Executive Vice President of Network Sales/Operations of the Company from 1986 to 1989. Mr. Guild has been employed by the Company or its predecessors since 1975 in various capacities. As President, Marketing Division of the Company, Mr. Guild plays a key role in the Company's sales and marketing programs, the Interep Radio University and the Company's research and technology divisions and also oversees the Company's regional executives. Mr. Guild serves on the Board of Directors of the International Radio and Television Foundation. Marc Guild is the son of Ralph Guild. William J. McEntee, Jr. has been Vice President and Chief Financial Officer of the Company since March 1997. Mr. McEntee serves in such positions pursuant to a Services Agreement between the Company and Media Financial Services, Inc. See "Certain Transactions and Relationships." Mr. McEntee was Chief Financial Officer at Sudbrink Broadcasting in West Palm Beach, Florida, from 1971 through 1994. Mr. McEntee owned and managed WCEE-TV in Mt. Vernon, Illinois from 1994 until selling the station in 1996. Mr. McEntee currently owns WIOJ- AM in Jacksonville, Florida. He is a certified public accountant and formerly served as an audit manager for Arthur Andersen & Co. Stewart Yaguda has been President of the Company's Radio 2000 Program since April 1992. Mr. Yaguda was a director of marketing for Ciba-Geigy, an international pharmaceuticals company, from 1985 to 1992, where he was responsible for a marketing budget of over $30 million for certain over-the- counter drugs. From 1981 to 1985, he was a product manager at Nabisco Brands. As President of the Company's Radio 2000 Program, Mr. Yaguda is responsible for attracting new advertisers to radio and expanding the advertising budgets of existing radio advertisers. He holds an M.B.A. from New York University. Charles Parra has been Chief Information Officer of the Company since September 1997. From July 1995 to August 1997, he was the Company's Director of Information Technology. Mr. Parra was a project manager for the information systems group at Russell Reynolds Associates, a New York-based executive search firm, from 1993 through 1995. From 1990 to 1993, Mr. Parra was a technical specialist for Sharp Electronics. 45 Leslie D. Goldberg served as President of the Company from August 1986 to the end of 1995, and has served as a director of the Company since 1986. He has been employed by the Company since 1968 in various capacities. Mr. Goldberg serves on the Board of Directors of the Radio Advertising Bureau. Jerome S. Traum has served as a director of the Company since 1994. Mr. Traum has been a partner with the New York law firm of Moses & Singer since June 1995. Before that, he was of counsel to the New York law firm of Proskauer Rose Goetz & Mendelsohn, beginning in 1991. Previously, he was a general partner of The Blackstone Group, an investment banking firm. DIRECTOR COMPENSATION Directors do not receive compensation for their services as directors, but are reimbursed for any reasonable out-of-pocket expenses incurred in connection with attending meetings of the Board of Directors. EXECUTIVE COMPENSATION The following table shows compensation for services rendered in all capacities to the Company for the year ended December 31, 1997 by the "Executive Officers," that is, the Chief Executive Officer and the Company's four most highly compensated executive officers other than the Chief Executive Officer. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ----------------------------- ANNUAL COMPENSATION AWARDS PAYOUTS ------------------------------ --------------------- ------- SECURITIES RESTRICTED UNDERLYING NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) SARS (#) PAYOUTS COMPENSATION(1) ------------------ ---- -------- -------- ------------ ---------- ---------- ------- --------------- Ralph C. Guild.......... 1997 $905,738 -- $104,583(2) -- -- -- $19,262 Chairman of the Board and Chief Executive Officer Marc G. Guild........... 1997 300,738 $270,000 -- -- -- -- 19,262 President, Marketing Division William J. McEntee, Jr. ................... 1997 98,383 -- -- -- -- -- 1,617 Vice President and Chief Financial Officer(3) Stewart Yaguda.......... 1997 120,738 100,000 27,500(4) -- -- -- 19,262 President, Radio 2000 Division Charles Parra........... 1997 110,041 18,000 -- -- -- -- 9,959 Chief Information Officer
- -------- (1) Includes amounts contributed by the Company on behalf of Messrs. Ralph Guild, Marc Guild, William McEntee, Stewart Yaguda and Charles Parra to the Stock Growth Plan of $14,512, $14,512, $1,617, $14,512 and $8,974, respectively and to the 401(k) Plan of $4,750, $4,750, $0, $4,750 and $985, respectively. (2) Represents payments under a supplemental income agreement. See "-- Employment Contracts." (3) Mr. McEntee serves in such capacities pursuant to a Services Agreement between the Company and Media Financial Services, Inc. See "Certain Transactions and Relationships." Mr. McEntee began his employment with the Company on March 1, 1997. (4) Represents contributions to a compensation deferral arrangement. 46 Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values The following table sets forth, as to each Executive Officer who holds options, the status of their options at the end of fiscal 1997. No options were exercised by any of them during fiscal 1997.
NUMBER OF IN-THE-MONEY UNEXERCISED OPTIONS/ OPTIONS/SARs AT NUMBER OF SARs AT FISCAL YEAR END FISCAL YEAR END ($)(1) SHARES ACQUIRED VALUE --------------------------- --------------------------- NAME ON EXERCISE REALIZED($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE ---- --------------- ----------- ----------- --------------- ----------- --------------- Ralph C. Guild.......... -- -- 30,000 -- 30,000 -- Marc G. Guild........... -- -- 5,000 -- 5,000 -- William J. McEntee, Jr.. -- -- -- -- -- -- Stewart Yaguda.......... -- -- -- -- -- -- Charles Parra........... -- -- -- -- -- --
- -------- (1) Fair market value of the Common Stock as of September 30, 1997 ($87.86 per share), as determined by an independent appraisal, minus exercise price multiplied by the number of shares subject to the option. In determining the fair market value of the Common Stock, for which no trading market existed, the Board of Directors relied on an independent appraisal. Employee Stock Ownership Plan The Company established the ESOP in 1975 to provide participating employees with a stock ownership interest in the Company. The ESOP is a stock bonus plan qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and is also an employee stock ownership plan under Section 4975(e)(7) of the Code. The assets of the ESOP are held in trust and are invested primarily in the Common Stock. The trustees of the ESOP are appointed by the Board of Directors of the Company and are responsible for the administration of the ESOP and the investment of its assets. The current trustees are Ralph Guild, Leslie D. Goldberg and Marc Guild. Each employee of the Company becomes eligible to participate in the ESOP following completion of one year of service, with a minimum of 1,000 hours of service to the Company. As of December 31, 1997, the ESOP had 400 participants. ESOP participation is mandatory and non-contributory for all eligible employees. Individual accounts are maintained under the ESOP for each participant. A participant becomes fully vested in his or her account in stages over five years of service to the Company or earlier, without regard to years of credited service, on the occurrence of total and permanent disability, death or attainment of the later of age 65 or the fifth anniversary of his or her participation in the ESOP. In the event of termination of the employment of a participant who is not fully vested, any non-vested portion of his or her account will be forfeited and reallocated among the remaining participants' accounts. The Company may make annual contributions to the ESOP, in the form of cash or shares of Common Stock, in such amounts as may be determined by its Board of Directors, subject to certain limitations imposed by the Code. Company contributions for each plan year are allocated to the participants' accounts based on the relative total compensation of each participant, subject to certain limitations under the Code. The Company has made, however, no contributions to the ESOP since 1994. The Company made loans to the ESOP of $1.3 million, $1.9 million and $2.9 million in 1995, 1996 and 1997, respectively, to fund distributions of the Common Stock from the ESOP in connection with the termination of employment of certain participants. As of December 31, 1997, $182,000 of such indebtedness remained outstanding. See "Risk Factors--Repurchase Obligation Under Employee Benefit Plan" and "Description of Exchange Notes--Certain Covenants--Restricted Payments." The ESOP provides that the trustees will generally determine the manner in which shares of Common Stock owned by the ESOP are voted. With respect, however, to voting in connection with certain significant matters specified in the Code, such as mergers, recapitalizations, or a liquidation, dissolution or sale of all or substantially all of the assets of the Company, each participant has the right to direct the trustees as to the voting of the shares of Common Stock allocated to his or her account. Allocated shares for which no directions are received in these 47 circumstances will be voted by the trustees as they deem to be in the best interests of the ESOP and its participants. Following a participant's termination of service, distribution of the vested amount in his or her account will generally be made in cash. Cash distributions will be based on the fair market value of the Common Stock, determined by the ESOP's independent appraiser as of the December 31 preceding the participant's termination. Distributions will normally be made in equal quarterly installments over a period of time ranging up to five years, depending on the size of the participant's account. Pending the final date of distribution, a participant's account balance will be credited with interest at rates based on U.S. Treasury Bill rates. STOCK GROWTH PLAN The Board of Directors established the Stock Growth Plan, effective as of January 1, 1995, to provide participating employees with a stock ownership interest in the Company. The Stock Growth Plan is a stock bonus plan qualified under Section 401(a) of the Code. The assets of the Stock Growth Plan are invested primarily in Common Stock and are held in trust. The trustees of the Stock Growth Plan are appointed by the Board of Directors and are responsible for the administration of the Stock Growth Plan and the investment of its assets. The current trustees are Ralph Guild, Leslie D. Goldberg and Marc Guild. Each employee of the Company who is regularly scheduled to work at least 20 hours per week is eligible to participate in the Stock Growth Plan as of his or her date of hire. As of June 1, 1998, the Stock Growth Plan had 555 participants. Participation in the Stock Growth Plan is mandatory for all eligible employees. All Stock Growth Plan participants are at all times fully vested in their accounts without regard to age or years of service. The Company makes regular payments to the Stock Growth Plan following each payroll period, primarily in the form of cash (although payments in the form of shares of Common Stock are permitted under the provisions of the Stock Growth Plan) in such amounts as may be determined by the Board of Directors, subject to certain limitations imposed by the Code. Such cash payments have been used, and are intended to be used, for the foreseeable future, primarily to purchase shares of Common Stock from the ESOP. These purchases are designed to fulfill the Stock Growth Plan's purpose of investing in the Company, while providing increased liquidity for the ESOP. Individual accounts are maintained under the Stock Growth Plan for each participant. Payments for each plan year are allocated to the participants' accounts based on the relative total compensation of each participant, subject to certain limitations under the Code and by taking into account benefits available under the Social Security Act. The Stock Growth Plan provides that the trustees will generally determine the manner in which the shares of Common Stock owned by the Stock Growth Plan are voted. With respect to voting in connection with certain significant matters specified in the Code, such as mergers, recapitalizations, or a liquidation, dissolution or sale of all or substantially all of the assets of the Company, each participant has the right to direct the trustees as to the voting of the shares of Common Stock allocated to his or her account. Allocated shares for which no directions are received in these circumstances will be voted by the trustees as they deem to be in the best interests of the ESOP and its participants. Following a participant's termination of service, distribution of his or her account will be made in four annual installments, with the first installment to occur as soon as practicable after termination of employment. If a participant's benefit does not exceed $3,500, the distribution will be made in a single lump sum as soon as practicable following termination of service. Distributions will normally be made in cash. COMPENSATION DEFERRAL PLAN The Company maintains the Compensation Deferral Plan, which was adopted by the Board of Directors effective as of January 1, 1994, for the purpose of providing deferred compensation to a select group of executive employees. The Compensation Deferral Plan is an unfunded "top hat" plan that is subject to Title I of the 48 Employee Retirement Income Security Act of 1974, as amended ("ERISA"), but is exempt from Parts 2, 3 and 4 of Title I(B) of ERISA. Although the Compensation Deferral Plan is an unfunded plan for purposes of Title I of ERISA, assets have been set aside in an irrevocable trust pursuant to a trust agreement between the Company and Ralph Guild and Stewart Yaguda, as trustees. The trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of Section 671 of the Code. The trustees of the Compensation Deferral Plan are responsible for the administration of the trust and the investment of trust assets. Following the Offering, the trust assets will consist of the cash proceeds of the redemption of the Series B Preferred Stock and the associated shares of the Common Stock formerly held by the Compensation Deferral Plan. See "Certain Transactions and Relationships." The Compensation Deferral Plan is administered and interpreted by the Company's Board of Directors and highly compensated employees of the Company. As of June 1, 1998, the Compensation Deferral Plan had 15 participants, each of whom is or was a member of senior management or a highly compensated employee. All participants are at all times fully vested in their Compensation Deferral Plan accounts without regard to their age or years of service. During 1994 and 1995, each plan participant deferred the receipt of a portion of the compensation otherwise payable to them for such periods. The Company then contributed to the Compensation Deferral Plan trust shares of the Series B Preferred Stock and the Common Stock. Each participant's account was credited with an initial balance of the Series B Preferred Stock (valued at $1,000 per share) equal in value to the amount deferred by the participant, plus 11.2875 shares of Common Stock for each share of the Series B Preferred Stock so credited. The Company does not contemplate making any further contributions to the Compensation Deferral Plan. In connection with the Financing Transactions, the cash proceeds of the redemption of the shares of the Series B Preferred Stock and the associated shares of the Common Stock were allocated among the plan participants strictly in accordance with the shares allocated to their account as of the date of redemption. The cash assets of the Compensation Deferral Plan allocable to any participant will be distributed to such participant on the earlier to occur of the participant's termination of employment with the Company or the termination of the Compensation Deferral Plan. 401(k) PLAN The Company maintains the 401(k) Plan, which allows employees to save a portion of their salaries on a tax-deferred basis pursuant to the provisions of Section 401(k) of the Code. Each employee of the Company becomes eligible to participate in the 401(k) Plan on the first day of the month following the date he or she completes one year of service. As of December 31, 1997, the 401(k) Plan had 560 participants. The assets of the 401(k) Plan are held in trust. The trustee of the 401(k) Plan is appointed by the Board of Directors of the Company, and the current trustee is Fidelity Management Trust Company. Each eligible employee may make a pre-tax contribution from salary in an amount not greater than 15% of his or her respective total compensation during each calendar year under the 401(k) Plan. For 1998, the limit under the Code for pre-tax contributions is $10,000. Each year, the Company contributes, for each participant who makes a pre-tax contribution, a matching contribution on the first 6% of such participant's compensation ("Matching Contribution") in an amount equal to a percentage of such participant's pre-tax contribution. Such percentages are determined annually by the Board of Directors, and the percentage for 1997 was 50%. The Company may also make discretionary contributions to be allocated among all participants in proportion to their relative total compensation. In order to share in the allocation of matching contributions and discretionary contributions, a participant must be employed on the last day of the calendar year (and, for discretionary contributions, complete at least 1,000 hours of service), unless such employee terminated employment during the year as a result of such employee's retirement, death or 49 disability. In any year, combined Company and employee contributions (when aggregated with contributions to the ESOP and the Stock Growth Plan) allocated to a participant are not permitted to exceed the lesser of $30,000 or 25% of a participant's total taxable compensation for the year. The portion of a participant's account balance attributable to pre-tax contributions is at all times 100% vested and non-forfeitable, while the portion attributable to contributions made by the Company vests in 20% increments on the completion of each year of service with the Company. Participants direct the investment of their accounts. The 401(k) Plan currently offers participants the choice of four mutual funds provided through Fidelity Investments. A 401(k) participant's account will be distributed to such participant following separation from service, attainment of retirement age, death or disability. In addition, upon attaining age 59 1/2, a participant may elect to withdraw the balance in such participant's account. Prior to the occurrence of any of the foregoing events, a participant may apply for a hardship withdrawal of his or her pre-tax contributions in certain circumstances. Subject to certain dollar limitations imposed by the 401(k) Plan and federal law, a participant is also permitted to borrow from the 401(k) Plan. EMPLOYMENT CONTRACTS Ralph Guild is employed as Chairman of the Board and Chief Executive Officer of the Company under an employment agreement with the Company entered in 1995. The term of this agreement runs through May 31, 2001 and is automatically extended for an additional year each June 1 unless either the Company or Mr. Guild notifies the other on or before May 1 of the same year of its or his election not to extend the agreement. Under the agreement, Mr. Guild receives a base salary of not less than $925,000 per year, plus any bonuses, incentive or other types of additional compensation which the Board of Directors determines to pay. Further, Mr. Guild is entitled, annually, to receive incentive compensation based on increases in the Company's EBITDA. If EBITDA for the year in question is greater than the EBITDA for the previous year, Mr. Guild will be entitled to a bonus equal to a percentage of his base salary equal to two times the percentage increase of EBITDA for such year over the higher of EBITDA for the prior year and the highest EBITDA for any prior year back to 1994. If the Company elects not to extend the term of the agreement, the Company will retain Mr. Guild as a consultant for two years after the end of the term of the agreement at a fee equal to his base salary in effect at such time. The agreement provides for continued payment of Mr. Guild's base salary through the balance of its term, plus two years, if (i) Mr. Guild terminates his employment with the Company by reason of the Company's material breach of the agreement, (ii) Mr. Guild is not re-appointed as Chairman of the Board and Chief Executive Officer of the Company or ceases to be elected as a director of the Company, other than by his own choice or for reasons justifying his termination of employment by the Company for cause, or (iii) there is a change in control of the Board of Directors of the Company. Mr. Guild may not compete with the Company during the term of the employment agreement and for any period during which he is receiving compensation thereunder. The employment agreement also provides (i) in the case of Mr. Guild's permanent disability, for payments to Mr. Guild equal to 75% of his then current salary, less any income disability benefits to which Mr. Guild may be entitled, for the balance of his employment term and (ii) in the case of Mr. Guild's death, for a death benefit equal, on the request of Mr. Guild's estate or his designated beneficiary, to either the present value at the time of his death of the entire amount of the salary that would have been payable to him for the balance of his employment term or the payment of his then current salary over the balance of his employment term. Mr. Guild also has a supplemental income agreement pursuant to which the Company pays him $104,583 per year, payable in monthly installments, through 2008. The Company maintains a whole life insurance policy on Mr. Guild for the purpose of funding the supplemental income agreement. Marc Guild is employed as President, Marketing Division of the Company under an employment agreement entered in 1991. The term of this agreement runs through January 1, 2001 and is automatically extended for an additional year each January 1 unless either the Company or Mr. Guild notifies the other on or before December 1 of the preceding year of its or his election not to extend the agreement. Under the agreement, Mr. Guild receives a base annual salary of $320,000 and an incentive amount of $80,000 per year, which is payable 50 by the Company only if it achieves certain financial or other goals set by the Company and Mr. Guild at the beginning of each year. The agreement provides for continued payments of base salary through the balance of its term if (i) there is a change in control of the Company, (ii) Mr. Guild is not re- appointed to his office with the Company or ceases to be a director of the Company, other than by reason of his own choice or the termination of his employment for cause by the Company or (iii) Mr. Guild's termination of his employment by reason of a material breach by the Company of the agreement. The agreement also provides (i) in the case of Mr. Guild's permanent disability, for payments to him equal to 75% of his then current salary, less any income disability benefits that he may receive or to which he may be entitled, for the duration of the term of the agreement and (ii) in the case of Mr. Guild's death, for a death benefit equal to the present value at the time of death of the entire amount of the salary that would have been payable to Mr. Guild for the balance of his employment term or the payment of his then current salary over the balance of his employment term. INDEMNIFICATION AGREEMENTS The Company is a party to an indemnity agreement with each of its directors and certain of its executive officers which provides that the indemnitee will be entitled to receive indemnification, which may include advancement of expenses, to the full extent permitted by law for all expenses, judgments, fines, penalties and settlement payments incurred by the indemnitee in actions brought against him or her in connection with any act taken in the indemnitee's capacity as a director or executive officer of the Company. Under these agreements, an indemnitee's entitlement to indemnification in a particular case will be made by a majority of the disinterested members of the Board of Directors, if such members constitute a quorum of the full Board and, if they do not, by independent legal counsel selected by the Board. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION For the fiscal year ended December 31, 1997, the entire Board of Directors determined executive officer compensation. Two members of the Board of Directors, Ralph Guild and Marc Guild, are officers of the Company, and have participated in certain transactions with the Company during fiscal 1997. 51 PRINCIPAL SHAREHOLDERS The following table sets forth, as of July 31, 1998, as adjusted to give effect to the Financing Transactions (see "Certain Transactions and Relationships"), information concerning the beneficial ownership of the Common Stock by (i) each person known to the Company to own beneficially more than 5% of the Common Stock, (ii) each director of the Company, (iii) each of the Executive Officers and (iv) all directors and Executive Officers of the Company as a group. As of July 31, 1998, as so adjusted, there were 285,421 shares of Common Stock outstanding and 106,245 shares held in treasury.
NUMBER OF SHARES NAME BENEFICIALLY OWNED(1) PERCENT - ---- --------------------- ------- ESOP(1)......................................... 199,018 69.7% Stock Growth Plan(1)............................ 55,654 19.5 Ralph C. Guild(2),(3), (5)...................... 73,680 25.8 Marc G. Guild(2), (4), (5)...................... 14,042 4.9 William J. McEntee, Jr.(5)...................... 46 * Stewart Yaguda.................................. 848 * Charles Parra................................... 226 * Leslie D. Goldberg.............................. -- -- Jerome S. Traum................................. -- -- All Directors and Executive Officers as a Group (8 Persons).................................... 88,842 31.1
- -------- * Less than 1% (1) The shares shown in this table as being owned beneficially by Messrs. Ralph Guild, Marc Guild, McEntee, Yaguda and Parra and by all directors and executive officers as a group include shares owned by the ESOP and the Stock Growth Plan and allocated to plan accounts maintained for such persons. At May 31, 1998, the combined number of shares allocated by such plans to such persons and all directors and executive officers as a group was as follows: Ralph Guild, 35,525 shares, Marc Guild, 6,012 shares, William J. McEntee, Jr., 46 shares, Stewart Yaguda, 848 shares, Charles Parra, 226 shares, and all directors and executive officers as a group, 42,657 shares. ESOP and Stock Growth Plan participants have the right to direct the votes of the shares allocated to them with respect to certain significant matters submitted to a vote of the Company's shareholders, although the trustees of the ESOP and Stock Growth Plan have the authority to vote all shares held by such plans in their discretion with regard to all other matters, including the election of directors. Messrs. Ralph Guild, Goldberg and Marc Guild are the sole trustees of the ESOP and the Stock Growth Plan. See "Management--Executive Compensation." (2) Ralph Guild and Marc Guild are father and son and each disclaims beneficial ownership of the other's holdings. (3) Includes options granted to Ralph Guild in 1988 to purchase up to 10,000 shares of the Common Stock at an option price of $32.62 per share, in 1991 to purchase 10,000 shares at an option price of $57.91, and in 1995 to purchase 10,000 shares at an option price of $81.63, such prices in each case being the value per share on the date of grant as established by an independent appraiser. All of these options expire on December 29, 2005 and are currently fully exercisable. (4) Includes options to purchase 5,000 shares of Common Stock at the appraisal-based option price of $57.91 per share, all of which are fully exercisable. These options expire on December 31, 2005. (5) Does not include options to purchase 30,000, 5,000 and 5,000 shares of Common Stock granted in June 1998 to Ralph Guild, Marc Guild and Mr. McEntee, respectively, which options will not be exercisable until December 1998 and which will expire in June 2008. The exercise price per share of such options will be equal to the value per share as of December 31, 1997, to be established by an independent appraiser. The address for the ESOP, the Stock Growth Plan and Messrs. Marc Guild, Yaguda and Parra is Interep National Radio Sales, Inc., 100 Park Avenue, New York, New York 10017. Ralph Guild's address is 10 South 52 Lake Trail, Palm Beach, Florida 33480. Mr. Goldberg's address is 200 Keller Lane, North Salem, New York 10560. Mr. McEntee's address is 2090 Palm Beach Lakes Boulevard, West Palm Beach, Florida 33409, Mr. Salem's address is 901 Fleet Center, 50 Kennedy Plaza, Providence, Rhode Island 02903, and Mr. Traum's address is Moses & Singer, 1301 Avenue of the Americas, New York, New York 10019. CERTAIN TRANSACTIONS AND RELATIONSHIPS In November 1993, Providence purchased 5,000 shares of the Series A Preferred Stock and 57,117 shares of the Common Stock for an aggregate purchase price of $5.0 million. In connection with this transaction, the Company and Providence entered into a Securities Purchase Agreement and Providence, the Company, and the Company's principal shareholders entered into a Shareholders' Agreement. The Securities Purchase Agreement contained, among other things, a number of restrictions on the Company's ability to pay dividends, make distributions or redemptions or engage in significant mergers, acquisitions, asset dispositions or similar transactions. Under the Shareholders' Agreement, Providence had certain preemptive rights and "tag-along" rights entitling Providence to participate on a proportional basis in any sales of Common Stock by other principal shareholders, the right to designate one member of the Company's Board of Directors and the right to require the Company to repurchase from Providence the Series A Preferred Stock (at face value) and all shares of Common Stock (at fair market value) held by Providence in May 1999 or earlier in the case of certain events. As the Company applied a portion of the net proceeds of the Offering to the redemption of all of the shares of the Series A Preferred Stock and the Common Stock held by Providence on consummation of the Offering, these restrictions and rights ceased to be effective on the closing of the Offering. On consummation of the Offering, the Company redeemed all of the shares of the Series A Preferred Stock owned by Providence (including the 5,000 shares issued to Providence in 1993 and 2,813 shares issued or issuable to Providence as stock dividends from time to time thereafter through the date of redemption in lieu of cash dividends) at their face value of $7.8 million, and all of the 57,117 shares of the Common Stock and options to acquire an additional 3,183 shares of Common Stock owned by Providence for an additional $6.3 million, for a total redemption price of $14.1 million. On consummation of the Offering, the Company also redeemed all of the 1,389 shares of the Series B Preferred Stock and the 11,150 shares of the Common Stock held by the Compensation Deferral Plan for an aggregate redemption price of $2.6 million, of which $1.4 million was attributable to the face value of the shares of the Series B Preferred Stock and the balance was attributable to such shares of the Common Stock. Following such redemption, the Compensation Deferral Plan was terminated and cash distributions were made to its 15 participants out of the proceeds of the redemption, including $1.1 million to Ralph Guild, $0.1 million to Marc Guild and $0.1 million to Mr. Yaguda. Paul J. Salem, who served as Providence's designee to the Board of Directors since late 1993, resigned his position effective upon the consummation of the Financing Transactions. Pursuant to a Services Agreement (the "Services Agreement") between the Company and Media Financial Services, Inc. ("Media"), the Company retained Media, for a five-year term commencing June 1, 1997, to provide certain financial and accounting services for the Company and its subsidiaries, including the preparation of monthly, quarterly and annual financial statements, the preparation and filing of all required federal, state and local tax returns and all billing, accounts receivable, accounts payable and collections functions. Media currently employs 36 full-time employees. Under the Services Agreement, Mr. McEntee, who is the President of Media, is in charge of all services rendered by Media to the Company and, pursuant to the Services Agreement, serves as Vice President and Chief Financial Officer of the Company for an annual salary of $120,000. For its services, Media will be paid an annual fee of $2.5 million in years one and two, $2.6 million in year three, $2.7 million in year four and $2.9 million in year five of the Services Agreement. 53 Since December 1979, the Company has leased from a trust, of which Ralph Guild is the income beneficiary and Marc Guild is the trustee, a building which is used from time to time by the Company for training sessions and management meetings. The current lease expires on December 31, 2004 and provides for a base annual rental which is adjusted each year to reflect inflation and actual usage. In each of 1995, 1996 and 1997 total lease expense was $74,000. The Company believes that this rental is substantially below the current fair market rental value of this property. The Company believes the terms of the building lease arrangement are at least comparable to, if not more favorable to the Company than, the terms which would have been obtained in transactions with unrelated parties. The Company intends to continue these or other arrangements in the future as long as it believes each transaction is more beneficial to the Company than using an unrelated provider. Mr. Guild is indebted to the Company in the amount of $170,000 pursuant to a promissory note in the original principal amount of $389,000. The note bears interest at a variable rate equal to the lowest rate permitted for federal income tax purposes and is payable in annual installments of principal and interest through December 31, 1999. In June 1997, Mr. Guild loaned the Company $2.0 million, which was repaid in full, together with interest, in December 1997. In December 1995, Leslie D. Goldberg resigned his positions as President and Chief Operating Officer of the Company. Pursuant to an agreement entered by the Company and Mr. Goldberg at such time, Mr. Goldberg received severance payments in 1997 of $565,700 and in January and February 1998 totalling $94,283 in consideration in part of consulting services rendered by Mr. Goldberg and his non-competition covenant in favor of the Company. The Company's obligation to make severance payments to Mr. Goldberg expired after February 1998. In June 1998, the Company, at the suggestion of the Initial Purchasers, disposed of its non-radio rep firm subsidiary, Corporate Family Network, Inc. ("CFN"). The results of operations of CFN had resulted in immaterial losses since its inception. The Company sold CFN to Ralph C. Guild for a purchase price of $200,000, which was the Company's estimate of the net fair market value of CFN, payable $50,000 in cash and $150,000 by execution and delivery by Mr. Guild of his promissory note payable to the Company in three annual installments of $50,000 each and bearing interest at a fluctuating rate equal to the prime rate of BancBoston, N.A., plus one percent. DESCRIPTION OF NEW CREDIT FACILITY As part of the Financing Transactions, on July 2, 1998, the Company and the Guarantors entered into the New Credit Facility with BankBoston and Summit, pursuant to which BankBoston and Summit have agreed to provide the Company and the Guarantors with a $10.0 million revolving credit facility. The term of the New Credit Facility is six years. The lenders under the New Credit Facility are BankBoston, Summit and any other lenders reasonably acceptable to the Company, with BankBoston acting as administrative agent. Interest is payable on borrowings under the New Credit Facility at rates based on either a "Base Rate" or "LIBOR," as selected by the Company plus a margin ranging from 5/8% to 2 7/8%, depending on (i) whether the selected rate is "Base Rate" or "LIBOR," and (ii) the Company's ratio of total debt to EBITDA on a trailing four quarter basis. The Company and the Guarantors pay a commitment fee under the New Credit Facility calculated at a rate ranging from 3/8% to 1/2% per annum (depending on the Company's ratio of total debt to EBITDA) on the daily average unused commitment under the New Credit Facility. Such fee will be payable quarterly in arrears and upon termination of the New Credit Facility (whether at stated maturity or otherwise). 54 The Company's and the Guarantors' obligations under the New Credit Facility are secured by a first priority perfected lien on all property and assets, tangible and intangible, of the Company and the Guarantors, including a pledge by the Company of all capital stock and membership interests held by it in the Guarantors. The New Credit Facility contains customary covenants and restrictions on the Company's and the Guarantors' ability to engage in certain activities, including, but not limited to (i) limitations on the incurrence of liens, indebtedness and guarantees, (ii) restrictions on investments, acquisitions, dividends, capital expenditures, transactions with affiliates and the Company's or the Guarantors' engaging in lines of business other than the radio representation business and (iii) certain financial covenants including, but not limited to, those governing maximum permitted leverage, minimum interest coverage and minimum fixed charge coverage. DESCRIPTION OF EXCHANGE NOTES GENERAL The Exchange Notes will be issued pursuant to an Indenture (the "Indenture") among the Company, the Guarantors and Summit Bank, as trustee (the "Trustee"). The terms of the Exchange Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Exchange Notes are subject to all such terms, and Holders of Exchange Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of the material provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. Copies of the Indenture are available as set forth below under "--Additional Information." The definitions of certain terms used in the following summary are set forth below under "-- Certain Definitions." For purposes of this summary, the term "Company" refers only to Interep National Radio Sales, Inc. and not to any of its Subsidiaries. The Exchange Notes will be general unsecured obligations of the Company and will be subordinated in right of payment to all current and future Senior Indebtedness of the Company, including all Senior Indebtedness under the New Credit Facility, and will rank pari passu or senior in right of payment with all existing and future subordinated indebtedness of the Company. As of March 31, 1998, on a pro forma basis after giving effect to the Financing Transactions, the aggregate principal amount of Senior Indebtedness (excluding trade payables) of the Company would have been approximately $0.4 million. The Indenture will permit additional borrowings, including borrowings under the New Credit Facility, in the future. See "Risk Factors--Subordination." As of the date of this Prospectus, all of the Company's Subsidiaries will be Restricted Subsidiaries. However, under certain circumstances, the Company will be able to designate current of future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the Indenture. PRINCIPAL, MATURITY AND INTEREST The Exchange Notes will be limited in aggregate principal amount to $100.0 million and will mature on July 1, 2008. Interest on the Exchange Notes will accrue at the rate of 10% per annum and will be payable semi-annually in arrears on January 1 and July 1, commencing on January 1, 1999, to Holders of record on the immediately preceding December 15 and June 15. Additional Exchange Notes may be issued from time to time after the Offering, subject to the provisions of the Indenture described below under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." Interest on the Exchange Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium, if any, and interest and Liquidated Damages on the Exchange Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the 55 Holders of the Exchange Notes at their respective addresses set forth in the register of Holders of Exchange Notes; provided that all payments of principal, premium, interest and Liquidated Damages with respect to Exchange Notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. The Exchange Notes will be issued in denominations of $1,000 and integral multiples thereof. SUBORDINATION The payment of principal of, premium, if any, Liquidated Damages, if any, and interest on the Exchange Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full of all Senior Indebtedness, whether outstanding on the date of the Indenture or thereafter incurred. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshaling of the Company's assets and liabilities, the holders of Senior Indebtedness will be entitled to receive payment in full of all Obligations due in respect of such Senior Indebtedness (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Indebtedness) before the Holders of Exchange Notes will be entitled to receive any payment with respect to the Exchange Notes, and until all Obligations with respect to Senior Indebtedness are paid in full, any distribution to which the Holders of Exchange Notes would be entitled shall be made to the holders of Senior Indebtedness (except that Holders of Exchange Notes may receive and retain Permitted Junior Securities and payments made from the trust described under "--Legal Defeasance and Covenant Defeasance"). The Company also may not make any payment upon or in respect of the Exchange Notes (except in Permitted Junior Securities or from the trust described under "--Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of the principal of, premium, if any, or interest on Designated Senior Indebtedness occurs and is continuing beyond any applicable period of grace or (ii) any other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the Company or the holders of any Designated Senior Indebtedness. Payments on the Exchange Notes may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived and (b) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced unless and until (i) 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest on the Exchange Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. The Indenture further requires that the Company promptly notify holders of Senior Indebtedness if payment of the Exchange Notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a liquidation or insolvency, Holders of Exchange Notes may recover less ratably than creditors of the Company who are holders of Senior Indebtedness. On a pro forma basis, after giving effect to the Financing Transactions, the principal amount of Senior Indebtedness outstanding at March 31, 1998 would have been approximately $0.4 million. The Indenture will limit, subject to certain financial tests, the amount of additional Indebtedness, including Senior Indebtedness, that the Company and its subsidiaries can incur. See "-- Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." 56 SUBSIDIARY GUARANTEES The Company's payment obligations under the Exchange Notes will be fully and unconditionally, jointly and severally guaranteed (the "Subsidiary Guarantees") by the Guarantors. The Subsidiary Guarantees will be subordinated in right of payment to all existing and future Senior Indebtedness of the Guarantors, including all of the obligations of the Guarantors under the New Credit Facility, and will rank pari passu or senior in right or payment with any subordinated Indebtedness of the Guarantors. The obligations of each Guarantor under its Subsidiary Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. See, however, "Risk Factors--Fraudulent Conveyance Considerations." The Indenture provides that no Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Guarantor unless (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Exchange Notes, the Indenture and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. The Indenture provides that in the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture. See "--Repurchase at Option of Holders--Asset Sales." OPTIONAL REDEMPTION The Exchange Notes will not be redeemable at the Company's option prior to July 1, 2003. Thereafter, the Exchange Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on July 1 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2003............................................................ 105.000% 2004............................................................ 103.333% 2005............................................................ 101.667% 2006 and thereafter............................................. 100.000%
Notwithstanding the foregoing, during the first 36 months after the date of this Prospectus, the Company may on any one or more occasions redeem up to 30% of the aggregate principal amount of Exchange Notes originally issued under the Indenture at a redemption price of 110.000% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of an offering of common stock of the Company; provided that at least 70% of the aggregate principal amount of Notes originally issued under the Indenture remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 45 days of the date of the closing of such offering. 57 SELECTION AND NOTICE If less than all of the Exchange Notes are to be redeemed at any time, selection of Exchange Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Exchange Notes are listed, or, if the Exchange Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Exchange Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Exchange Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Exchange Note is to be redeemed in part only, the notice of redemption that relates to such Exchange Note shall state the portion of the principal amount thereof to be redeemed. A new Exchange Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Exchange Note. Exchange Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Exchange Notes or portions of them called for redemption. MANDATORY REDEMPTION The Company is not required to make mandatory redemption or sinking fund payments with respect to the Exchange Notes. REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL Upon the occurrence of a Change of Control, each Holder of Exchange Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Exchange Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Exchange Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Exchange Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all Exchange Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Exchange Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Exchange Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Exchange Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Exchange Notes so tendered the Change of Control Payment for such Exchange Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Exchange Note equal in principal amount to any unpurchased portion of the Exchange Notes surrendered, if any; provided that each such new Exchange Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Exchange Notes to require that the Company repurchase or redeem the Exchange Notes in the event of a takeover, recapitalization or similar transaction. 58 The New Credit Facility, contains prohibitions of certain events that would constitute a Change of Control. In addition, the exercise by the Holders of Exchange Notes of their right to require the Company to repurchase the Exchange Notes could cause a default under the New Credit Facility, even if the Change of Control itself does not, due to the financial effect of such repurchases on the Company. Finally, the Company's ability to pay cash to the Holders of Exchange Notes upon a repurchase may be limited by the Company's then existing financial resources. See "Risk Factors--Change of Control." The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Exchange Notes validly tendered and not withdrawn under such Change of Control Offer. The definition of Change of Control includes a phrase relating to the sale, transfer, conveyance or other disposition of "all or substantially all" of the assets of the Company and its Restricted Subsidiaries taken as a whole. Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Exchange Notes to require the Company to repurchase such Exchange Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain. ASSET SALES The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee in the event of an Asset Sale (whether pursuant to a single transaction or a series of related transactions) that has fair market value or involves Net Proceeds in excess of $5.0 million) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 80% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash; provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Exchange Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (y) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are contemporaneously (subject to ordinary settlement periods) converted by the Company or such Subsidiary into cash (to the extent of the cash received), shall be deemed to be cash for purposes of this provision. Within 180 days after the receipt of any Net Proceeds from an Asset Sale (360 days in the case of Net Proceeds that are comprised solely of Buy Out Proceeds), the Company may apply such Net Proceeds (a) to repay Indebtedness under the New Credit Facility, (b) to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business, (c) to make capital expenditures, (d) to acquire other long-term assets that are used or useful in a Permitted Business, including Media Representation Contracts, or (e) to pay Buy Out Proceeds Amounts in connection with Contract Buy Outs. Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer to all Holders of Exchange Notes and all holders of other Indebtedness that is pari passu with the Exchange Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Exchange Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof 59 plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture and such other pari passu Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Exchange Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Exchange Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. CERTAIN COVENANTS RESTRICTED PAYMENTS The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company or other Affiliate of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary of the Company); (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Exchange Notes, except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock;" and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Indenture to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds received by the Company since the date of the Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that any Restricted Investment that was made after the date of the Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment. 60 The foregoing provisions will not prohibit (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (v) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by (A) any employee, director or consultant of the Company (or any of its Restricted Subsidiaries) pursuant to any employee, director or consultant equity subscription agreement or stock option agreement or (B) any Employee Stock Ownership Plan (or related trust) of the Company; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $750,000 in any twelve-month period and (vi) the repurchase, redemption or other acquisition or retirement for value of any Equity Interest of the Company or any Restricted Subsidiary of the Company held by any Employee Stock Ownership Plan (or related trust) of the Company necessary in order for any such Employee Stock Ownership Plan (or related trust) of the Company to constitute a qualified plan or trust under Sections 401(a) and 501(a), respectively of the Code; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests (excluding any Equity Interests repurchased, redeemed, acquired or retired pursuant to clause (v) hereof) since the date of the Indenture shall not exceed $2.5 million. See "Risk Factors--Repurchase Obligations Under Employee Benefit Plans" and "Management--Executive Compensation." The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. In the event of any such designation, all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant or Permitted Investments, as applicable. All such outstanding Investments will be deemed to constitute Restricted Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $5.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "Restricted Payments" were computed, together with a copy of any fairness opinion or appraisal required by the Indenture. Contributions by employees to the Stock Growth Plan, as in effect on the Issue Date, and, if such plan is not a Restricted Subsidiary, payments by such Plan to purchase Equity Interests of the Company, in each case, in the ordinary course of business on a basis consistent with past practices, shall not constitute "Restricted Payments." 61 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK The Indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and the Guarantors may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this covenant will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of Indebtedness under the New Credit Facility; provided that the aggregate principal amount of all Indebtedness outstanding under the New Credit Facility after giving effect to such incurrence does not exceed an amount equal to $10.0 million less the aggregate amount of all Net Proceeds of Asset Sales that have been applied since the date of the Indenture to repay Indebtedness pursuant to the covenant described above under the caption "--Repurchase at the Option of Holders--Asset Sales;" (ii) the incurrence by the Company of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company, in an aggregate principal amount not to exceed $2.5 million at any time outstanding; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company up to $100.0 million of Indebtedness represented by the Notes and the Exchange Notes; (v) the guarantee by the Company or any of the Guarantors of Indebtedness that was permitted to be incurred by another provision of this covenant; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Exchange Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vi); (vii) the incurrence by the Company of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding; provided, that the agreement, indenture or other documents governing such Indebtedness require such fixing or hedging of interest rate risk; (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph hereof or clauses (iii), (iv), (viii) and (x) of this paragraph; 62 (ix) the incurrence by the Company of Indebtedness with respect to performance, surety and appeal bonds in the ordinary course of business; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non- Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x); and (xi) the incurrence by the Company of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xi), not to exceed $5.0 million. The Indenture also provides that the Company will not incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the Exchange Notes on substantially identical terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured. For purposes of determining compliance with this covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xi) above as of the date of incurrence thereof, or is entitled to be incurred pursuant to the first paragraph of this covenant as of the date of incurrence thereof, the Company shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence in any manner that complies with this covenant. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. LIENS The Indenture provides that the Company will not and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Indenture and the Exchange Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the Indenture, (b) the New Credit Facility as in effect as of the date of the Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the New Credit Facility as in effect on the date of the Indenture, (c) the Indenture, the Exchange Notes and the Subsidiary Guarantees, 63 (d) applicable law, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred, (f) customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition, (i) Liens securing Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption "--Liens" that limit the right of the Company or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien, (j) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business and (k) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. MERGER, CONSOLIDATION, OR SALE OF ASSETS The Indenture provides that the Company may not, directly or indirectly, consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person unless (i) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Registration Rights Agreement, the Exchange Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, immediately after such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock." The Indenture also provides that the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. The provisions of this covenant is not be applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of the Guarantors. TRANSACTIONS WITH AFFILIATES The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee 64 (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $1.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not otherwise Affiliates of the Company, (iv) any sale or other issuance of Equity Interests (other than Disqualified Stock) of the Company, (v) Restricted Payments that are permitted by the provisions of the Indenture described above under the caption "--Restricted Payments," (vi) the application of the proceeds from the sale of the Notes as described in the final offering memorandum, dated June 29, 1998 pertaining thereto, (vii) the performance of the Services Agreement between the Company and Media Financial Services, Inc. as in effect on the date of the Indenture, (viii) the performance of the lease of the real property located in Tuxedo Park, New York, between the Company and The Tuxedo Park Executive Conference Center Proprietorship as in effect on the date of the Indenture and (ix) payments in respect of the promissory note from Mr. Ralph C. Guild payable to the Company in the original aggregate principal amount of $389,000 as in effect on the date of the Indenture. ADDITIONAL SUBSIDIARY GUARANTEES The Indenture provides that if the Company or any of its Restricted Subsidiaries shall acquire or create another Subsidiary after the date of the Indenture, then such newly acquired or created Subsidiary shall become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel, in accordance with the terms of the Indenture; provided, that all Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with the Indenture (i) shall not be subject to the requirements of this covenant and (ii) shall be released from Obligations under any Subsidiary Guarantee, in each case for so long as they continue to constitute Unrestricted Subsidiaries. BUSINESS ACTIVITIES The Company will not, and will not permit any Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Subsidiaries taken as a whole. PAYMENTS FOR CONSENT The Indenture provides that neither the Company nor any of its Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Exchange Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Exchange Notes unless such consideration is offered to be paid and is paid to all Holders of the Exchange Notes in connection with such consent, waiver or agreement. NO SENIOR SUBORDINATED DEBT The Indenture provides that (i) the Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness and senior in any respect in right of payment to the Exchange Notes, and (ii) no Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness of such Guarantor and senior in any respect in right of payment to the Subsidiary Guarantee of such Guarantor. 65 REPORTS The Indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any Exchange Notes are outstanding, the Company will furnish to the Holders of Exchange Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q (commencing with the fiscal quarter ending June 30, 1998) and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission's rules and regulations. In addition, following the consummation of the exchange offer contemplated by the Registration Rights Agreement, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company and the Subsidiary Guarantors have agreed that, for so long as any Exchange Notes remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. EVENTS OF DEFAULT AND REMEDIES The Indenture provides that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Exchange Notes; (ii) default in payment when due of the principal of or premium, if any, on the Exchange Notes; (iii) failure by the Company or any of its Subsidiaries to comply with the provisions described under the captions "--Repurchase at the Option of Holders--Change of Control," "--Repurchase at the Option of Holders--Asset Sales," "--Certain Covenants--Restricted Payments" or "--Certain Covenants-- Incurrence of Indebtedness and Issuance of Preferred Stock;" (iv) failure by the Company or any of its Subsidiaries for 60 days after notice to comply with any of its other agreements in the Indenture or the Exchange Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries (or the payment of which is guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (vi) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee and (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Exchange Notes may declare all the Exchange Notes to be due and payable 66 immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Exchange Notes will become due and payable without further action or notice. Holders of the Exchange Notes may not enforce the Indenture or the Exchange Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Exchange Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Exchange Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Exchange Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Exchange Notes. If an Event of Default occurs prior to July 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Exchange Notes prior to July 1, 2003, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Exchange Notes. The Holders of a majority in aggregate principal amount of the Exchange Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Exchange Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Exchange Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or such Guarantor under the Exchange Notes, any Guarantee thereof, the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Exchange Notes by accepting an Exchange Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Exchange Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Exchange Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding Exchange Notes to receive payments in respect of the principal of, premium, if any, and interest and Liquidated Damages on such Exchange Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the Exchange Notes concerning issuing temporary Exchange Notes, registration of Exchange Notes, mutilated, destroyed, lost or stolen Exchange Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Exchange Notes. In the event Covenant Defeasance occurs, 67 certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Exchange Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Exchange Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest and Liquidated Damages on the outstanding Exchange Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Exchange Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Exchange Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Exchange Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company must deliver to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A Holder may transfer or exchange the Exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Exchange Note selected for redemption. Also, the Company is not required to transfer or exchange any Exchange Note for a period of 15 days before a selection of Exchange Notes to be redeemed. The registered Holder of an Exchange Note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture, the Exchange Notes and the Subsidiary Guarantees may be amended or supplemented with the consent of the Holders of at least a majority 68 in principal amount of the Exchange Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Exchange Notes), and any existing default or compliance with any provision of the Indenture or the Exchange Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Exchange Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Exchange Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Exchange Notes held by a non-consenting Holder): (i) reduce the principal amount of Exchange Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any Exchange Note or alter the provisions with respect to the redemption of the Exchange Notes (other than provisions relating to the covenants described above under the caption "--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Exchange Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Exchange Notes (except a rescission of acceleration of the Exchange Notes by the Holders of at least a majority in aggregate principal amount of the Exchange Notes and a waiver of the payment default that resulted from such acceleration), (v) make any Exchange Note payable in money other than that stated in the Exchange Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Exchange Notes to receive payments of principal of or premium, if any, or interest on the Exchange Notes, (vii) waive a redemption payment with respect to any Exchange Note (other than a payment required by one of the covenants described above under the caption "-- Repurchase at the Option of Holders"), (viii) release any Guarantor from its Obligations under its Subsidiary Guarantee or the Indenture, except in accordance with the terms of the Indenture or (ix) make any change in the foregoing amendment and waiver provisions. In addition, any amendment to the provisions of Article 10 of the Indenture (which relate to subordination) will require the consent of the Holders of at least 75% in aggregate principal amount of the Exchange Notes then outstanding if such amendment would adversely affect the rights of Holders of Exchange Notes. Notwithstanding the foregoing, without the consent of any Holder of Exchange Notes, the Company and the Trustee may amend or supplement the Indenture or the Exchange Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Exchange Notes in addition to or in place of certificated Exchange Notes, to provide for the assumption of the Company's obligations to Holders of Exchange Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's assets, to make any change that would provide any additional rights or benefits to the Holders of Exchange Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Holders of a majority in principal amount of the then outstanding Exchange Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Exchange Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. 69 ADDITIONAL INFORMATION Anyone who receives this Prospectus may obtain a copy of the Indenture and Registration Rights Agreement without charge by writing to Interep National Radio Sales, Inc., 100 Park Avenue, New York, New York 10017, Attention: Chief Financial Officer. BOOK-ENTRY, DELIVERY AND FORM The certificates representing the Exchange Notes will be issued in fully registered global form in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. Except as described in the next paragraph, the Exchange Notes initially will be represented by a single, permanent global Exchange Note, in definitive, fully registered form without interest coupons (the "Global Exchange Note") and will be deposited with the Trustee as custodian for DTC and registered in the name of Cede & Co. or such other nominee as DTC may designate. The Global Exchange Note (and any Exchange Notes issued in exchange therefor) will be subject to certain restrictions on transfer set forth therein and in the Indenture and will bear the respective legends regarding such restrictions. Holders of Exchange Notes who elect to take physical delivery of their certificates instead of holding their interest through the Global Exchange Note (collectively referred to herein as the "Non-Global Holders") will be issued in registered form a certificated Exchange Note ("Certificated Exchange Note"). Upon the transfer of any Certificated Exchange Note initially issued to a Non-Global Holder, such Certificated Exchange Note will, unless the transferee requests otherwise or the Global Exchange Note has previously been exchanged in whole for Certificated Exchange Notes, be exchanged for an interest in the Global Exchange Note. The following description of the operations and procedures of DTC, Euroclear and Cedel are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them from time to time. The Company takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters. The Depositary is a limited-purpose trust company that was created to hold securities for its participating organizations (collectively, the "Participants" or the "Depositary's Participants") and to facilitate the clearance and settlement of transactions in such securities between Participants through electronic book-entry changes in accounts of its Participants. The Depositary's Participants include securities brokers and dealers (including the Initial Purchasers), banks and trust companies, clearing corporations and certain other organizations. Access to the Depositary's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants" or the "Depositary's Indirect Participants") that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalf of the Depositary only thorough the Depositary's Participants or the Depositary's Indirect Participants. The Company expects that, pursuant to procedures established by the Depositary, (i) upon deposit of the Global Exchange Notes, the Depositary will credit the accounts of Participants designated by the Initial Purchasers with portions of the principal amount of the Global Exchange Notes and (ii) ownership of the Exchange Notes evidenced by the Global Exchange Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by the Depositary (with respect to the interests of the Depositary's Participants), the Depositary's Participants and the Depositary's Indirect Participants. Prospective purchasers are advised that the laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer Exchange Notes evidenced by the Global Exchange Notes will be limited to such extent. So long as the Global Exchange Note Holder is the registered owner of any Exchange Notes, the Global Exchange Note Holder will be considered the sole Holder under the Indenture of any Exchange Notes evidenced 70 by the Global Exchange Notes. Beneficial owners of Exchange Notes evidenced by the Global Exchange Notes will not be considered the owners or Holders thereof under the Indenture for any purpose, including with respect to the giving of any directions, instructions or approvals to the Trustee thereunder. Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records of the Depositary or for maintaining, supervising or reviewing any records of the Depositary relating to the Exchange Notes. Payments in respect of the principal of and premium, interest and Liquidated Damages, if any, on any Exchange Notes registered in the name of the Global Exchange Note Holder on the applicable record date will be payable by the Trustee to or at the direction of the Global Exchange Note Holder in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee may treat the persons in whose names Exchange Notes, including the Global Exchange Notes, are registered as the owners thereof for the purpose of receiving such payments. Consequently, neither the Company nor the Trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of Exchange Notes. The Company believes, however, that it is currently the policy of the Depositary to immediately credit the accounts of the relevant Participants with such payments, in amounts proportionate to their respective holdings of beneficial interests in the relevant security as shown on the records of the Depositary. Payments by the Depositary's Participants and the Depositary's Indirect Participants to the beneficial owners of Exchange Notes will be governed by standing instructions and customary practice and will be the responsibility of the Depositary's Participants or the Depositary's Indirect Participants. ADDITIONAL INFORMATION CONCERNING EUROCLEAR AND CEDEL BANK Euroclear and Cedel Bank hold securities for participating organizations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in accounts of such participants. Euroclear and Cedel Bank provide to their participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Cedel Bank interface with domestic securities markets. Euroclear and Cedel Bank participants are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect access to Euroclear and Cedel Bank is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodian relationship with a Euroclear or Cedel Bank participant, either directly or indirectly. The Company will have no direct control over the clearance and settlement of such transactions. When beneficial interests are to be transferred from the account of a Participant (other than Morgan Guaranty Trust Company of New York and Citibank, N.A., as depositaries for Euroclear and Cedel Bank, respectively) to the account of a Euroclear participant or a Cedel Bank participant, the purchaser must send instructions to Euroclear or Cedel Bank through a participant at least one business day prior to settlement. Euroclear or Cedel Bank, as the case may be, will instruct Morgan Guaranty Trust Company of New York or Citibank, N.A. to receive the beneficial interests against payment. Payment will include interest attributable to the beneficial interest from and including the last payment date to and excluding the settlement date, on the basis of a calendar year consisting of twelve 30-day calendar months. For transactions settling on the 31st day of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by Morgan Guaranty Trust Company of New York or Citibank, N.A., as the case may be, to the Participant's account against delivery of the beneficial interests. After settlement has been completed, the beneficial interests will be credited to the respective clearing systems and by the clearing system, in accordance with its usual procedures, to the Euroclear participants' or Cedel Bank participants' account. Credit for the beneficial interests will appear on the next business day (European time) and the cash debit will be back-valued to, and interest attributable to the beneficial interests will accrue from, the value date (which would be the preceding business day when settlement occurs in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Euroclear or Cedel Bank cash debit will instead be valued as of the actual settlement date. 71 Euroclear participants and Cedel Bank participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Euroclear or Cedel Bank. Under this approach, they may take on credit exposure to Euroclear or Cedel Bank until the beneficial interests are credited to their accounts one day later. Finally, day traders that use Euroclear or Cedel Bank and that purchase beneficial interests from Participants for credit to Euroclear participants or Cedel Bank participants should note that these trades would automatically fall on the sale side unless affirmative action were taken to avoid these potential problems. Due to time zone differences in their favor, Euroclear participants and Cedel Bank participants may employ their customary procedures for transactions in which beneficial interests are to be transferred by the respective clearing system, through Morgan Guaranty Trust Company of New York or Citibank, N.A., to another Participant. The seller must send instructions to Euroclear or Cedel Bank through a participant at least one business day prior to settlement. In these cases, Euroclear or Cedel Bank will instruct Morgan Guaranty Trust Company of New York or Citibank, N.A., as the case may be, to credit the beneficial interests to the Participant's account against payment. Payment will include interest attributable to the beneficial interest from and including the last payment date to and excluding the settlement date on the basis of a calendar year consisting of twelve 30-day calendar months. For transactions settling on the 31st day of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the Euroclear participant or Cedel Bank participant the following business day, and receipt of the cash proceeds in the Euroclear or Cedel Bank participant's account will be back- valued to the value date (which would be the preceding business day, when settlement occurs in New York). If the Euroclear participant or Cedel Bank participant has a line of credit with its representative clearing system and elects to draw on such line of credit in anticipation of receipt of the sale proceeds in its account, the back-valuation may substantially reduce or offset any overdraft charges incurred over that one-day period. If settlement is not completed on the intended value date (i.e., if trade fails), receipt of the cash proceeds in the Euroclear or Cedel Bank participant's account would instead be valued as of the actual settlement date. CERTIFICATED SECURITIES Subject to certain conditions, any person having a beneficial interest in a Global Exchange Note may, upon request, exchange such beneficial interest for Exchange Notes in the form of Certificated Securities. Upon any such issuance, the Trustee is required to register such Certificated Securities in the name of, and cause the same to be delivered to, such person or persons (or the nominee of any thereof). In addition, if (i) the Company notifies the Trustee in writing that the Depositary is no longer willing or able to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Exchange Notes in the form of Certificated Securities under the Indenture, then, upon surrender by the Global Exchange Note Holder of the Global Exchange Notes, Exchange Notes in such form will be issued to each person that the Global Exchange Note Holder and the Depositary identify as being the beneficial owner of the related Exchange Notes. Neither the Company nor the Trustee will be liable for any delay by the Global Exchange Note Holder or the Depositary in identifying the beneficial owners of Exchange Notes and the Company and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the Global Exchange Note Holder or the Depositary for all purposes. SAME-DAY SETTLEMENT AND PAYMENT The Indenture requires that payments in respect of the Exchange Notes represented by the Global Exchange Notes (including principal, premium interest and Liquidated Damages, if any) be made by wire transfer of immediately available funds to the accounts specified by the Global Exchange Note Holder. With respect to Certificated Securities, the Company will make all payments of principal, premium, interest and Liquidated 72 Damages, if any, by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. The Exchange Notes represented by the Global Exchange Notes are expected to be eligible to trade in the PORTAL market and to trade in the Depositary's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Exchange Notes will, therefore, be required by the Depositary to be settled in immediately available funds. The Company expects that secondary trading in the Certificated Securities will also be settled in immediately available funds, although such settlement will not be within the Company's control. REGISTRATION RIGHTS; LIQUIDATED DAMAGES The Company and the Initial Purchasers entered into the Registration Rights Agreement dated as of July 2, 1998. Pursuant to the Registration Rights Agreement, the Company agreed to file with the Commission the Exchange Offer Registration Statement on the appropriate form under the Securities Act with respect to the Exchange Notes. Upon the effectiveness of the Exchange Offer Registration Statement, the Company will offer to the Holders of Transfer Restricted Securities pursuant to the Exchange Offer who are able to make certain representations the opportunity to exchange their Transfer Restricted Securities for Exchange Notes. If (i) the Company is not required to file the Exchange Offer Registration Statement or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (ii) any Holder of Transfer Restricted Securities notifies the Company prior to the 20th day following consummation of the Exchange Offer that (A) it is prohibited by law or Commission policy from participating in the Exchange Offer or (B) that it may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales or (C) that it is a broker-dealer and owns Notes acquired directly from the Company or an affiliate of the Company, the Company will file with the Commission a Shelf Registration Statement to cover resales of the Series A Notes by the Holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. The Company will use its best efforts to cause the applicable registration statement to be declared effective as promptly as possible by the Commission. For purposes of the foregoing, "Transfer Restricted Securities" means each Series A Note until (i) the date on which such Series A Note has been exchanged by a person other than a broker-dealer for an Exchange Note in the Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of a Series A Note for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Series A Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Series A Note is distributed to the public pursuant to Rule 144 under the Act. The Registration Rights Agreement provides that (i) the Company will file an Exchange Offer Registration Statement with the Commission on or prior to 60 days after the Closing Date, (ii) the Company will use its best efforts to have the Exchange Offer Registration Statement declared effective by the Commission on or prior to 120 days after the Closing Date, (iii) unless the Exchange Offer would not be permitted by applicable law or Commission policy, the Company will commence the Exchange Offer and use its best efforts to issue on or prior to 30 business days after the date on which the Exchange Offer Registration Statement was declared effective by the Commission, Exchange Notes in exchange for all Series A Notes tendered prior thereto in the Exchange Offer and (iv) if obligated to file the Shelf Registration Statement, the Company will use its best efforts to file the Shelf Registration Statement with the Commission on or prior to 60 days after such filing obligation arises and to cause the Shelf Registration to be declared effective by the Commission on or prior to 120 days after such obligation arises. If (a) the Company fails to file any of the Registration Statements required by the Registration Rights Agreement on or before the date specified for such filing, (b) any of such Registration Statements is not declared effective by the Commission on or prior to the date specified for such effectiveness (the "Effectiveness Target Date"), or (c) the Company fails to consummate the Exchange Offer within 30 business days of the 73 Effectiveness Target Date with respect to the Exchange Offer Registration Statement, or (d) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above a "Registration Default"), then the Company will pay Liquidated Damages to each Holder of Series A Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to $0.05 per week per $1,000 principal amount of Series A Notes held by such Holder. The amount of the Liquidated Damages will increase by an additional $0.05 per week per $1,000 principal amount of Series A Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages for all Registration Defaults of $0.50 per week per $1,000 principal amount of Series A Notes. All accrued Liquidated Damages will be paid by the Company on each Damages Payment Date to the Global Note Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Securities by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults, the accrual of Liquidated Damages will cease. Holders of Series A Notes will be required to make certain representations to the Company (as described in the Registration Rights Agreement) in order to participate in the Exchange Offer and will be required to deliver certain information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have their Notes included in the Shelf Registration Statement and benefit from the provisions regarding Liquidated Damages set forth above. Holders of Notes will also be required to suspend their use of the prospectus included in the Shelf Registration Statement under certain circumstances upon receipt of written notice to that effect from the Company. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices and other than any Contract Buy Out (provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption "--Repurchase at the Option of Holder--Change of Control" and/or the provisions described above under the caption "--Certain Covenants--Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the issue by any Restricted Subsidiary of the Company of any Equity Interests of such 74 Restricted Subsidiary and the sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $1.0 million or (b) for net proceeds in excess of $1.0 million; provided that with respect to Contract Buy Outs of Media Representation Contracts of the Company and its Restricted Subsidiaries, if, as of any Buy Out Determination Date after the Date of the Indenture, the Buy Out Proceeds Amount exceeds $6.0 million, the Buy Out Proceeds Amount will be deemed to be Net Proceeds with respect to an Asset Sale as of such Date and shall be applied in accordance with the second paragraph of the covenant entitled "Repurchase at the Option of Holders-Asset Sales." Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Subsidiary to the Company or to another Wholly Owned Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, and (iii) a Restricted Payment that is permitted by the covenant described above under the caption "--Certain Covenants--Restricted Payments." "Buy Out Proceeds Amount" means an amount equal to (a) the aggregate amount of cash consideration actually received by the Company and its Restricted Subsidiaries in connection with Contract Buy Outs during a fiscal year (whether or not a Contract Buy Out pursuant to which any such consideration was received occurred during such fiscal year), minus (b) the aggregate amount of cash consideration actually paid by the Company and its Restricted Subsidiaries in connection with Contract Buy Outs during a fiscal year (whether or not a Contract Buy Out pursuant to which any such consideration was paid occurred during such fiscal year). Immediately following each But Out Proceeds Determination Date, the Buy Out Proceeds Amount will be reset at zero. "Buy Out Proceeds Determination Date" means the last day of each fiscal year of the Company. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the New Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within six months after the date of acquisition and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i)--(v) of this definition. "Change of Control" means the occurrence of any of the following: (i) the sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than a Principal or a Related Party of a 75 Principal (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person," such "person" shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 35% of the Voting Stock of the Company (measured by voting power rather than number of shares), (iv) the consummation of the first transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above) becomes the "beneficial owner" (as defined above), directly or indirectly, of more of the Voting Stock of the Company (measured by voting power rather than number of shares) than is at the time "beneficially owned" (as defined above) by the Principals and their Related Parties in the aggregate or (v) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Closing Date" means the date of the closing of the sale of the Series A Notes. "Code" means the Internal Revenue Code of 1986, as amended. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income, plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non- cash expenses were deducted in computing such Consolidated Net Income, minus (v) non-cash items increasing such Consolidated Net Income for such period (other than items that were accrued in the ordinary course of business), in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Subsidiary of the Company shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Company only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that 76 the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded; and (v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Subsidiaries. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (x) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the date of the Indenture in the book value of any asset owned by such Person or a consolidated Subsidiary of such Person, (y) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in each case, Permitted Investments), and (z) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Contract Buy Out" means the involuntary disposition or termination (including, without limitation, pursuant to a buy out) by a media client of a Media Representation Contract. "Credit Facilities" means, with respect to the Company, one or more debt facilities (including, without limitation, the New Credit Facility) or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under the Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Debt. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Designated Senior Indebtedness" means (i) any Indebtedness outstanding under the New Credit Facility and (ii) any other Senior Indebtedness permitted under the Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as "Designated Senior Indebtedness." "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock 77 if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "--Certain Covenants--Restricted Payments." "Employee Stock Ownership Plan" means an employee stock ownership plan that constitutes a qualified plan or trust, under Sections 401(a) and 501(a), respectively of the Code and meets the requirements of Section 4975(e)(7) of the Code. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Existing Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the New Credit Facility) in existence on the date of the Indenture, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiary for such period to the Fixed Charges of such Person and its Restricted Subsidiary for such period. In the event that the referent Person or any of its Restricted Subsidiaries incurs, assumes, Subsidiary Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. 78 "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of the Indenture. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantors" means each of (i) McGavren Guild, Inc., D&R Radio, Inc., CBS Radio Sales, Inc., Allied Radio Partners, Inc., Clear Channel Radio Sales, LLC and Caballero Spanish Media LLC and (ii) any other subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the Indenture, and their respective successors and assigns. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable or Media Representation Contract buyouts payable incurred in the ordinary course of business and consistent with past practices, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "--Certain Covenants--Restricted Payments." "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). 79 "Media Representation Contract" means any contract between a media representation firm and a media client providing for media representation services. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness (other than Indebtedness under the New Credit Facility) secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Credit Facility" means that certain Credit Facility, dated as of July 2, 1998, by and among the Company, the Guarantors and BankBoston, N.A. and Summit Bank providing for up to $10.0 million of borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Permitted Business" means the business of providing media representation and media services and the sale of advertising and any other activities that are reasonably incidental, similar or related thereto. "Permitted Investments" means (a) any Investment in the Company or in a Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (d) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "-- Repurchase at the Option of Holders--Asset Sales;" (e) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; and (f) other Investments in any Person having an aggregate fair 80 market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (f) that are at the time outstanding, not to exceed $5.0 million. "Permitted Junior Securities" means Equity Interests in the Company or any Guarantor or debt securities that are subordinated to all Senior Indebtedness (and any debt securities issued in exchange for Senior Indebtedness) to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Indebtedness pursuant to Article 10 of the Indenture. "Permitted Liens" means (i) Liens on the assets of the Company and its Subsidiaries securing Indebtedness under the New Credit Facility that was permitted by the terms of the Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (ii) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" covering only the assets acquired with such indebtedness, (vii) Liens existing on the date of the Indenture; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $5.0 million at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Subsidiary and (x) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Principal" means Ralph C. Guild. "Related Party" with respect to any Principal means (A) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (B) any 81 trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (A). "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Senior Indebtedness" means (i) all Indebtedness outstanding under the New Credit Facility and all Hedging Obligations with respect thereto, (ii) any other Indebtedness permitted to be incurred by the Company under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include (w) any liability for federal, state, local or other taxes owed or owing by the Company, (x) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in violation of the Indenture. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stock Growth Plan" means the Stock Growth Plan of the Company qualified under Section 401(a) of the Code. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying 82 that such designation complied with the foregoing conditions and was permitted by the covenant described above under the caption "Certain Covenants-- Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the caption "Certain Covenants-- Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. 83 CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS The following is a general discussion of certain United States federal income and estate tax consequences of the acquisition, ownership and disposition of Exchange Notes by an initial beneficial owner of Exchange Notes that, for United States federal income tax purposes, is not a "United States person" (a "Non-United States Holder"). This discussion is based upon the United States federal tax law now in effect, which is subject to change, possibly retroactively. For purposes of this discussion, a "United States person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in the United States or under the laws of the United States or of any political subdivision thereof, an estate whose income is includible in gross income for United States federal income tax purposes regardless of its source or a trust, if a United States court is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. The tax treatment of the holders of the Exchange Notes may vary depending upon their particular situations. United States persons acquiring the Exchange Notes are subject to different rules than those discussed below. In addition, certain other holders (including insurance companies, tax exempt organizations, financial institutions and broker-dealers) may be subject to special rules not discussed below. Prospective investors are urged to consult their tax advisors regarding the United States federal tax consequences of acquiring, holding and disposing of Exchange Notes, as well as any tax consequences that may arise under the laws of any foreign, state, local or other taxing jurisdiction. INTEREST Interest paid by the Company to a Non-United States Holder will not be subject to United States federal income or withholding tax if such interest is not effectively connected with the conduct of a trade or business within the United States by such Non-United States Holder and such Non-United States Holder (i) does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company; (ii) is not a controlled foreign corporation with respect to which the Company is a "related person" within the meaning of the United States Internal Revenue Code of 1986, as amended (the "Code"), and (iii) certifies, under penalties of perjury, that such holder is not a United States person and provides such holder's name and address. Interest paid to a Non-United States Holder that is effectively connected with a United States trade or business conducted by such Non-United States Holder is taxed at the graduated rates applicable to United States citizens, resident aliens and domestic corporations, and is not subject to withholding tax if the Non-United States Holder gives an appropriate statement to the Company or its paying agent in advance of the interest payment. In addition to the graduated tax, effectively connected interest received by a Non-United States Holder that is a corporation may also be subject to an additional branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty). GAIN ON DISPOSITION A Non-United States Holder will generally not be subject to United States federal income tax on gain recognized on a sale, redemption or other disposition of a Note unless (i) the gain is effectively connected with the conduct of a trade or business within the United States by the Non-United States Holder or (ii) in the case of a Non-United States Holder who is a nonresident alien individual and holds the Note as a capital asset, such holder is present in the United States for 183 or more days in the taxable year and certain other requirements are met. If a Non-United States Holder falls under clause (i) in the preceding paragraph, the holder will be taxed on the net gain derived from the sale under the graduated United States federal income tax rates that are applicable to United States citizens, resident aliens and domestic corporations, as the case may be, and may be subject to withholding under certain circumstances (and, with respect to corporate Non-United States Holders may also be subject to the branch profits tax described above.) If an individual Non-United States Holder falls under 84 clause (ii) in the preceding paragraphs, the holder generally will be subject to United States federal income tax at a rate of 30% on the amount by which the gain derived from the sale from sources within the United States were to exceed such holder's capital losses allocable to sources within the United States for the taxable year of the sale. FEDERAL ESTATE TAXES If interest on the Exchange Notes is exempt from withholding of United States federal income tax under the rules described above, the Exchange Notes will not be included in the estate of a deceased Non-United States Holder for United States federal estate tax purposes. BACKUP WITHHOLDING AND INFORMATION REPORTING The Company must report annually to the IRS and to each Non-United States Holder any interest that is subject to withholding, or that is exempt from United States withholding pursuant to a tax treaty, or interest that is exempt from United States tax under the portfolio interest exception. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to tax authorities of the country in which the Non-United States Holder resides. Treasury Regulations provide that backup withholding and additional information reporting will not apply to payments of principal on the Exchange Notes by the Company to a Non-United States Holder if the holder certifies as to its Non-United States status under penalties of perjury or otherwise establishes an exemption (provided that neither the Company nor its Paying Agent has actual knowledge that the holder is a United States person or that the conditions of any other exemption are not, in fact, satisfied). The payment of the proceeds from the disposition of Exchange Notes to or through the United States office of any broker, United States or foreign, will be subject to information reporting and possible backup withholding at a rate of 31%, unless the owner certifies as to its status as a Non-United States Holder under penalties of perjury or otherwise establishes an exemption, provided that the broker does not have actual knowledge that the holder is a United States person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the proceeds from the disposition of an Exchange Note to or through a non-United States office of a non-United States broker that is not a United States related person will not be subject to information reporting or backup withholding. In the case of the payment of proceeds from the disposition of an Exchange Note to or through a non-United States office of a broker that is either a United States person or a United States related person, information reporting is required on the payment unless the broker has documentary evidence in its files that the owner is a Non- United States Holder and the broker has no actual knowledge to the contrary. Backup withholding will not apply to payments made through foreign offices of a broker that is not a United States person or a United States related person (absent actual knowledge that the payee is a United States person). For purposes of this paragraph, a "United States related person" is (i) a "controlled foreign corporation" for United States federal income tax purposes, (ii) a foreign person 50% or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment (or for such part of the period that the broker has been in existence) is derived from activities that are effectively connected with the conduct of a United States trade or business or (iii) with respect to payments made after December 31, 1999, a foreign partnership that, at any time during its taxable year, is 50% or more (by income or capital interest) owned by United States persons or is engaged in the conduct of a United States trade or business. Recently adopted Treasury Regulations provide certain presumptions under which a Non-United States Holder will be subject to backup withholding and information reporting unless the Non-United States Holder provides a certification as to its Non-United States Holder status. Any amounts withheld under the backup withholding rules from a payment to a Non-United States Holder will be allowed as a refund or a credit against such Non-United States Holder's United States federal income tax liability provided that the requisite procedures are followed. 85 PLAN OF DISTRIBUTION Each Participating Broker-Dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of Exchange Notes received in exchange for Series A Notes where such Series A Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that it will make this Prospectus, as amended or supplemented, available to any Participating Broker-Dealer for use in connection with any such resale, and Participating Broker-Dealers shall be authorized to deliver this Prospectus in connection with the sale or transfer of the Exchange Notes. In addition, until , 1998 (90 days after the date of this Prospectus), all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sales of the Exchange Notes by Participating Broker-Dealers, Exchange Notes received by Participating Broker-Dealers for their own account pursuant to the Exchange Offer may be sold from time to time, in one or more transactions in the over- the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Participating Broker- Dealer that resells the Exchange Notes that were received by it for its own account pursuant to the Exchange Offer. Any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that is an "underwriter" within the meaning of the Securities Act. The Company will promptly send additional copies of this Prospectus and any amendment or supplement of this Prospectus to any Participating Broker-Dealer that requests such documents in the Letter of Transmittal. See "The Exchange Offer." LEGAL MATTERS The validity of certain legal matters will be passed upon on behalf of the Company by Christy & Viener, New York, New York. EXPERTS The consolidated balance sheets of the Company as of December 31, 1997 and 1996, and the consolidated statements of operations and shareholders' deficit and cash flows for each of the three years in the period ended December 31, 1997 included in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said report. 86 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Report of Independent Public Accountants................................. F-2 Consolidated Balance Sheets as of December 31, 1997 and 1996............. F-3 Consolidated Statements of Operations for the Years Ended December 31, 1997, 1996 and 1995..................................................... F-4 Consolidated Statements of Shareholders' Deficit for the Years Ended December 31, 1997, 1996 and 1995........................................ F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995..................................................... F-6 Notes to Consolidated Financial Statements............................... F-7 Consolidated Balance Sheet as of March 31, 1998 (unaudited).............. F-20 Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1997 (unaudited)........................................... F-21 Consolidated Statement of Shareholders' Deficit for the Three Months Ended March 31, 1998 (unaudited)........................................ F-22 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997 (unaudited)........................................... F-23 Notes to Unaudited Interim Consolidated Financial Statements............. F-24
F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Interep National Radio Sales, Inc.: We have audited the accompanying consolidated balance sheets of Interep National Radio Sales, Inc. (a New York corporation) and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of operations, shareholders' deficit and cash flows for each of the three years in the period ended December 31, 1997. 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 in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Interep National Radio Sales, Inc. and subsidiaries as of December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. Arthur Andersen LLP New York, New York April 24, 1998 F-2 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE INFORMATION)
DECEMBER 31, ------------------ 1997 1996 -------- -------- ASSETS CURRENT ASSETS: Cash and cash equivalents................................ $ 1,419 $ 2,653 Receivables, less allowance for doubtful accounts of $1,220 and $982 in 1997 and 1996, respectively.......... 42,324 38,132 Current portion of deferred representation contract costs................................................... 38,698 22,753 Prepaid expenses and other current assets................ 678 1,059 -------- -------- Total current assets................................... 83,119 64,597 -------- -------- Fixed assets, net.......................................... 4,335 4,216 Deferred costs on representation contract purchases........ 36,270 12,290 Station contract rights, net............................... 2,922 3,618 Other assets............................................... 14,566 9,464 -------- -------- Total assets........................................... $141,212 $ 94,185 ======== ======== LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES AND DEFERRED INCOME: Current portion of long-term debt........................ $ 291 $ 4,200 Accounts payable and accrued expenses.................... 45,044 38,049 Accrued employee-related liabilities..................... 4,586 2,129 Deferred income.......................................... 15,998 18,986 -------- -------- Total current liabilities and deferred income.......... 65,919 63,364 -------- -------- Long-term debt............................................. 44,134 30,035 -------- -------- Other noncurrent liabilities............................... 47,786 9,197 -------- -------- Commitments and contingencies Common and preferred stock subject to redemption: Series A cumulative redeemable preferred stock, $.01 par value--subject to mandatory redemption, 25,000 shares authorized, 7,441 and 6,765 issued and outstanding in 1997 and 1996, respectively (redemption value of $7,441 and $6,765 in 1997 and 1996, respectively).............. 6,174 4,763 Series B cumulative redeemable preferred stock, $.01 par value--5,000 shares authorized, 1,323 and 1,202 issued and outstanding in 1997 and 1996, respectively (redemption value of $1,323 and $1,202 in 1997 and 1996, respectively)........................................... 750 571 Common stock subject to redemption--57,117 shares issued and outstanding (stated at redemption value)............ 4,522 4,662 -------- -------- Total common and preferred stock subject to redemption............................................ 11,446 9,996 ======== ======== SHAREHOLDERS' DEFICIT: Common stock, $.04 par value--1,000,000 shares authorized, 334,549 shares issued excluding common stock subject to redemption................................... 14 13 Additional paid-in-capital............................... 228 485 Accumulated deficit...................................... (26,373) (17,169) Treasury stock, at cost--34,955 and 22,309 shares in 1997 and 1996, respectively.................................. (1,942) (1,736) -------- -------- Total shareholders' deficit............................ (28,073) (18,407) -------- -------- Total liabilities and shareholders' deficit............ $141,212 $ 94,185 ======== ========
The accompanying notes are an integral part of these consolidated balance sheets. F-3 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------- 1997 1996 1995 ------- ------- ------- Commission revenues.................................. $87,096 $72,858 $70,306 ------- ------- ------- Operating expenses: Selling expenses................................... 63,135 53,251 48,240 General and administrative expenses................ 12,541 9,626 13,595 Depreciation and amortization expense.............. 14,983 8,187 4,694 ------- ------- ------- Total operating expenses......................... 90,659 71,064 66,529 ------- ------- ------- Operating income (loss)............................ (3,563) 1,794 3,777 Interest expense, net................................ 3,779 3,911 3,385 ------- ------- ------- Income (loss) before provision for income taxes.... (7,342) (2,117) 392 Provision for income taxes........................... 412 400 320 ------- ------- ------- Net income (loss).................................. (7,754) (2,517) 72 Preferred stock dividends requirements............... 1,590 1,364 1,159 ------- ------- ------- Net loss applicable to common shareholders....... $(9,344) $(3,881) $(1,087) ======= ======= =======
The accompanying notes are an integral part of these consolidated statements. F-4 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (IN THOUSANDS EXCEPT SHARE INFORMATION)
COMMON STOCK ADDITIONAL TREASURY STOCK -------------- PAID-IN ACCUMULATED --------------- SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT ------- ------ ---------- ----------- ------- ------ BALANCE, JANUARY 1, 1995................... 323,549 $ 13 $ 485 $(11,217) 15,004 $ 966 Net income.............. -- -- -- 72 -- -- Treasury stock purchases.............. -- -- -- -- 142 10 Accretion of preferred stock.................. -- -- -- (512) -- -- Other issuances and sales.................. -- -- -- -- (11,233) (584) Accrued dividends in- kind on preferred stock.................. -- -- -- (647) -- -- Revaluation of common stock subject to redemption............. -- -- -- (454) -- -- ------- ---- ----- -------- ------- ------ BALANCE, DECEMBER 31, 1995................... 323,549 13 485 (12,758) 3,913 392 Net loss................ -- -- -- (2,517) -- -- Treasury stock purchases.............. -- -- -- -- 18,396 1,344 Accretion of preferred stock.................. -- -- -- (640) -- -- Accrued dividends in- kind on preferred stock.................. -- -- -- (724) -- -- Revaluation of common stock subject to redemption............. -- -- -- (530) -- -- ------- ---- ----- -------- ------- ------ BALANCE, DECEMBER 31, 1996................... 323,549 13 485 (17,169) 22,309 1,736 Net loss................ -- -- -- (7,754) -- -- Treasury stock purchases.............. -- -- -- -- 12,646 206 Accretion of preferred stock.................. -- -- -- (793) -- -- Accrued dividends in- kind on preferred stock.................. -- -- -- (797) -- -- Revaluation of common stock subject to redemption............. -- -- -- 140 -- -- Exercise of stock options................ 11,000 1 (257) -- -- -- ------- ---- ----- -------- ------- ------ BALANCE, DECEMBER 31, 1997................... 334,549 $ 14 $ 228 $(26,373) 34,955 $1,942 ======= ==== ===== ======== ======= ======
The accompanying notes are an integral part of these consolidated statements. F-5 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------- 1997 1996 1995 -------- ------- ------- Cash flows from operating activities: Net income (loss)................................ $ (7,754) $(2,517) $ 72 Depreciation and amortization.................... 14,983 8,187 4,694 Changes in assets and liabilities-- Receivables.................................... (4,487) (1,450) (5,328) Prepaid expenses and other current assets...... 243 654 (680) Other noncurrent assets........................ 954 (5,211) (5,626) Accounts payable and accrued expenses.......... (796) 9,502 5,903 Accrued employee-related liabilities........... 2,457 (383) (1,385) Other noncurrent liabilities................... (2,399) (1,147) (2,720) -------- ------- ------- Net cash provided by (used in) operating activities.................................. 3,201 7,635 (5,070) -------- ------- ------- Cash flows from investing activities: Net additions to fixed assets.................... (792) (1,021) (1,689) Businesses purchased............................. -- -- (3,510) Net purchases of station representation contracts....................................... (13,371) (3,080) (2,202) -------- ------- ------- Net cash used in investing activities........ (14,163) (4,101) (7,401) -------- ------- ------- Cash flows from financing activities: Debt repayments.................................. (6,100) (1,820) -- Borrowings in accordance with credit agreement, net............................................. 16,519 1,341 9,076 Sales and issuances of stock, net of issuance costs........................................... (256) -- 747 Purchases of treasury stock...................... (206) (1,344) (314) Other, net....................................... (229) (810) (494) -------- ------- ------- Net cash provided by (used in) financing activities.................................. 9,728 (2,633) 9,015 -------- ------- ------- Net increase (decrease) in cash and cash equivalents................................. (1,234) 901 (3,456) Cash and cash equivalents, beginning of period..... 2,653 1,752 5,208 -------- ------- ------- Cash and cash equivalents, end of period........... $ 1,419 $ 2,653 $ 1,752 ======== ======= ======= Supplemental disclosures of cash flow information: Interest paid.................................... $ 3,220 $ 3,274 $ 2,995 Income taxes paid, net........................... 235 628 1,670 Details of businesses purchased: Fair value of assets acquired.................... $ 8,791 Less--Liabilities assumed........................ 5,281 ------- Cash paid for businesses purchased............... $ 3,510 =======
The accompanying notes are an integral part of these consolidated statements. F-6 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS EXCEPT SHARE INFORMATION) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Interep National Radio Sales, Inc. ("Interep"), together with its subsidiaries (collectively, the "Company"). All significant intercompany transactions and balances have been eliminated. Revenue Recognition The Company is a national representation ("rep") firm serving radio broadcast clients throughout the United States. Commission revenue is derived from sales of advertising time for radio stations under representation contracts. Commissions and fees are recognized in the month the advertisement is broadcast. In connection with its unwired network business, the Company collects fees for unwired network radio advertising and, after deducting its commissions, remits the fees to the respective radio stations. Since it is common practice in the industry for rep companies not to pay a station until the corresponding receivable is paid, and since the receivable and payable are equal, except for the commissions, fees payable to stations have been offset against the related receivable from advertising agencies in the accompanying consolidated balance sheets. In accordance with industry practice, commissions are recognized based on the standard broadcast calendar that ends on the last Sunday in each reporting period. The broadcast calendar for the calendar years ended December 31, 1997 and 1996 had 52 weeks. The broadcast calendar for the calendar year ended December 31, 1995 had 53 weeks. Representation Contract Buyout Income and Expense The Company's station representation contracts usually renew automatically from year to year unless either party provides written notice of termination at least twelve months prior to the next automatic renewal date. In accordance with industry practice, in lieu of termination, an arrangement is normally made for the purchase of such contracts by a successor representative firm. The purchase price paid by the successor representation firm is generally based upon the historic commission income projected over the remaining contract period plus two months (the "Buyout Period"). Income resulting from the disposition of station representation contracts and costs of obtaining station representation contracts are deferred and amortized over the Buyout Period. Such amortization is included in the accompanying consolidated statements of operations as a component of depreciation and amortization expense. Amounts which are to be amortized during the next year are included as current assets or current liabilities in the accompanying consolidated balance sheets. In addition, costs incurred as a result of commission rate reductions are deferred and amortized over the remaining life of the existing representation agreement. Such amortization is included in the accompanying consolidated statements of operations as a component of depreciation and amortization expense. Fixed Assets, net Furniture, fixtures and equipment are recorded at cost and are depreciated over three to ten-year lives, and leasehold improvements are amortized over the shorter of the lives of the leases or assets, all on a straight-line basis. F-7 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) Depreciation and Amortization Expense A summary of depreciation and amortization expense for the years ended December 31, 1997, 1996 and 1995 is as follows:
1997 1996 1995 ------- ------ ------ Depreciation and amortization of office facilities... $ 1,587 $1,796 $1,817 Amortization of intangible assets.................... 2,764 2,630 892 Representation contract buyout amortization, net..... 10,632 3,761 1,985 ------- ------ ------ $14,983 $8,187 $4,694 ======= ====== ======
Cash and Cash Equivalents Cash equivalents consist of cash in excess of daily requirements which are invested in overnight deposits. Station Contract Rights, Net Station contract rights consist of costs of purchased businesses in excess of net tangible assets acquired and are stated at cost less accumulated amortization. These costs are being amortized using the straight-line method over 5 years. Amortization expense for 1997, 1996 and 1995 was $978, $1,206 and $496, respectively, and is included in the above table. Recoverability of goodwill and intangible assets is assessed regularly (at least annually) and impairments, if any, are recognized in operating results if a permanent diminution in value were to occur based upon an undiscounted cash flow analysis. The Company has determined that no such impairment exists. Income Taxes Income taxes are recognized during the year in which transactions enter into the determination of financial statement income, with deferred taxes being provided for temporary differences between amounts of assets and liabilities recorded for tax and financial reporting purposes. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. FIXED ASSETS Fixed assets are comprised of the following:
DECEMBER 31, ------------------ 1997 1996 -------- -------- Furniture and equipment.................................. $ 10,145 $ 9,451 Leasehold improvements................................... 5,778 5,191 Equipment held under lease............................... 3,461 3,036 -------- -------- 19,384 17,678 Less--Accumulated depreciation and amortization.......... (15,049) (13,462) -------- -------- Fixed assets, net...................................... $ 4,335 $ 4,216 ======== ========
F-8 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) 3. ACQUISITIONS In May 1995, the Company acquired the station representation agreements and certain other assets of Concert Music Broadcasting, Inc., which specializes in the representation of classical music radio stations, for approximately $1,500,000. In 1991, the Company exchanged 2.7% of the outstanding stock of one of its subsidiaries, McGavren Guild, Inc. ("McGavren Guild"), for a 19.8% interest in Caballero Spanish Media, Inc. ("Caballero"). Concurrent with the original exchange, the Company entered into an arrangement with Caballero whereby the Company would provide representation in certain cities for Caballero's clients in return for a portion of the commission revenues, after deducting selling expenses. In 1995 prior to the acquisition, shared revenues approximated selling and other expenses. Income attributable to the minority interest in McGavren Guild, Inc. was not material. In September 1995, the Company acquired the station representation agreements and certain other assets of Caballero for approximately $6,300,000. In connection with the acquisition, the Company also exchanged its 19.8% interest in Caballero for the 2.7% interest in McGavren Guild owned by Caballero. The acquisitions have been accounted for using the purchase method of accounting. The consolidated statements of operations include the operations of the acquired businesses since their respective date of acquisition. 4. ACCOUNTS PAYABLE The Company utilizes a cash management system whereby repayments of the revolving credit note (Note 8) and overnight investments are determined daily. Included in accounts payable are $5,580 and $5,955 of book overdrafts as of December 31, 1997 and 1996, respectively, which result from this cash management program. 5. EMPLOYEE STOCK PLANS Employee Stock Ownership Plan Under the terms of the Company's nonleveraged Employee Stock Ownership Plan ("ESOP") and Trust ("ESOT"), the Company may make annual contributions to the ESOT in the form of either cash or common stock of the Company for the benefit of eligible employees. In lieu of contributions, the Company may repurchase shares of common stock from the ESOP or advance money to the plan from time to time. The amount of annual funding is at the discretion of the Board of Directors of the Company except that the minimum amount must be sufficient to enable the ESOT to meet its current obligations. No cash contributions were made by the Company in 1997 and 1996. In lieu of contributions during 1997 and 1996, the Company loaned money to the ESOP. At December 31, 1997 and 1996, $182 and $255, respectively, of this advance remained outstanding and is included in receivables in the accompanying consolidated balance sheets. The ESOP intends to repay the Company through the proceeds of the sale of company stock to the Interep Radio Store Stock Growth Plan (the "Stock Growth Plan"). Substantially all assets of the ESOT consist of common shares of the Company, and the ESOT currently has no alternative method to fund its payment to participants except through Company funding (see the Stock Growth Plan below). Pursuant to the ESOP, as amended, employees of the Company and each of its subsidiaries are eligible to participate, subject to certain uniform requirements. Upon leaving the Company, employees may sell the shares back to the ESOT at the then fair market value of the Company's common stock; related distributions are made in quarterly installments over a period not to exceed five years, depending upon the former employee's total account balance. The portion of the vested liability relating to terminated employees as of December 31, 1996 F-9 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) was $4,506 and is payable over a one to five-year period. As discussed in Note 9, the independent appraisal as of December 31, 1997 has not yet been completed. The Company has purchased life insurance policies on certain of its executives for which Interep is the beneficiary. Proceeds from these policies will be used to partially fund payments under the ESOP for these executives. Such policies had a cash surrender value of $2,405 and $1,937 as of December 31, 1997 and 1996, respectively, with no offsetting loans. As of December 31, 1997 and 1996, the Company's ESOP owned 223,363 and 220,027 shares, respectively, representing approximately 67% and 66%, respectively, of the Company's total shares outstanding, before consideration of common stock equivalents. Stock Growth Plan On January 1, 1995, the Company established the Stock Growth Plan, a qualified stock bonus plan through which a portion of qualified employee compensation is allocated to the plan. Contributions to the Stock Growth Plan are used to repurchase shares of Interep common stock from the ESOP, the Interep Radio Store Wealth Attainment Plan (the "401(k) Plan") and shares held by terminated employees. Distributions to participants will be made in cash upon termination of employment over a period not to exceed three years. The Stock Growth Plan purchased 24,345, 22,839 and 13,687 shares from the ESOP in 1997, 1996 and 1995, respectively. No contributions were made by the Company to the Stock Growth Plan in 1997, 1996 or 1995. Stock Options A summary of the stock options outstanding during the years ended December 31, 1997, 1996 and 1995 is set forth below:
NUMBER OF WEIGHTED SHARES SUBJECT AVERAGE TO OPTION EXERCISE PRICE -------------- -------------- Outstanding at December 31, 1994.............. 46,000 $52.41 Granted during 1995......................... 23,183 81.63 ------- ------ Outstanding at December 31, 1995.............. 69,183 62.20 Exercised during 1996....................... (10,000) 57.91 ------- ------ Outstanding at December 31, 1996.............. 59,183 62.93 Exercised during 1997....................... (11,000) 57.91 ------- ------ Outstanding at December 31, 1997.............. 48,183 64.07 ------- ------ Options exercisable at December 31, 1997...... 48,183 64.07 ------- ------
F-10 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) The following table summarizes information regarding the stock options outstanding at December 31, 1997, pursuant to the terms of the Plan: OPTIONS OUTSTANDING AND EXERCISABLE
REMAINING AT DECEMBER 31, 1997 EXERCISE PRICE CONTRACTUAL LIFE -------------------- -------------- ---------------- 10,000..................................... $32.62 8 Years 15,000..................................... 57.91 8 Years 23,183..................................... 81.63 8 Years ------ 48,183 ======
In October 1995, the Financial Accounting Standards Board ("FASB") issued Statement No. 123, "Accounting for Stock-Based Compensation." The Company adopted the disclosure provisions of FASB Statement No. 123 in 1996, but opted to remain under the expense recognition provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for stock option plans. Had compensation expense for stock options granted under the Plan been determined based on fair value at the grant dates consistent with the disclosure method required in accordance with FASB Statement No. 123, there would have been no impact on 1997 or 1996 reported results as all options granted in previous years vested 100% on the grant dates, and no options were granted in 1997 or 1996. The Company's net income for 1995 would have been decreased to the pro forma amounts shown below: Net income (loss): As reported.......................................................... $ 72 Pro forma............................................................ (760)
The weighted average fair value of options granted in 1995 was estimated as of the date of grant using the Black-Scholes stock option pricing model, based on the following weighted average assumptions: risk free interest rate of 5.79% and expected term of 10 years. All options granted in 1995 vested 100% on the grant dates. 6. EMPLOYEE BENEFIT PLANS Managers' Incentive Compensation Plans The Company maintains various managers' incentive compensation plans for substantially all managerial employees. The plans provide for incentives to be earned based on attainment of threshold operating profit and market share goals established each year, as defined. The Company provided approximately $4,551, $3,030 and $2,639 for such compensation during 1997, 1996 and 1995, respectively. 401(k) Plan The Company has a defined contribution plan, the 401(k) Plan, which covers substantially all employees who have completed one year of service with the Company. Under the terms of the 401(k) Plan, the Company may contribute a matching contribution percentage determined by, and at the discretion of, the Board of Directors but not in excess of the maximum amount deductible for federal income tax purposes. Company contributions vest to the employees at 20% per year over a five-year period. The Company provided $728, $641 and $285 in F-11 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) the form of cash in 1997, 1996 and 1995, respectively, and $250 in the form of common stock (representing 3,780 shares) in 1995. As of December 31, 1996, the 401(k) Plan owned 21,029 shares, representing approximately 6% of the Company's total shares outstanding, before consideration of common stock equivalents. Upon termination of employment, individual shares are repurchased by the Company to fund that portion of the individual's account balance attributable to Interep common stock. The 401(k) Plan currently has no alternative method to fund the repurchase of Company common stock except through Company funding (see the Stock Growth Plan in Note 5). During 1996 and 1995, the Company repurchased 3,948 and 2,033 shares, respectively, from the 401(k) Plan relating to terminated employees. During 1997, the ESOP purchased all remaining shares held by the 401(k) Plan. Deferred Compensation Plans Certain of Interep's subsidiaries maintain deferred compensation plans which cover employees selected at the discretion of management. Participants are entitled to deferred compensation and other benefits under these plans. Under certain of these plans, the subsidiaries have agreed to repurchase shares ("phantom stock") held by employees based upon the appreciation in value (as defined) of each subsidiary. In 1997, 1996 and 1995, the Company provided compensation expense (income) of $14, $14 and $(278) related to these plans. All amounts due under these plans were fully vested as of December 31, 1997; however, they remain subject to further appreciation/depreciation upon changes in value (as defined). In 1994, the Company established a compensation deferral plan for key executives. Participants made a one-time election to defer certain of their compensation and have such amounts contributed to a tax-deferred trust in the form of Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred Stock") and Interep common stock. As of December 31, 1995, 11,263 shares of common stock (fair market value of $725) and 998 shares of Series B Preferred Stock were held by the trust. No contributions were made in 1997 or 1996. In the accompanying consolidated financial statements, the amounts allocated to the Series B Preferred Stock and common stock were determined based on the relative fair values of each class of stock to the total amount contributed to the trust. Distribution to participants out of the trust are made in cash upon termination as follows: for shares of common stock, depending on the total fair market value of such common stock in a participant's account, over a period up to five years and, with respect to shares of the Series B Preferred Stock, at the later of the participant's termination of employment or when the Company redeems such Series B Preferred Stock (see Note 9). All amounts under these plans are fully vested. Supplemental Retirement Benefits The Company has agreements with several of its employees to provide supplemental retirement benefits. The benefits under these plans were fully vested as of December 31, 1997. The Company provided $262, $476 and $263 in 1997, 1996 and 1995, respectively, for these plans which principally represented interest on the vested benefits. The Company has life insurance policies on certain of its executives for which Interep is the beneficiary. Proceeds from these policies will be used to partially fund certain of the retirement benefits under these supplemental agreements. Such policies had cash surrender values of $1,115 and $1,022 as of December 31, 1997 and 1996, respectively, and offsetting loans of $673 and $617, respectively. F-12 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) 7. INCOME TAXES Interep and its subsidiaries file a consolidated federal tax return. However, for state tax purposes, separate tax returns are filed in various jurisdictions where losses on certain subsidiaries are not available to offset income on other subsidiaries, and tax benefits on such losses may not be realized. As a result, the consolidated tax provisions are determined considering this tax reporting structure and may not fluctuate directly with consolidated pretax income. Components of the provisions for income taxes are as follows:
YEAR ENDED DECEMBER 31, --------------------------- 1997 1996 1995 -------- -------- ------- Current: Federal........................................ $ (2,310) $ (2,070) $ 458 State.......................................... 412 400 320 Deferred......................................... 2,310 2,070 (458) -------- -------- ------ Total provision................................ $ 412 $ 400 $ 320 ======== ======== ======
A reconciliation of the U.S. federal statutory tax rate to the effective tax rate on the income (loss) before income taxes for the periods ended December 31, 1997, 1996 and 1995, is as follows:
1997 1996 1995 ------- ------- ----- Provision computed at the federal statutory rate of 34%........................................... $(2,496) $ (691) $ 166 State and local taxes, net of federal income tax benefit.......................................... 272 264 211 Nondeductible travel and entertainment expense.... 249 298 309 Nondeductible insurance premiums.................. 45 (23) 102 Tax net operating loss carryforwards.............. (2,310) (2,070) (420) Valuation allowance............................... 3,123 3,612 (269) Other............................................. 1,529 (990) 221 ------- ------- ----- Total........................................... $ 412 $ 400 $ 320 ======= ======= =====
Generally accepted accounting principles require the recognition of deferred tax assets and liabilities for both the expected future tax impact of temporary differences arising from assets and liabilities whose tax bases are different from financial statement amounts, and for the expected future tax benefit to be derived from tax loss and other carryforwards. A valuation allowance is required to be established if it is more likely than not that all or a portion of deferred tax assets will not be realized. Realization of the future tax benefits is dependent on the Company's ability to generate taxable income within the carryforward period and the periods in which net temporary differences reverse. F-13 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities and the related valuation allowance at December 31, 1997 and 1996, are as follows:
DECEMBER 31, ---------------- 1997 1996 ------- ------- Deferred tax assets: Depreciation and amortization............................ $ 1,349 $ 519 Deferred income on sale of contracts..................... 4,159 3,100 Accruals not currently deductible for tax purposes....... 2,603 3,372 Consolidated net operating loss carryforward............. 2,310 2,070 Other.................................................... 593 1,081 ------- ------- 11,014 10,142 ------- ------- Deferred tax liabilities: Unamortized representation contracts..................... 1,280 3,531 Valuation allowance........................................ (9,734) (6,611) ------- ------- Net deferred tax asset................................... $ -- $ -- ======= =======
The amount of net deferred tax assets recorded in prior years was limited to the extent of then available carryback of losses. As of December 31, 1997 and 1996, the Company has a refund receivable of $110 and $620, respectively. Future utilizations of tax loss carryforwards are subject to Internal Revenue Service examination and there is no assurance that the entire amount would be sustained. 8. LONG-TERM DEBT Long-term debt at December 31, 1997 and 1996, includes the following:
1997 1996 ------- ------- Borrowings under term loan(a)............................... $ -- $26,180 Borrowings under revolving credit facility(a)............... 44,000 7,401 ------- ------- 44,000 33,581 Capitalized lease obligations(b)............................ 425 654 ------- ------- 44,425 34,235 Less--Current portion....................................... 291 4,200 ------- ------- $44,134 $30,035 ======= =======
(a) In 1997, the Company entered into an Amended and Restated Revolving Line of Credit Agreement (the "Credit Agreement") which provides for borrowings of up to $55,000. The Credit Agreement replaces the 1995 secured senior financing facility. Unamortized debt issue costs relating to the 1995 secured senior financing facility of $186 were written off in conjunction with the refinancing. The outstanding borrowings under the Credit Agreement bear interest, payable quarterly, at .625% to 1.625% above the bank's base rate or 1.625% to 2.625% above the bank's Eurodollar rate, at the option of the Company. A commitment fee of .5% per annum is payable on any unused portion of the revolving credit agreement. The Credit Agreement requires the Company to maintain certain financial ratios and includes other restrictions relating to additional indebtedness, guarantees, liens, leases, investments, capital expenditures, mergers, consolidations and sales of assets. Dividends or distributions of any kind by Interep or any of its F-14 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) subsidiaries are prohibited except that a subsidiary may make a dividend or distribution to its immediate parent, Interep may purchase shares of the Company's stock from terminated employees and Interep may make "payment in kind" distributions to the holders of Series A Cumulative Redeemable Preferred Stock (the "Series A Preferred Stock") and Series B Preferred Stock (see Note 9). The weighted average interest rate charged to the Company under the revolving credit facilities was 8.8% in both 1997 and 1996 and 9.9% in 1995. The "Borrowings in accordance with credit agreement, net" on the consolidated statements of cash flows were net of repayments under the revolving credit facility of $4,100 and $1,550 in 1996 and 1995, respectively. The Credit Agreement requires scheduled reductions on a quarterly basis beginning October 1, 1998, resulting in maximum allowed borrowings as follows: December 31: 1998............................................................... $53,625 1999............................................................... 45,705 2000............................................................... 36,190 2001............................................................... 25,318 2002............................................................... 13,748 2003............................................................... --
Total borrowings are classified as long-term on the consolidated balance sheets as of December 31, 1997 as they are less than the maximum allowed at December 31, 1998. (b) Certain of the Company's office furniture and equipment is rented under lease arrangements expiring between 1998 and 2000. Such leases have been capitalized, and the discounted obligations have been reflected as liabilities in the accompanying consolidated balance sheets. Future payments under these leases are as follows: 1998................................................................... $456 1999................................................................... 197 2000................................................................... 13 Thereafter............................................................. -- ---- 666 Less--Amount representing interest..................................... 241 ---- Present value of net minimum lease payments............................ $425 ====
9. COMMON AND PREFERRED STOCK SUBJECT TO REDEMPTION Series A Preferred Stock accrues dividends at 10% per annum on the sum of all issued shares plus accumulated and unpaid dividends thereon. On the occurrence of certain events, as defined in the Company's Certificate of Amendment of the Certificate of Incorporation, the dividend rate will increase to 15% per annum and will decrease back to 10% per annum once these events have been cured. Dividends, in the form of cash or additional shares of Series A Preferred Stock (valued at $1,000 per share), are payable annually. Series A Preferred Stock shares outstanding on October 31, 2003 must be redeemed in whole by the Company, inclusive of accrued or unpaid dividends. Series A Preferred Stock is redeemable at the option of the holder on the earlier of the sale of the Company, May 1, 1999, or certain events, as defined, or at the option of the Company subject to the provisions of applicable corporate law. F-15 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) The Securities Purchase Agreement includes certain restrictions relating to the Company's ability to issue additional equity, incur additional indebtedness, pay dividends and sell assets. Furthermore, the Securities Purchase Agreement allows the holders to require the Company to redeem the shares of both the Series A Preferred Stock and common stock on the earliest of the payment in full of all Senior Indebtedness (Note 8), May 1, 1999, sale of the corporation, or certain other events as defined in the Securities Purchase Agreement. The redemption value of the Series A Preferred Stock shall be equal to the sum of $1,000 per share plus all dividends accrued and unpaid thereon to the date of the redemption notice. Accordingly, the value of Series A Preferred Stock is being accreted using the effective interest rate method to achieve the redemption value at May 1, 1999. The redemption value of the common stock at that date would be equal to the then appraised market value of the common stock. At December 31, 1997, the common stock subject to redemption is valued at the latest available appraised value and will be adjusted each year. The adjustment for revaluation of common stock subject to redemption was $(140), $530 and $454 in 1997, 1996 and 1995, respectively. Series B Preferred Stock accrues dividends at 10% per annum on the sum of all issued shares, plus accumulated and unpaid dividends thereon. In the event of liquidation of the Company, Series B Preferred Stock shares are subordinate to the Company's debt and Series A Preferred Stock. Dividends, in the form of cash or additional shares of Series B Preferred Stock (valued at $1,000 per share), are payable annually. Series B Preferred Stock may be redeemed at the option of the Company or the holders of a majority of the then outstanding Series B Preferred Stock on the later of the redemption of all outstanding Series A Preferred Stock or November 1, 2003. The redemption value of the Series B Preferred Stock shall be equal to the sum of $1,000 per share plus all dividends accrued and unpaid thereon to the date of the redemption notice. Accordingly, the Series B Preferred Stock is being accreted using the effective interest method to achieve the redemption value at November 1, 2003. Accretion of the Series A Preferred Stock in 1997, 1996 and 1995 was $735, $590 and $474, respectively. Accretion of the Series B Preferred Stock in 1997, 1996 and 1995 was $58, $50 and $38, respectively. Dividends-in-kind on the Series A Preferred Stock in 1997, 1996 and 1995 were $676, $615 and $559, respectively (consisting of 676, 615 and 559 shares, respectively). Dividends- in-kind on the Series B Preferred Stock for 1997, 1996 and 1995 were $121, $109 and $88, respectively (consisting of 121, 109 and 88 shares, respectively). The Company has traditionally repurchased the shares of its common stock held by departing employees outside the ESOP at a price equal to the then independently appraised value. The purchase price is payable in quarterly installments, including interest at rates prevailing for U.S. Treasury securities, over a one to five-year period depending upon the total value of the shares. During 1997, 1996 and 1995, in connection with employee terminations, the Company repurchased 12,646, 18,396 and 142 shares of common stock, respectively, at a price equal to the then fair market value of the shares. The independent appraisal as of December 31, 1996 and 1995 was $79.17 and $81.63, respectively. 10. RELATED PARTY TRANSACTIONS In connection with the 1988 repayment of certain promissory notes to one of the Company's executives, the Company issued to the executive options to purchase up to 10,000 shares of the common stock of the Company at an option price of $32.62 per share. Effective January 1991, as part of the executive's 1991 Amended and Restated Employment Agreement, options to purchase an additional 10,000 shares of the Company's stock were granted at an option price of $57.91 per share and an expiration date in 2001. Effective June 18, 1993, in connection with an amendment to the executive's 1991 Amended and Restated Employment Agreement, the expiration date of the options at $32.62 per share was extended until January 1, 1997. The option prices F-16 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) represented the fair market value at the date of grant as determined by an independent appraisal. In December 1995, by a Unanimous Written Consent of the Board of Directors, the expiration date of all the executive's outstanding options was extended until December 31, 2005. Since December 1979, the Company has leased from a trust, of which one of its executives is an income beneficiary and one of its executives is the trustee, a building which is used by the Company for training sessions and management meetings. The current lease expires on December 31, 1999 and provides for a base annual rental which is adjusted each year to reflect inflation and actual usage. Total lease expense was $74 in 1997, 1996 and 1995. At December 31, 1997 and 1996, an executive was indebted to Interep in the total amount of $170 and $222, respectively (including accrued interest), which is evidenced by a promissory note payable to Interep. This note bears variable interest at the lowest rate permitted for federal income tax purposes, which was 5.68% and 5.75% at December 31, 1997 and 1996, respectively, and is due in equal annual installments of principal and interest through December 31, 1999. From June 1997 to December 1997, Interep was indebted to an executive of the Company for amounts up to $2,000 plus interest. The interest expense incurred is included in the consolidated statements of operations. In 1997, the Company entered into an agreement with Media Financial Services, an affiliate of one of the Company's executives, whereby Media Financial Services provides financial and accounting services to the Company. The fee for these services amounted to approximately $1,435 in 1997. The Company believes the terms of the arrangements relating to the building rental, indebtedness and accounting services are at least comparable to, if not more favorable for the Company, than the terms which would have been obtained in transactions with unrelated parties. 11. COMMITMENTS AND CONTINGENCIES At December 31, 1997, the Company was committed under operating leases, principally for office space, which expire at various dates through 2009. Certain leases are subject to rent reviews and require payment of expenses under escalation clauses. Rent expense was $4,266, $4,145 and $4,068 in 1997, 1996 and 1995, respectively. The noncash portion of rent expense was $85, $89 and $26 for 1997, 1996 and 1995, respectively. Future minimum rental commitments under noncancellable leases are as follows: 1998................................................................. $ 4,040 1999................................................................. 3,843 2000................................................................. 3,538 2001................................................................. 3,475 2002................................................................. 3,407 Thereafter........................................................... 10,011
The Company has employment agreements with certain of its officers and employees for terms ranging from three to six years with annual compensation aggregating approximately $1,643. These agreements include escalation clauses (as defined) and provide for certain additional bonus and incentive compensation. The Company may be involved in various legal actions from time to time arising in the normal course of business. In the opinion of management, there are no matters outstanding that would have a material adverse effect on the consolidated financial position or results of operations of the Company. F-17 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) 12. SUPPLEMENTAL INFORMATION Interest expense is shown net of interest income of $109, $138 and $109 in 1997, 1996 and 1995, respectively. One broadcast group (a different group in each year) contributed approximately 28.7%, 13.1% and 12.8% of the Company's total revenues in 1997, 1996 and 1995, respectively. No other client group contributed revenues in excess of 10% in 1997, 1996 or 1995. In 1997 and 1996, contract buyout receivables from one group of radio rep firms represented $17,425 and $11,197, respectively, of the Company's total contract buyout receivables. In 1997, the Company relocated its accounting department from New York to Florida. Severance and relocation costs in connection with this move totaled $1,350. The following amounts are included under the receivables caption at December 31, 1997 and 1996, on the accompanying consolidated balance sheets:
1997 1996 ------- ------- Trade accounts receivable, net............................. $31,196 $25,923 Representation contract buyouts and other accounts receivable................................................ 11,128 12,209 ------- ------- Total.................................................... $42,324 $38,132 ======= =======
The following amounts are included under the accounts payable and accrued liabilities caption at December 31, 1997 and 1996, on the accompanying consolidated balance sheets:
1997 1996 ------- ------- Accounts payable and accrued expenses....................... $24,853 $25,650 Representation contract buyouts payable..................... 20,191 12,399 ------- ------- Total..................................................... $45,044 $38,049 ======= =======
The following amounts are included under the other noncurrent liabilities caption at December 31, 1997 and 1996, on the accompanying consolidated balance sheets:
1997 1996 ------- ------ Deferred income.............................................. $17,767 $ -- Representation contract buyouts payable...................... 23,221 -- Other........................................................ 6,798 9,197 ------- ------ Total...................................................... $47,786 $9,197 ======= ======
The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments." The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of F-18 INTEREP NATIONAL RADIO SALES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS EXCEPT SHARE INFORMATION) the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
DECEMBER 31, 1997 ------------------- CARRYING ESTIMATED AMOUNT FAIR VALUE -------- ---------- Assets: Cash and cash equivalents.............................. $ 1,419 $ 1,419 Liabilities: Long-term debt......................................... 44,134 44,134
The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and Cash Equivalents The carrying amount approximates fair value because of the short maturity of those instruments. Long-Term Debt The fair value of long-term debt is estimated based on financial instruments or financial instruments with similar terms, credit characteristics and expected maturities. The fair value estimates presented herein are based on pertinent information available to the Company as of December 31, 1997. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively reevaluated for purposes of these financial statements since that date, and current estimates of fair value may differ significantly from the amounts presented herein. F-19 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED BALANCE SHEET (IN THOUSANDS EXCEPT SHARE INFORMATION) (UNAUDITED)
MARCH 31, 1998 --------- ASSETS CURRENT ASSETS: Cash and cash equivalents.......................................... $ 4,441 Receivables, less allowance for doubtful accounts of $1,220........ 48,532 Current portion of deferred representation contract costs.......... 38,291 Prepaid expenses and other current assets.......................... 932 -------- Total current assets............................................. 92,196 -------- Fixed assets, net.................................................... 3,883 Deferred costs on representation contract purchases.................. 31,280 Station contract rights, net......................................... 2,809 Other assets......................................................... 14,973 -------- Total assets..................................................... $145,141 ======== LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES AND DEFERRED INCOME: Current portion of long-term debt.................................. $ 291 Accounts payable and accrued expenses.............................. 37,991 Accrued employee-related liabilities............................... 2,780 Deferred income.................................................... 13,973 -------- Total current liabilities and deferred income.................... 55,035 -------- Long-term debt....................................................... 42,593 -------- Other noncurrent liabilities......................................... 68,700 -------- Commitments and contingencies Common and preferred stock subject to redemption: Series A cumulative redeemable preferred stock, $.01 par value-- subject to mandatory redemption, 25,000 shares authorized, 7,627 issued and outstanding (redemption value of $7,627)............... 6,589 Series B cumulative redeemable preferred stock, $.01 par value-- 5,000 shares authorized, 1,356 issued and outstanding (redemption value of $1,356).................................................. 800 Common stock subject to redemption--57,117 shares issued and outstanding (stated at redemption value).......................... 4,522 -------- Total common and preferred stock subject to redemption........... 11,911 -------- SHAREHOLDERS' DEFICIT: Common stock, $.04 par value--1,000,000 shares authorized, 334,549 shares issued excluding common stock subject to redemption........ 14 Additional paid-in-capital......................................... 228 Accumulated deficit................................................ (31,142) Treasury stock, at cost--37,896 shares............................. (2,198) -------- Total shareholders' deficit...................................... (33,098) -------- Total liabilities and shareholders' deficit...................... $145,141 ========
The accompanying notes are an integral part of these consolidated balance sheet. F-20 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS) (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, ---------------------- 1998 1997 ---------- ---------- Commission revenues.................................... $ 15,898 $ 15,029 ---------- ---------- Operating expenses: Selling expenses..................................... 13,836 13,980 General and administrative expenses.................. 2,597 2,545 Depreciation and amortization expense................ 2,715 322 ---------- ---------- Total operating expenses........................... 19,148 16,847 ---------- ---------- Operating loss..................................... (3,250) (1,818) Interest expense, net.................................. 1,005 831 ---------- ---------- Loss before provision for income taxes............... (4,255) (2,649) Provision for income taxes............................. 49 131 ---------- ---------- Net loss........................................... (4,304) (2,780) Preferred stock dividends requirements................. 465 398 ---------- ---------- Net loss applicable to common shareholders......... $ (4,769) $ (3,178) ========== ==========
The accompanying notes are an integral part of these consolidated statements. F-21 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT (IN THOUSANDS EXCEPT SHARE INFORMATION) (UNAUDITED)
COMMON STOCK ADDITIONAL TREASURY STOCK -------------- PAID-IN ACCUMULATED --------------- SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT ------- ------ ---------- ----------- ------- ------- BALANCE, JANUARY 1, 1998................... 334,549 $ 14 $228 $(26,373) 34,955 $1,942 Net loss................ -- -- -- (4,304) -- -- Treasury stock purchases.............. -- -- -- -- 2,941 256 Accretion of preferred stock.................. -- -- -- (246) -- -- Accrued dividends in- kind on preferred stock.................. -- -- -- (219) -- -- ------- ---- ---- -------- ------- ------- BALANCE, MARCH 31, 1998................... 334,549 $ 14 $228 $(31,142) 37,896 $ 2,198 ======= ==== ==== ======== ======= =======
The accompanying notes are an integral part of these consolidated statements. F-22 INTEREP NATIONAL RADIO SALES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, ---------------- 1998 1997 ------- ------- Cash flows from operating activities: Net loss.................................................. $(4,304) $(2,780) Depreciation and amortization............................. 2,715 322 Changes in assets and liabilities-- Receivables............................................. 3,453 32 Prepaid expenses and other current assets............... (254) (102) Other noncurrent assets................................. (107) (275) Accounts payable and accrued expenses................... (2,120) 2,606 Accrued employee-related liabilities.................... (1,806) (1,171) Other noncurrent liabilities............................ 267 6 ------- ------- Net cash used in operating activities................. (2,156) (1,362) ------- ------- Cash flows from investing activities: Net additions to fixed assets............................. (177) (101) Businesses purchased...................................... -- -- Net receipts from or (purchases of) station representation contracts.................................................. 7,150 (117) ------- ------- Net cash provided by (used in) investing activities... 6,973 (218) ------- ------- Cash flows from financing activities: Debt repayments........................................... (7,250) (280) Borrowings in accordance with credit agreement, net....... 5,725 -- Sales and issuances of stock, net of issuance costs....... -- -- Purchases of treasury stock............................... (256) -- Other, net................................................ (14) -- ------- ------- Net cash used in financing activities................. (1,795) (280) ------- ------- Net increase (decrease) in cash and cash equivalents.. 3,022 (1,860) Cash and cash equivalents, beginning of period.............. 1,419 2,653 ------- ------- Cash and cash equivalents, end of period.................... $ 4,441 $ 793 ======= ======= Supplemental disclosures of cash flow information: Interest paid............................................. $ 904 $ 730 Income taxes paid, net.................................... 49 131
The accompanying notes are an integral part of these consolidated statements. F-23 INTEREP NATIONAL RADIO SALES, INC. NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Interep National Radio Sales, Inc. ("Interep"), together with its subsidiaries (collectively, the "Company") and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. All significant intercompany transactions and balances have been eliminated. The consolidated financial statements as of March 31, 1998 and 1997 are unaudited; however, in the opinion of management, such statements include all adjustments necessary for a fair presentation of the results for the periods presented. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Consolidated Financial Statements for the year ended December 31, 1997, which are available upon request of the Company. Due to the seasonal nature of the Company's business, the results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ended December 31, 1998. REVENUE RECOGNITION The Company is a national representation ("rep") firm serving radio broadcast clients throughout the United States. Commission revenue is derived from sales of advertising time for radio stations under representation contracts. Commissions and fees are recognized in the month the advertisement is broadcast. In connection with its unwired network business, the Company collects fees for unwired network radio advertising and, after deducting its commissions, remits the fees to the respective radio stations. Since it is common practice in the industry for rep companies not to pay a station until the corresponding receivable is paid, and since the receivable and payable are equal, except for the commissions, fees payable to stations have been offset against the related receivable from advertising agencies in the accompanying consolidated balance sheets. REPRESENTATION CONTRACT BUYOUT INCOME AND EXPENSE The Company's station representation contracts usually renew automatically from year to year unless either party provides written notice of termination at least twelve months prior to the next automatic renewal date. In accordance with industry practice, in lieu of termination, an arrangement is normally made for the purchase of such contracts by a successor representative firm. The purchase price paid by the successor representation firm is generally based upon the historic commission income projected over the remaining contract period plus two months (the "Buyout Period"). Income resulting from the disposition of station representation contracts and costs of obtaining station representation contracts are deferred and amortized over the Buyout Period. Such amortization is included in the accompanying consolidated statements of operations as a component of depreciation and amortization expense. Amounts which are to be amortized during the next year are included as current assets or current liabilities in the accompanying consolidated balance sheets. In addition, costs incurred as a result of commission rate reductions are deferred and amortized over the remaining life of the existing representation agreement. Such amortization is included in the accompanying consolidated statements of operations as a component of depreciation and amortization expense. F-24 INTEREP NATIONAL RADIO SALES, INC. NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (IN THOUSANDS) 2. SUBSEQUENT EVENT--FINANCING TRANSACTION On July 2, 1998, the Company issued (the "Offering") $100,000,000 aggregate principal amount of 10.0% Senior Subordinated Notes (the "Notes") due on July 1, 2008. The Notes are general unsecured obligations of the Company, and the indenture agreement for the Notes stipulates, among other things, restrictions on incurrence of additional indebtedness, payment of dividends, repurchase of equity interests (as defined), create liens (as defined), enter into transactions with affiliates (as defined), sell assets or enter into certain mergers and consolidations. The Notes bear interest at the rate of 10.0% per annum, payable semiannually in arrears on January 1 and July 1 of each year, commencing on January 1, 1999. The Notes are subject to redemption at the option of the Company, in whole or in part, at any time after July 1, 2003. In addition, at any time and from time to time prior to July 1, 2001, the Company may redeem up to an aggregate of 30% in principal amount of Notes originally issued under the indenture agreement at a redemption price equal to 110.00% of the principal amount thereof, plus accrued and unpaid interest and liquidated damages, if any, with the net cash proceeds of one or more equity offerings (as defined). A portion of the net proceeds of the Offering were used to refinance bank indebtedness and to redeem all of the outstanding shares of Series A and Series B cumulative redeemable preferred stock and all of the outstanding shares of the common stock subject to redemption. As part of the Financing Transactions, on July 2, 1998, the Company has entered into a $10.0 million revolving credit facility (the "New Credit Facility") with BankBoston, N.A. ("BankBoston") and Summit Bank ("Summit"). The term of the New Credit Facility is six years. The lenders under the New Credit Facility are BankBoston, Summit and any other lenders reasonably acceptable to the Company, with BankBoston acting as administrative agent. F-25 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following Unaudited Pro Forma Condensed Consolidated Financial Statements of Interep are based on the historical financial statements of Interep included elsewhere in the Offering Memorandum and give pro forma effect to the adjustments described in the notes hereto. The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the Financing Transactions as though these transactions had occurred on March 31, 1998. The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1997 gives effect to the Financing Transactions as though these transactions had occurred on January 1, 1997. The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 1998 gives effect to the Financing Transactions as though these transactions had occurred on January 1, 1998. The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the twelve months ended March 31, 1998 gives effect to the Financing Transactions as though these transactions had occurred on April 1, 1997. The pro forma adjustments are based upon available data and certain assumptions that Company management believes are reasonable. The Unaudited Pro Forma Condensed Consolidated Financial Statements are not necessarily indicative of the Company's financial position or results of operations that might have occurred had the aforementioned transactions been completed as of the dates indicated above and do not purport to represent what the Company's financial position or results of operations might be for any future period or date. The Unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and the related notes and the information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Prospectus. P-1 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (IN THOUSANDS)
AT MARCH 31, 1998 -------------------------------- PRO FORMA PRO ACTUAL ADJUSTMENTS FORMA -------- ----------- -------- ASSETS Current assets Cash and cash equivalents.................. $ 4,441 36,801(a) $ 41,242 Receivables, net........................... 48,532 48,532 Current portion of deferred representation contract costs............................ 38,291 38,291 Prepaid expenses and other current assets.. 932 932 -------- -------- Total current assets..................... 92,196 128,997 Fixed assets, net............................ 3,883 3,883 Deferred costs on representation contracts... 31,280 31,280 Station contract rights, net................. 2,809 2,809 Other assets................................. 14,973 3,325(b) 18,298 -------- -------- Total assets............................. $145,141 $185,267 ======== ======== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities and deferred income Current portion of long-term debt.......... $ 291 $ 291 Accounts payable and accrued expenses...... 37,991 37,991 Accrued employee-related liabilities....... 2,780 2,780 Deferred income............................ 13,973 13,973 -------- -------- Total current liabilities and deferred income.................................. 55,035 55,035 Long-term debt............................... 42,593 (42,500)(c) 93 Senior subordinated notes.................... -- 100,000(d) 100,000 Other noncurrent liabilities................. 68,700 68,700 -------- -------- Total liabilities........................ 166,328 223,828 Commitments and contingencies Redeemable securities Series A preferred stock................... 6,589 (6,589)(e) -- Series B preferred stock................... 800 (800)(e) -- Common stock subject to redemption......... 4,522 (4,522)(e) -- -------- -------- Total redeemable securities.............. 11,911 -- Shareholders' deficit Common stock............................... 14 14 Additional paid-in-capital................. 228 (228)(f) -- Accumulated deficit........................ (31,142) (5,235)(g) (36,377) Treasury stock............................. (2,198) (2,198) -------- -------- Total shareholders' deficit.............. (33,098) (38,561) -------- -------- Total liabilities and shareholders' deficit............................... $145,141 $185,267 ======== ========
P-2 NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (IN THOUSANDS) (a) CASH AND CASH EQUIVALENTS Proceeds from the issuance of Notes........................... $100,000 Cash used to pay estimated transaction fees and expenses (including discounts and commissions)........................ (4,000) Cash used to repay bank facility.............................. (42,500) Cash used for redemption of Redeemable Securities............. (16,699) -------- Net increase in cash.......................................... $ 36,801 ======== (b) OTHER ASSETS Estimated transaction fees and expenses in connection with the Offering..................................................... $ 4,000 Write-off of deferred financing costs associated with current bank facility................................................ (675) -------- Net increase in other assets.................................. $ 3,325 ======== (c) LONG-TERM DEBT Repayment of bank facility.................................... $ 42,500 ======== (d) SENIOR SUBORDINATED NOTES Proceeds from the issuance of Notes........................... $100,000 ======== (e) REDEEMABLE SECURITIES Redemption of Series A preferred stock........................ $ (6,589) Redemption of Series B preferred stock........................ (800) Redemption of common stock subject to redemption.............. (4,522) -------- Net decrease in redeemable securities......................... $(11,911) ======== (f) ADDITIONAL PAID-IN CAPITAL Amount paid in excess of carrying value to acquire Redeemable Securities attributable to Additional-paid-in-capital........ $ (228) ======== (g) ACCUMULATED DEFICIT Write-off of deferred financing costs associated with current bank facility................................................ $ (675) Amount paid in excess of carrying value to acquire Redeemable Securities................................................... (4,560) -------- Net increase in accumulated deficit........................... $ (5,235) ========
P-3 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1997 ----------------------------- PRO FORMA PRO ACTUAL ADJUSTMENTS FORMA ------- ----------- -------- Commission revenue.............................. $87,096 $ 87,096 Operating expenses: Selling expenses.............................. 63,135 63,135 General and administrative expenses........... 12,541 12,541 Depreciation and amortization expense......... 14,983 365(a) 15,348 ------- -------- Total operating expenses.................... 90,659 91,024 ------- -------- Operating loss.................................. (3,563) (3,928) Interest expense, net........................... 3,779 6,221(b) 10,000 ------- -------- Loss before provision for income taxes.......... (7,342) (13,928) Provision for income taxes...................... 412 412 ------- -------- Net loss........................................ $(7,754) $(14,340) ======= ========
(a) DEPRECIATION AND AMORTIZATION Amortization of deferred financing costs from the Offering..... $ 400 Elimination of previously recorded amortization of deferred financing costs associated with current bank facility......... (35) ------- $ 365 ======= (b) INTEREST EXPENSE, NET Interest expense on the Notes at a rate of 10% per annum....... $10,000 Elimination of previously recorded interest expense............ (3,779) ------- $ 6,221 =======
P-4 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, 1998 ---------------------------- PRO FORMA PRO ACTUAL ADJUSTMENTS FORMA ------- ----------- ------- Commission revenue............................... $15,898 $15,898 Operating expenses: Selling expenses............................... 13,836 13,836 General and administrative expenses............ 2,597 2,597 Depreciation and amortization expense.......... 2,715 65(a) 2,780 ------- ------- Total operating expenses..................... 19,148 19,213 ------- ------- Operating loss................................... (3,250) (3,315) Interest expense, net............................ 1,005 1,495(b) 2,500 ------- ------- Loss before provision for income taxes........... (4,255) (5,815) Provision for income taxes....................... 49 49 ------- ------- Net loss......................................... $(4,304) $(5,864) ======= =======
(a) DEPRECIATION AND AMORTIZATION Amortization of deferred financing costs from the Offering..... $ 100 Elimination of previously recorded amortization of deferred financing costs associated with current bank facility......... (35) ------- $ 65 ======= (b) INTEREST EXPENSE, NET Interest expense on the Notes at a rate of 10% per annum....... $ 2,500 Elimination of previously recorded interest expense............ (1,005) ------- $ 1,495 =======
P-5 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (IN THOUSANDS)
TWELVE MONTHS ENDED MARCH 31, 1998 ----------------------------- PRO FORMA PRO ACTUAL ADJUSTMENTS FORMA ------- ----------- -------- Commission revenue.............................. $87,965 $ 87,965 Operating expenses: Selling expenses.............................. 62,991 62,991 General and administrative expenses........... 12,593 12,593 Depreciation and amortization expense......... 17,376 331(a) 17,707 ------- -------- Total operating expenses.................... 92,960 93,291 ------- -------- Operating loss.................................. (4,995) (5,326) Interest expense, net........................... 3,953 6,047(b) 10,000 ------- -------- Loss before provision for income taxes.......... (8,948) (15,326) Provision for income taxes...................... 330 330 ------- -------- Net loss........................................ $(9,278) $(15,656) ======= ========
(a) DEPRECIATION AND AMORTIZATION Amortization of deferred financing costs from the Offering.... $ 400 Elimination of previously recorded amortization of deferred financing costs associated with current bank facility........ (69) -------- $ 331 ======== (b) INTEREST EXPENSE, NET Interest expense on the Notes at a rate of 10% per annum...... $ 10,000 Elimination of previously recorded interest expense........... (3,953) -------- $ 6,047 ========
P-6 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN- FORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL IN CONNECTION WITH THE EXCHANGE OFFER COV- ERED BY THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY SALE MADE HEREUNDER SHALL, UN- DER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECU- RITIES, OTHER THAN THE SECURITIES TO WHICH IT RELATES, OR ANY OFFER TO BUY THE EXCHANGE NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UN- LAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. --------------- TABLE OF CONTENTS
PAGE ---- Summary.................................................................. 1 Risk Factors............................................................. 13 The Exchange Offer....................................................... 20 Use of Proceeds.......................................................... 28 Capitalization........................................................... 29 Selected Consolidated Financial Data..................................... 30 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 32 Business................................................................. 38 Management............................................................... 45 Principal Shareholders................................................... 52 Certain Transactions and Relationships................................... 53 Description of New Credit Facility....................................... 54 Description of Exchange Notes............................................ 55 Certain United States Federal Tax Considerations for Non-United States Holders................................................................. 84 Plan of Distribution..................................................... 86 Legal Matters............................................................ 86 Independent Accountants.................................................. Available Information.................................................... ii Index to Consolidated Financial Statements............................... F-1 Unaudited Pro Forma Condensed Consolidated Financial Statements.......... P-1
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- INTEREP NATIONAL RADIO SALES, INC. OFFER TO EXCHANGE 10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES B FOR ALL OUTSTANDING 10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A --------------- PROSPECTUS --------------- , 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART II ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 727 of the Business Corporation Law of the State of New York grants each corporation organized under such laws, such as the Company, the power to indemnify its officers and directors. Article 12 of the Restated Certificate of Incorporation of the Company provides that any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was an officer or director of the Company or of any company which he served as such at the request of the Company, shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer or director is or was liable for negligence or misconduct in the performance of his duties. Article V of the Company's By-laws provides that, without limiting the generality of the foregoing, the expenses referred to in the preceding paragraph shall be deemed to include (1) if any such action, suit or proceeding shall proceed to judgment, any and all costs and other expenses imposed upon such person by reason of such judgment, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer or director is liable for negligence or misconduct in the performance of his duties; and (2) in the event of any settlement of any such action, suit or proceeding, all reasonable costs and other expenses of such settlement (other than any payments made to the Company itself), subject to the condition that the costs and other expenses of such settlement shall not substantially exceed the expenses which might reasonably be incurred in conducting such litigation to a final conclusion. A determination that the costs and other expenses of such settlement do not or did not substantially exceed the expense which might reasonably be incurred in conducting such litigation to a final conclusion made or approved (A) by a majority of the directors of the Company then in office other than any directors who may be involved in such litigation (whether or not such majority constitutes a quorum, but provided that there shall be at least two such directors in office), or (B) by the vote of the holders of at least a majority of the outstanding stock at any annual or special meeting of the shareholders of the Company, either before or after such settlement, shall conclusively satisfy such condition. If any such indemnity is paid otherwise than pursuant to a court order or action by the shareholders, the Company shall within 18 months from the date of such payment mail to its shareholders at the time entitled to vote for the election of directors a statement specifying the persons paid, the amounts of the payments and the final disposition of the litigation. The foregoing rights of indemnification are not exclusive of any other rights to which any director or officer may be entitled under any present or future law, statute, by-law, agreement, vote of stockholders or otherwise. The Company has entered into indemnity agreements with each of its directors and certain of its executive officers which provides that the indemnitee will be entitled to receive indemnification, which may include advancement of expenses, to the full extent permitted by law for all expenses, judgments, fines, penalties and settlement payments incurred by the indemnitee in actions brought against him or her in connection with any act taken in the indemnitee's capacity as a director or executive officer of the Company. Under these agreements, and indemnitee's entitlement to indemnification in a particular case will be made by a majority of the disinterested members of the Board of Directors, if such members constitute a quorum of the full Board and, if they do not, by independent legal counsel selected by the Board. II-1 ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 1.1 Purchase Agreement, dated June 29, 1998, among the Company, BancBoston Securities Inc., Loewenbaum & Company Incorporated and SPP Hambro & Co., LLC. 3.1 Restated Certificate of Incorporation of the Company dated April 25, 1985. 3.2 Certificate of Amendment of the Certificate of Incorporation of the Company, dated June 24, 1993. 3.3 Certificate of Amendment of the Certificate of Incorporation of the Company, dated November 9, 1993. 3.4 Certificate of Amendment of the Certificate of Incorporation of the Company, dated February 14, 1994. 3.5 By-Laws (as amended) of the Company. 4.1 A/B Exchange Registration Rights Agreement, dated July 2, 1998, among the Company, the Guarantors, BancBoston Securities Inc, Loewenbaum & Company Incorporated and SPP Hambro & Co., LLC. 4.2 Indenture, dated July 2, 1998, between the Company, the Guarantors and Summit Bank. 4.3 Form of Note (Included in Exhibit 4.2). 4.4 Form of Note Guarantee (Included in Exhibit 4.2). 5.1* Opinion of Christy and Viener. 10.1 Revolving Line of Credit Agreement, dated July 2, 1998, among the Company, the Guarantors and Various Financial Institutions Now or Hereafter Parties Hereto, BancBoston, N.A. and Summit Bank. 10.2 LLC Membership Interest Pledge Agreement, dated July 2, 1998, made by the Company and McGavren Guild, Inc. in favor of BancBoston, N.A. 10.3 Security Agreement, dated July 2, 1998, among the Company, the Guarantors and BankBoston, N.A. 10.4 Stock Pledge Agreement, dated July 2, 1998, by the Company in favor of BankBoston, N.A. 10.5 Agreement of Lease, dated December 31, 1992, between the Prudential Insurance Company of America and the Company. 10.6* Amended Lease, dated June 15, 1998, between the Tuxedo Park Executive Conference Center Proprietorship and the Company. 10.7 Agreement, dated June 29, 1998, between the Company and Ralph C. Guild. 10.8 Promissory Note, dated June 29, 1998 by Ralph C. Guild in favor of the Company. 10.9 Interep National Radio Sales, Inc. Compensation Deferral Plan. 10.10 Trust Agreement under the Interep National Radio Sales, Inc. Compensation Deferral Plan, dated August 22, 1994. 10.11 Services Agreement, dated June 1, 1997, between the Company and Media Financial Services, Inc. 10.12 Amendment to Services Agreement, dated July 1, 1997, between the Company and Media Financial Services, Inc.
II-2
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.13 Fourth Amended and Restated Employment Agreement, dated June 1, 1995, between the Company and Ralph C. Guild. 10.14 Employment Agreement, dated January 1, 1991, between the Company and Marc G. Guild. 10.15 Amendment, dated June 29, 1998, to Employment Agreement, dated January 1, 1991, between the Company and Marc G. Guild. 10.16 Non-Qualified Stock Option granted to Ralph C. Guild on December 31, 1988. 10.17 Amendment and Extension of Option, dated January 1, 1991, between the Company and Ralph C. Guild. 10.18 Non-Qualified Stock Option granted to Ralph C. Guild on January 1, 1991. 10.19 Non-Qualified Stock Option granted to Ralph C. Guild on December 31, 1995. 10.20 Non-Qualified Stock Option granted to Marc G. Guild on January 1, 1991. 10.21 Non-Qualified Stock Option granted to Ralph C. Guild on June 29, 1997. 10.22 Non-Qualified Stock Option granted to Marc G. Guild on June 29, 1997. 10.23 Non-Qualified Stock Option granted to William J. McEntee, Jr. on June 29, 1997. 10.24 Deferred Compensation Agreement, dated September 30, 1997, between the Company and Stewart Yaguda. 10.25 Supplemental Income Agreement, dated December 31, 1986, between the Company and Ralph C. Guild. 10.26 Agreement, dated June 18, 1993, between the Company and Ralph C. Guild. 12.1 Calculation of Ratio of Earnings to Fixed Charges. 21.1 Subsidiaries of Registrant. 23.1 Consent of Arthur Andersen LLP. 23.2* Consent of Christy & Viener (included in Exhibit 5.1). 24.1 Power of Attorney (included on signature pages hereto). 25.1 Form T-1 Statement of Eligibility Under the Trust Indenture Act of 1939 of Summit Bank. 27.1 Financial Data Schedule. 99.1* Form of Letter of Transmittal. 99.2* Form of Notice of Guaranteed Delivery.
- -------- * To be filed by Amendment. ITEM 22. UNDERTAKINGS. Each undersigned Registrant hereby undertakes: (a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in II-3 the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) That, insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (d) To respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (e) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. II-4 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE UNDERSIGNED REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, HEREUNTO DULY AUTHORIZED, IN THE STATE OF NEW YORK, ON AUGUST 4, 1998. Interep National Radio Sales, Inc. /s/ Ralph C. Guild By: _________________________________ Ralph C. Guild Chief Executive Officer KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears below makes, constitutes and appoints Ralph C. Guild and William J. McEntee, Jr., and each of them acting without the other, his attorney-in-fact and agent, in his name, place and stead, to execute on his behalf, as an officer or director of the Company, this Registration Statement and any and all amendments, including any post-effective amendments, to this Registration Statement, and to file the same, with all exhibits thereto, and any other documents in connection therewith, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and any other instruments which either of such attorneys-in-fact and agents deems necessary or desirable to enable the Company to comply with the Act and the rules and regulations promulgated thereunder and the securities or blue sky laws of any state or other governmental subdivision, giving and granting to each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises as fully to all intents as he might or could do if personally present, with full power of substitution and resubstitution, hereby ratifying and confirming all that said attorneys-in-fact, or their substitutes, may lawfully do or cause to be done by virtue thereof. PURSUANT TO THE REQUIREMENTS OF THE ACT, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. /s/ Ralph C. Guild President, Chief August 4, 1998 - ------------------------------------- Executive Officer and RALPH C. GUILD Director (Principal CHIEF EXECUTIVE OFFICER Executive Officer) /s/ Marc G. Guild President, Marketing August 4, 1998 - ------------------------------------- Division; Director MARC G. GUILD /s/ William J. McEntee, Jr. Vice President and August 4, 1998 - ------------------------------------- Chief Financial WILLIAM J. MCENTEE, JR. Officer (Principal Financial and Accounting Officer) /s/ Leslie D. Goldberg Director August 4, 1998 - ------------------------------------- LESLIE D. GOLDBERG /s/ Jerome S. Traum Director August 4, 1998 - ------------------------------------- JEROME S. TRAUM II-5 EX-1.1 2 PURCHASE AGREEMENT EXHIBIT 1.1 Execution Copy ================================================================================ INTEREP NATIONAL RADIO SALES, INC. and THE GUARANTORS LISTED ON SCHEDULE A HERETO $100,000,000 10% Senior Subordinated Notes due 2008 PURCHASE AGREEMENT June 29, 1998 BANCBOSTON SECURITIES INC. LOEWENBAUM & COMPANY INCORPORATED SPP HAMBRO & CO., LLC ================================================================================ Interep National Radio Sales, Inc. $100,000,000 10% Senior Subordinated Notes due 2008 PURCHASE AGREEMENT ------------------ June 29, 1998 New York, New York BANCBOSTON SECURITIES INC. LOEWENBAUM & COMPANY INCORPORATED SPP HAMBRO & CO., LLC c/o BANCBOSTON SECURITIES INC. 100 Federal Street Boston, Massachusetts 02110 Ladies & Gentlemen: Interep National Radio Sales, Inc., a New York corporation (the "Company"), ------- proposes to issue and sell to BancBoston Securities Inc., Loewenbaum & Company Incorporated and SPP Hambro & Co., LLC (each, an "Initial Purchaser" and, ----------------- collectively, the "Initial Purchasers") $100,000,000 in aggregate principal ------------------ amount of 10% Series A Senior Subordinated Notes due 2008 (the "Series A -------- Notes"), subject to the terms and conditions set forth herein. The Series A Notes will be issued pursuant to an indenture (the "Indenture"), to be dated as --------- of the Closing Date (as defined), among the Company, the Guarantors (as defined) and Summit Bank, as trustee (the "Trustee"). The Series A Notes will be fully ------- and unconditionally guaranteed (the "Series A Subsidiary Guarantees") as to ------------------------------ payment of principal, interest, liquidated damages and premium, if any, on an unsecured senior subordinated basis, jointly and severally, by each entity listed on Schedule A hereto (collectively, the "Guarantors"). Capitalized terms ---------- ---------- used herein and not otherwise defined shall have the meanings assigned to such terms in the Indenture. 1. Issuance of Securities. The Company proposes, upon the terms and ---------------------- subject to the conditions set forth herein, to issue and sell to the Initial Purchasers an aggregate of $100,000,000 in principal amount of Series A Notes. The Series A Notes and the Series B Notes (as defined) issuable in exchange therefor are collectively referred to herein as the "Notes" and the Series A ----- Subsidiary Guarantees and the Series B Subsidiary Guarantees (as defined) issuable in exchange therefor are collectively referred to herein as the "Subsidiary Guarantees." - ---------------------- Upon original issuance thereof, and until such time as the same is no longer required THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, AND IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAW OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE PURCHASER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. 2. Offering. The Series A Notes (including the Series A Subsidiary -------- Guarantees) will be offered and sold to the Initial Purchasers pursuant to an exemption from the registration requirements under the Act. The Company and the Guarantors have prepared a preliminary offering memorandum, dated June 12, 1998 (the "Preliminary Offering Memorandum"), and a final offering memorandum, dated ------------------------------- June 30, 1998 (the "Offering Memorandum"), relating to the Company, its ------------------- subsidiaries, the Notes and the Subsidiary Guarantees. The Initial Purchasers have advised the Company that the Initial Purchasers will make offers (the "Exempt Resales") of the Series A Notes (including the -------------- Series A Subsidiary Guarantees) on the terms set forth in the Offering Memorandum, as amended or supplemented, solely to (i) persons whom the Initial Purchasers reasonably believe to be "qualified institutional buyers," as defined in Rule 144A under the Act ("QIBs"), and (ii) non-U.S. persons outside the ---- United States in reliance upon Regulation S ("Regulation S") under the Act ------------ (each, a "Reg S Investor"). The QIBs and Reg S Investors are collectively -------------- referred to herein as the "Eligible Purchasers." The Initial Purchasers will ------------------- offer the Series A Notes (including the 2 Series A Subsidiary Guarantees) to such Eligible Purchasers initially at a price equal to 100.00% of the principal amount thereof. Such price may be changed at any time without notice. Holders (including subsequent transferees) of the Series A Notes (including the Series A Subsidiary Guarantees) will have the registration rights set forth in the registration rights agreement relating thereto in the form of Exhibit E hereto (the "Registration Rights Agreement"), to be dated the Closing Date, for ----------------------------- so long as such Series A Notes (including the Series A Subsidiary Guarantees) constitute "Transfer Restricted Securities" (as defined in the Registration ------------------------------ Rights Agreement). Pursuant to the Registration Rights Agreement, the Company and the Guarantors will agree to file with the Securities and Exchange Commission (the "Commission"), under the circumstances set forth therein, (i) a ---------- registration statement under the Act (the "Exchange Offer Registration --------------------------- Statement") relating to the 10% Series B Notes due 2008 (the "Series B Notes") - --------- -------------- and the guarantees thereof (the "Series B Subsidiary Guarantees") to be offered ------------------------------- in exchange for the Series A Notes and the Series A Subsidiary Guarantees, respectively, (the "Exchange Offer") and (ii) a shelf registration statement -------------- pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and, ------------------- together with the Exchange Offer Registration Statement, the "Registration ------------ Statements") relating to the resale by certain holders of the Series A Notes and - ---------- the Series A Subsidiary Guarantees, and to use their best efforts to cause such Registration Statements to be declared effective and to consummate the Exchange Offer. This Agreement, the Notes, the Subsidiary Guarantees, the Indenture and the Registration Rights Agreement are hereinafter referred to collectively as the "Operative Documents." ------------------- 3. Purchase, Sale and Delivery. (a) On the basis of the representations, --------------------------- warranties and covenants contained in this Agreement, and subject to its terms and conditions, (i) the Company agrees to issue and sell to the Initial Purchasers, and each of the Initial Purchasers agrees, severally and not jointly, to purchase from the Company an aggregate principal amount of Series A Notes (including the Series A Subsidiary Guarantees) set forth opposite its name on Schedule D hereto and (ii) the Guarantors agree to issue the Series A Subsidiary Guarantees. The purchase price for the Series A Notes (including the Series A Subsidiary Guarantees) will be $970 per $1,000 principal amount of Series A Note. (b) Delivery of the Series A Notes (including the Series A Subsidiary Guarantees) shall be made, against payment of the purchase price therefor, at the offices of Christy & Viener, New York, New York or such other location as may be mutually acceptable. Such delivery and payment shall be made at 9:00 a.m., New York City time, on July 2, 1998 or at such other time as shall be agreed upon by the Initial Purchasers and the Company. The time and date of such delivery and payment are herein called the "Closing Date." ------------ (c) On the Closing Date, one or more Series A Notes (including the Series A Subsidiary Guarantees) in definitive global form, registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), having an aggregate --- principal amount corresponding to the aggregate principal amount of the Series A Notes (the "Global Notes") shall be delivered by the Company and the Guarantors ------------ to the Initial Purchasers (or as the Initial Purchasers direct), against payment by the Initial Purchasers of the purchase price therefor, by wire transfer of same day funds, to an account designated by the Company, provided that the Company shall give at least two business days' prior written notice to the Initial Purchasers of the information required to effect such wire transfer. The Global Notes shall be made 3 available to the Initial Purchasers for inspection not later than 9:30 a.m. on the business day immediately preceding the Closing Date. 4. Agreements of the Company and the Guarantors. The Company and the -------------------------------------------- Guarantors, jointly and severally, covenant and agree with the Initial Purchasers as follows: (a) To advise the Initial Purchasers promptly and, if requested by the Initial Purchasers, confirm such advice in writing, (i) of the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of any Notes or Subsidiary Guarantees for offering or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any state securities commission or other regulatory authority and (ii) of the happening of any event that makes any statement of a material fact made in the Preliminary Offering Memorandum or the Offering Memorandum untrue or that requires the making of any additions to or changes in the Preliminary Offering Memorandum or the Offering Memorandum in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Company and the Guarantors shall use their reasonable best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of any Notes or Subsidiary Guarantees under any state securities or Blue Sky laws and, if at any time any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption of any Notes or Subsidiary Guarantees under any state securities or Blue Sky laws, the Company and the Guarantors shall use their reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. (b) To furnish the Initial Purchasers and those persons identified by the Initial Purchasers to the Company, without charge, as many copies of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments or supplements thereto, as the Initial Purchasers may reasonably request. The Company and the Guarantors consent to the use of the Preliminary Offering Memorandum (until the requested number of copies of the Offering Memorandum are furnished to the Initial Purchasers and to those persons identified by the Initial Purchasers) and the Offering Memorandum, and any amendments and supplements thereto required pursuant hereto, by the Initial Purchasers in connection with Exempt Resales. (c) Not to amend or supplement the Preliminary Offering Memorandum or the Offering Memorandum prior to the Closing Date unless the Initial Purchasers shall previously have been advised thereof and shall not have objected thereto within a reasonable time after being furnished a copy thereof. The Company and the Guarantors shall promptly prepare, upon the Initial Purchasers' request, any amendment or supplement to the Preliminary Offering Memorandum or the Offering Memorandum that may be necessary or advisable in connection with Exempt Resales. (d) If, after the date hereof and prior to consummation of any Exempt Resale, any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of counsel for the Company or counsel for the Initial Purchasers, it becomes necessary or advisable to amend or supplement the Preliminary Offering Memorandum or the Offering Memorandum in 4 order to make the statements therein, in the light of the circumstances when such Preliminary Offering Memorandum or Offering Memorandum is delivered to an Eligible Purchaser which is a prospective purchaser, not misleading in any material respect, or if it is necessary or advisable to amend or supplement the Preliminary Offering Memorandum or Offering Memorandum to comply with applicable law, (i) to notify the Initial Purchasers and (ii) forthwith to prepare an appropriate amendment or supplement to such Preliminary Offering Memorandum or Offering Memorandum so that the statements therein as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that such Preliminary Offering Memorandum or Offering Memorandum will comply with applicable law. (e) To cooperate with the Initial Purchasers and counsel for the Initial Purchasers in connection with the qualification or registration of the Series A Notes and Series A Subsidiary Guarantees under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may reasonably request and to continue such qualification in effect so long as required for the Exempt Resales; provided, however, that none of the Company or the Guarantors shall be required in connection therewith to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to service of process in suits or taxation, in each case, other than as to matters and transactions relating to the Preliminary Offering Memorandum, the Offering Memorandum or Exempt Resales, in any jurisdiction where it is not now so subject. (f) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement becomes effective or is terminated, to pay all costs, expenses, fees and taxes incident to the performance of the obligations of the Company and the Guarantors hereunder, including, without limitation, in connection with: (i) the preparation, printing, filing and distribution of the Preliminary Offering Memorandum and the Offering Memorandum (including, without limitation, financial statements) and all amendments and supplements thereto required pursuant hereto, (ii) the issuance, transfer and delivery of the Series A Notes and the Series A Subsidiary Guarantees to the Initial Purchasers, (iii) the qualification or registration of the Series A Notes and the Series A Subsidiary Guarantees for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the cost of printing and mailing a preliminary and final Blue Sky Memorandum and the reasonable fees and disbursements of counsel for the Initial Purchasers relating thereto), (iv) furnishing such copies of the Preliminary Offering Memorandum and the Offering Memorandum, and all amendments and supplements thereto, as may be requested for use in connection with Exempt Resales, (v) the preparation of certificates for the Series A Notes and the Series A Subsidiary Guarantees (including, without limitation, printing and engraving thereof), (vi) the fees, disbursements and expenses of the Company's and the Guarantors' counsel and accountants, (vii) all fees and expenses (including fees and expenses of counsel) of the Company and the Guarantors in connection with the approval of the Notes (including the Subsidiary Guarantees) by DTC for "book-entry" transfer, (viii) rating the Notes (including the Subsidiary Guarantees) by rating agencies, (ix) the reasonable fees and expenses of the Trustee and its counsel, (x) the performance by the Company of their other obligations under this Agreement and the other Operative Documents and (xi) "roadshow" travel and other expenses incurred by the 5 Company in connection with the marketing and sale of the Series A Notes (and the Series A Subsidiary Guarantees). (g) To use the proceeds from the sale of the Series A Notes (and the Series A Subsidiary Guarantees) in the manner described in the Offering Memorandum under the caption "Use of Proceeds." (h) Not to claim voluntarily, and to resist actively any attempts to claim, the benefit of any usury laws against the holders of any Notes or Subsidiary Guarantees. (i) To do and perform all things required to be done and performed under this Agreement by the Company and the Guarantors prior to or after the Closing Date and to satisfy all conditions precedent on their part to the delivery of the Series A Notes and the Series A Guarantees. (j) During the period beginning on the date hereof and continuing to and including the Closing Date, not to offer, sell, contract to sell or otherwise transfer or dispose of any debt securities of the Company or any Guarantor or any warrants, rights or options to purchase or otherwise acquire debt securities of the Company or any Guarantor substantially similar to the Notes or the Subsidiary Guarantees (other than (i) the Notes and the Subsidiary Guarantees and (ii) commercial paper issued in the ordinary course of business), without the prior written consent of the Initial Purchasers. (k) Not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Act) that would be integrated with the sale of the Series A Notes (and the Series A Subsidiary Guarantees) in a manner that would require the registration under the Act of the sale to the Initial Purchasers or the Eligible Purchasers of the Series A Notes (and the Series A Subsidiary Guarantees) or to take any other action that would result in the Exempt Resales not being exempt from registration under the Act. (l) For so long as any of the Series A Notes remain outstanding and during any period in which the Company and the Guarantors are not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make available to any holder or beneficial owner ------------ of Notes and Subsidiary Guarantees in connection with any sale thereof and any prospective purchaser of such Notes and Subsidiary Guarantees from such holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act. (m) To cause the Exchange Offer to be made in the appropriate form to permit registered Series B Notes and Series B Subsidiary Guarantees to be offered in exchange for the Series A Notes and Series A Subsidiary Guarantees, respectively, and to comply with all applicable federal and state securities laws in connection with the Exchange Offer. 6 (n) To comply with all of their agreements set forth in the Registration Rights Agreement and all agreements set forth in the representation letters of the Company and Guarantors to DTC relating to the approval of the Notes (including the Subsidiary Guarantees) by DTC for "book-entry" transfer. (o) To effect the inclusion of the Notes (including the Subsidiary Guarantees) in PORTAL and to obtain approval of the Notes (including the Subsidiary Guarantees) by DTC for "book-entry" transfer. (p) During a period of five years following the Closing Date, to deliver without charge to the Initial Purchasers, as they may reasonably request, promptly upon their becoming available, copies of (i) all reports or other publicly available information that the Company and the Guarantors shall mail or otherwise make available to their public securityholders and (ii) all reports, financial statements and proxy or information statements filed by the Company and the Guarantors with the Commission or any national securities exchange and such other publicly available information concerning the Company, the Guarantors, or any of their subsidiaries, including without limitation, press releases. (q) Prior to the Closing Date, to furnish to the Initial Purchasers, as soon as they have been prepared in the ordinary course by the Company, copies of any unaudited interim financial statements for any period subsequent to the periods covered by the financial statements appearing in the Offering Memorandum. (r) Not to take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Company or any of the Guarantors to facilitate the sale or resale of the Notes and the Subsidiary Guarantees. Except as permitted by the Act, the Company will not distribute any (i) preliminary offering memorandum, including, without limitation, the Preliminary Offering Memorandum, (ii) offering memorandum, including, without limitation, the Offering Memorandum, or (iii) other offering material in connection with the offering and sale of the Notes. (s) To use their best efforts to do and perform all things required or necessary to be done and performed under this Agreement prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Series A Notes and the Series A Subsidiary Guarantees. 5. Representations and Warranties. (a) The Company and the Guarantors, ------------------------------ jointly and severally, represent and warrant to the Initial Purchasers that: (i) The Preliminary Offering Memorandum as of its date does not, and the Offering Memorandum as of its date and (as amended or supplemented) as of the Closing Date does not and will not, and any supplement or amendment to any of them will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, 7 not misleading, except that the representations and warranties contained in this paragraph shall not apply to statements in or omissions from the Preliminary Offering Memorandum and the Offering Memorandum (or any supplement or amendment thereto) made in reliance upon and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by the Initial Purchasers through BancBoston Securities Inc. expressly for use therein. No stop order preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or supplement thereto, or any order asserting that any of the transactions contemplated by this Agreement are subject to the registration requirements of the Act, has been issued. (ii) The Company (A) is a New York corporation duly incorporated, validly existing and in good standing under the laws of New York, (B) has all requisite corporate power and authority to carry on its business as it is currently being conducted and as described in the Offering Memorandum and to own, lease and operate its properties, and (C) is duly qualified and is in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification except where the failure to be so qualified could not reasonably be expected to (x) result, individually or in the aggregate, in a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Company and its subsidiaries, taken as a whole, (y) interfere with or adversely affect the issuance or marketability of the Notes or the issuance of the Subsidiary Guarantees pursuant hereto or (z) in any manner draw into question the validity of this Agreement or any other Operative Document or the transactions described in the Offering Memorandum under the caption "Use of Proceeds" (any of the events set forth in clauses (x), (y) or (z), a "Material -------- Adverse Effect"). -------------- (iii) Each of the Guarantors (A) has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation or has been duly organized and is validly existing as a limited liability company in good standing under the laws of its jurisdiction of formation, (B) has all requisite corporate power and authority to carry on its business as it is currently being conducted and as described in the Offering Memorandum and to own, lease and operate its properties, and (C) is duly qualified and in good standing as a foreign corporation or foreign limited liability company, authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. (iv) The entities listed on Schedule B hereto are the only ---------- subsidiaries, direct or indirect, of the Company. All of the outstanding shares of capital stock of each of the Company's subsidiaries that are corporations have been duly authorized and validly issued and are fully paid and non assessable, and are owned by the Company, directly or indirectly through one or more subsidiaries, free and clear of any security interest, claim, lien, limitation on voting rights, encumbrance or adverse interest of any nature (collectively, "Liens"), except for those Liens contemplated by the Credit Agreement as described in the Offering Memorandum. All membership interests of each of the Company's subsidiaries that are limited liability companies are 8 owned by the Company, directly or indirectly, through one or more subsidiaries, free and clear of all Liens, except for those Liens contemplated by the Credits Documents as described in the Offering Memorandum. (v) Other than as described in the Preliminary Offering Memorandum and the Offering Memorandum, there are not currently any outstanding subscriptions, rights, warrants, calls, commitments of sale or options to acquire, or instruments convertible into or exchangeable for, any capital stock or other equity interest of the Company's subsidiaries. (vi) When the Series A Notes and the Series A Subsidiary Guarantees are issued and delivered pursuant to this Agreement, none of the Series A Notes or the Series A Subsidiary Guarantees will be of the same class (within the meaning of Rule 144A under the Act) as securities of either of the Company or of any of the Guarantors that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated inter-dealer quotation system. (vii) Each of the Company and the Guarantors has all requisite corporate or other power and authority, to execute, deliver and perform its obligations under this Agreement and each of the other Operative Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, including, without limitation, the corporate power and authority, to issue, sell and deliver the Notes and to issue and deliver the Guarantees as provided herein and therein. (viii) This Agreement has been duly and validly authorized, executed and delivered by each of the Company and the Guarantors. (ix) The Indenture has been duly and validly authorized by each of the Company and the Guarantors and on the Closing Date, will have been duly executed and delivered by each of the Company and the Guarantors. When the Indenture has been duly executed and delivered by each of the Company and the Guarantors, the Indenture will be the legal, valid and binding obligation of each of them, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. On the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the "Trust ----- Indenture Act"), and the rules and regulations of the Commission applicable ------------- to an indenture which is qualified thereunder. The Offering Memorandum contains a summary of the material terms of the Indenture, which is accurate in all material respects. (x) The Registration Rights Agreement has been duly and validly authorized by each of the Company and the Guarantors and, on the Closing Date, will have been duly executed and delivered by each of the Company and the Guarantors. When the Registration Rights Agreement has been duly executed and delivered by each of the Company and the Guarantors, the Registration Rights Agreement will be the legal, valid and binding obligation of each of the Company and the Guarantors, enforceable against each of them in accordance with its terms, subject to applicable 9 bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the material terms of the Registration Rights Agreement, which is accurate in all material respects. (xi) Each of the Company and the Guarantors has all requisite corporate or other power and authority to execute, deliver and perform its obligations under (i) that certain credit agreement (the "Credit Agreement") to be executed after the date hereof but prior to the Closing Date, by and among the Company, each of the Guarantors and BankBoston, N.A. and Summit Bank and (ii) any and all other agreements and instruments ancillary to or entered into in connection with the transactions contemplated by the Credit Agreement (items (i) and (ii) are referred to collectively as the "Credit Documents"). Each of the Credit Documents has been duly and validly authorized by each of the Company and the Guarantors and, on the Closing Date, will have been duly executed and delivered by each of the Company and the Guarantors. When each of the Credit Documents has been duly executed and delivered by each of the Company and the Guarantors, each of the Credit Documents will be the legal, valid and binding obligation of each of the Company and the Guarantors, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar laws affecting the rights of creditors generally and subject to general principles of equity. The Company will have at least $10.0 million of borrowings available to it under the Credit Agreement on the Closing Date after giving effect to all transactions contemplated by the Operative Documents, the initial borrowings under the Credit Agreement but subject to covenant compliance in the Credit Agreement. All representations and warranties to be made by the Company and the Guarantors under any of the Credit Documents are true and correct in all material respects as of the date hereof. The Offering Memorandum contains a summary of the material terms of the Credit Documents, which is accurate in all material respects. (xii) The Series A Notes have been duly and validly authorized by the Company for issuance and sale to the Initial Purchasers pursuant to this Agreement and, on the Closing Date, will have been duly executed and delivered by the Company. When the Series A Notes have been issued and authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms hereof and thereof, the Series A Notes will be the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the material terms of the Notes, which is accurate in all material respects. (xiii) The Series B Notes have been duly and validly authorized for issuance by the Company and, when issued and authenticated in accordance with the terms of the Registration Rights Agreement and the Indenture, will be the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, 10 reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. (xiv) The Series A Subsidiary Guarantees have been duly and validly authorized by each of the Guarantors and, on the Closing Date, will have been duly executed and delivered by each of the Guarantors. When the Series A Subsidiary Guarantees have been executed and delivered in accordance with the terms of the Indenture and when the Series A Notes have been issued and authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms hereof and thereof, the Series A Subsidiary Guarantees will be the legal, valid and binding obligations of each of the Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the material terms of the Subsidiary Guarantees, which is accurate in all material respects. (xv) The Series B Subsidiary Guarantees have been duly and validly authorized by each of the Guarantors and, when executed and delivered in accordance with the terms of the Indenture and when the Series B Notes have been issued and authenticated in accordance with the terms of the Registration Rights Agreement and the Indenture, will be the legal, valid and binding obligations of each of the Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. (xvi) Each of the Company and its subsidiaries is not and, after giving effect to the transactions contemplated hereby or by the other Operative Documents or the Credit Documents, will not be, (A) in violation of its charter or bylaws or other organizational documents, (B) in default in the performance of any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, which singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (C) in violation of any local, state, federal or foreign law, statute, ordinance, rule, regulation, requirement, judgment or court decree (including, without limitation, environmental laws, statutes, ordinances, rules, regulations, judgments or court decrees) applicable to it or any of its subsidiaries or any of its or their assets or properties (whether owned or leased), which singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Company and the Guarantors, there exists no condition that, with notice, the passage of time or otherwise, would constitute a default under any such document or instrument. (xvii) None of (A) the execution, delivery or performance by the Company or any of the Guarantors of this Agreement or any of the other Operative Documents or the Credit Documents, (B) the compliance by the Company or any of the Guarantors with any of the provisions hereof or 11 thereof or (C) the consummation by the Company and the Guarantors of the transactions described in the Offering Memorandum under the caption "Use of Proceeds," violates, conflicts with or constitutes a breach of any of the terms or provisions of, or, after giving effect to the transactions contemplated hereby or thereby, will violate, conflict with or constitute a breach of any of the terms or provisions of, or a default under (or an event that with notice or the lapse of time, or both, would constitute a default), or require consent under, or result in the imposition of a lien or encumbrance on any properties of the Company or any of its subsidiaries, except as contemplated by the Credit Documents as described in the Offering Memorandum, or an acceleration of any indebtedness of the Company or any of its subsidiaries pursuant to, (1) the charter or bylaws of the Company or any of its subsidiaries, (2) any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them or their property is or may be bound, (3) any statute, rule or regulation applicable to the Company or any of its subsidiaries or any of their assets or properties, (4) any judgment, order or decree of any court or governmental agency or authority having jurisdiction over the Company or any of its subsidiaries or any of their assets or properties or (5) any Permits (as defined) of the Company or any of its subsidiaries. No consent, approval, authorization or order of, or filing, registration, qualification, license or permit of or with, (A) any court or governmental agency, body or administrative agency or (B) any other person is required for (1) the execution, delivery and performance by the Company or any of the Guarantors of this Agreement or the other Operative Documents or the Credit Documents or (2) the consummation of the transactions contemplated hereby and thereby, except such as have been or will be obtained and made on or prior to the Closing Date (or, in the case of the Registration Rights Agreement, will be obtained and made under the Act, the Trust Indenture Act, and state securities or Blue Sky laws and regulations). (xviii) There is (A) no action, suit, investigation or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending or, to the best knowledge of the Company and the Guarantors, threatened or contemplated to which the Company or any of its subsidiaries is or may be a party or to which the business or property of the Company or any of its subsidiaries is or may be subject, (B) no statute, rule, regulation or order that has been enacted, adopted or issued by any governmental agency or that has been proposed by any governmental body and (C) no injunction, restraining order or order of any nature by a federal or state court or foreign court of competent jurisdiction to which the Company or any of its subsidiaries is or may be subject or to which the business, assets or property of the Company or any of its subsidiaries is or may be subject, that, in the case of clauses (A), (B) and (C) above, (1) is required to be disclosed in the Preliminary Offering Memorandum and the Offering Memorandum and that is not so disclosed, or (2) could reasonably be expected to result in a Material Adverse Effect. (xix) No action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency that prevents the issuance of the Notes or the Subsidiary Guarantees or prevents or suspends the use of the Preliminary Offering Memorandum or the Offering Memorandum; no injunction, restraining order or order of any nature by a federal or state court of competent jurisdiction has been issued that prevents the issuance of the Notes or the 12 Subsidiary Guarantees or prevents or suspends the sale of the Notes (including the Subsidiary Guarantees) in any jurisdiction referred to in Section 4(e) hereof; and every request of any securities authority or agency of any jurisdiction for additional information has been complied with in all material respects. (xx) There is (A) no unfair labor practice complaint pending against the Company or any of its subsidiaries nor threatened against any of them, before the National Labor Relations Board, any state or local labor relations board or any foreign labor relations board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Company or any of its subsidiaries or threatened against any of them, (B) no strike, labor dispute, slowdown or stoppage pending against the Company or any of its subsidiaries nor threatened against the Company or any of its subsidiaries and (C) no union representation question existing with respect to the employees of the Company or any of its subsidiaries. No collective bargaining organizing activities are taking place with respect to the Company or any of its subsidiaries, except those activities that could not reasonably be expected to have a Material Adverse Effect. None of the Company or any of its subsidiaries has violated (A) any federal, state or local law or foreign law relating to discrimination in hiring, promotion or pay of employees, (B) any applicable wage or hour laws or (C) any provision of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules ----- and regulations thereunder, except those violations that could not reasonably be expected to have a Material Adverse Effect. (xxi) None of the Company or any of its subsidiaries has violated any foreign, federal, state or local law or regulation relating to the Permits or to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws") which violation could reasonably be expected to have -------------------- a Material Adverse Effect. There is no alleged liability attributable to the Company, nor, to the best knowledge of the Company, any reasonable basis for liability (including, without limitation, alleged or potential liability for investigatory costs, cleanup costs, governmental response costs, natural resource damages, property damages, personal injuries or penalties) of the Company or any of its subsidiaries arising out of, based on or resulting from (A) the presence or release into the environment of any Hazardous Material (as defined) at any location, whether or not owned by the Company or such subsidiary, as the case may be, or (B) any violation or alleged violation of any Environmental Law, which alleged or potential liability is required to be disclosed in the Offering Memorandum, other than as disclosed therein, or could reasonably be expected to have a Material Adverse Effect. The term "Hazardous Material" means (i) any ------------------ "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl, and (v) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any other law relating to protection of human health or the environment or imposing liability or standards of conduct concerning any such chemical material, waste or substance. 13 (xxii) Each of the Company and the Guarantors has such permits, licenses, certificates, franchises and authorizations of, and approvals from, governmental or regulatory authorities ("Permits"), including, ------- without limitation, any Permits required by the Federal Communications Commission and under any applicable Environmental Laws, as are necessary to own, lease and operate their respective properties and to conduct their businesses except where the failure to have such Permits could not reasonably be expected to have a Material Adverse Effect; each of the Company and the Guarantors has fulfilled and performed all of its obligations with respect to such Permits and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any such Permit; and such Permits contain no restrictions that are materially burdensome to the Company or such Guarantor, as the case may be. All such Permits are valid and in full force and effect and each of the Company and the Guarantor is in compliance in all material respects with the terms and conditions of all such Permits and with the rules and regulations of the regulatory authorities having jurisdiction with respect thereto. (xxiii) Each of the Company and the Guarantors has (A) good and marketable title to all of the properties and assets described in the Offering Memorandum as owned by it, free and clear of all Liens, except for those Liens contemplated by the Credit Documents as described in the Offering Memorandum, (B) peaceful and undisturbed possession under all material leases to which any of them is a party as lessee and each of which lease is valid and binding and no default exists thereunder, except for defaults that could not reasonably be expected to have a Material Adverse Effect, and (C) no reason to believe that any governmental body or agency is considering limiting, suspending or revoking any Permits material to the business of the Company and its subsidiaries either individually or in the aggregate. All material leases to which the Company or any of the Guarantors is a party are valid and binding and no default by the Company or such Guarantor, as the case may be, has occurred and is continuing thereunder and no material defaults by the landlord are existing under any such lease, except those defaults that could not reasonably be expected to have a Material Adverse Effect. (xxiv) Each of the Company and the Guarantors owns, possesses or has the right to employ all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, software, systems or procedures), trademarks, service marks and trade names, inventions, computer programs, technical data and information (collectively, the "Intellectual Property") presently employed by it in connection with the ---------------------- businesses now operated by it or that are proposed to be operated by it free and clear of and without violating any right, claimed right, charge, encumbrance, pledge, security interest, restriction or lien of any kind of any other person except for those Liens contemplated by the Credit Documents as disclosed in the Offering Memorandum, and none of the Company or any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing. The use of the Intellectual Property in connection with the business and operations of the Company or any of the Guarantors does not infringe on the rights of any person, except as could not reasonably be expected to have a Material Adverse Effect. 14 (xxv) The market-related and customer related data and estimates included in the Preliminary Offering Memorandum and the Offering Memorandum are based on or derived from sources which the Company and the Guarantors believe to be reliable and accurate. (xxvi) All material tax returns required to be filed by the Company or any of its subsidiaries in all jurisdictions have been so filed. All material taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due or claimed to be due from such entities or that are due and payable have been paid, other than those being contested in good faith and for which adequate reserves have been provided or those currently payable without penalty or interest. There are no material proposed additional tax assessments against the Company or any of its subsidiaries, or the assets or property of the Company or any of its subsidiaries, except those tax assessments for which adequate reserves have been established. (xxvii) None of the Company or any of the Guarantors is and, after giving effect to the transactions contemplated herein or in the other Operative Documents or the Credit Documents and to the applications of the net proceeds from the sale and issuance of the Series A Notes and the Series A Subsidiary Guarantees to the Initial Purchasers, as described in the Offering Memorandum under the caption "Use of Proceeds," will be an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"). ----------------------- (xxviii) There are no holders of securities of the Company or any of its subsidiaries who, by reason of the execution by the Company and the Guarantors of this Agreement or any other Operative Document or the Credit Documents or the consummation by the Company and the Guarantors of the transactions contemplated hereby and thereby, have the right to request or demand that the Company or any of its subsidiaries register under the Act or analogous foreign laws and regulations securities held by them. (xxix) The Company, for itself and on behalf of the Guarantors, maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect thereto. (xxx) Each of the Company and its subsidiaries maintains insurance covering its properties, operations, personnel and businesses, insuring against such losses and risks as are consistent with reasonable and prudent practice to protect the Company and its subsidiaries and their respective businesses. None of the Company or any of its subsidiaries has received notice from any insurer or agent of such insurer that substantial capital improvements or other expenditures will have to be made in order to continue such insurance. 15 (xxxi) None of the Company or any of its subsidiaries has (A) taken, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Company or any of its subsidiaries to facilitate the sale or resale of the Notes and the Subsidiary Guarantees or (B) since the date of the Preliminary Offering Memorandum (1) sold, bid for, purchased or paid any person any compensation for soliciting purchases of the Notes or the Subsidiary Guarantees or (2) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company or any of its subsidiaries. (xxxii) No registration under the Act of the Series A Notes or the Series A Subsidiary Guarantees is required for the sale of the Series A Notes and the Series A Subsidiary Guarantees to the Initial Purchasers as contemplated hereby or for the Exempt Resales assuming (A) that the purchasers who buy the Series A Notes and the Series A Subsidiary Guarantees in the Exempt Resales are Eligible Purchasers and (B) the accuracy of the Initial Purchasers' representations regarding the absence of general solicitation in connection with the sale of Series A Notes and the Series A Subsidiary Guarantees to the Initial Purchasers and the Exempt Resales contained herein. No form of general solicitation or general advertising (as defined in Regulation D under the Act) was used by the Company or the Guarantors or any of their representatives (other than the Initial Purchasers, as to which the Company and the Guarantors make no representation or warranty) in connection with the offer and sale of any of the Series A Notes and the Series A Subsidiary Guarantees or in connection with Exempt Resales, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. No securities of the same class as the Notes or the Subsidiary Guarantees have been issued and sold by the Company or any of its subsidiaries within the six-month period immediately prior to the date hereof. (xxxiii) The execution and delivery of this Agreement, the other Operative Documents and the issuance and the sale of the Series A Notes and the Series A Subsidiary Guarantees to be purchased by Eligible Purchasers will not involve any prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986. The representation made by the Company and the Guarantors in the preceding sentence is made in reliance upon and subject to the accuracy of, and compliance with, the representations and covenants made or deemed made by Eligible Purchasers as set forth in the Offering Memorandum under the caption "Notice to Investors." (xxxiv) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its date, and each amendment or supplement thereto, as of its date, contains the information specified in, and meets the requirements of, Rule 144A(d)(4) under the Act. (xxxv) Prior to the effectiveness of any Registration Statement, the Indenture is not required to be qualified under the Trust Indenture Act. 16 (xxxvi) None of the Company or the Guarantors or any of their respective affiliates or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation) has engaged or will engage in any directed selling efforts within the meaning of Regulation S with respect to the Series A Notes or the Series A Subsidiary Guarantees. The Series A Notes and the Series A Subsidiary Guarantees offered and sold in reliance on Regulation S have been and will be offered and sold by the Company and the Guarantors only in offshore transactions. The sale of the Series A Notes and the Series A Subsidiary Guarantees pursuant to Regulation S is not part of a plan or scheme by the Company or the Guarantors to evade the registration provisions of the Act. The Company and the Guarantors and their respective affiliates and all persons acting on their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation) have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of the Series A Notes and the Series A Subsidiary Guarantees outside the United States and, in connection therewith, the Preliminary Offering Memorandum and the Offering Memorandum contains or will contain the disclosure required by Rule 902(h). (xxxvii) The Series A Notes and the Series A Subsidiary Guarantees sold in reliance on Regulation S will be represented upon issuance by a temporary global security that may not be exchanged for definitive securities until the expiration of the 40-day restricted period referred to in Rule 903(c)(3) of the Act and only upon certification of beneficial ownership of such Series A Notes and the Series A Subsidiary Guarantees by non-U.S. persons or U.S. persons who purchased such Series A Notes and Series A Subsidiary Guarantees in transactions that were exempt from the registration requirements of the Act. (xxxviii) Subsequent to the respective dates as of which information is given in the Offering Memorandum and up to the Closing Date, except as set forth in the Offering Memorandum, (A) none of the Company or any of its subsidiaries has incurred any liabilities or obligations, direct or contingent, which are material, individually or in the aggregate, to the Company and its subsidiaries, taken as a whole, (B) none of the Company or any of its subsidiaries has entered into any transaction not in the ordinary course of business other than, with respect to any of the subsidiaries of the Company who is not also a Guarantor, consummation of such subsidiary's corporate dissolution or other customary action taken reasonably pertaining thereto, (C) there has not been any change or development which, singly or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and (D) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of their capital stock. (xxxix) None of the execution, delivery and performance of this Agreement, the issuance and sale of the Series A Notes, the issuance of the Series A Subsidiary Guarantees, the application of the proceeds from the issuance and sale of the Series A Notes and the Series A Subsidiary Guarantees and the consummation of the transactions contemplated thereby as set forth in the Offering Memorandum, will violate Regulations G, T, U or X promulgated by the Board of Governors of the Federal Reserve System or analogous foreign laws and regulations. 17 (xl) Except as disclosed in the Offering Memorandum, no relationship, direct or indirect, exists between or among the Company or any of its subsidiaries on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any of its subsidiaries on the other hand, which would be required by the Act to be described in the Offering Memorandum if the Offering Memorandum were a prospectus included in a registration statement on Form S-1 filed with the Commission. (xli) The accountants who have rendered an opinion with respect to the financial statements included or to be included as part of the Offering Memorandum were, as of the respective dates of their reports, independent accountants as required by the Act. The historical financial statements of the Company, together with related schedules and notes thereto, comply as to form in all material respects with the requirements applicable to registration statements on Form S-1 under the Act and present fairly in all material respects the financial position and results of operations of the Company and its subsidiaries at the dates and for the periods indicated. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods presented. The pro forma financial statements included in the Offering Memorandum have been prepared on a basis consistent with such historical statements of the Company, except for the pro forma adjustments specified therein, and give effect to assumptions made on a reasonable basis and present fairly in all material respects the historical and proposed transactions contemplated by this Agreement and the other Operative Documents; and such pro forma financial statements comply as to form in all material respects with the requirements applicable to pro forma financial statements included in registration statements on Form S-1 under the Act, except as expressly stated therein. The other financial and statistical information and data included in the Offering Memorandum derived from the historical and pro forma financial statements, are accurately presented in all material respects and prepared on a basis consistent with the financial statements, historical and pro forma, included in the Offering Memorandum and the books and records of the Company and its subsidiaries. (xlii) All indebtedness of the Company that will be repaid with the proceeds of the issuance and sale of the Series A Notes (including the Series A Subsidiary Guarantees) was incurred, and the indebtedness represented by the Series A Notes (including the Series A Subsidiary Guarantees) is being incurred, for proper purposes and in good faith and each of the Company and the Guarantors was, at the time of the incurrence of such indebtedness that will be repaid with the proceeds of the issuance and sale of the Series A Notes (including the Series A Subsidiary Guarantees), and will be on the Closing Date (after giving effect to the application of the proceeds from the issuance of the Series A Notes (including the Series A Subsidiary Guarantees)) solvent, and had at the time of the incurrence of such indebtedness that will be repaid with the proceeds of the issuance and sale of the Series A Notes (including the Series A Subsidiary Guarantees) and will have on the Closing Date (after giving effect to the application of the proceeds from the issuance of the Series A Notes (including the Series A Subsidiary Guarantees)) sufficient capital for carrying on its business and was, at the time of the incurrence of such indebtedness that will be repaid with the proceeds of the issuance and sale of the Series A Notes (including the Series A Subsidiary Guarantees), and will be on the Closing Date (after giving effect to the application of the proceeds 18 from the issuance of the Series A Notes (including the Series A Subsidiary Guarantees)) able to pay its debts as they mature. (xliii) Except pursuant to this Agreement, there are no contracts, agreements or understandings between the Company and its subsidiaries and any other person that would give rise to a valid claim against the Company or any of its subsidiaries or the Initial Purchasers for a brokerage commission, finder's fee or like payment in connection with the issuance, purchase and sale of the Notes or the issuance of the Subsidiary Guarantees. (xliv) As of the Closing date, there will be no contracts, agreements or understandings between the Company or any Guarantor and any person granting such person the right to require the Company or such Guarantor to file a registration statement under the Act with respect to any securities of the Company or such Guarantor. There are no contracts, agreements or understandings between the Company or any Guarantor and any person granting such person the right to require the Company or such Guarantor to include any securities with the Notes and Guarantees registered pursuant to any Registration Statement. (xlv) No "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Act (i) has imposed (or has informed the Company or any Guarantor that it is considering imposing) any condition (financial or otherwise) on the Company's or any Guarantor's retaining any rating assigned to the Company or any Guarantor, any securities of the Company or any Guarantor or (ii) has indicated to the Company or any Guarantor that it is considering (a) the downgrading, suspension, or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned or (b) any change in the outlook for any rating of the Company, any Guarantor or any securities of the Company or any Guarantor. (xlvi) Each of the Company and its subsidiaries, to their knowledge, has complied with all of the provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes, and the Company and its subsidiaries are not doing business with the Government of Cuba or with any person or any affiliate located in Cuba. (xlvii) No subsidiary listed on Schedule B hereto, other than those ---------- also listed on Schedule A hereto, has, individually or in the aggregate, ---------- (i) contributed in the last fiscal year ended December 31, 1997 or in the last fiscal quarter ended March 31, 1998 greater than $10,000 of the Company's EBITDA (as defined in the Offering Memorandum) or (ii) at the period ended December 31, 1997 or March 31, 1998 constituted greater than 1% of the total assets or net assets of the Company. (xlviii) Each certificate signed by any officer of the Company or any of the Guarantors and delivered to the Initial Purchasers or counsel for the Initial Purchasers shall be deemed to be a representation and warranty by the Company or such Guarantor, as the case may be, to the Initial Purchasers as to the matters covered thereby. 19 The Company and the Guarantors acknowledge that the Initial Purchasers and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel for the Company and counsel for the Initial Purchasers, will rely upon the accuracy and truth of the foregoing representations and hereby consent to such reliance. (b) Each Initial Purchaser, severally and not jointly, represents, warrants and covenants to the Company and agrees that: (i) Such Initial Purchaser is a QIB, with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Series A Notes (including the Series A Subsidiary Guarantees). (ii) Such Initial Purchaser (A) is not acquiring the Series A Notes (including the Series A Subsidiary Guarantees) with a view to any distribution thereof that would violate the Act or the securities laws of any state of the United States or any other applicable jurisdiction and (B) will be reoffering and reselling the Series A Notes only to QIBs in reliance on the exemption from the registration requirements of the Act provided by Rule 144A in a private placement exempt from the registration requirements of the Act and in offshore transactions in reliance upon Regulation S under the Act. (iii) No form of general solicitation or general advertising (within the meaning of Regulation D under the Act) has been or will be used by such Initial Purchaser or any of its representatives in connection with the offer and sale of any of the Series A Notes (including the Series A Subsidiary Guarantees), including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. (iv) In connection with the Exempt Resales, it will solicit offers to buy the Series A Notes (including the Series A Subsidiary Guarantees) only from, and will offer to sell the Series A Notes (including the Series A Subsidiary Guarantees) only to, Eligible Purchasers. Each Initial Purchaser further (A) agrees that it will offer to sell the Series A Notes (including the Series A Subsidiary Guarantees) only to, and will solicit offers to buy the Series A Notes (including the Series A Subsidiary Guarantees) only from (1) Eligible Purchasers that such Initial Purchaser reasonably believes are QIBs, and (2) Reg S Investors, (B) in the case of such QIBs and such Reg S Investors, acknowledges and agrees that such Series A Notes (including the Series A Subsidiary Guarantees) will not have been registered under the Act and may be resold, pledged or otherwise transferred only (x)(I) to a person whom the seller reasonably believes is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting the requirements of Rule 144A, (II) in an offshore transaction (as defined in Rule 902 under the Act) meeting the requirements of Rule 904 under the Act, (III) in a transaction meeting the requirements of Rule 144 under the Act, (IV) to an institutional Accredited Investor that, prior to such transfer, furnishes the Trustee a signed letter containing certain representations and agreements relating to the registration of 20 transfer of such Series A Notes (the form of which may be obtained from the Trustee) and, if such transfer is in respect of an aggregate principal amount of Series A Notes less than $250,000, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Act or (V) in accordance with another exemption from the registration requirements of the Act (and based upon an opinion of counsel if the Company so request), (y) to the Company, (z) pursuant to an effective registration statement under the Act and, in each case, in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction and (C) acknowledges that it will, and will notify each subsequent holder that it is required to, notify any purchaser of the security evidenced thereby of the resale restrictions set forth in (B) above. (v) Such Initial Purchaser has offered the Series A Notes (including the Series A Subsidiary Guarantees) and will offer and sell the Series A Notes (A) as part of its distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Series A Notes pursuant hereto and the Closing Date, only in accordance with Rule 903 of Regulation S or another exemption from the registration requirements of the Act. Such Initial Purchaser agrees that, during such 40-day restricted period, it will not cause any advertisement with respect to the Series A Notes (including the Series A Subsidiary Guarantees) (including any "tombstone advertisement") to be published in any newspaper or periodical or posted in any public place and will not issue any circular relating to the Series A Notes (including the Series A Subsidiary Guarantees), except such advertisements as are permitted by and include the statements required by Regulation S. (vi) Such Initial Purchaser has not offered or sold and will not offer or sell the Series A Notes (including the Series A Subsidiary Guarantees) sold pursuant hereto in reliance on Regulation S (A) as part of its distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Series A Notes (including the Series A Subsidiary Guarantees) pursuant hereto and the Closing Date, to a U.S. person (as defined in Rule 902 of the Act) or for the account or benefit of a U.S. person (other than a distributor (as defined in Rule 902 of the Act)). (vii) Such Initial Purchaser agrees that, at or prior to confirmation of a sale of Series A Notes (including the Series A Subsidiary Guarantees) by it to any distributor, dealer or person receiving a selling concession, fee or other remuneration during the 40-day restricted period referred to in Rule 903(c)(3) under the Act, it will send to such distributor, dealer or person receiving a selling concession, fee or other remuneration a confirmation or notice to substantially the following effect: "The Series A Notes (and Series A Subsidiary Guarantees) covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, except in either case in accordance with Regulation S under the Act (or Rule 144A or to Accredited Investors in transactions that are exempt 21 from the registration requirements of the Act), and in connection with any subsequent sale by you of the Series A Notes (and Series A Subsidiary Guarantees) covered hereby in reliance on Regulation S during the period referred to above to any distributor, dealer or person receiving a selling concession, fee or other remuneration, you must deliver a notice to substantially the foregoing effect. Terms used above have the meanings assigned to them in Regulation S." (viii) Such Initial Purchaser agrees that the Series A Notes (and Series A Subsidiary Guarantees) offered and sold in reliance on Regulation S will be represented upon issuance by a global security that may not be exchanged for definitive securities until the expiration of the 40-day restricted period referred to in Rule 903(c)(3) of the Act and only upon certification of beneficial ownership of such Series A Notes by non-U.S. persons or U.S. persons who purchased such Series A Notes (and Series A Subsidiary Guarantees) in transactions that were exempt from the registration requirements of the Act. Such Initial Purchaser understands that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel for the Company and counsel for the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations and hereby consents to such reliance. 6. Indemnification. --------------- (a) The Company and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) the Initial Purchasers, (ii) each person, if any, who controls the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the officers, directors, partners, employees, representatives and agents of the Initial Purchasers or any controlling person to the fullest extent lawful, from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company and the Guarantors will not be liable in any such case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by or on behalf of the Initial Purchasers expressly for use therein. This 22 indemnity agreement will be in addition to any liability which the Company and the Guarantors may otherwise have, including under this Agreement. (b) Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless (i) the Company and the Guarantors, (ii) each person, if any, who controls any of the Company and the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and (iii) the respective officers, directors, trustees, partners, employees, representatives and agents of the Company and the Guarantors, or any controlling person, against any losses, liabilities, claims, damages and expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation) to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to such Initial Purchaser furnished to the Company in writing by or on behalf of such Initial Purchaser expressly for use therein; provided, however, that in no case shall such Initial Purchaser be liable or responsible for any amount in excess of the discounts and commissions received by such Initial Purchaser, as set forth on the cover page of the Offering Memorandum. This indemnity will be in addition to any liability which such Initial Purchaser may otherwise have, including under this Agreement. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the 23 defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded, based upon the advice of counsel, that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above shall only be liable for the legal expenses of one counsel (in addition to any local counsel) for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its prior written consent, provided that such consent was not unreasonably withheld. 7. Contribution. In order to provide for contribution in circumstances in ------------ which the indemnification provided for in Section 6 is for any reason held to be unavailable from the Company and the Guarantors or is insufficient to hold harmless a party indemnified thereunder, the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company and the Guarantors, any contribution received by the Company and the Guarantors from persons, other than the Initial Purchasers, who may also be liable for contribution, including persons who control the Company and the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company, the Guarantors and the Initial Purchasers may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on one hand, and the Initial Purchasers, on the other hand, from the offering of the Series A Notes or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in Section 6, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Guarantors, on one hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors, on one hand, and the Initial Purchasers, on the other hand, shall be deemed to be in the same proportion as (i) the total proceeds from the offering of Series A Notes (and Series A Subsidiary Guarantees) (net of discounts but before deducting expenses) received by the Company and the Guarantors and (ii) the discounts and commissions received by the Initial Purchasers, respectively, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault of the Company and the Guarantors, on one hand, and of the Initial Purchasers, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantors or the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or 24 omission. The Company, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 7, (i) in no case shall the Initial Purchasers be required to contribute any amount in excess of the amount by which the discounts and commissions applicable to the Series A Notes (and the Series A Subsidiary Guarantees) purchased by the Initial Purchasers pursuant to this Agreement exceeds the amount of any damages which the Initial Purchasers have otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, (A) each person, if any, who controls the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the officers, directors, partners, employees, representatives and agents of the Initial Purchasers or any controlling person shall have the same rights to contribution as the Initial Purchasers, and (A) each person, if any, who controls any of the Company and the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, trustees, partners, employees, representatives and agents of the Company and the Guarantors shall have the same rights to contribution as the Company and the Guarantors, subject in each case to clauses (i) and (ii) of this Section 7. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 7, notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 7 or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent, provided that such written consent was not unreasonably withheld. 8. Conditions of Initial Purchaser's Obligations. The obligations of the --------------------------------------------- Initial Purchasers to purchase and pay for the Series A Notes (and the Series A Subsidiary Guarantees), as provided herein, shall be subject to the satisfaction of the following conditions: (a) All of the representations and warranties of the Company and the Guarantors contained in this Agreement shall be true and correct on the date hereof and on the Closing Date with the same force and effect as if made on and as of the Closing Date. The Company and the Guarantors shall have performed or complied with all of the agreements herein contained and required to be performed or complied with by it at or prior to the Closing Date. (b) The Offering Memorandum shall have been printed and copies distributed to the Initial Purchasers not later than 10:00 a.m., New York City time, on the second business day following the date of this Agreement or at such later date and time as to which the Initial Purchasers may agree, and no stop order suspending the qualification or exemption from qualification of the Series A Notes (and the Series A Subsidiary Guarantees) in any jurisdiction referred to in Section 4(e) shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. 25 (c) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency which would, as of the Closing Date, prevent the issuance of the Series A Notes or the Series A Subsidiary Guarantees; no action, suit or proceeding shall have been commenced and be pending against or affecting or threatened against, the Company or any of its subsidiaries before any court or arbitrator or any governmental body, agency or official that, if adversely determined, could reasonably be expected to prevent the issuance of the Series A Notes or the Series A Subsidiary Guarantees; and no stop order shall have been issued preventing the use of the Offering Memorandum, or any amendment or supplement thereto, or which could reasonably be expected to have a Material Adverse Effect. (d) Since the dates as of which information is given in the Offering Memorandum, (i) there shall not have been any material adverse change, or any development that is reasonably likely to result in a material adverse change, in the capital stock or the long-term debt, or material increase in the short-term debt, of the Company or any of its subsidiaries from that set forth in the Offering Memorandum, (ii) no dividend or distribution of any kind shall have been declared, paid or made by the Company or any of its subsidiaries on any class of its capital stock (other than Tax Distributions) and (iii) none of the Company or any of its subsidiaries shall have incurred any liabilities or obligations, direct or contingent, that are or, after giving effect to the sale and issuance of the Series A Notes and Series A Subsidiary Guarantees, the initial borrowings under the Credit Agreement, and the application of the proceeds therefrom as described in the Offering Memorandum, will be material, individually or in the aggregate, to the Company and its subsidiaries, taken as a whole, and that are required to be disclosed on a balance sheet or notes thereto in accordance with generally accepted accounting principles and are not disclosed on the latest balance sheet or notes thereto included in the Offering Memorandum. Since the date hereof and since the dates as of which information is given in the Offering Memorandum, there shall not have occurred any material adverse change in the business, prospects, financial condition or results of operation of the Company and its subsidiaries, taken as a whole. (e) On or after the date hereof, (i) there shall not have occurred any downgrading, suspension or withdrawal of, nor shall any notice have been given of any potential or intended downgrading, suspension or withdrawal of, or of any review (or of any potential or intended review) for a possible change that does not indicate the direction of the possible change in, any rating of the Company or any Guarantor or any securities of the Company or any Guarantor (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction) by any "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have occurred any change, nor shall any notice have been given of any potential or intended change, in the outlook for any rating of the Company or any Guarantor or any securities of the Company or any Guarantor by any such rating organization and (iii) no such rating organization shall have given notice that it has assigned (or is considering assigning) a lower rating to the Notes than that on which the Notes were marketed. 26 (f) The Initial Purchasers shall have received certificates, dated the Closing Date, signed on behalf of the Company and the Guarantors, in form and substance satisfactory to the Initial Purchasers, confirming, as of the Closing Date, the matters set forth in paragraphs (a), (b), (c), (d) and (e) of this Section 8 and that, as of the Closing Date, the obligations of the Company and the Guarantors to be performed hereunder on or prior thereto have been duly performed. (g) The Initial Purchasers shall have received on the Closing Date an opinion, dated the Closing Date, in form and substance satisfactory to the Initial Purchasers and counsel for the Initial Purchasers, of Christy & Viener, counsel for the Company and the Guarantors, to the effect set forth in Exhibit C-1 hereto. ----------- (h) At the time this Agreement is executed and at the Closing Date, the Initial Purchasers shall have received from Arthur Andersen LLP, independent public accountants dated as of the date of this Agreement and as of the Closing Date, customary comfort letters addressed to the Initial Purchasers and in form and substance satisfactory to the Initial Purchasers and counsel for the Initial Purchasers with respect to the financial statements and certain financial information of the Company and its subsidiaries contained in the Offering Memorandum. (i) The Initial Purchasers shall have received an opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, of Latham & Watkins, counsel for the Initial Purchasers, covering such matters as are customarily covered in such opinions. (j) Latham & Watkins shall have been furnished with such documents, in addition to those set forth above, as they may reasonably require for the purpose of enabling them to review or pass upon the matters referred to in this Section 8 and in order to evidence the accuracy, completeness or satisfaction in all material respects of any of the representations, warranties or conditions herein contained. (k) Prior to the Closing Date, the Company and the Guarantors shall have furnished to the Initial Purchasers such further information, certificates and documents as the Initial Purchasers may reasonably request. (l) The Company, the Guarantors and the Trustee shall have entered into the Indenture and the Initial Purchasers shall have received counterparts, conformed as executed, thereof. (m) The Company and the Guarantors shall have entered into the Registration Rights Agreement and the Initial Purchasers shall have received counterparts, conformed as executed, thereof. (n) The Company and the subsidiaries that are parties to the Credit Documents shall have entered into each of the Credit Documents and the Initial Purchasers shall have received counterparts, conformed as executed, of each of the Credit Documents. 27 (o) The Company shall have applied the proceeds from the sale and issuance of the Series A Notes and Series A Subsidiary Guarantees in accordance with the caption "Use of Proceeds" of the Offering Memorandum. (p) The Notes shall have been approved for trading on PORTAL. (q) The Initial Purchasers shall have received a reliance letter, dated the Closing Date, from Christy & Viener, counsel for the Company and the Guarantors, authorizing each of the Initial Purchasers to rely on the opinion provided, pursuant to the provisions of the Credit Documents, by such counsel to BankBoston, N.A. and Summit Bank, as if such opinion were addressed to each of the Initial Purchasers; and such opinion shall be in form and substance satisfactory to the Initial Purchasers and shall be substantially in the form of Exhibit C-2 hereof. . ----------- All opinions, certificates, letters and other documents required by this Section 8 to be delivered by the Company and the Guarantors will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Initial Purchasers and the counsel for the Initial Purchasers. The Company and the Guarantors shall furnish the Initial Purchasers with such conformed copies of such opinions, certificates, letters and other documents as they shall reasonably request. 9. Initial Purchaser's Information. The Company acknowledges that the ------------------------------- statements with respect to the offering of the Series A Notes set forth in the third paragraph under the caption "Plan of Distribution" in the Offering Memorandum constitute the only information relating to the Initial Purchasers furnished to the Company in writing by or on behalf of the Initial Purchasers expressly for use in the Offering Memorandum. 10. Survival of Representations and Agreements. All representations and ------------------------------------------ warranties, covenants and agreements of the Initial Purchasers, the Company and the Guarantors contained in this Agreement, including the agreements contained in Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and the contribution agreements contained in Section 7, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Initial Purchasers, any controlling person thereof, or by or on behalf of the Company or the Guarantors or any controlling person thereof, and shall survive delivery of and payment for the Series A Notes to and by the Initial Purchasers. The representations contained in Section 5 and the agreements contained in Sections 4(f), 6, 7 and 11(d) shall survive the termination of this Agreement, including any termination pursuant to Section 11. 11. Effective Date of Agreement; Termination. ---------------------------------------- (a) This Agreement shall become effective upon execution and delivery of a counterpart hereof by each of the parties hereto. (b) The Initial Purchasers shall have the right to terminate this Agreement at any time prior to the Closing Date by notice to the Company from the Initial Purchasers, without liability (other than with respect to Sections 6 and 7) on the Initial Purchasers' part to the Company if, on or 28 prior to such date, (i) the Company or the Guarantors shall have failed, refused or been unable to perform in any material respect any agreement on their part to be performed hereunder, (ii) any other condition to the obligations of the Initial Purchasers hereunder as provided in Section 8 is not fulfilled when and as required in any material respect, (iii) in the reasonable judgment of the Initial Purchasers, any material adverse change shall have occurred since the respective dates as of which information is given in the Offering Memorandum in the condition (financial or otherwise), business, properties, assets, liabilities, prospects, net worth, results of operations or cash flows of the Company and its subsidiaries, taken as a whole, other than as set forth in the Offering Memorandum, or (iv)(A) any domestic or international event or act or occurrence has materially disrupted, or in the opinion of the Initial Purchasers will in the immediate future materially disrupt, the market for the Company's or the Guarantors' securities or for securities in general; or (B) trading in securities generally on the New York or American Stock Exchange shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been established, or maximum ranges for prices for securities shall have been required, on such exchange, or by such exchange or other regulatory body or governmental authority having jurisdiction; or (C) a banking moratorium shall have been declared by federal or state authorities, or a moratorium in foreign exchange trading by major international banks shall have been declared; or (D) there is an outbreak or escalation of armed hostilities involving the United States on or after the date hereof, or if there has been a declaration by the United States of a national emergency or war, the effect of which shall be, in the Initial Purchasers' judgment, to make it inadvisable or impracticable to proceed with the offering or delivery of the Series A Notes and the Series A Subsidiary Guarantees on the terms and in the manner contemplated in the Offering Memorandum; or (E) there shall have been such a material adverse change in general economic, political or financial conditions or if the effect of international conditions on the financial markets in the United States shall be such as, in the Initial Purchasers' judgment, makes it inadvisable or impracticable to proceed with the delivery of the Series A Notes and the Series A Subsidiary Guarantees as contemplated hereby. (c) Any notice of termination pursuant to this Section 11 shall be by telephone or telephonic facsimile and, in either case, confirmed in writing by letter. (d) If this Agreement shall be terminated pursuant to any of the provisions hereof (otherwise than pursuant to clause (iv) of Section 11(b), in which case each party will be responsible for its own expenses), or if the sale of the Series A Notes and the Series A Subsidiary Guarantees provided for herein is not consummated because any condition to the obligations of the Initial Purchasers set forth herein is not satisfied or because of any refusal, inability or failure on the part of the Company or the Guarantors to perform any agreement herein or comply with any provision hereof, the Company and the Guarantors shall jointly and severally reimburse the Initial Purchasers for all out-of-pocket expenses (including the reasonable fees and expenses of the Initial Purchasers' counsel), incurred by the Initial Purchasers in connection herewith. 12. Notice. All communications hereunder, except as may be otherwise ------ specifically provided herein, shall be in writing and, if sent to the Initial Purchasers shall be mailed, delivered, telecopied and 29 confirmed in writing or sent by a nationally recognized overnight courier service guaranteeing delivery on the next business day to BancBoston Securities Inc., 100 Federal Street, Boston, Massachusetts 02110, Attention: Corporate Finance Department, telecopy number: (617) 434-0624, with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York 10022, Attention: Greg Ezring, telecopy number: (212) 751-4864; and if sent to the Company or the Guarantors, shall be mailed, delivered, telecopied and confirmed in writing or sent by a nationally recognized overnight courier service guaranteeing delivery on the next business day to Interep National Radio Sales, Inc., 100 Park Avenue, New York, New York 10017, Attention: Chief Executive Officer, telecopy number (212) 309-9081 and to Interep National Radio Sales, Inc., 2090 Palm Beach Lakes Blvd., 3rd Floor, West Palm Beach, FL 33409, Attention: Chief Financial Officer, telecopy number: (561) 616-4019, with a copy to Christy & Viener, Rockefeller Center, 620 Fifth Avenue, New York, New York 10020, Attention: Laurence S. Markowitz, Esq., telecopy number: (212) 307-3314. 13. Parties. This Agreement shall inure solely to the benefit of, and ------- shall be binding upon, the Initial Purchasers, the Company and the Guarantors and the controlling persons and agents referred to in Sections 6 and 7, and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of Notes from the Initial Purchasers. 14. Construction. This Agreement shall be construed in accordance with ------------ the internal laws of the State of New York. TIME IS OF THE ESSENCE IN THIS AGREEMENT. 15. Captions. The captions included in this Agreement are included solely -------- for convenience of reference and are not to be considered a part of this Agreement. 16. Counterparts. This Agreement may be executed in various counterparts ------------ which together shall constitute one and the same instrument. [Signature page to follow] 30 If the foregoing correctly sets forth the understanding among the Initial Purchasers and the Company and the Guarantors please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among us. Very truly yours, Interep National Radio Sales, Inc. By:/s/ William J. McEntee, Jr. --------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer Guarantors: McGavren Guild, Inc. By:/s/ William J. McEntee, Jr. --------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer D&R Radio, Inc. By:/s/ William J. McEntee, Jr. --------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CBS Radio Sales, Inc. By:/s/ William J. McEntee, Jr. --------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer 31 Allied Radio Partners, Inc. By:/s/ William J. McEntee, Jr. --------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer 32 Clear Channel Radio, LLC By:/s/ William J. McEntee, Jr. --------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer Caballero Spanish Media LLC By:/s/ William J. McEntee, Jr. --------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer 33 Accepted and agreed to as of the date first above written: BancBoston Securities Inc. By: /s/ Gregory C. Foy ------------------ Name: Gregory C. Foy Title: Managing Director Loewenbaum & Company Incorporated By: /s/ Calvin L. Chrisman ---------------------- Name: Calvin L. Chrisman Title: Managing Director SPP Hambro & Co., LLC By: /s/ Stefan Shaffer ------------------ Name: Stefan Shaffer Title: President 34 Schedule A THE GUARANTORS -------------- McGavren Guild, Inc. - A New York corporation. D&R Radio, Inc. - A New York corporation. CBS Radio Sales, Inc. - A New York corporation. Allied Radio Partners, Inc. - A New York corporation. Clear Channel Radio, LLC - A New York limited liability company. Caballero Spanish Media LLC - A New York limited liability company. A-1 Schedule B THE SUBSIDIARIES ---------------- McGavren Guild, Inc.. D&R Radio, Inc. CBS Radio Sales, Inc. Allied Radio Partners, Inc. Clear Channel Radio, LLC Caballero Spanish Media LLC MG Spanish Media, Inc. McGavren Guild Radio Sales, Inc. B-1 Exhibit C-1 Form of Opinion of Christy & Viener addressed to the Initial Purchasers 1. The Company (a) is a New York corporation duly incorporated, validly existing and in good standing under the laws of New York, (b) has all requisite corporate power and authority to carry on its business as it is currently being conducted and to own, lease and operate its properties, and (c) is duly qualified and is in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. 2. Each of the Company's subsidiaries (a) is duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, (b) has all requisite corporate power and authority to carry on its business as it is currently being conducted and as described in the Offering Memorandum and to own, lease and operate its properties, and (c) is duly qualified and in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. 3. Each of the Company and the Guarantors has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Operative Documents and each of the Credit Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, including, without limitation, the corporate power and authority to issue, sell and deliver the Notes and to issue and deliver the Subsidiary Guarantees as provided herein. 4. All of the outstanding shares of capital stock of each of the Company's subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable, and are owned by the Company, free and clear of any security interest, claim, lien, limitation on voting rights, encumbrance or adverse interest of any nature. 5. The Purchase Agreement has been duly and validly authorized, executed and delivered by each of the Company and the Guarantors. 6. The Registration Rights Agreement has been duly and validly authorized, executed and delivered by each of the Company and the Guarantors, and is the valid and binding obligation of each of the Company and the Guarantors, enforceable against each of them in accordance with its terms, except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and C-1-1 (b) the enforceability of indemnification and contribution provisions may be limited by Federal and state securities laws and the policies underlying such laws. 7. The Indenture has been duly and validly authorized, executed and delivered by each of the Company and the Guarantors, and is the valid and binding obligation of each of the Company and the Guarantors, enforceable against each of them in accordance with its terms (assuming the due authorization, execution and delivery of the Indenture by the Trustee), except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity. 8. Each of the Credit Documents has been duly and validly authorized, executed and delivered by each of the Company and the subsidiaries party thereto, and is the valid and binding obligation of each of the Company and such subsidiaries, enforceable against each of them in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 9. The Series A Notes have been duly and validly authorized and executed by each of the Company for issuance and sale to the Initial Purchasers pursuant to the Agreement, and, when authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms thereof, the Series A Notes will be the valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 10. The Series B Notes have been duly and validly authorized for issuance by the Company, and, when issued and authenticated in accordance with the terms of the Registration Rights Agreement and the Indenture, the Series B Notes will be the valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 11. The Series A Subsidiary Guarantees have been duly and validly authorized and executed by each of the Guarantors, and when the Series A Notes have been issued and authenticated in accordance with the terms of the Indenture and delivered against payment C-1-2 therefor in accordance with the terms thereof, the Series A Subsidiary Guarantees will be the valid and binding obligations of each of the Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity. 12. The Series B Subsidiary Guarantees have been duly and validly authorized by each of the Guarantors, and when executed and delivered in accordance with the terms of the Registration Rights Agreement and the Indenture, and when the Series B Notes have been issued and authenticated in accordance with the terms of the Exchange Offer and the Indenture, the Series B Subsidiary Guarantees will be the valid and binding obligations of each of the Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity. 13. The Offering Memorandum contains a summary of the material terms of each of the Indenture, the Registration Rights Agreement, the Credit Documents, the Series A Notes, the Series B Notes, the Series A Subsidiary Guarantees and the Series B Subsidiary Guarantees, which, in each case, is accurate in all material respects. The statements under the captions "Risk FactorsChanges in Radio Industry Regulations and Ownership of Client Stations," "BusinessGeneral," "BusinessIndustry OverviewRepresentation Contracts," "Business--Litigation," "ManagementExecutive Compensation," "ManagementIndemnification Agreements," "Certain Transactions and Relationships," "Description of New Credit Facility" "Description of Notes," "Certain United States Federal Tax Considerations for Non-United States Holders" and "Notice to Investors" in the Offering Memorandum, insofar as such statements constitute a summary of the legal matters, documents or proceedings referred to therein, present fairly in all material respects, such legal matters, documents and proceedings. 14. To such counsel's knowledge, neither the Company nor any of its subsidiaries is in violation of its charter or bylaws or other organizational documents, as applicable. 15. No registration under the Act of the Series A Notes and the Series A Subsidiary Guarantees is required for the sale of the Series A Notes and the Series A Subsidiary Guarantees to the Initial Purchasers as contemplated by the Agreement or for the Exempt Resales assuming (a) that each of the Initial Purchasers is a QIB, (b) that the purchasers who buy the Series A Notes and the Series A Subsidiary Guarantees in the Exempt Resales are either QIBs or Reg S Investors and (c) the accuracy of the Initial Purchasers' representations regarding the absence of general solicitation in connection with the sale of Series A Notes and the Series A Subsidiary Guarantees to the Initial Purchasers and the Exempt Resales contained herein. C-1-3 16. Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its date, and each amendment or supplement thereto, as of its date (except for the financial statements and related notes, the financial statement schedules and other financial data included therein or omitted therefrom, as to which no opinion need be expressed), contains the information specified in, and meets the requirements of, Rule 144A(d)(4) under the Act. 17. To such counsel's knowledge, when the Series A Notes and the Series A Subsidiary Guarantees are issued and delivered pursuant to this Agreement, no Series A Note or Series A Subsidiary Guarantee will be of the same class (within the meaning of Rule 144A under the Act) as securities of the Company or of any of the Guarantors that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated inter-dealer quotation system. 18. None of (a) the execution, delivery or performance by the Company or any of the Guarantors of this Agreement or any of the other Operative Documents or any of the Credit Documents to which it is a party, or (b) the consummation by the Company and its subsidiaries of the transactions described in the Offering Memorandum under the caption "Use of Proceeds," violates, conflicts with or constitutes a breach of any of the terms or provisions of, or a default under (or an event that with notice or the lapse of time, or both, would constitute a default), or requires consent under, or results in the imposition of a lien or encumbrance on any properties of the Company or any of its subsidiaries, or an acceleration of any indebtedness of the Company or any of its subsidiaries pursuant to, (i) the charter or bylaws of the Company or any of its subsidiaries, (ii) any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them or their property is or may be bound that has been filed or incorporated by reference as an exhibit to any filing by the Company or any of its subsidiaries with the Commission, (iii) any statute, rule or regulation applicable to the Company or any its subsidiaries or any of their assets or properties, (iv) to such counsel's knowledge, any judgment, order or decree of any court or governmental agency or authority having jurisdiction over the Company or any of its subsidiaries or any of their assets or properties or (v) any Permits of the Company. Assuming compliance with applicable state securities and Blue Sky laws, as to which such counsel need express no opinion, and except for the filing of a registration statement under the Act and qualification of the Indenture under the Trust Indenture Act, or in connection with the Registration Rights Agreement, no consent, approval, authorization or order of, or filing, registration, qualification, license or permit of or with, (a) any court or governmental agency, body or administrative agency or (b) any other person is required for (i) the execution, delivery and performance by the Company or any of the Guarantors of the Agreement or any of the other Operative Documents or any of the Credit Documents to which it is a party or (ii) the issuance and sale of the Notes and the issuance of the Subsidiary Guarantees and the transactions contemplated thereby, except such as have been obtained and made or have been disclosed in the Offering Memorandum. C-1-4 14. To such counsel's knowledge, there is (a) no action, suit, investigation or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending or threatened to which the Company or any of its subsidiaries is or may be a party or to which the business or property of the Company or any of its subsidiaries, is or may be subject and (b) no injunction, restraining order or order of any nature by a federal or state court or foreign court of competent jurisdiction to which the Company or any of its subsidiaries is or may be subject or to which the business, assets, or property of the Company or any of its subsidiaries is or may be subject, that, in the case of clauses (a) and (b) above, is required to be disclosed in the Offering Memorandum and that is not so disclosed. 15. None of the Company or any of its subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act. 16. To such counsel's knowledge, there are no holders of securities of the Company or any of its subsidiaries who, by reason of the execution by the Company and the Guarantors of the Agreement or any other Operative Document or the consummation by the Company and the Guarantors of the transactions contemplated thereby, have the right to request or demand that the Company or any of its subsidiaries register under the Act or analogous foreign laws and regulations securities held by them. 17. To such counsel's knowledge, no stop order preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or supplement thereto, or any order asserting that any of the transactions contemplated by the Agreement are subject to the registration requirements of the Act, has been issued. 18. The Indenture complies as to form in all material respects with the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder. Prior to the Exchange Offer or the effectiveness of the Shelf Registration Statement, the Indenture is not required to be qualified under the Trust Indenture Act. In addition, such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent certified public accountants of the Company and the Guarantors and the Initial Purchasers and its representatives at which the contents of the Preliminary Offering Memorandum and the Offering Memorandum and related matters were discussed and, although it has not undertaken to investigate or verify independently, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Preliminary Offering Memorandum or the Offering Memorandum (except as indicated above), on the basis of the foregoing (relying as to materiality to the extent such counsel deems appropriate upon facts provided to such counsel by officers or other representatives of the Company and the Guarantors and without independent verification of such facts), no facts have come to its attention which led it to believe that the Preliminary Offering Memorandum or the Offering Memorandum, as of its date or the Closing Date, C-1-5 contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except as to financial statements and related notes, the financial statement schedules and other financial data included therein). C-1-6 Exhibit C-2 Form of Christy & Viener Opinion addressed to BankBoston, N.A. and Summit Bank [to be provided] C-3-1 Schedule D PRINCIPAL AMOUNT OF NOTES -------------------------
Initial Purchasers: - ------------------ BancBoston Securities Inc.............. $ 74,800,000 Loewenbaum & Company................... 9,000,000 SPP Hambro & Co., LLC.................. 16,200,000 ------------ Total............................. $100,000,000 ============
A-1 Exhibit E FORM OF REGISTRATION RIGHTS AGREEMENT ------------------------------------- A-1 EX-3.1 3 RESTATED CERTIFICATE OF INCORPORATION EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION of INTEREP NATIONAL RADIO SALES, INC. Under Section 807 of the Business Corporation Law Haley, Bader & Potts Suite 600 2000 M Street, N.W. Washington, D.C. 20036 RESTATED CERTIFICATE OF INCORPORATION of INTEREP NATIONAL RADIO SALES, INC. Under Section 807 of the Business Corporation Law Pursuant to the provisions of Section 807(a) of the Business Corporation Law of the State of New York and pursuant to a resolution duly adopted by the Board of Directors, the undersigned corporation hereby adopts the following restated certificate of incorporation: ONE. The name of the corporation is INTEREP NATIONAL RADIO SALES, INC. The name under which the corporation was originally incorporated was McGAVREN -QUINN CORPORATION. TWO. The Certificate of Incorporation was filed in the office of the Secretary of State of the State of New York on March 31, 1958. THREE. The text of the Certificate of Incorporation as Restated, and without further change, is as follows: 1. The name of the corporation is INTEREP NATIONAL RADIO SALES, INC. 2. The purposes for which the corporation is formed are: To engage in all phases of the radio, television and advertising business; including, without intending to limit the generality of the foregoing, to act as representative of television and radio stations in the sale of broadcast time, to act as representative of purchasers of broadcast time, to own, operate, license, lease, or sublease television and radio broadcasting stations and otherwise to do anything in connection therewith that a natural person could do. As principal, agent, or broker, and on commission or otherwise: to buy, sell, exchange, lease, let, grant, or take licenses in respect of, improve, develop, repair, manage, maintain and operate real property of every kind, corporeal and incorporeal, and every kind of estate, right or interest therein or pertaining thereto; to construct, improve, repair, raze and wreck buildings, structures and works of all kinds for itself or for others; to buy, sell and deal in building materials and supplies; to advance loans secured by mortgages or other liens on real estate. To act as loan broker. Generally to do everything suitable, proper and conducive to the successful conduct of a real estate business and real estate agency and brokerage business in all its branches and departments. To take, buy, purchase, exchange, hire, lease or otherwise acquire and dispose of real property. To purchase, sell, manufacture and deal in materials, goods, wares, and merchandise of any and every kind and to carry on any lawful trade or business incident to or proper or useful in connection with such purchase, sale, manufacture and dealing; to carry on any kind of retail or wholesale mercantile business. To sell, manage, improve, develop, assign, transfer, convey, lease, sublease, pledge or otherwise alienate or dispose of, and to mortgage or otherwise encumber the lands, buildings, real property, chattels, real and other property of the corporation real and/or personal and wheresoever situate, and any and all legal and equitable rights therein. To borrow money, and, from time to time, make, accept, endorse, execute and issue bonds, debentures, promissory notes, bills of exchange and other obligations of the corporation for moneys borrowed or in payment for property acquired or for any of the other objects or purposes of the corporation or its business, and to secure the payment of any such obligations by mortgage, pledge, deed, indenture, agreement or other instrument of trust, or by other lien upon, assignment of or agreement in regard to all or any part of the real or personal property, interests, rights, franchises or privileges of the corporation whenever situated, whether now owned or hereafter to be acquired. To purchase or otherwise acquire its own shares of stock (so far as may be permitted by law) and its bonds, debentures, notes, scrip or other securities or evidences of indebtedness, and to cancel or to hold, transfer or re-issue the same to such persons, firms, corporations, or associations and upon such terms and conditions as the Board of Directors may in its discretion determine without offering any thereof on the same terms or on any terms to the stockholders then of record. To do any or all things to the same extent and as fully as natural persons might or could do, and in any part of the world, and as principal, agent, contractor or otherwise, and either alone or in conjunction with any other persons, firms, associations, or corporations. To conduct its business in all its branches in the State of New York, other states, the District of Columbia, the territories and colonies of the United States, and in foreign countries, and to have one or more offices out of the State of New York, and to hold, purchase, mortgage and convey real and personal property both within and without the State of New York. To do all and everything necessary and proper for the accomplishment of the objects herein enumerated or necessary or incidental to the protection and benefit of the corporation, and in general to carry on any lawful business necessary to the attainment of the purposes of this corporation, whether such business is similar in nature to the objects and powers hereinabove set forth, or otherwise; but nothing hereinabove stated shall be construed to give this corporation any rights, powers or privileges not permitted by the laws of the State of New York to corporations organized under the Stock Corporation Law of the State of New York. The foregoing clauses shall be construed as objects, purposes and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of this corporation. -2- 3. (a) The aggregate number of shares which the Corporation shall have authority to issue is One Million (1,000,000) shares, all of which shares shall be Common Stock, par value $.04 per share. (b) No holder of shares of the Corporation shall be entitled as of right to subscribe for, purchase or receive any new or additional shares, whether no or hereafter authorized, or any notes, bonds, debentures, or other securities convertible into, or carrying options or warrants to purchase, shares; but all such new or additional shares or notes, bonds, debentures, or other securities convertible into, or carrying options or warrants to purchase, shares may be issued or disposed of by the Board of Directors to such persons and on such terms as it, in its absolute discretion, may deem advisable. 4. The office of the corporation shall be located in the Borough of Manhattan, County of New York, City and State of New York. 5. The duration of the corporation shall be perpetual. 6. The number of directors shall be not less than three, nor more than eleven, none of whom need to be stockholders. 7. Any director of this corporation may be removed at any annual or special meeting of stockholders, either with or without cause, by the same vote as that required to elect a director. 8. The Secretary of State is designated as the agent of the corporation upon whom process in any action or proceeding against the corporation may be served. The address to which the Secretary of State of the State of New York shall mail a copy of process in any action or proceeding against the corporation which may be served upon him pursuant to law is as follows: United Corporation Services, Inc. 9 East 40th Street New York, New York 10016 9. All corporate powers shall be exercised by the Board of Directors, except as otherwise provided by statute or by this Certificate. By-laws may be made by the Board of Directors, except as otherwise provided. The Board of Directors shall have power to authorize the payment of compensation to the directors for services to the corporation including fees for attendance at meetings of the Board of Directors and other meetings, and to determine the amounts of such compensation, or fees. 10. A director of the corporation shall not be disqualified by his office from dealing or contracting with the corporation either as a vendor, purchaser or otherwise, nor shall any transaction or contract of the corporation be void or voidable by reason of the fact that -3- any firm of which any director is a member or any corporation of which any director is a shareholder or director, is in any way interested in such transaction or contract; nor shall any director be liable to account to the corporation for any profits realized by or from or through any such transaction or contract of the corporation authorized, ratified or approved as aforesaid, by reason of the fact that he or any firm of which he is a member or any corporation of which is a shareholder or director was interested in such transaction or contract. Nothing herein contained shall create any liability in the events above described or prevent the authorization, ratification or approval of such contracts in any manner provided by law. 11. (a) The presence of 66-2/3% of the full Board of Directors as then provided in the Certificate of Incorporation and the Bylaws shall be necessary at any meeting of the directors in order to constitute a quorum for the transaction of any business or of any specified item of business. (b) The affirmative vote of 66-2/3% of the full Board of Directors as then provided in the Certificate of Incorporation and the Bylaws shall be necessary at any meeting of the directors for the transaction of any business or of any specified item of business. 12. Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was an officer, director or employee of the Corporation or of any Corporation which he served as such at the request of the Corporation, shall be indemnified by the Corporation against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is or was liable for negligence or misconduct in the performance of his duties. Such right of indemnification shall not be deemed exclusive of any other rights to which such officer, director or employee may be entitled apart from this provision. 13. If the incorporators or the stockholders entitled to vote adopt any provision of By-laws, or if two or more subscribers to stock or stockholders enter into any agreement, abridging, limiting or restricting the right of any one or more stockholders to sell, assign, transfer, mortgage, pledge, hypothecate, or transfer on the books of the Corporation, any or all of the stock of the Corporation held by any stockholder, or requiring any one or more stockholders first to offer any or all of the stock of the Corporation held by such stockholder for sale to other stockholders or persons or to the Corporation, under rules and regulations established in such By-laws or pursuant to such agreement, then all certificates of stock subject to such abridgment, limitation, or restriction shall have a reference thereto endorsed thereon by an officer of the Corporation, and a copy of such agreement, if any, shall be filed at the office of the Corporation, and such stock shall not thereafter be transferred on the books of the Corporation except in accordance with the terms and provisions of any such By-laws or agreement, as the case may be. -4- FOUR. The foregoing restated certificate of incorporation correctly sets forth without change, except for correction of nonsubstantive typographical errors, the corresponding provisions of the certificate of incorporation as heretofore amended, and supersedes the original certificate of incorporation and all amendments thereto. IN WITNESS WHEREOF, We hereto sign our names and affirm that the statements contained herein are true under penalties of perjury this 25th day of April, 1985. By /s/ Ralph C. Guild ------------------------------------ Its President - Ralph C. Guild and /s/ Patrick G. Healy ----------------------------------- Its Secretary - Patrick G. Healy STATE OF NEW YORK ) COUNTY OF NEW YORK )ss: On this 25th day of April, 1985, before me personally came RALPH C. GUILD and PATRICK G. HEALY to me known and known to me to be the individuals described in and who executed the foregoing instrument and they duly severally acknowledged to me that they executed the same. /s/ Jane Sperrazza ---------------------------------------- Notary Public -5- EX-3.2 4 CERTIFICATE OF AMENDMENT EXHIBIT 3.2 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF INTEREP NATIONAL RADIO SALES, INC. Under Section 805 of the Business Corporation Law of the State of New York Haley Bader & Potts 4350 N. Fairfax Dr. Suite 900 Arlington, Virginia 22203 CERTIFICATE OF AMENDMENT of the CERTIFICATE OF INCORPORATION of INTEREP NATIONAL RADIO SALES, INC. _________________________________________________ Under Section 805 of the Business Corporation Law __________________________________________________ The undersigned President of INTEREP NATIONAL RADIO SALES, INC., for the purpose of amending its Certificate of Incorporation, CERTIFIES that: FIRST: The name of the corporation is INTEREP NATIONAL RADIO SALES, INC. (the "Corporation"). The name under which the corporation was originally incorporated was McGAVERN QUINN CORPORATION. SECOND: The Certificate of Incorporation of the Corporation was filed by the Department of State on March 31, 1958. A Restated Certificate of Incorporation was filed on May 28, 1985, and since the filing of the Restated Certificate of Incorporation a Certificate of Amendment thereof was filed on June 13, 1991. THIRD: The Certificate of Incorporation of the Corporation is to be amended by the deletion in its entirety of Article THIRD, which sets forth the total number of shares of stock which the Corporation is authorized to issue, and by the substitution of a new Article THIRD, which will increase the authorized shares by authorizing a class of Preferred Stock consisting of One Million (1,000,000) shares of the par value of $0.01 per share, and which shall read in its entirety as follows: 3. The Corporation shall have authority to issue a total of Two Million (2,000,000) shares of stock of which One Million (1,000,000) shares shall be Common Stock of the par value of $0.04 per share and One Million (1,000,000) shares shall be Preferred Stock of the par value of $0.01 per share. PREFERRED STOCK Shares of the Preferred Stock may be issued from time to time in series, and the Board of Directors of the corporation is authorized, subject to the limitations provided by law, to establish and designate one or more series of the Preferred Stock, to fix the number of shares constituting each series, and to fix the designations and rights, preferences and limitations of each series and the variations and relative rights, preferences and limitations as between series, and to increase and to decrease the number of shares constituting each series. The authority of the Board of Directors of the Corporation with respect to each series shall include, but shall not be limited to, the authority to determine the following: (a) the designation of such series; (b) the number of shares initially constituting such series and any increase or decrease (to a number not less than the number of outstanding shares of such series) of the number of shares constituting such series theretofore fixed; (c) the rate or rates, and the conditions on and the times at which dividends on the shares of such series shall be paid, the preference or relation which such dividends shall bear to the dividends payable on any other class or series of stock of the Corporation, and whether or not such dividends shall be cumulative and, if so, the date or dates from and after which they shall accumulate; (d) whether or not the shares of such series shall be redeemable, and, if so, the terms and conditions of such redemption, including, without limitation, the date or dates on or after which such shares shall be redeemable and the amount per share which shall be payable on such redemption, which amount may vary under different conditions and at different redemption dates; (e) the rights to which the holders of the shares of such series shall be entitled on the voluntary or involuntary liquidation, dissolution or winding up or on any distribution of the assets, of the Corporation, which rights may be different in the case of a voluntary liquidation, dissolution or winding up than in the case of such an involuntary event; (f) whether or not the shares of such series shall have voting rights in addition to the voting rights provided by law and, if so, the terms and conditions thereof, including, without limitation, the right of the holders of such shares to vote on a separate class, either alone or with the holders of shares of one or more other series of the Preferred Stock and the right to have more than one vote per share; -2- (g) whether or not a sinking fund or a purchase fund shall be provided for the redemption or purchase of the shares of such series and, if so, the terms and conditions thereof; (h) whether or not the shares of such series shall be convertible into, or exchangeable for, shares of any other class or series of the same or any other class of stock of the Corporation and, if so, the terms and conditions of conversion or exchange, including, without limitation, any provision for the adjustment of the conversion or exchange rate or the conversion or exchange price; and (i) any other relative rights, preferences and limitation. COMMON STOCK (a) Subject to the preferential dividend rights of the Preferred Stock, as determined by the Board of Directors of the Corporation pursuant to the foregoing provisions of this Article THREE, the holders of shares of the Common Stock shall be entitled to receive such dividends as may be declared by the Board of Directors of the Corporation. (b) Subject to the preferential liquidation rights of the Preferred Stock and except as determined by the Board of Directors of the Corporation pursuant to the foregoing provisions of this Article THREE, in the event of any voluntary or involuntary liquidations, dissolution or winding up of, or any distribution of the assets of, the Corporation. the holders of shares of the Common Stock shall be entitled to receive all of the assets of the Corporation available for distribution to its shareholders ratably in proportion to the number of shares of the Common stock held by them. (c) Except as otherwise required by law or by the provisions of this Certificate of Incorporation, the holders of shares of the Common Stock shall be entitled to vote on all matters at all meetings of the shareholders of the Corporation, and shall be entitled to one vote for each share of the Common Stock entitled to vote at such meeting, voting together as one class with the holders of the Preferred Stock who are entitled to vote. FOURTH: The foregoing amendment was duly authorized in accordance with Section 803(a) of the Business Corporation Law by the unanimous written consent of the Board of Directors of the Corporation on June 1, 1993, followed by the affirmative vote of the holders of a majority of the outstanding shares of the Corporation's Common stock entitled to vote thereon at a meeting of the shareholders of the Corporation duly called and held on June 23, 1993. -3- IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment on June 24, 1993 and affirms its contents as true under penalties of perjury. /s/ Ralph C. Guild ---------------------------------- Ralph C. Guild Chairman and Chairman of the Board /s/ John A. Rykala - ---------------------------- Secretary, John A. Rykala -4- EX-3.3 5 CERTIFICATE OF AMENDMENT EXHIBIT 3.3 CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF INTEREP NATIONAL RADIO SALES, INC. _________________________________________________ Under Section 805 of the Business Corporation Law _________________________________________________ CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF INTEREP NATIONAL RADIO SALES, INC. _________________________________________________ Pursuant to Section 805 of the Business Corporation Law of the State of New York _________________________________________________ The undersigned President of INTEREP NATIONAL RADIO SALES, INC., for the purpose of amending its Certificate of Incorporation, CERTIFIES that: FIRST: The name of the corporation is INTEREP NATIONAL RADIO SALES, INC., (the "Corporation"). The name under which the Corporation was formed was McGavron-Quinn Corporation. SECOND: The Certificate of Incorporation of the Corporation was filed by the Department of State on March 31, 1958, a Restated Certificate of Incorporation was filed on May 28, 1985, a Certificate of Change thereof was filed on June 13, 1991 and a Certificate of Amendment thereof was filed on June 26, 1993. THIRD: The Certificate of Incorporation of the Corporation is to be amended by the addition of provision stating the number, designation, relative rights, preferences and limitations of the shares of the Series A Cumulative Redeemable Preferred Stock of the Corporation and Series B Cumulative Redeemable Preferred Stock of the Corporation, as fixed by the Board of Directors of the Corporation pursuant to authority to do so set forth in ARTICLE FOURTH of the Certificate of Incorporation of the Corporation, which provision shall read in its entirety as follows: -2- I. SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK A series of Series A Cumulative Redeemable Preferred Stock, consisting of 25,000 shares of Preferred Stock which the Corporation has authority to issue, is created, and the designated and relative rights, preferences and limitations of the shares of such series are fixed as follows: Series A Cumulative Redeemable Preferred Stock ---------------------------------------------- 1. Designation. The designation of such series is "Series A ----------- Cumulative Redeemable Preferred Stock" (hereinafter in this Certificate of Amendment called the "Series A Preferred Stock") and the number of shares constituting such series shall be 25,000, which number may be decreased (but not increased) by the Board of Directors without a vote of stockholders; provided, -------- however, that such number may not be decreased below the number of then - ------- currently outstanding shares of Series A Preferred Stock, plus the number of shares of Series A Preferred Stock, required to be issued in connection with the payment of dividends thereon. All capitalized terms used in this part I and not otherwise defined shall have the meaning given to such terms in Section 12 hereof. 2. Dividends. (a). The holders of shares of Series A Preferred --------- Stock, on a parity with the holders of shares of Series B Preferred Stock (as hereinafter defined) and otherwise in preference to the holders of the Junior Securities, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, cumulative dividends as provided in this Section 2. Dividends on each share of Series A Preferred Stock shall accrue at the rate of 10% per annum of the sum of (i) the Liquidation Value and (ii) all accumulated and unpaid dividends thereon. Such dividend rate shall be increased to accrue at the rate of 15% per annum of the sum of (i) the Liquidation Value and (ii) all accumulated and unpaid dividends thereon from and after the occurrence of a Trigger Event; provided, however, that the dividend rate shall be restored to 10% per annum for any period thereafter during which no Trigger Events exist, subject to being increased again to 15% per annum upon the occurrence of a Trigger Event. An authorized officer of the Corporation shall deliver to the holders of Series A Preferred Stock a certificate certifying the date as of which the Corporation believes that any Trigger Event has been cured or has otherwise ceased to exist, specifying in reasonable detail the basis for such belief. Such dividends shall commence to accrue on each share of Series A Preferred Stock from the date of issuance thereof whether or not declared by the Board of Directors and shall continue to accrue thereon until the date the Liquidation value of such share (plus all accrued and unpaid dividends thereon) is paid. For purposes of determining the amount of dividends accrued on the Series A Preferred Stock pursuant to this Section 2 in connection with the sale, redemption or repurchase of any Series A Preferred Stock which may occur prior to December 31 of any year, the applicable dividend rate(s) for such period shall be multiplied by a fraction, the numerator of which is the actual number of days elapsed in the then current year and the denominator of which is 365. Such dividends shall be payable annually to the record holders of the Series A Preferred Stock on December 31 of each year commencing December 31, 1993 which dividends shall be payable in cash, by wire transfer of immediately available federal funds or, to the extent the Board of -3- Directors of the Corporation in its sole discretion so desires, in additional shares of Series A Preferred Stock valued at $1,000 per share which shares shall be deemed fully paid and non-assessable. (b) If in any fiscal year, the Corporation assigns to the trustees of the ESOP the Corporation's obligations to repurchase shares of the Corporation's stock from the ESOP in connection with distributions to or stock repurchase from plan participants, and the trustees of the ESOP assume such obligation, and the amount of the Corporation's direct or indirect contributions to the ESOP in connection with such assignment and assumption exceeds the Threshold Amount (the "Excess Contributions"), each holder of Series A Preferred Stock shall be entitled to receive, in addition to the dividends provided for in subsection (a) above, a dividend equal to (i) the Excess Contributions divided by the number of shares of Common Stock then held by the ESOP (before giving effect to any repurchases effected or to be effected with such Excess Contributions), multiplied by (ii) the number of shares of Common Stock then held by such holder of the Series A Preferred Stock (the "Additional Dividend"). For purpose of this subsection (b), the "Threshold Amount" shall mean for fiscal years 1993 and 1994, any contributions to the ESOP in excess of $800,000 which amount shall be increased by Forty Thousand Dollars ($40,000) per annum effective as of January 1, 1995 and on each January 1 thereafter. Such Additional Dividends shall be payable no later than March 31 of each year with respect to any Excess Contributions paid during the preceding calender year and shall be paid in cash, by wire transfer of immediately available federal funds or, if such cash payment is not then permitted by the Corporation's institutional lender(s), in additional shares of Series A Preferred Stock valued at $1,000 per share which shares shall be deemed fully paid and non-assessable. Upon payment of any Additional Dividend, the Corporation shall provide to Providence Media a written explanation of the calculation of such Additional Dividend. (c) Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series A Preferred Stock, such payment shall be distributed ratably among the holders thereof based upon the aggregate accrued but unpaid dividends on the Series A Preferred Stock held by each holder. (d) Except as otherwise provided in this Certificate of Amendment, the Purchase Agreement or the Shareholders' Agreement, so long as any shares of Series A Preferred Stock are outstanding, the Corporation will not declare, pay or set apart for payment any dividends or make any other distribution on or redeem any Junior Securities and will not permit any subsidiary or other affiliate to redeem, purchase or otherwise acquire for value, or set apart for any sinking or other analogous fund for the redemption or purchase of, any Junior Securities. 3. Liquidation Preference. (a) In the event of any liquidation, ---------------------- dissolution or winding up of the affairs of the Corporation, either voluntarily or involuntarily, each holder of Series A Preferred Stock shall be entitled, after provision for the payment of the Corporation's debts and other liabilities, to be paid in cash by wire transfer of immediately available federal funds the aggregate Liquidation value of all shares of Series A Preferred Stock held by such holder plus an amount equal to the sum of all accrued and unpaid dividends thereon and all -4- unpaid Additional Dividends, whether or not declared to the date of such payment, before any distribution is made on any Junior Securities. If, upon any such liquidation, dissolution or other winding up of the affairs of the Corporation, the net assets of the Corporation distributable among the holders of all outstanding shares of the Series A Preferred Stock shall be insufficient to permit the payment in full to such holders of the preferential amounts to which they are entitled, then the entire net assets of the Corporation remaining after the provision for the payment of the Corporation's debts and other liabilities shall be distributed among the holders of the Series A Preferred Stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled. (b) Holders of Series A Preferred Stock shall not be entitled to any additional distribution in the event of any liquidation, dissolution or winding up of the affairs of the Corporation in excess of the preferential amount referred to in Section 3(a) above. 4. Voting Rights. (a) The holders of Series A Preferred Stock ------------- shall not have or be entitled to any voting rights or powers, either general or special, except as required by law and subparagraph (b) of this Section 4. (b) The holders of shares of Series A Preferred Stock shall have the following voting rights: (i) The affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock, voting separately as a single series, in person or by proxy, at a special or annual meeting of stockholders called for the purpose, shall be necessary to (i) authorize, or increase the authorized number of shares of, or issue, any class or series of the Corporation's capital stock ranking (either as to dividends or upon liquidation, dissolution or winding up) prior to, or on a parity with, the Series A Preferred Stock, including shares of Series A Preferred Stock authorized pursuant to this Certificate of Amendment and issued after the date of original issuance of the Series A Preferred Stock, provided that no such vote shall be required to issue additional shares of Series A Preferred Stock as a dividend to the holders of Series A Preferred Stock in accordance with Section 2 hereof or to issue shares of Series B Preferred Stock having a liquidation value of up to $2,000,000 in the aggregate including dividends on such Series B Preferred Stock payable solely in additional shares of Series B Preferred Stock in accordance with this Certificate of Amendment, or (ii) amend, repeal or change, directly or indirectly, any of the provisions of the Certificate of Incorporation of the Corporation, as amended, in any manner which would alter or change the powers, preferences or special rights of the shares of Series A Preferred Stock so as to affect them adversely. (ii) The rights of holders of shares of Series A Preferred Stock to vote or take any other actions as provided in this Section 4 may be exercised at any annual meeting of stockholders or at a special meeting of stockholders held for such purposes. At each meeting of stockholders at which the holders of shares of Series A Preferred Stock shall have the right, voting separately as a single series, to take any action as provided in this -5- Section 4, the presence in person or by proxy of the holders of record of a majority of the total number of shares of Series A Preferred Stock then outstanding and entitled to vote on the matter shall be necessary and sufficient to constitute a quorum. At any such meeting or at any adjournment thereof, in the absence of a quorum of the holders of shares of Series A Preferred Stock, a majority of the holders of such shares present in person or by proxy shall have the power to adjourn the meeting as to the actions to be taken by the holders of shares of Series A Preferred Stock from time to time and place to place without notice other than announcement at the meeting until a quorum shall be present. (iii) For the taking of any action as provided in this Section 4 by the holders of shares of Series A Preferred Stock, each such holder shall have one vote for each share of such stock standing in his name on the transfer books of the Corporation as of any record date fixed for such purpose or, if no such date be fixed, at the close of business on the business day next preceding the day on which notice is given, or if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. "Business Day" shall mean any date other than a Saturday, Sunday or a day on which banking institutions in the State of Rhode Island are authorized or obligated by law or executive order to close. 5. Redemption. (a) The Series A Preferred Stock then outstanding ---------- shall be redeemed in whole on or after October 31, 2003 (the "Mandatory Redemption"). The Corporation shall give each holder of Series A Preferred Stock not less than 10 nor more than 20 days notice of such redemption (the date set forth in such notice for the redemption of said shares of Series A Preferred Stock shall hereinafter be referred to as the "Mandatory Redemption Date"). The Corporation shall redeem on the Mandatory Redemption Date all shares of Series A Preferred Stock held by the holders of Series A Preferred Stock in cash by wire transfer of immediately available funds at the Liquidation Value plus an amount ---- equal to the sum of all accrued and unpaid dividends including unpaid Additional Dividends (whether or not declared by the Board of Directors) on the Series A Preferred Stock to be redeemed as of the Mandatory Redemption Date. (b) The Series A Preferred Stock may be redeemed at the option of the holder(s) of a majority of the then outstanding Series A Preferred Stock on the earlier to occur of (i) the Sale of the Corporation or (ii) a Trigger Event (each an "Optional Redemption"). In either case, the holders of a majority of the outstanding Series A Preferred Stock shall notify the Corporation in writing of its or their intent to exercise the rights afforded by this Section 5(b) and specify a date not less than 10 nor more than 60 days from the date of such notice on which the Series A Preferred Stock shall be redeemed (the "Optional Redemption Date"). Upon receipt of such notice, the Corporation shall promptly notify the remaining holders of the Series A Preferred Stock of the Optional Redemption Date and offer such shareholders the opportunity to redeem their shares of Series A Preferred Stock on such Optional Redemption Date. The recipients of such notice may participate in the Optional Redemption by giving prompt written notice to the Corporation to such effect. The Corporation shall redeem on the Optional -6- Redemption Date all shares of Series A Preferred Stock held by the holders of the Series A Preferred Stock electing to participate in such Optional Redemption in cash by wire transfer of immediately available funds at the Liquidation Value plus an amount equal to the sum of all accrued and unpaid dividends including - ---- unpaid Additional Dividends (whether or not declared by the Board of Directors) on the Series A Preferred Stock to be redeemed on such Optional Redemption Date. (c) On and after any Mandatory Redemption Date or any Optional Redemption Date, dividends will cease to accumulate on shares of Series A Preferred Stock to be redeemed and the holders of the Series A Preferred Stock shall cease to have any rights as stockholders of the Corporation except the right to receive, without interest, the Liquidation Value thereof and an amount equal to the sum of all accrued and unpaid dividends, including unpaid Additional Dividends, upon the surrender of the certificate(s) representing the Series A Preferred Stock to the Corporation; provided, however, that in the -------- ------- event any holder of Series A Preferred Stock tenders its shares to the Corporation on any Mandatory Redemption Date or any Optional Redemption Date, the Corporation shall be obligated to pay interest on the Liquidation Value at the maximum rate allowable under applicable law in the event the Corporation defaults in its obligation to pay the Liquidation Value on any such Mandatory Redemption Date or Optional Redemption Date. If less than all of the outstanding shares of Series A Preferred Stock are to be redeemed, such shares shall be redeemed pro rata in accordance with the number of Series A Preferred --- ---- Stock owned by each holder of Series A Preferred Stock. (d) The redemption by the Corporation of all or any part of the Series A Preferred Stock pursuant this Section 5 is subject to the provisions of applicable corporate law. 6. Redemption Notice. The notice described in Section 5 hereof ----------------- shall be sent, if by or on behalf of the Corporation to the holders of the Series A Preferred Stock at their respective addresses as shall then appear on the records of the Corporation, or if by any holder of Series A Preferred Stock to the Corporation at 100 Park Avenue, New York, New York 10017, Attention: Chief Financial Officer, by first class mail, postage prepaid, a. notifying such recipient of the redemption, the date of such redemption, the number of shares of Series A Preferred Stock to be redeemed, and the redemption price therefor and b. in the case of any notice by or on behalf of the Corporation, stating the place or places at which the shares called for redemption shall, upon presentation and surrender of such certificates representing such shares, by redeemed. 7. Status of Reacquired Shares. Shares of Series A Preferred Stock --------------------------- which have been issued and reacquired in any manner shall (upon compliance with any applicable provisions of the laws of the State of New York) have the status of authorized and unissued shares of Series A Preferred Stock issuable in series undesignated as to series and may be redesignated and reissued. 8. Exclusion of Other Rights. Except as may otherwise be required ------------------------- by law, the shares of Series A Preferred Stock shall not have any preferences or relative, participating, -7- optional or other special rights, other than those specifically set forth in this Certificate of Amendment. The shares of Series A Preferred Stock shall have no preemptive or subscription rights. 9. Rank. The Series A Preferred Stock shall rank senior as to ---- dividends and upon liquidation, dissolution or winding up to all Junior Securities, whenever issued, provided, however, that the Series B Preferred Stock shall be on a parity with the Series A Preferred Stock as to dividends. 10. Identical Rights. Each share of the Series A Preferred Stock ---------------- shall have the same relative rights and preferences as, and shall be identical in all respects with, all other shares of the Series A Preferred Stock. 11. Certificates. So long as any shares of the Series A Preferred ------------ Stock are outstanding, there shall be set forth on the face or back of each stock certificate issued by the Corporation a statement that the Corporation shall furnish without charge to each shareholder who so requests, a full statement of the designation and relative rights, preferences and limitations of each class of stock or series thereof that the Corporation is authorized to issue and of the authority of the Board of Directors to designate and fix the relative rights, preferences and limitations of each series. 12. Definitions. ----------- "ESOP" means the Interep National Radio Sales Employee Stock Ownership Plan and Trust. "401(k) Plan" means The Interep National Radio Store Wealth Attainment Plan and Trust. "Junior Securities" means any of the Corporation's equity securities other than the Series A Preferred Stock. "Liquidation Value" of any share of Series A Preferred Stock or Series B Preferred Stock shall be $1,000. "Person" means an individual, partnership, corporation, association, trust, joint venture, unincorporated organization and any government, governmental department or agency or political subdivision thereof. "Providence Media" means Providence Media Partners L.P., a Delaware limited partnership. "Purchase Agreement" means that certain Securities Purchase Agreement of even date herewith between Providence Media and the Corporation. -8- "Sale of the Corporation" means the sale of the Corporation to a Person or group of Persons in a single transaction or a series of transactions pursuant to which such Person or Persons acquire (i) capital stock of the Corporation possessing the voting power to elect a majority of the Corporation's board of directors (whether by merger, consolidation or sale or transfer of the Corporation's capital stock, provided, however, that an IPO that results in an acquisition of voting power shall not be a Sale of the Corporation) or (ii) all or substantially all of the Corporation's assets determined on a consolidation basis. "Shareholders' Agreement" means that certain Shareholders' Agreement of even date herewith, among the Corporation, Providence Media and certain other stockholders of the Corporation. "Trigger Event" means the occurrence of any of the following: (i) the Corporation shall fail in any material respect to perform or observe any of the covenants set forth in the Purchase Agreement and such failure shall continue unremedied for more than 30 days from the occurrence thereof; or (ii) the Corporation shall be obligated (which shall include the obligation to provide funding for purchases by the ESOP and/or THE 401(k) Plan to repurchase or redeem shares of its common stock constituting more than 15% of the issued and outstanding common stock of the Corporation, whether in a single transaction or a series of transactions occurring during the course of any twelve month period; or (iii) the Corporation fails to file a registration statement upon the exercise of Providence Media's rights under the Shareholders' Agreement or that certain Registration Rights Agreement of even date herewith between the Corporation and Providence Media; or (iv) the Corporation fails to purchase the PMP Securities (as defined in the Shareholders' Agreement) by, and in accordance with Section 3 of such Shareholders' Agreement within 120 days of delivery of a Put Notice (as defined in the Shareholders' Agreement) regardless of whether the failure to complete such purchase results from the Corporation's lack of sufficient capital to tender the Put Purchase Price (as defined in the Shareholders' Agreement) for such securities; or (v) violation of the Corporation's Articles of Incorporation or by- laws with respect to the Series A Preferred Stock; or (vi) the Corporation violates the terms of that certain side letter of even date herewith between the Corporation and Providence Media and such violation shall continue unremedied for more than 30 days after notice of such violation is provided by Providence Media to the Corporation; or -9- (vii) the imposition by the Federal Trade Commission of any material fine or penalty or other form of relief or enforcement action which has a material adverse effect on the Company. II. SERIES B CUMULATIVE REDEEMABLE PREFERRED STOCK A series of Series B Cumulative Redeemable Preferred Stock, consisting of 5,000 shares of Preferred Stock which the Corporation has authority to issue, is created, and the designation and relative rights, preferences and limitations of the shares of such series are fixed as follows: Series B Cumulative Redeemable Preferred Stock ---------------------------------------------- 1. Designation. The designation of such series is "Series B ----------- Cumulative Redeemable Preferred Stock" (hereinafter in this Certificate of Amendment called the "Series B Preferred Stock") and the number of shares constituting such series shall be 5,000, which number may be decreased (but not increased) by the Board of Directors without a vote of stockholders; provided, -------- however, that such number may not be decreased below the number of then - ------- currently outstanding shares of Series B Preferred Stock, plus the number of shares of Series B Preferred Stock required to be issued in connection with the payment of dividends thereon. All capitalized terms used in this part II and not otherwise defined shall have the meaning given to such terms in Section 12 of part I hereof. 2. Dividends. (a) The holders of shares of Series B Preferred --------- Stock, on a parity with the holders of the Series A Preferred Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, cumulative dividends as provided in this Section 2. Dividends on each share of Series B Preferred Stock shall accrue at the rate of 10% per annum of the sum of (i) the liquidation Value and (ii) all accumulated and unpaid dividends thereon. Such dividends shall commence to accrue on each share of Series B Preferred Stock from the date of issuance thereof whether or not declared by the Board of Directors and shall continue to accrue thereon until the date the Liquidation Value of such share (plus all accrued and unpaid dividends thereon) is paid. For purposes of determining the amount of dividends accrued on the Series B Preferred Stock in connection with the sale, redemption or repurchase of any Series B Preferred Stock which may occur prior to December 31 of any year, the applicable dividend rate(s) for such period shall be multiplied by a fraction, the numerator of which is the actual number of days elapsed in the then current year and the denominator of which is 365. Such dividends shall be payable annually to the record holders of the Series B Preferred Stock on December 31 of each year commencing December 31, 1994 which dividends shall be payable in additional shares of Series B Preferred Stock valued at $1,000 per share which shares shall be deemed fully paid and non-assessable; provided, however, in the event the dividends pursuant to Article Third, part I, Section 2(a) are paid in cash, then the dividends payable to the holders of the Series B Preferred Stock for such year may, at the election of the Board of Directors, be paid in cash by wire transfer of immediately available federal funds. -10- (b) Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series B Preferred Stock, such payment shall be distributed ratably among the holders thereof based upon the aggregate accrued by unpaid dividends on the Series B Preferred Stock held by each holder. (c) Except as otherwise provided in this Amendment, so long as any shares of Series B Preferred Stock are outstanding, the Corporation will not declare, pay or set apart for payment any dividends or make any other distribution on or redeem any Junior Securities other than as may be required under the Shareholders' Agreement and will not permit any subsidiary or other affiliate to redeem, purchase or otherwise acquire for value, or set apart for any sinking or other analogous fund for the redemption or purchase of, any Junior Securities. 3. Liquidation Preference. (a) In the event of any liquidation, ---------------------- dissolution or winding up of the affairs of the Corporation, either voluntarily or involuntarily, each holder of Series B Preferred Stock shall be entitled, after provision for the payment of the Corporation's debts and other liabilities and payment in full of the aggregate Liquidation Value of all shares of Series A Preferred Stock plus all accrued and unpaid dividends on the Series A Preferred Stock, including the Additional Dividends, if any, to be paid in cash by wire transfer of immediately available federal funds the aggregate Liquidation Value of all shares of Series B Preferred Stock held by such holder plus an amount equal to the sum of all accrued and unpaid dividends thereon, whether or not declared to the date of such payment, before any distribution is made on any Junior Securities. If, upon any such liquidation, dissolution or other winding up of the affairs of the Corporation, the net assets of the Corporation distributable among the holders of all outstanding shares of the Series B Preferred Stock shall be insufficient to permit the payment in full to such holders of the preferential amounts to which they are entitled, then the entire net assets of the Corporation remaining after the provision for the payment of the Corporation's debts and other liabilities shall be distributed among the holders of the Series B Preferred Stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled. (b) Holders of Series B Preferred Stock shall not be entitled to any additional distribution in the event of any liquidation, dissolution or winding up the affairs of the Corporation in excess of the preferential amount referred to in Section 3(a) above. 4. Voting Rights. (a) The holders of Series B Preferred Stock ------------- shall not have or be entitled to any voting rights or powers, either general or special, except as required by law and subparagraph (b) of this Section 4. (b) The holders of shares of Series B Preferred Stock shall have the following voting rights: (i) The affirmative vote of the holder of a majority of the outstanding shares of Series B Preferred Stock voting separately as a single series, in person or by proxy, at a special or annual meeting of stockholders called for the purpose, shall be necessary to (i) authorize or increase the authorized number of shares of, or issue, any class or series of -11- the Corporation's capital stock ranking (either as to dividends or upon liquidation, dissolution or winding up) prior to or on a parity with the Series B Preferred Stock, including shares of Series B Preferred Stock authorized pursuant to this Certificate of Amendment and issued after the date of original issuance of the Series B Preferred Stock, provided that no such vote shall be required to authorize or issue additional shares of Series A Preferred Stock including shares of Series A Preferred Stock issued as a dividend to the holders of Series A Preferred Stock in accordance with Section 2 of part I hereof or in accordance with the terms of the Shareholders' Agreement or (ii) amend, repeal or change, directly or indirectly, any of the provisions of the Certificate of Incorporation of the Corporation, as amended, in any manner which would alter or change the powers, preferences or special rights of the shares of Series B Preferred Stock so as to affect them adversely. (ii) The rights of holders of shares of Series B Preferred Stock to vote or take any other actions as provided in this Section 4 may be exercised at any annual meeting of stockholders or at a special meeting of stockholders held for such purposes. At each meeting of stockholders at which the holders of shares of Series B Preferred Stock shall have the right, voting separately as single series, to take any action as provided in this Section 4, the presence in person or by proxy of the holders of record of a majority of the total number of shares of Series B Preferred Stock then outstanding and entitled to vote on the matter shall be necessary and sufficient to on the matter shall be necessary and sufficient to constitute a quorum. At any such meeting or at any adjournment thereof, in the absence of a quorum of the holders of shares of Series B Preferred Stock, a majority of the holders of such shares present in person or by proxy shall have the power to adjourn the meeting as to the actions to be taken by the holders of shares of Series B Preferred Stock from time to time and place to place without notice other than announcement at the meeting until a quorum shall be present. (iii) For the taking of any action as provided in this Section 4 by the holders of shares of Series B Preferred Stock, each such holder shall have one vote for each share of such stock standing in his name on the transfer books of the Corporation as of any record date fixed for such purpose or, if no such date be fixed, at the close of business on the business day next preceding the day on which notice is given, or if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. "Business Day" shall mean any date other than a Saturday, Sunday or a day on which banking institutions in the State of Rhode Island are authorized or obligated by law or executive order to close. 5. Redemption. (a) The Series B Preferred Stock may be redeemed at ---------- the option of the Corporation or the holder(s) of a majority of the then outstanding Series B Preferred Stock on the late to occur of (i) the redemption of all outstanding Series A Preferred Stock or (ii) November 1, 2003 (the "Series B Optional Redemption"). In either case, the Corporation shall notify the holders of the Series B Preferred Stock or the holders of majority of the outstanding Series B Preferred Stock shall notify the Corporation, as the case may be, in writing of its or their -12- intent to exercise the rights afforded by this Section 5(a) and specify a date not less than 10 nor more than 60 days from the date of such notice on which the Series B Preferred Stock shall be redeemed (the "Series B Optional Redemption Date"). Upon receipt of any such notice from a majority of the holders of the Series B Preferred Stock, the Corporation shall promptly notify the remaining holders of the Series B Preferred Stock of the Series B Optional Redemption Date and offer such shareholders the opportunity to redeem their shares of Series B Preferred Stock on such Series B Optional Redemption Date. The recipients of such notice may participate in the Series B Optional Redemption by giving prompt written notice to the Corporation to such effect. The Corporation shall redeem on the Series B Optional Redemption Date all shares of Series B Preferred Stock held by the holders of the Series B Preferred Stock electing to participate in such Series B Optional Redemption in cash by wire transfer of immediately available funds at the Liquidation Value plus an amount equal to the sum of all ---- accrued and unpaid dividends (whether or not declared by the Board of Directors) on the Series B Preferred Stock to be redeemed on such Series B Optional Redemption Date. (b) Up to 100 shares of Series B Preferred Stock may be redeemed during any calendar year from any holder or holders of Series B Preferred Stock who is no longer employed by the Corporation (each a "Series B mandatory Redemption"); provided, however, that the Series B Preferred Stock has been held by any such holder for at least two (2) years. The Corporation shall give any such holder of Series B Preferred Stock not less than 10 nor more than 20 days notice of such redemption (the date set forth in such notice for the redemption of said shares of Series B Preferred Stock shall hereinafter be referred to as the "Series B Mandatory Redemption Date"). The Corporation shall redeem on the Series B Mandatory Redemption Date all shares of Series B Preferred Stock held by the holders of Series B Preferred Stock entitled to participate in such Series B Mandatory Redemption in cash by wire transfer of immediately available funds at the Liquidation Value plus an amount equal to the sum of all accrued ---- and unpaid dividends (whether or not declared by the Board of Directors) on the Series B Preferred Stock to be redeemed as of the Series B Mandatory Redemption Date. (c) On and after any Series B Optional Redemption Date or any Series B Mandatory Redemption Date, dividends will cease to accumulate on shares of Series B Preferred Stock to be redeemed and the holders of the Series B Preferred Stock shall cease to have any rights as stockholders of the Corporation except the right to receive, without interest, the Liquidation Value thereof and an amount equal to the sum of all accrued and unpaid dividends upon the surrender of the certificate(s) representing the Series B Preferred Stock to the Corporation; provided, however, that in the event any holder of Series B -------- ------- Preferred Stock tenders its shares to the Corporation on any Series B Optional Redemption Date or any Series B Mandatory Redemption Date, the Corporation shall be obligated to pay interest on the Liquidation Value at the maximum rate allowable under applicable law in the event the Corporation defaults in its obligation to pay the Liquidation Value on any such Series B Optional Redemption Date or any Series B Mandatory Redemption Date. If less than all of the outstanding shares of Series B Preferred Stock are to be redeemed, such shares shall be redeemed pro rata in accordance with the number of Series B Preferred --- ---- Stock owned by each holder of Series B Preferred Stock. -13- (d) The redemption by the Corporation of all or any part of the Series B Preferred stock pursuant to this Section 5 is subject to the provisions of applicable corporate law. 6. Redemption Notice. The notice described in Section 5 hereof ----------------- shall be sent, if by or on behalf of the Corporation to the holders of the Series B Preferred Stock at their respective addresses as shall then appear on the records of the Corporation, or if by any holder of Series B Preferred Stock to the Corporation at 100 Park Avenue, New York, New York 10017, Attention: Chief Financial Officer, by first class mail, postage prepaid, (i) notifying such recipient of the redemption, the date of such redemption, the number of shares of Series B Preferred Stock to be redeemed, and the redemption price therefor and (ii) in the case of any notice by or on behalf of the Corporation, stating the place or places at which the shares called for redemption shall, upon presentation and surrender of such certificates representing such shares, be redeemed. 7. Status of Reacquired Shares. Shares of Series B Preferred Stock --------------------------- which have been issued and reacquired in any manner shall (upon compliance with any applicable provisions of the laws of the State of New York) have the status of authorized and unissued shares of Series B Preferred Stock issuable in series undesignated as to series and may be redesignated and reissued. 8. Exclusion of Other Rights. Except as may otherwise be required ------------------------- by law, the shares of Series B Preferred Stock shall not have any preferences or relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Amendment. The shares of Series B Preferred Stock shall have no preemptive or subscription rights. 9. Rank. The Series B Preferred Stock shall rank junior upon ---- liquidation, dissolution or winding up to the Series A Preferred Stock, whenever issued, provided, however, that the Series B Preferred Stock shall be on a parity with the Series A Preferred Stock as to dividends. The Series B Preferred Stock shall rank senior upon liquidation, dissolution or winding up to all other classes of Junior Securities. 10. Identical Rights. Each share of the Series B Preferred Stock ---------------- shall have the same relative rights and preferences as, and shall be identical in all respects with, all other shares of the Series B Preferred Stock. 11. Certificates. So long as any shares of the Series B Preferred ------------ Stock are outstanding, there shall be set forth on the face or back of each stock certificate issued by the Corporation a statement that the Corporation shall furnish without charge to each shareholder who so requests, a full statement of the designation and relative rights, preferences and limitations of each class of stock or series thereof that the Corporation is authorized to issue and of the authority of the Board of Directors to designate and fix the relative rights, preferences and limitations of each series. -14- FOURTH: The foregoing provision and amendment was duly authorized in accordance with Section 502 of the Business Corporation Law by the unanimous written consent of the Board of Directors of the Corporation. -15- IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment on November 9, 1993 and affirms its contents as true under penalties of perjury. /s/ Leslie Goldberg -------------------------- Leslie Goldberg President /s/ John Rykala ----------------------- John Rykala Secretary -16- EX-3.4 6 CERTIFICATE OF AMENDMENT EXHIBIT 3.4 CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION INTEREP NATIONAL RADIO SALES, INC. Under Section 805 of the Business Corporation Law of the State of New York Haley Bader & Potts 4350 N. Fairfax Dr. Suite 900 Arlington, Virginia 22203 CERTIFICATE OF AMENDMENT of the CERTIFICATE OF INCORPORATION of INTEREP NATIONAL RADIO SALES, INC. ------------------------------------------------- Under Section 805 of the Business Corporation Law ------------------------------------------------- The undersigned Chairman of the Board and Chief Executive Officer of the INTEREP NATIONAL RADIO SALES INC., for the purpose of amending its Certificate of Incorporation, CERTIFIES that: FIRST: The name of the corporation is INTEREP NATIONAL RADIO SALES, INC. (the "Corporation"). The name under which the corporation was originally incorporated was MCGAVERN QUINN CORPORATION. SECOND: The Certificate of Incorporation of the Corporation was filed by the Department of State on March 31, 1958. A Restated Certificate of Incorporation was filed on May 28, 1985, and since the filing of the Restated Certificate of Incorporation, Certificates of Amendment thereof were filed on June 13, 1991, and on June 29, 1993. THIRD: The Certificates of Incorporation is to be amended by the deletion in its entirety of Article SIX, which sets forth the minimum and maximum number of directors of the Corporation, and by the substitution of a new Article SIX, which will increase the maximum number of directors to thirteen, and which shall read in its entirety as follows: 6. The number of directors shall not be less than three, nor more than thirteen, none of whom need to be stockholders. FOURTH: The foregoing amendment was duly authorized in accordance with Section 803(a) of the Business Corporation Law by the unanimous written consent of the Board of Directors on November 10, 1993, followed by the affirmative vote of the holders of a majority of the outstanding shares of the Corporation's Common Stock entitled to vote thereon at a meeting of the shareholders of the Corporation duly called and held on February 14, 1994. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment on February 14, 1994, and affirms its contents as true under penalties of perjury. /s/ Ralph C. Guild ------------------------------------------- Ralph C. Guild Chairman and Chief Executive Officer /s/ John A. Rykala - ---------------------------------------------- John A. Rykala Secretary -2- EX-3.5 7 BY-LAWS OF THE COMPANY Exhibit 3.5 INTEREP NATIONAL RADIO SALES, INC. (A NEW YORK CORPORATION) BY-LAWS ARTICLE I STOCKHOLDERS SECTION 1. Annual Meetings. The annual meeting of the stockholders of --------------- Interep National Radio Sales, Inc. (hereinafter called "the Corporation"), for the purpose of electing directors for the ensuing year and for the transaction of such other business as may properly come before the meeting, shall be held at the office of the Corporation within the State of New York at ten A.M. on the Third Tuesday in November in each year, or if such date falls on a legal holiday, on the first business day thereafter which is not a legal holiday, or at such other place within the State of New York and at such hour as shall be designated by the President. If the election of directors for the ensuing year shall not be held on the day designated herein for any annual meeting (or any adjournment or adjournments thereof), the Board of Directors shall forthwith call a meeting of the stockholders of the Corporation for the purpose of electing such directors. If such meeting shall not be called within one month, or, if held, shall result in a failure to elect such directors, any stockholder of the Corporation entitled to vote for election of directors may call a meeting for such purpose, as by statute in such case provided; and at such meeting the stockholders entitled to vote may elect such directors and transact other business with the same force and effect as at an annual meeting duly called and held. SECTION 2. Special Meetings. A special meeting of the stockholders, ---------------- unless otherwise prescribed by statute, may be called at any time by the President, the Secretary, or the Board of -2- Directors, and shall be called by the President or the Secretary on the written request of stockholders owning of record at least twenty per cent (20%) of the outstanding shares of stock of the Corporation entitled to vote, which written request shall state the purpose or purposes of such meeting. SECTION 3. Notice of Meetings. Except as hereinafter in this Section ------------------ provided, or as may be otherwise required by law, notice of each annual and special meeting of the stockholders shall be in writing and signed by the President, a Vice-President, the Secretary, or an Assistant Secretary. Such notice shall state the purpose or purposes for which the meeting is called and the time when and the place within the State of New York where it is to be held; and a copy thereof shall be delivered personally or mailed in a postage prepaid envelope, not less than ten (10) nor more than forty (40) days before such meeting, to each stockholder of record entitled to vote at such meeting and to any stockholder of record who, by reason of any action proposed at such meeting, would be entitled to have his stock appraised if such action were taken; and, if mailed, it shall be directed to such stockholder at his address as it appears on such 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 it shall be mailed to the address designated in such request. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy, or who before or after the meeting shall personally or by his attorney thereunto authorized waive notice thereof in writing; nor shall the giving of notice to any stockholder be required when the giving of such notice is dispensed with pursuant to statute. Notice of any adjourned meeting need not be given. SECTION 4. Place of Meeting. Every meeting of the stockholders of ---------------- the Corporation (other than annual meetings, which are governed by Section 1 hereof) shall be held at the office of -3- the Corporation in the State of New York, or at such other place in the State of New York as shall be specified or fixed in the notice or waiver of notice thereof. SECTION 5. Quorum. At all meetings of the stockholders of the ------ Corporation, except as otherwise provided by law or by the Certificate of Incorporation of the Corporation, the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority in voting power of the stockholders present in person or by proxy and entitled to vote may adjourn the meeting from time to time and from place to place until a quorum is obtained. At any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 6. Order of Business. The order of business at all meetings of ----------------- the stockholders shall be as determined by the Chairman of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority in voting power of the stockholders present in person or by proxy and entitled to vote at the meeting. SECTION 7. Organization. At every meeting of the stockholders, the ------------ President, or in the absence of the President, a Vice-President (and in case more than one Vice-President shall be present, that Vice-President who shall have served as such for the longest period of time), shall act as Chairman of the meeting. The Secretary of the Corporation, or in his absence one of the Assistant Secretaries of the Corporation, shall act as Secretary of the meeting. In case none of the officers above designated to act as Chairman or Secretary of the meeting, respectively, shall be present, a chairman or a secretary of the meeting, as the case may be, shall be chosen by a majority in voting power of the stockholders present in person or by proxy and entitled to vote at the meeting. -4- SECTION 8. Voting. At each meeting of the stockholders, every ------ stockholder of record of stock entitled to vote thereat shall be entitled to one vote for each share of such stock outstanding in his name on the books of the Corporation on the date determined in accordance with the provisions of Section 6 of Article VII of these By-laws. Stock belonging to the Corporation shall not be voted upon directly or indirectly. Any stockholder entitled to vote may vote either in person, or by proxy duly appointed by an instrument in writing subscribed by such stockholder (or by his attorney thereunto authorized) and delivered to the Secretary of the meeting; provided, however, that no proxy shall be valid after the expiration of eleven months from the date of its execution unless the stockholder executing it shall have specified therein its duration. At all meetings of the stockholders, a quorum being present, all matters, except as otherwise provided by law or by the Certificate of Incorporation of the Corporation or by these By-laws, shall be decided by a majority in voting power of the stockholders of the Corporation present in person or by proxy and entitled to vote. In voting on any question on which a vote by ballot is required by law or is demanded by any stockholder entitled to vote, the voting shall be by ballot. Each ballot shall be signed by the stockholder voting or by his proxy, and shall state the number of shares voted. All other questions may be passed upon by voice vote. SECTION 9. Inspectors of Election. At any election of directors by ---------------------- stockholders, or in any other case in which inspectors may act, inspectors of election shall not be required unless they are requested by a stockholder present or represented by proxy and entitled to vote, in which case not less than two (2) inspectors shall be appointed by the Chairman of the meeting; provided, however, -5- that if any stockholder shall demand an election, they shall be elected by the votes cast in person or by proxy of the holders of record of a plurality of the shares voted, and the person presiding shall conduct such election. The inspectors appointed or elected as aforesaid, before entering upon the discharge of their duties, shall take and subscribe an oath faithfully to execute the duties of inspectors with strict impartiality and according to the best of their ability, and shall take charge of the polls and after the balloting shall make a certificate of the result of the vote taken. ARTICLE II DIRECTORS SECTION 1. General Powers. The business of the Corporation shall be -------------- managed by the Board of Directors. The Board of Directors may adopt such rules and regulations, not inconsistent with the Certificate of Incorporation of the Corporation or these By-laws or the laws of the State of New York, as it may deem proper for the conduct of its meetings and the management of the Corporation. In addition to the powers expressly conferred by these By-laws, the Board of Directors may exercise all powers and perform all acts which are not required, by these By-laws, by the Certificate of Incorporation of the Corporation or by law, to be exercised and performed by the stockholders. SECTION 2. Number, Term of Office and Qualifications. The number of ----------------------------------------- directors shall be not less than three (3) nor more than thirteen (13). Until changed by an amendment to these By-laws pursuant to Article XII, the number of directors shall be five (5). A Board of Directors shall be elected annually, all of whom shall be of full age and at least one of whom shall be a citizen of -6- the United States and a resident of the State of New York. Each director shall continue in office until the annual meeting next following his election and until his successor shall have been elected and shall qualify, or until his death, resignation or removal. Directors need not be stockholders. SECTION 3. Election of Directors. At each meeting of the stockholders --------------------- for the election of directors, at which a quorum is present, the persons receiving a plurality of the votes cast shall be directors. SECTION 4. Organization. At each meeting of the Board of Directors, ------------ the President, or in the absence of the President a chairman chosen by the majority of the directors present, shall preside. The Secretary of the Corporation shall act as Secretary at each meeting of the Board of Directors. In case the Secretary shall be absent from any meeting of the Board of Directors, an Assistant Secretary shall perform the duties of Secretary at such meeting; and in the absence from any such meeting of the Secretary and Assistant Secretaries, the Chairman may appoint any person to act as Secretary of the meeting. SECTION 5. Place of Meeting, etc. The Board of Directors may hold its ---------------------- meetings within or without the State of New York at such places as the Board of Directors may from time to time by resolution determine or (unless contrary to resolution of the Board of Directors) at such place as shall be specified in the notice of the meeting. SECTION 6. First Meeting. After each annual election of directors, the ------------- Board of Directors may meet, without notice of such meeting, for the purposes of organization, the election of officers, and the transaction of other business, on the day when and at the place where such annual election is held, and as soon as practicable after such annual election. Such first meeting may be held at any -7- other time and place specified in a notice given as hereinafter provided for special meetings of the Board of Directors or in a consent and waiver of notice thereof. SECTION 7. Regular Meetings. Regular meetings of the Board of ---------------- Directors may be held at such times and places as may be fixed from time to time by the Board of Directors; and, unless required by the Board of Directors, notice of any such meeting need not be given. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting, which would otherwise be held on that day, shall be held at the same hour at such place on the next succeeding business day. SECTION 8. Special Meetings. Special meetings of the Board of ---------------- Directors shall be held whenever called by the President, the Secretary, or any two or more directors. Notice of each such meeting shall be sent to each director, addressed to him at his residence or usual place of business, at least two (2) days before the date on which the meeting is to be held, by telegraph or other means sufficient to ensure that the notice is delivered to him personally not later than the day before the date on which the meeting is to be held. Every such notice shall state the time and place of the meeting but need not state the purposes of the meeting, except to the extent required by law. Notice of any adjourned meeting of the directors need not be given. SECTION 9. Waivers of Notice of Meetings. Anything in these By-laws or ----------------------------- in any resolution adopted by the Board of Directors to the contrary notwithstanding, notice of any meeting of the Board of Directors need not be given to any director if such notice shall be waived by him in writing (before or after the meeting). At any meeting at which every member of the Board of Directors is present, any business may be transacted though the meeting may be held without notice. -8- SECTION 10. Quorum and Manner of Acting. Notwithstanding any vacancy in --------------------------- the Board of Directors, whether caused by death, resignation, disqualification, increase in the number of directors, removal or otherwise, the presence of 66 2/3 of the full Board of Directors shall be present in person at the time of any regular or special meeting of the Board of Directors in order to constitute a quorum for the transaction of business at such meeting and, except as specified in Section 13 of this Article II and Sections 1 and 5 of Article III of these By-laws, the act of the majority of the full Board of Directors shall be the act of the Board of Directors. In the absence of a quorum, any meeting may be adjourned from time to time until a quorum be had. Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time; participation by such means shall constitute presence in person at any meeting. The directors shall act only as a Board and the individual directors shall have no power as such. SECTION 11. Resignations. Any director of the Corporation may resign at ------------ any time orally or in writing by notifying the President or the Secretary of the Corporation. Such resignation shall take effect at the time therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. SECTION 12. Removal of Directors. Any director may be removed at any -------------------- time, with or without cause, by the affirmative vote of a majority in voting power of the stockholders of record of the Corporation entitled to elect a successor, which vote shall be given, in person or by proxy, at a special meeting of such stockholders called for that purpose. -9- SECTION 13. Vacancies. Any vacancy in the Board of Directors, whether --------- caused by death, resignation, disqualification, increase in the number of directors, removal or otherwise, may be filled for the unexpired term by unanimous vote of the remaining directors at any regular or special meeting of the Board of Directors, or by the stockholders entitled to vote at a special meeting called for such purpose. SECTION 14. Compensation. Each director, in consideration of his ------------ serving as such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at directors' meetings, or both, as the Board of Directors shall from time to time determine, together with reimbursement for the reasonable expenses incurred by him in connection with the performance of his duties. Each director who shall serve as a member of the Executive Committee or any other committee of the Board of Directors, in consideration of his serving as such, shall be entitled to such additional amount per annum or such fees for attendance at committee meetings, or both, as the Board of Directors shall from time to time determine. Nothing in this section contained shall preclude any director from serving the Corporation or its subsidiaries in any other capacity and receiving proper compensation therefor. ARTICLE III COMMITTEES SECTION 1. How Constituted and Powers. The Board of Directors may, by -------------------------- resolution passed by a majority of the full Board of Directors, designate two or more of its number to constitute an Executive Committee, which Committee, so far as may be permitted by law and to the extent provided in said resolution or in these By-laws, shall have and may exercise, between meetings of -10- the Board of Directors, the powers of the Board of Directors in the management of the affairs and business of the Corporation and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. SECTION 2. Organization, etc. The Executive Committee shall choose its ----------------- own Chairman and Secretary and shall keep and record all its acts and proceedings and report the same from time to time to the Board of Directors. SECTION 3. Meetings. Regular meetings of the Executive Committee, of -------- which no notice shall be necessary, shall be held at such times and in such places as shall be fixed by a majority of the Committee. Special meetings of the Committee shall be called at the request of any member of the Committee. Notice of each special meeting of the Committee shall be sent by mail, telegraph, or telephone not later than the day before the date on which the meeting is to be held. Notice of any such meeting need not be given to any member of the Committee, however, if waived by him in writing before or after the meeting; and any meeting of the Committee shall be a legal meeting without notice thereof having been given, if all the members of the Committee shall be present thereat. SECTION 4. Quorum and Manner of Acting. A majority of the Executive --------------------------- Committee shall constitute a quorum for the transaction of business, and the act of a majority of the Executive Committee at any meeting at which a quorum is present shall be the act of the Executive Committee. Members of the Executive Committee shall act only as a Committee and the individual members shall have no power as such. -11- SECTION 5. Other Committees. The Board of Directors may, by a ---------------- resolution passed by a majority of the full Board of Directors, designate members of the Board to constitute such other committees, which shall in each case consist of such number of directors and shall have and may exercise such powers, as the Board of Directors may determine. A majority of all the members of any such committee may determine its action, fix the time and place of its meetings and adopt rules, unless the Board of Directors shall otherwise provide. SECTION 6. General. The Board of Directors shall have power at any ------- time to change the members of the Executive Committee or of any other committee designated by it, may fill vacancies in any such committee, and may discharge any such committee, either with or without cause. ARTICLE IV OFFICERS SECTION 1. Officers. The Board of Directors shall, as soon as -------- practicable after the annual meeting of stockholders in each year, elect a Chairman of the Board of Directors, a President, one or more Vice-Presidents, a Treasurer and a Secretary, each to have such functions or duties as are provided in these By-laws or as the Board of Directors may from time to time determine and each to hold office until his successor shall have been duly chosen and shall qualify, or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. The Board of Directors may, from time to time, appoint other officers or assistant officers, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these By-laws or as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer or committee the power to appoint and to remove any such subordinate officer -12- or assistant officer. One person may hold the office of, and perform the duties of, any one or more of the above-mentioned positions, except those of President and Vice-President, Treasurer and Assistant Treasurer, or Secretary and Assistant Secretary. SECTION 2. Removal. Any officer may be removed either with or without ------- cause by resolution of the Board of Directors passed at any regular or special meeting thereof, or, except in the case of any officers elected by the Board of Directors, by any committee or superior officer upon whom the power of removal may be conferred by the Board of Directors or by these By-laws. SECTION 3. Resignations. Any officer may resign at any time orally or ------------ in writing by notifying the Board of Directors, the President, or the Secretary of the Corporation. Such resignation shall take effect at the date of receipt of such notice or at such later time as is therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. SECTION 4. Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in these By-laws for the regular appointment or election to said office. SECTION 5. Compensation. Salaries or other compensation to the ------------ officers may be fixed from time to time by the Board of Directors. No officer shall be prevented from receiving a salary or other compensation by reason of the fact that he is also a director of the Corporation. SECTION 6. Chairman of the Board of Directors. The Chairman of the ---------------------------------- Board of Directors shall be a director and the chief executive officer of the Corporation and shall have general supervision over the business of the Corporation and its several officers, subject, however, to the -13- control of the Board of Directors. The Chairman of the Board shall, if present, preside at all meetings of the shareholders and the Board of Directors. In general, the Chairman of the Board shall have such other powers and perform such other duties as may usually pertain to the office of Chairman of the Board and chief executive officer or as from time to time may be assigned to him by the Board of Directors. SECTION 7. President. The President shall be the chief operating --------- officer of the Corporation and shall have supervision over the operations of the Corporation, subject, however, to the control of the Board of Directors, any duly authorized committee of directors and the Chairman of the Board. In the absence of the Chairman of the Board, the President shall, if present, preside at all meetings of the shareholders and the Board of Directors. He may, with the Treasurer, the Secretary, an assistant Treasurer or an assistant Secretary, sign certificates for stock of the Corporation. In general, the President shall have such other powers and perform such other duties as may usually pertain to the office of President and chief operating officer or as from time to time may be assigned to him by the Board of Directors, any duly authorized committee of directors, or the Chairman of the Board. SECTION 8. Vice-Presidents. At the request of the President, or in his --------------- absence, at the request of the Chairman of the Board or the Board of Directors, the Vice-Presidents designated by the Board of Directors shall, in order of seniority, perform all the duties of the President and so acting shall have all the powers of and be subject to all the restrictions upon the President. Any Vice-President may also, with the Treasurer, the Secretary, an Assistant Treasurer, or an Assistant Secretary, sign certificates for stock of the Corporation; may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board of -14- Directors or by any duly authorized committee of directors, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by any duly authorized committee of directors or by these By-laws to some other officer or agent of the Corporation, or shall be required by law otherwise to be signed or executed; and shall perform such other duties as from time to time may be assigned to him by the Board of Directors or by any duly authorized committee of directors or by the President or the Chairman of the Board. SECTION 9. The Treasurer. The Treasurer shall, if required by the ------------- Board of Directors, give a bond for the faithful discharge of his duties, in such sum and with such sureties as the Board of Directors shall determine. He shall have charge and custody of, and be responsible for, all funds, securities and notes of the Corporation; receive and give receipts for moneys due and payable to the Corporation from any sources whatsoever; deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 4 of Article VI of these By-laws; against proper vouchers cause such funds to be disbursed by checks or drafts on the authorized depositaries of the Corporation, signed in such manner as shall be determined in accordance with the provisions of Section 3 of Article VI of these By-laws, and be responsible for the accuracy of the amounts of all money so disbursed; regularly enter or cause to be entered in books to be kept by him or under his direction full and adequate account of all moneys received or paid by him for the account of the Corporation; have the right to require, from time to time, reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation from the officers or agents transacting the same; render to the Chairman of the Board, the President, the Board of Directors or any duly authorized committee of directors, whenever the same shall require him so to do, an account of the financial condition of the Corporation and of all his transactions as Treasurer; exhibit at all -15- reasonable times his books of account and other records to any of the directors of the Corporation, upon application at the office of the Corporation where such books and records are kept; and in general, perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors, any duly authorized committee of directors, the Chairman of the Board, or the President; and he may sign with the President or the Chairman of the Board of Directors or a Vice-President certificates for stock of the Corporation. SECTION 10. The Secretary. The Secretary, if present, shall act as ------------- Secretary of all meetings of the Board of Directors and of the stockholders of the Corporation, and shall keep the minutes thereof in the proper book or books to be provided for that purpose; he shall see that all notices required to be given by the Corporation are duly given and served; he may, with the President or the Chairman of the Board of Directors or any Vice-President, sign certificate for stock of the Corporation; he shall be custodian of the seal of the Corporation and shall affix the seal or cause it to be affixed to all certificates for stock of the Corporation and to all documents the execution of which on behalf of the Corporation under its corporate seal is duly authorized in accordance with the provisions of these By-laws; he shall have charge of the stock records and also of the other books, records and papers of the Corporation relating to its organization and management as a Corporation, and shall see that the reports, statements and other documents required by law are properly kept and filed; and shall, in general, perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors, by any duly authorized committee of directors, the Chairman of the Board, or the President. SECTION 11. Assistant Treasurers and Assistant Secretaries. The ---------------------------------------------- Assistant Treasurers shall, respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall require. Assistant -16- Treasurers and Assistant Secretaries shall perform such duties as shall be assigned to them by the Treasurer and by the Secretary, respectively, by the Board of Directors, by any duly authorized committee of directors, by the Chairman of the Board, or by the President. Assistant Treasurers and Assistant Secretaries may, with the President or the Chairman of the Board of Directors or a Vice-President, sign certificates for stock of the Corporation. ARTICLE V INDEMNIFICATION In accordance with the provisions of the Certificate of Incorporation, any person made a party to any action, suit or proceeding, whether civil or criminal, by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of the Corporation or of any corporation which he served as such at the request of the Corporation, shall be indemnified by the Corporation against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties. Without limitation of the generality of the foregoing, the expenses referred to in the preceding paragraph shall be deemed to include (1) if any such action, suit or proceeding shall proceed to judgment, any and all costs and other expenses imposed upon such person by reason of such judgment, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the -17- performance of his duties; and (2) in the event of any settlement of any such action suit or proceeding, all reasonable costs and other expenses of such settlement (other than any payments made to the Corporation itself), subject to the condition that the costs and other expenses of such settlement shall not substantially exceed the expenses which might reasonably be incurred in conducting such litigation to a final conclusion. A determination that the costs and other expenses of such settlement do not or did not substantially exceed the expense which might reasonably be incurred in conducting such litigation to a final conclusion made or approved (A) by a majority of the directors of the Corporation then in office other than any directors who may be involved in such litigation (whether or not such majority constitutes a quorum, but provided that there shall be at least two such directors in office), or (B) by the vote of the holders of at least a majority of the outstanding stock at any annual or special meeting of the stockholders of the Corporation, either before or after such settlement, shall conclusively satisfy such condition. If any such indemnity is paid otherwise than pursuant to a court order or action by the stockholders, the Corporation shall within eighteen (18) months from the date of such payment mail to its stockholders at the time entitled to vote for the election of directors a statement specifying the persons paid, the amounts of the payments and the final disposition of the litigation. The foregoing rights of indemnification shall not be exclusive of any other rights to which any such director, officer or employee may be entitled under any present or future law, statute, by-law, agreement, vote of stockholders or otherwise. -18- ARTICLE VI CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. SECTION 1. Execution of Contracts. The Board of Directors or any duly ---------------------- authorized committee of directors, except as by these By-laws otherwise required, may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into contract or execute and satisfy any instrument, and any such authority may be general or confined to specific instances. SECTION 2. Loans. The President or any other officer or agent of the ----- Corporation thereunto authorized by these By-laws or by the Board of Directors, any duly authorized committee of directors, or the President, may effect loans and advances at any time for the Corporation from any bank, trust company or other institutions or from any firm, corporation or individual and for such loans and advances may make, execute and delivery promissory notes, bonds or other certificates or evidence of indebtedness of the Corporation, and when authorized so to do may pledge and hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. Such authority may be general or confined to specific instances. SECTION 3. Checks, Drafts, Etc. All checks, drafts, and other orders -------------------- for the payment of money out of the funds of the Corporation and all notes or other evidences of indebtedness of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by resolution of the Board of Directors or of any duly authorized committee of directors. -19- SECTION 4. Deposits. The funds of the Corporation not otherwise -------- employed shall be deposited from time to time to the order of the Corporation in such banks, trust companies or other depositaries as the Board of Directors or any duly authorized committee of directors may select or as may be selected by an officer or officers, agent or agents, of the Corporation to whom such power may from time to time be delegated by the Board of Directors or any duly authorized committee of directors. ARTICLE VII STOCK AND DIVIDENDS SECTION 1. Certificates for Shares. Certificates for stock of the ----------------------- Corporation shall be in such form as shall be approved by the Board of Directors. The certificates for such stock shall be numbered in the order of their issue, shall be signed by the Chairman of the Board, President or a Vice- President, and by the Secretary, an Assistant Secretary, Treasurer, or an Assistant Treasurer, and the seal of the Corporation shall be affixed thereto, which seal may be facsimile, engraved or printed. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation and by a registrar, the signatures of the President, Vice-President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer upon such certificate may be facsimiles, engraved or printed. In case any officer or officers who shall have signed or whose signature or facsimile signature or signatures shall be used on any such certificate or certificates shall cease to be such officer or officers of the Corporation, for whatever cause, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless, unless otherwise ordered by the Board of Directors, be issued and delivered as though -20- the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the Corporation. SECTION 2. Transfer of Stock. Transfers of stock of the Corporation ----------------- shall be made only on the books of the Corporation by the holder thereof or by his duly authorized attorney appointed by a power of attorney duly executed and filed with the Secretary of the Corporation or a transfer agent of the Corporation, and on surrender of the certificate or certificates for such stock properly endorsed for transfer and upon payment of all necessary transfer taxes. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Cancelled," with the date of cancellation, by the Secretary or an Assistant Secretary of the Corporation or the transfer agent thereof. A person in whose name stock of the Corporation shall stand on the books of the Corporation shall be deemed the owner thereof to receive dividends, to vote as such owner and for all other purposes as respects the Corporation. No transfer of stock shall be valid as against the Corporation, its stockholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. SECTION 3. Transfer and Registry Agents. The Corporation may from time ---------------------------- to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors. SECTION 4. Lost, Destroyed, Stolen and Mutilated Certificates. The -------------------------------------------------- holder of any stock in the Corporation shall immediately notify the Corporation of any loss, destruction, theft or mutilation of the certificate therefor, and the Corporation may issue a new certificate in the place of -21- any certificate theretofore issued by it alleged to have been lost, destroyed, stolen or mutilated. The Board of Directors may, in its discretion, as a condition to the issue of any such new certificate, require the owner of the lost, destroyed or stolen certificate or his legal representatives to make proof satisfactory to the Board of Directors of the loss, destruction or theft thereof, and to advertise said fact in such manner as the Board of Directors may require, and to give the Corporation and its transfer agents and registrars or such of them as the Board of Directors may require a bond in such form, with such surety or sureties as the Board of Directors (with the approval of its transfer agents and registrars) may direct, to indemnify the Corporation and its transfer agents and registrars against any claim that may be made against any of them on account of the continued existence of any such certificate so alleged to have been lost, destroyed or stolen. SECTION 5. Regulations. The Board of Directors or any duly authorized ----------- committee of directors may make such rules and regulations as it may deem expedient, not inconsistent with these By-laws or with the Certificate of Incorporation of the Corporation concerning the issue, transfer and registration of certificates for stock of the Corporation. SECTION 6. Closing of Transfer Books and Record Date. The Board of ----------------------------------------- Directors may prescribe a period, not exceeding forty (40) days prior to the date of meetings of stockholders or prior to the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose without a meeting, during which no transfer of stock on the books of the Corporation may be made; or, in lieu of prohibiting the transfer of stock, may fix a time not more than forty (40) days prior to the date of any meeting of stockholders or prior to the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose without a meeting, as the time as of which stockholders entitled to notice of and to vote at such meeting or whose consent or -22- dissent is required or may be expressed for any purpose, as the case may be, shall be determined, and all persons who were holders of record of voting stock at such time and no others shall be entitled to notice of and to vote at such meeting, or to express their consent or dissent, as the case may be. The Board of Directors may fix a day and hour not exceeding forty (40) days preceding the date fixed for the payment of any dividend or for the making of any distribution, or for the delivery of evidences of rights or evidences of interests arising out of any change, conversion or exchange of capital stock, as a record time for the determination of the stockholders entitled to receive any such dividend, distribution, rights or interests, and in such case only stockholders of record at the time so fixed shall be entitled to receive such dividend, distribution, rights or interests. The Board of Directors at its option, in lieu of so fixing a record time, may prescribe a period not exceeding forty (40) days prior to the date for such payment, distribution, or delivery during which no transfer of stock on the books of the Corporation may be made. SECTION 7. Dividends, Surplus, Etc. Subject to the provisions of the ------------------------ Certificate of Incorporation and of law, the Board of Directors (1) may declare dividends on the stock of the Corporation in such amounts as, in its opinion, the condition of the affairs of the Corporation shall render advisable, (2) may use and apply, in its discretion, any of the surplus of the Corporation or the net profits arising from its business in purchasing or acquiring any of the shares of stock of the Corporation or of purchase warrants therefor in accordance with law, or any of its bonds, debentures, notes, script or other securities or evidences of indebtedness, and (3) may set aside from time to time out of such surplus or net profits such sum or sums as it in its absolute discretion may think proper, as a reserve fund to meet contingencies, or equalizing dividends, or for the purpose of maintaining or increasing the property or business of the Corporation, or for any other purpose it may think conducive to the best interests of the Corporation. -23- ARTICLE VII STOCK OWNERSHIP LIMITATION AND REPURCHASE OPTION SECTION 1. No shares of stock of the Corporation (hereinafter "Shares") may be issued to any person other than (1) an employee of the Corporation who is such at the time of the issuance of such Shares, (2) a trust maintained by the Corporation for the benefit of its employees and/or the employees of a controlled group of corporations (within the meaning of Section 1563 of the Internal Revenue Code), of which the Corporation is a member, which trust is described in Section 401(a) of the Internal Revenue Code (hereinafter "Employee Trust"), (3) individuals who receive Shares as a benefit pursuant to the provisions of an Employee Trust, provided, however, that any such individual -------- ------- must promptly resell such Shares to the Corporation or such Employee Trust and (4) any other party to whom the Board of Directors determines an issuance of Shares should be made in the best interests of the Corporation, provided, -------- however, that, in any event, "substantially all" (within the meaning of Section - ------- 409(h)(2) of the Internal Revenue Code of 1986, as amended) of the Shares of the Corporation's Common Stock shall be owned by parties described in clauses (1), (2) or (3) of this Section 1. SECTION 2. During his or her employment by the Corporation, no shareholder-employee may sell or transfer any Shares of the Corporation's stock except to another then employee of the Corporation, or to the Corporation itself, or to an Employee Trust. SECTION 3. By accepting ownership of Shares, each individual shareholder shall be conclusively presumed to thereby grant to the Corporation an irrevocable option to purchase, for the price and in the manner set forth below, all, but not less than all, of the Shares owned by him, which -24- option shall be exercisable upon the termination of employment of said shareholder with the Corporation for any reason. Each such option shall be exercisable at any time within the period of twelve (12) months following such termination of employment, provided however that, if such termination is caused by death, then such option shall be exercisable at any time within the period of twelve (12) months following the date of judicial appointment of the personal representative of the deceased shareholder. The option shall be deemed to have been exercised by the Corporation giving to the shareholder or, in the event of his death, to the personal representative of the deceased shareholder, written notice thereof. The Corporation shall have the right at any time to assign to any Employee Trust the purchase option granted to it hereunder. The purchase price of any Shares to be sold pursuant to this Section 3 shall be determined as follows: (a) If there shall then be an Employee Trust in existence, which trust then owns Shares, the price per Share shall be the price at which such Employee Trust would value the Shares of said employee, had he then been a participant in said Employee Trust, and had the Shares been allocated to this account therein, and had his employment by the Corporation terminated at the same time and in the same manner as his employment did actually terminate. (b) If paragraph (a) above does not apply, but an independent valuation of the Shares has been performed within twelve months preceding the exercise of the option, the price per Share shall be the value fixed by said independent valuation. (c) If neither paragraph (a) nor paragraph (b) applies, then the value of said Shares shall be equal to the book value thereof as of the close of the Corporation's fiscal year next preceding the exercise of the option. -25- SECTION 4. For purposes hereof, book value shall be determined by the independent public accountants then serving the Corporation, or if none, then by the independent public accountants engaged by the Corporation for the purpose of determining book value. The determination of such accountants shall be in accordance with generally accepted accounting principles consistently applied, but no allowance of any kind shall be made for any leaseholds, good will, trade names, contracts or any intangible assets of the Corporation. The determination of said accountants shall be final, conclusive and binding on all parties hereto. SECTION 5. The purchase price hereunder may be paid in installments and in such event, said amount shall be paid as follows: ten percent (10%) of the purchase price shall be paid at the closing of the sale, as provided in Section 6 below, and an additional ten percent (10%) thereof shall be paid on each of the nine (9) succeeding anniversaries of the first payment, until the entire purchase price is paid. Each installment payment, except the first, shall bear interest at the minimum interest rate required in order to avoid having interest computed at a higher rate for federal income tax purposes, imputed from the closing date. The Corporation may, at its option, accelerate, in whole or in part, any installment payment to be made hereunder, or all of them. SECTION 6. The closing of the sale of any Shares pursuant to this agreement shall be held at the office of the Corporation on a day fixed by the Corporation, but not later than the thirtieth (30th) day following the exercise of the option which causes the sale. At the closing, the seller shall deliver to the Corporation the certificate representing the Shares to be sold, properly endorsed for transfer, and with appropriate stock transfer stamps affixed. -26- SECTION 7. Upon the failure of the Corporation to exercise the purchase option granted to it, pursuant hereto, the shareholder may freely transfer his Shares without restriction as to purchaser, provided however, that any and all purchasers thereof shall be considered employees hereunder, and may not transfer the Shares except in strict compliance with the provisions of these By-laws. Specifically, any such purchaser desiring to sell purchased shares will be deemed to have granted to the Corporation the option to purchase provided for herein, and such Shares will be subject to repurchase by the Corporation for the same amount and in the same manner as though said selling shareholder had been in the employ of the Corporation, and had terminated his employment therewith at the time he either attempts to sell such Shares or notifies the Corporation of his desire to sell such Shares. Any subsequent purchasers of Shares shall likewise be bound by all of the provisions thereof, just as though they were employees of the Corporation at the time they acquired Shares. SECTION 8. Except as permitted by these By-laws, each individual shareholder, by his acceptance of ownership of Shares, agrees that he will not sell, transfer, assign, pledge, hypothecate or otherwise dispose of any of the Shares or any interest therein, nor will he enter into any agreement for the sale, transfer, assignment, pledge, hypothecation, or other disposition of any of said Shares. Each shareholder, by his acceptance of ownership of Shares, further agrees that all his Shares shall be held and disposed of by him solely as provided in this Article VIII. SECTION 9. Each certificate representing Shares issued from and after the date of adoption of this Article VIII of these By-laws shall be stamped or overtyped with a legend stating that the -27- Shares represented thereby are subject to the provisions and repurchase option contained in these By-laws. SECTION 10. The provisions of SECTIONS 2 through 9 of this Article VIII shall not apply to a party referred to in clause (4) of SECTION 1 of this Article VIII. ARTICLE IX BOOKS SECTION 1. Books. There shall be kept at the office of the Corporation ----- correct books of account of all the business and transactions of the Corporation and a copy of these By-laws. The stock records of the Corporation, which may be kept either at the office of the Corporation or, subject to the provisions of Section 10 of the Stock Corporation Law, at the office of a transfer agent of the Corporation in the State of New York, if any, shall contain the names, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares held by them, respectively, the time when they respectively became owners thereof, and the amount paid thereon. SECTION 2. Inspection of Books. The Board of Directors shall ------------------- determine from time to time whether, and, if allowed, when and under what conditions and regulations, the accounts and books of the Corporation (except such as may, by statute, be specifically open to inspection), or any of them, shall be open to the inspection of the stockholders, and the stockholders' rights in this respect are and all shall be restricted and limited accordingly. -28- ARTICLE X SEAL The Board of Directors shall provide a corporate seal which shall be in the form of a circle and shall bear the full name of the Corporation and the year of its incorporation. ARTICLE XI FISCAL YEAR The Fiscal Year of the Corporation shall be determined, and may be changed, by resolution of the Board of Directors. ARTICLE XII VOTING OF STOCK HELD Unless otherwise provided by resolution of the Board of Directors, the President may, from time to time, appoint an attorney or attorneys or agent or agents of this Corporation, in the name and on behalf of this Corporation to cast the votes which this Corporation may be entitled to cast as a stockholder or otherwise in any other corporation, any of whose stock or securities may be held by this Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing to any action by any such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of this Corporation and under its corporate seal, or otherwise, such written proxies, consents, waivers or other instruments as he may deem necessary or proper in the -29- premises; or the President may himself attend any meeting of the holders of stock or other securities of any such other corporation and thereat vote or exercise any or all other powers of this Corporation as the holder of such stock or other securities of such other corporation. ARTICLE XII AMENDMENTS These By-laws may be altered, amended, supplemented or repealed, or new By- laws may be adopted, by the affirmative vote of the holders of a majority in number of the shares of stock of the Corporation entitled to vote represented at a duly constituted meeting of the stockholders or, except as may be otherwise provided in a By-law adopted by the stockholders, by the affirmative vote of 66 2/3% of the full Board of Directors; provided, however, that any By-laws made, altered, amended or supplemented by the Board of Directors may be altered, amended, supplemented or repealed by the stockholders entitled to vote. ARTICLE XIV CERTIFICATE OF INCORPORATION Wherever reference is made in these By-laws to the Certificate of Incorporation of the Corporation, such reference shall be deemed to refer to the Certificate of Incorporation as changed and amended by any other certificate filed pursuant to law in the office of the Secretary of State of the State of New York. -30- The undersigned, Secretary of Interep National Radio Sales, Inc., a New York corporation, hereby certifies that the foregoing is a true and correct copy of the By-laws of said Corporation adopted at a meeting of the Board of Directors of said corporation held February 14, 1994.. ------------------ WITNESS the signature of the undersigned, this 2nd day of March, 1994. --- ----- By /s/ John A. Rykala ------------------- John A. Rykala Secretary EX-4.1 8 A/B EXCHANGE REGISTRATION RIGHTS AGREEMENT Exhibit 4.1 - -------------------------------------------------------------------------------- A/B EXCHANGE REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 2, 1998 BY AND AMONG INTEREP NATIONAL RADIO SALES, INC. AND THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO AND BANCBOSTON SECURITIES INC. LOEWENBAUM & COMPANY INCORPORATED SPP HAMBRO & CO., LLC - ------------------------------------------------------------------------------- This Registration Rights Agreement (this "AGREEMENT") is made and entered --------- into as of July 2, 1998, by and among Interep National Radio Sales, Inc., a New York corporation (the "COMPANY"), each of the entities named as a Guarantor on ------- the signature pages hereto (each, a "GUARANTOR" and, collectively, the --------- "GUARANTORS"), and BancBoston Securities Inc., Loewenbaum & Company Incorporated - ----------- and SPP Hambro & Co., LLC (each an "INITIAL PURCHASER" and, collectively, the ----------------- "INITIAL PURCHASERS"), each of whom has agreed to purchase the Company's 10% - ------------------- Series A Senior Subordinated Notes due 2008 (the "SERIES A NOTES") pursuant to -------------- the Purchase Agreement (as defined below). The Series A Notes will be fully and unconditionally guaranteed (the "SERIES A GUARANTEES") and the Series B Notes ------------------- (as defined) will be fully and unconditionally guaranteed (the "SERIES B -------- GUARANTEES") as to payment of principal, interest and liquidated damages and - ---------- premium, if any, on an unsecured senior subordinated basis, jointly and severally, in each case, by each of the Guarantors. This Agreement is made pursuant to the Purchase Agreement, dated June 29, 1998, (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors and ------------------ the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Series A Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 3 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Indenture, dated as of the Closing Date (as defined), between the Company and Summit Bank, as Trustee, relating to the Series A Notes and the Series B Notes (the "INDENTURE"). --------- The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: ACT: The Securities Act of 1933, as amended. --- AFFILIATE: As defined in Rule 144 of the Act. --------- BROKER-DEALER: Any broker or dealer registered under the Exchange Act. ------------- CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture. ----------------------- CLOSING DATE: The date hereof. ------------ COMMISSION: The Securities and Exchange Commission. ---------- CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes ---------- of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Series B Notes and the Series B Guarantees to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company and the Guarantors to the Registrar under the Indenture of Series B Notes (including Series B Guarantees) in the same aggregate principal amount as the aggregate principal amount of Series A Notes (including Series A Guarantees) tendered by Holders thereof pursuant to the Exchange Offer. CONSUMMATION DEADLINE: As defined in Section 3(b) hereof. --------------------- EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof. ---------------------- EXCHANGE ACT: The Securities Exchange Act of 1934, as amended. ------------ EXCHANGE OFFER: The exchange and issuance by the Company and the -------------- Guarantors of a principal amount of Series B Notes (including the Series B Guarantees) (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Series A Notes (including Series A Guarantees) that are tendered by such Holders in connection with such exchange and issuance. EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating ------------------------------------- to the Exchange Offer, including the related Prospectus. FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof. --------------- HOLDERS: As defined in Section 2 hereof. ------- PROSPECTUS: The prospectus included in a Registration Statement at the ---------- time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. RECOMMENCEMENT DATE: As defined in Section 6(d) hereof. ------------------- REGISTRATION DEFAULT: As defined in Section 5 hereof. -------------------- REGISTRATION STATEMENT: Any registration statement of the Company and the ---------------------- Guarantors relating to (a) an offering of Series B Notes (including the Series B Guarantees) pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. RULE 144: Rule 144 promulgated under the Act. -------- 2 SERIES B NOTES: The Company's 10% Series B Senior Subordinated Notes due -------------- 2008 to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof. ---------------------------- SUSPENSION NOTICE: As defined in Section 6(d) hereof. ----------------- TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as --- in effect on the date of the Indenture. TRANSFER RESTRICTED SECURITIES: Each Series A Note and corresponding Series ------------------------------ A Guarantee, until the earliest to occur of (a) the date on which such Series A Note and Series A Guarantee are exchanged in the Exchange Offer for a Series B Note and corresponding Series B Guarantee which are entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (b) the date on which such Series A Note and Series A Guarantee have been disposed of in accordance with a Shelf Registration Statement (and the purchasers thereof have been issued Series B Notes and corresponding Series B Guarantee), or (c) the date on which such Series A Note and Series A Guarantee are distributed to the public pursuant to Rule 144 under the Act (and purchasers thereof have been issued Series B Notes and corresponding Series B Guarantee) and each Series B Note and corresponding Series B Guarantee until the date on which such Series B Note and Series B Guarantee are disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). SECTION 2. HOLDERS A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER" and collectively, the "HOLDERS") whenever such Person owns Transfer ------ ------- Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company and the Guarantors shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 60 days after the Closing Date (such 60th day being the "FILING DEADLINE"), (ii) use its best efforts to --------------- cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 120 days after the Closing Date (such 120th day being the "EFFECTIVENESS DEADLINE"), (iii) in connection ---------------------- with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such 3 Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Series B Notes and the Series B Guarantees to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Series B Notes and the Series B Guarantees to be offered in exchange for the Series A Notes and the Series A Guarantees, respectively, that are Transfer Restricted Securities and (ii) resales of Series B Notes (including Series B Guarantees) by Broker-Dealers that tendered into the Exchange Offer Series A Notes (including Series A Guarantees) that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Series A Notes and the Series A Guarantees acquired directly from the Company, the Guarantors or any of their respective Affiliates) as contemplated by Section 3(c) below. (b) The Company and the Guarantors shall use their respective best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open, for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company and the Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Series B Notes and the Series B Guarantees shall be included in the Exchange Offer Registration Statement. The Company and the Guarantors shall use their respective best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter (such 30th day being the "CONSUMMATION DEADLINE"). ---------------------- (c) The Company and the Guarantors shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Series A Notes and Series A Guarantees acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker- Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. 4 Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Series B Notes (including Series B Guarantees) received by such Broker-Dealer in the Exchange Offer, the Company and Guarantors shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the prospectus contained in the Exchange Offer Registration Statement is available for sales of Series B Notes (including Series B Guarantees) by Broker-Dealers, the Company and the Guarantors agree to use their respective best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company and the Guarantors shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than three day after such request, at any time during such period. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Exchange Offer is not permitted by ------------------ applicable law (after the Company and the Guarantors have complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Series B Notes (including Series B Guarantees) acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes and Series A Guarantees acquired directly from the Company, the Guarantors or any of their respective Affiliates, then the Company and the Guarantors shall: (x) cause to be filed, on or prior to 60 days after the earlier of (i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf registration statement --------------- pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to ---------------------------- all Transfer Restricted Securities, and (y) shall use their respective best efforts to cause such Shelf Registration Statement to become effective on or prior to 120 days after the earlier of (i) the date on which the Company determines 5 that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above, (such earlier date, the "EFFECTIVENESS ------------- DEADLINE"). - --------- If, after the Company and the Guarantors have filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company and the Guarantors are required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Company and the Guarantors shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and the Guarantors shall use their respective best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. (b) Provision by Holders of Certain Information in Connection with the ------------------------------------------------------------------ Shelf Registration Statement. No Holder of Transfer Restricted Securities may - ---------------------------- include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. SECTION 5. LIQUIDATED DAMAGES If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, 6 (iii) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective immediately (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then -------------------- the Company and the Guarantor s hereby jointly and severally agree to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 in principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000 in principal amount of Transfer Restricted Securities; provided that the Company and the Guarantors shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. All accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture and the Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company and the Guarantors to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. The Company and the Guarantors shall have no liabilities for monetary damages for any Registration Default in addition to Liquidated Damages to the Initial Purchasers or any Holder; provided, however, that in the event of a Registration Default, the Initial Purchasers and the Holders shall be entitled to, and the Company and the Guarantors shall not oppose the granting of, equitable relief, including injunction and specific performance. SECTION 6. REGISTRATION PROCEDURES 7 (a) Exchange Offer Registration Statement. In connection with the ------------------------------------- Exchange Offer, the Company and the Guarantors shall (x) comply with all applicable provisions of Section 6(c) below, (y) use their respective best efforts to effect such exchange and to permit the resale of Series B Notes (including Series B Guarantees) by Broker-Dealers that tendered in the Exchange Offer Series A Notes (including Series A Guarantees) that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Series A Notes and Series A Guarantees acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company and the Guarantors hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company and the Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company and the Guarantors hereby agree to take all such other actions as may be requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company and the Guarantors (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Notes or the Series B Guarantees to be issued in the Exchange Offer and (C) it is acquiring the Series B Notes and Series B Guarantees in its ordinary course of business. As a condition to its participation in the Exchange Offer each Holder using the Exchange Offer to participate in a distribution of the Series B Notes and Series B Guarantees shall acknowledge and agree that, if the resales are of Series B Notes and Series B Guarantees obtained by such Holder in exchange for Series A Notes and Series A Guarantees acquired directly from the Company, the Guarantors or an 8 Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and ---------------------------- Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted ---------------------------------- in the Commission's letter to Shearman & Sterling dated July 2, 1993, and ------------------- similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantors shall provide a supplemental letter to the Commission (A) stating that the Company and the Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May ---------------------------------- 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as ---------------------------- interpreted in the Commission's letter to Shearman & Sterling dated July 2, ------------------- 1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that neither the Company nor any Guarantor has entered into any arrangement or understanding with any Person to distribute the Series B Notes or the Series B Guarantees to be received in the Exchange Offer and that, to the best of the Company's and each Guarantor's information and belief, each Holder participating in the Exchange Offer is acquiring the Series B Notes and the Series B Guarantees in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Series B Notes or the Series B Guarantees received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) Shelf Registration Statement. ---------------------------- In connection with the Shelf Registration Statement, the Company and the Guarantors shall (i) comply with all the provisions of Section 6(c) below and use their respective best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company and the Guarantors will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof, and (ii) issue,upon the request of any Holder or purchaser of Series A Notes (including Series A Guarantees) covered by any Shelf Registration Statement contemplated by this 9 Agreement, Series B Notes (including Series B Guarantees) having an aggregate principal amount equal to the aggregate principal amount of Series A Notes (including Series A Guarantees) sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Series B Notes (including Series B Guarantees) on the Shelf Registration Statement for this purpose and issue the Series B Notes (including Series B Guarantees) to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate; provided, that no Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with such Shelf Registration Statement. (c) General Provisions. In connection with any Registration Statement and ------------------ any related Prospectus required by this Agreement, the Company and the Guarantors shall: (i) use their respective best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and the Guarantors shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use their respective best efforts to cause such amendment to be declared effective as soon as practicable. (ii) prepare and file with the Commission such amendments and post- effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or 10 any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or blue sky laws, the Company and the Guarantors shall use their respective best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (v) furnish to each Holder in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Holders shall reasonably object within five Business Days after the receipt thereof. A Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or 11 supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (vi) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder in connection with such exchange or sale, if any, make the Company's and the Guarantors' representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Holders may reasonably request; provided, however, that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Holders or any such attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality and that the foregoing inspection and information gathering shall not be available for any such Holder that is a competitor of the Company ; (vii) make reasonably available for inspection by each Holder and any attorney, accountant or other agent retained by such Holders, all financial and other records, pertinent corporate documents and properties of the Company and the Guarantors and cause the Company's and the Guarantors' officers, directors, employees, accountants and auditors to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness, in each case, as shall be reasonably necessary to enable such persons to conduct reasonable and customary investigation within the meaning of Section 11 of the Securities Act; provided, however, that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Holders or any such attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality and that the foregoing inspection and information gathering shall not be available for any such Holder that is a competitor of the Company; (viii) if requested by any Holders in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the 12 Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (ix) furnish to each Holder in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company and the Guarantors hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) upon the written request of any Holder, enter into such agreements (including underwriting agreements) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company and the Guarantors shall: (A) upon request of any Holder, furnish (or in the case of paragraphs (2) and (3), use its best efforts to cause to be furnished) to each Holder, upon Consummation of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: (1) a certificate, dated such date, signed on behalf of the Company and each of the Guarantors by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company and each of the Guarantors, confirming, as of the date thereof, the matters set forth in Sections 5(a)(xxxviii), 8(a) and 8(e) of the Purchase Agreement and such other similar matters as such Holders may reasonably request; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company and the Guarantors covering matters similar to those set forth in Exhibit C to the Purchase Agreement and such other matters as such Holder may reasonably request, and in any event including a statement to the effect that such counsel has participated in 13 conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent public accountants for the Company and the Guarantors and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to the extent such counsel deems appropriate upon the statements of officers and other representatives of the Company and the Guarantors and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the Exchange Offer, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 8(h) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Company and the Guarantors pursuant to this clause (xi); 14 (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that neither the Company nor any Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use their respective best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xv) provide a CUSIP number for all Transfer Restricted Securities no later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvi) otherwise use their respective best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xvii) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the 15 terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and (xviii) provide promptly to each Holder, upon written request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a ----------------------- Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of - ------------------ Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT -------------- DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will - ---- either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's and the Guarantors' performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Series B Notes to be issued in the Exchange Offer and printing of Prospectuses whether for exchanges, sales, market making or otherwise), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Guarantors and the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Series B Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and 16 the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will, in any event, bear its and the Guarantors' internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company and the Guarantors will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Series A Notes (including the Series A Guarantees) into in the Exchange Offer and/or selling or reselling Series A Notes (including the Series A Guarantees) or Series B Notes (including the Series B guarantees) pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Latham & Watkins, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (a) The Company and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) each Holder, (ii) each person, if any, who controls such Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the officers, directors, partners, employees, representatives and agents of such Holder or any controlling person to the fullest extent lawful, from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company and the Guarantors will not be liable in any such case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information 17 relating to any of the Holders furnished to the Company in writing by or on behalf of any of the Holders expressly for use therein or (ii) if a court of competent jurisdiction determines that a Holder received a Suspension Notice, the disposition by such Holder of Transfer Restricted Securities pursuant to the applicable Registration Statement prior to the Recommencement Date. This indemnity agreement will be in addition to any liability which the Company and the Guarantors may otherwise have, including under this Agreement. (b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless (i) the Company and the Guarantors, (ii) each person, if any, who controls any of the Company and the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and (iii) the respective officers, directors, trustees, partners, employees, representatives and agents of the Company and the Guarantors, or any controlling person, against any losses, liabilities, claims, damages and expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation) to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to such Holder furnished to the Company in writing by or on behalf of such Holder expressly for use therein; provided, however, that in no case shall such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. This indemnity will be in addition to any liability which such Holder may otherwise have, including under this Agreement. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the 18 failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded, based upon the advice of counsel, that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above shall only be liable for the legal expenses of one counsel (in addition to any local counsel) for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its prior written consent, provided that such consent was not unreasonably withheld. (d) In order to provide for contribution in circumstances in which the indemnification provided for in this Section 8 is for any reason held to be unavailable from the Company and the Guarantors or is insufficient to hold harmless a party indemnified thereunder, the Company and the Guarantors, on the one hand, and the Holders, on the other hand, shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company and the Guarantors, any contribution received by the Company and the Guarantors from persons, other than the Holders, who may also be liable for contribution, including persons who control the Company and the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company, the Guarantors and the Holders may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on one hand, and the Initial Purchasers, on the other hand, from the offering of the Series A Notes or, if such allocation is not permitted by applicable law or indemnification is not 19 available as a result of the indemnifying party not having received notice as provided in Section 6, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Guarantors, on one hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors, on one hand, and of the Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantors or the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 8, (i) in no case shall any Holder, its officers or any Person, if any, who controls such Holder be required to contribute any amount in excess of the amount by which total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, (A) each person, if any, who controls any Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the officers, directors, partners, employees, representatives and agents of such Holder or any controlling person shall have the same rights to contribution as such Holder, and (A) each person, if any, who controls any of the Company and the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, trustees, partners, employees, representatives and agents of the Company and the Guarantors shall have the same rights to contribution as the Company and the Guarantors, subject in each case to clauses (i) and (ii) of this Section 8. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 8, notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 8 or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent, provided that such written 20 consent was not unreasonably withheld. The Holders' obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. SECTION 9. RULE 144A AND RULE 144 The Company and each Guarantor agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. SECTION 10. MISCELLANEOUS (a) Remedies. The Company and the Guarantors acknowledge and agree that -------- any failure by the Company and/or the Guarantors to comply with their respective obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's and the Guarantor's obligations under Sections 3 and 4 hereof. The Company and the Guarantors further agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. Neither the Company nor any Guarantor -------------------------- will, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor any Guarantor is currently a party to any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's and the Guarantors' securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be ---------------------- amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(c)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in 21 the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (d) Third Party Beneficiary. The Holders shall be third party ----------------------- beneficiaries to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (e) Notices. All notices and other communications provided for or ------- permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Company or the Guarantors: Interep National Radio Sales, Inc. 100 Park Avenue New York, New York 10017 Telecopier No.: (212) 309-9081-0576 Attention: Chief Executive Officer and Interep National Radio Sales, Inc. 2090 Palm Beach Lakes Blvd., 3rd Floor West Palm Beach, FL 33409 Telecopier No.: (561) 616-4031 Attention: Chief Financial Officer With a copy to: 22 Christy & Viener Rockefeller Center 620 Fifth Avenue New York, New York 10020 Telecopier No.: (212) 307-3314 Attention: Laurence S. Markowitz, Esq. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of ---------------------- and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ------------- ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (j) Severability. In the event that any one or more of the provisions ------------ contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, 23 legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a ---------------- final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 24 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Interep National Radio Sales, Inc. By: /s/ Paul J. Parzuchowski -------------------------- Name: Title: Guarantors: McGavren Guild, Inc. By: /s/ Paul J. Parzuchowski ------------------------- Name: Title: D&R Radio, Inc. /s/ Paul J. Parzuchowski ------------------------ Name: Title: CBS Radio Sales, Inc. /s/ Paul J. Parzuchowski ------------------------ Name: Title: Allied Radio Partners, Inc. /s/ Paul J. Parzuchowski ------------------------ Name: Title: 25 Clear Channel Radio, LLC /s/ Paul J. Parzuchowski ------------------------ Name: Title: Caballero Spanish Media LLC /s/ Paul J. Parzuchowski ------------------------ Name: Title: 26 BancBoston Securities Inc. By: /s/Gregory C. Foy ------------------- Name: Gregory C. Foy Title: Managing Director Loewenbaum & Company Incorporated By: /s/ Mike Powell ----------------- Name: Mike Powell Title: Associate SPP Hambro & Co., LLC By: /s/ Adam C. Beshara -------------------- Name: Adam C. Beshara Title: Associate 27 EX-4.2 9 INDENTURE EXHIBIT 4.2 - ------------------------------------------------------------------------------- ------------------------------------------ INTEREP NATIONAL RADIO SALES, INC. SERIES A AND SERIES B 10% SENIOR SUBORDINATED NOTES DUE 2008 INDENTURE --------------------------- Dated as of July 2, 1998 ______________________ SUMMIT BANK Trustee ______________ - ------------------------------------------------------------------------------- CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section 310 (a)(1)................................................................ 7.10 (a)(2).................................................................... 7.10 (a)(3).................................................................... N.A. (a)(4).................................................................... N.A. (a)(5).................................................................... 7.10 (i)(b).................................................................... 7.10 (ii)(c)................................................................... N.A. 311(a).................................................................... 7.11 (b)....................................................................... 7.11 (iii)(c).................................................................. N.A. 312 (a)................................................................... 2.05 (b).......................................................................11.03 (iv)(c)...................................................................11.03 313(a).................................................................... 7.06 (b)(1).................................................................... N.A. (b)(2).................................................................... 7.07 (v)(c)....................................................................7.06; 11.02 (vi)(d)................................................................... 7.06 314(a)....................................................................4.03; 11.02 (A)(b)....................................................................10.02 (c)(1)....................................................................11.04 (c)(2)....................................................................11.04 (c)(3).................................................................... N.A. (d)....................................................................... N.A. (vii)(e)..................................................................11.05 (f)....................................................................... N.A. 315 (a)................................................................... 7.01 (b).......................................................................7.05, 11.02 (A)(c).................................................................... 7.01 (d)....................................................................... 7.01 (e)....................................................................... 6.11 316 (a)(last sentence).................................................... 2.09 (a)(1)(A)................................................................. 6.05 (a)(1)(B)................................................................. 6.04 (a)(2).................................................................... N.A. (b)....................................................................... 6.07 (B)(c).................................................................... 2.12
317 (a)(1)................................................................ 6.08 (a)(2).................................................................... 6.09 (b)....................................................................... 2.04 318 (a)...................................................................11.01 (b)....................................................................... N.A. (c).......................................................................11.01 N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture. 2 TABLE OF CONTENTS -----------------
Page ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................. 1 SECTION 1.01. DEFINITIONS........................................................................ 1 SECTION 1.02. OTHER DEFINITIONS.................................................................. 17 SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS.................................................... 18 SECTION 1.04. RULES OF CONSTRUCTION.............................................................. 18 ARTICLE 2. THE NOTES............................................................................... 19 SECTION 2.01. FORM AND DATING.................................................................... 19 SECTION 2.02. EXECUTION AND AUTHENTICATION....................................................... 20 SECTION 2.03. REGISTRAR AND PAYING AGENT......................................................... 21 SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST................................................ 21 SECTION 2.05. HOLDER LISTS....................................................................... 21 SECTION 2.06. TRANSFER AND EXCHANGE.............................................................. 21 SECTION 2.07. REPLACEMENT NOTES.................................................................. 33 SECTION 2.08. OUTSTANDING NOTES.................................................................. 34 SECTION 2.09. TREASURY NOTES..................................................................... 34 SECTION 2.10. TEMPORARY NOTES.................................................................... 34 SECTION 2.11. CANCELLATION....................................................................... 35 SECTION 2.12. DEFAULTED INTEREST................................................................. 35 ARTICLE 3. REDEMPTION AND PREPAYMENT............................................................... 35 SECTION 3.01. NOTICES TO TRUSTEE................................................................. 35
i SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.................................................. 35 SECTION 3.03. NOTICE OF REDEMPTION............................................................... 36 SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION..................................................... 37 SECTION 3.05. DEPOSIT OF REDEMPTION PRICE........................................................ 37 SECTION 3.06. NOTES REDEEMED IN PART............................................................. 37 SECTION 3.07. OPTIONAL REDEMPTION................................................................ 37 SECTION 3.08. MANDATORY REDEMPTION............................................................... 38 SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS................................ 38 ARTICLE 4. COVENANTS............................................................................... 40 SECTION 4.01. PAYMENT OF NOTES................................................................... 40 SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.................................................... 40 SECTION 4.03. REPORTS............................................................................ 41 SECTION 4.04. COMPLIANCE CERTIFICATE............................................................. 41 SECTION 4.05. TAXES.............................................................................. 42 SECTION 4.06. STAY, EXTENSION AND USURY LAWS..................................................... 42 SECTION 4.07. RESTRICTED PAYMENTS................................................................ 43 SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES..................... 45 SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK......................... 46 SECTION 4.10. ASSET SALES........................................................................ 48 SECTION 4.11. TRANSACTIONS WITH AFFILIATES....................................................... 49 SECTION 4.12. LIENS.............................................................................. 49 SECTION 4.13. LINE OF BUSINESS................................................................... 50 SECTION 4.14. CORPORATE EXISTENCE................................................................ 50 SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL......................................... 50
ii SECTION 4.16. NO SENIOR SUBORDINATED DEBT........................................................ 51 SECTION 4.17. PAYMENTS FOR CONSENT............................................................... 51 SECTION 4.18. ADDITIONAL NOTE GUARANTEES......................................................... 51 ARTICLE 5. SUCCESSORS.............................................................................. 52 SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS........................................... 52 SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.................................................. 53 ARTICLE 6. DEFAULTS AND REMEDIES................................................................... 53 SECTION 6.01. EVENTS OF DEFAULT.................................................................. 53 SECTION 6.02. ACCELERATION....................................................................... 54 SECTION 6.03. OTHER REMEDIES..................................................................... 55 SECTION 6.04. WAIVER OF PAST DEFAULTS............................................................ 56 SECTION 6.05. CONTROL BY MAJORITY................................................................ 56 SECTION 6.06. LIMITATION ON SUITS................................................................ 56 SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT...................................... 57 SECTION 6.08. COLLECTION SUIT BY TRUSTEE......................................................... 57 SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM................................................... 57 SECTION 6.10. PRIORITIES......................................................................... 57 SECTION 6.11. UNDERTAKING FOR COSTS.............................................................. 58 ARTICLE 7. TRUSTEE................................................................................. 58 SECTION 7.01. DUTIES OF TRUSTEE.................................................................. 58 SECTION 7.02. RIGHTS OF TRUSTEE.................................................................. 59 SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE....................................................... 60 SECTION 7.04. TRUSTEE'S DISCLAIMER............................................................... 60
iii SECTION 7.05. NOTICE OF DEFAULTS................................................................. 60 SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES......................................... 60 SECTION 7.07. COMPENSATION AND INDEMNITY......................................................... 61 SECTION 7.08. REPLACEMENT OF TRUSTEE............................................................. 62 SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC................................................... 63 SECTION 7.10. ELIGIBILITY; DISQUALIFICATION...................................................... 63 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.................................. 63 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE................................................ 63 SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE........................... 63 SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE..................................................... 63 SECTION 8.03. COVENANT DEFEASANCE................................................................ 64 SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE......................................... 64 SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS....................................................................................... 65 SECTION 8.06. REPAYMENT TO COMPANY............................................................... 66 SECTION 8.07. REINSTATEMENT...................................................................... 66 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER....................................................... 67 SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES................................................ 67 SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES................................................... 67 SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT................................................ 69 SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.................................................. 69 SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES................................................... 69 SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.................................................... 70
iv ARTICLE 10. SUBORDINATION......................................................................... 70 SECTION 10.01. AGREEMENT TO SUBORDINATE.......................................................... 70 SECTION 10.02. CERTAIN DEFINITIONS............................................................... 70 SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.............................................. 71 SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT................................................. 71 SECTION 10.05. ACCELERATION OF SECURITIES........................................................ 72 SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER............................................... 72 SECTION 10.07. NOTICE BY COMPANY................................................................. 73 SECTION 10.08. SUBROGATION....................................................................... 73 SECTION 10.09. RELATIVE RIGHTS................................................................... 73 SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY...................................... 73 SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.......................................... 74 SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT................................................ 74 SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION............................................. 74 SECTION 10.14. AMENDMENTS........................................................................ 74 ARTICLE 11. NOTE GUARANTEES....................................................................... 75 SECTION 11.01. GUARANTEE......................................................................... 75 SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE................................................... 76 SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY................................................. 76 SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.......................................... 76 SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS................................ 77 SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS................................................. 77 ARTICLE 12. MISCELLANEOUS......................................................................... 78
v SECTION 12.01. TRUST INDENTURE ACT CONTROLS...................................................... 78 SECTION 12.02. NOTICES........................................................................... 78 SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES..................... 79 SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT................................ 80 SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................................... 80 SECTION 12.06. RULES BY TRUSTEE AND AGENTS....................................................... 80 SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.......... 80 SECTION 12.08. GOVERNING LAW..................................................................... 81 SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................................... 81 SECTION 12.10. SUCCESSORS........................................................................ 81 SECTION 12.11. SEVERABILITY...................................................................... 81 SECTION 12.12. COUNTERPART ORIGINALS............................................................. 81 SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.................................................. 81
EXHIBITS Exhibit A-1 FORM OF NOTE Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Exhibit E FORM OF NOTE GUARANTEE Exhibit F FORM OF SUPPLEMENTAL INDENTURE SCHEDULE Schedule I SCHEDULE OF GUARANTORS vi INDENTURE dated as of July 2, 1998 among Interep National Radio Sales, Inc., a New York corporation (the "Company"), the Guarantors (as defined) and Summit Bank, as trustee (the "Trustee"). The Company, each of the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined) of the 10% Series A Senior Subordinated Notes due 2008 (the "Series A Notes") and the 10% Series B Senior Subordinated Notes due 2008 (the "Series B Notes" and, together with the Series A Notes, the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. "144A Global Note" means a global note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien encumbering any assets acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices and other than any Contract Buy Out (provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be governed by Sections 4.15 and/or 5.01 hereof and not by Section 4.10 hereof), and (ii) the issue by any Restricted Subsidiary of the Company of any Equity Interests of such Restricted Subsidiary and the sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $1.0 million or (b) for net proceeds in excess of $1.0 million; provided that with respect to Contract Buy Outs of Media Representation Contracts of the Company and its Restricted Subsidiaries, if, as of any Buy Out Determination Date after the date hereof, the Buy Out Proceeds Amount exceeds $6.0 million, the Buy Out Proceeds Amount shall be deemed to be Net Proceeds with respect to an Asset Sale as of such date and shall be applied in accordance with the second paragraph of Section 4.10 hereof. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, and (iii) a Restricted Payment that is permitted by Section 4.07 hereof. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Buy Out Proceeds Amount" means an amount equal to (a) the aggregate amount of cash consideration actually received by the Company and its Restricted Subsidiaries in connection with Contract Buy Outs during a fiscal year (whether or not a Contract Buy Out pursuant to which any such consideration was received occurred during such fiscal year), minus (b) the aggregate amount of cash consideration actually paid by the Company and its Restricted Subsidiaries in connection with Contract Buy Outs during a fiscal year (whether or not a Contract Buy Out pursuant to which any such consideration was paid occurred during such fiscal year). Immediately following each But Out Proceeds Determination Date, the Buy Out Proceeds Amount shall be reset at zero. "Buy Out Proceeds Determination Date" means the last day of each fiscal year of the Company. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents 2 (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the New Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within six months after the date of acquisition and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this definition. "Cedel" means Cedel Bank, S.A. "Change of Control" means the occurrence of any of the following: (i) the sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Principal or a Related Party of the Principal, (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person," other than the Principal and his Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person," such "person" shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 35% of the Voting Stock of the Company (measured by voting power rather than number of shares), (iv) the consummation of the first transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" becomes the "beneficial owner" (as defined above), directly or indirectly, of more of the Voting Stock of the Company (measured by voting power rather than number of shares) than is at the time "beneficially owned" by the Principal and his Related Parties in the aggregate or (v) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means Interep National Radio Sales, Inc., and any and all successors thereto. 3 "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income, plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, minus (v) non-cash items increasing such Consolidated Net Income for such period (other than items that were accrued in the ordinary course of business), in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Subsidiary of the Company shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Company only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in 4 accounting principles shall be excluded; and (v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Subsidiaries. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (x) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the date of this Indenture in the book value of any asset owned by such Person or a consolidated Subsidiary of such Person, (y) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in each case, Permitted Investments), and (z) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Contract Buy Out" means the involuntary disposition or termination (including, without limitation, pursuant to a buy out) by a media client of a Media Representation Contract. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company. "Credit Facilities" means, with respect to the Company, one or more debt facilities (including, without limitation, the New Credit Facility) or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. Indebtedness under Credit Facilities outstanding on the date of this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the second paragraph of Section 4.09 hereof. "Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. 5 "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. "Employee Stock Ownership Plan" means an employee stock ownership plan that constitutes a qualified plan or trust, under Sections 401(a) and 501(a), respectively of the Code and meets the requirements of Section 4975(e)(7) of the Code. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. 6 "Existing Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the New Credit Facility) in existence on the date of this Indenture, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiary for such period to the Fixed Charges of such Person and its Restricted Subsidiary for such period. In the event that the referent Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such 7 Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of this Indenture. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantors" means each of (i) McGavren Guild, Inc., D&R Radio, Inc., CBS Radio Sales, Inc., Allied Radio Partners, Inc., Clear Channel Radio, LLC and Caballero Spanish Media LLC and (ii) any other subsidiary that executes a Note Guarantee pursuant to a supplemental indenture, in the form of Exhibit F hereto, in accordance with the provisions of this Indenture, and, in each case, their respective successors and assigns. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "Holder" means a Person in whose name a Note is registered. "IAI Global Note" means the global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or 8 similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable or Media Representation Contract buyouts payable incurred in the ordinary course of business and consistent with past practices, if and to the extent any of the foregoing (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness . "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07 hereof. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the State of New Jersey or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. 9 "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Media Representation Contract" means any contract between a media representation firm and a media client providing for media representation services. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions), or (b) the disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries, and (ii) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness (other than Indebtedness under the New Credit Facility) secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Credit Facility" means that certain Credit Facility, dated as of July 2, 1998, by and among the Company, the Guarantors and BankBoston, N.A. and Summit Bank providing for up to $10.0 million of borrowings, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted 10 Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than the Notes being offered hereby) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. Person. "Note Guarantee" means the Guarantee by each Guarantor of the Company's payment obligations under this Indenture and the Notes, executed pursuant to the provisions of this Indenture. "Notes" has the meaning assigned to it in the preamble to this Indenture. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offering" means the offering of the Notes by the Company. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 12.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel). "Participating Broker-Dealer" means any Broker-Dealer that holds Series B Notes that were acquired in the Registration Exchange Offer in exchange for Series A Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Series A Notes acquired directly from the Company or any of its Affiliates). "Permitted Business" means the business of providing media representation and media services and the sale of advertising and any other activities that are reasonably incidental, similar or related thereto. 11 "Permitted Investments" means (a) any Investment in the Company or in a Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (d) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof, (e) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; and (f) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (f) that are at the time outstanding, not to exceed $5.0 million. "Permitted Liens" means (i) Liens on the assets of the Company and its Subsidiaries securing Indebtedness under the New Credit Facility that was permitted by Section 4.09 hereof; (ii) Liens in favor of the Company; (iii) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (ii) of the second paragraph of Section 4.09 hereof covering only the assets acquired with such Indebtedness, (vii) Liens existing on the date of this Indenture; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens incurred in the ordinary course of business of the Company or any Subsidiary of the Company with respect to obligations that do not exceed $5.0 million at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Subsidiary and (x) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, 12 renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Principal" means Ralph C. Guild. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of July 2, 1998, by and among the Company, the Guarantors and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a global Note bearing the Private Placement Legend and deposited with or on behalf of the Depositary and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S or a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate. "Regulation S Permanent Global Note" means a permanent global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period. 13 "Regulation S Temporary Global Note" means a temporary global Note in the form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S. "Related Party" with respect to any Principal means (A) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (A). "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. 14 "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stock Growth Plan" means the Stock Growth Plan of the Company qualified under Section 401(o) of the Code. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa- 77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Global Note" means a permanent global Note in the form of Exhibit A-1 attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the 15 Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted by Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the reference period, and (ii) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person or by such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. 16 Section 1.02. Other Definitions.
Defined in Term Section "Affiliate Transaction"....................................4.11 "Asset Sale Offer".........................................4.10 "Authentication Order".....................................2.02 "Bankruptcy Law"...........................................4.01 "Change of Control Offer"..................................4.15 "Change of Control Payment"................................4.15 "Change of Control Payment Date"...........................4.15 "Covenant Defeasance"......................................8.03 "Designated Senior Debt"...................................10.02 "Event of Default".........................................6.01 "Excess Proceeds"..........................................4.10 "incur"....................................................4.09 "Legal Defeasance".........................................8.02 "Offer Amount".............................................3.09 "Offer Period".............................................3.09 "Paying Agent".............................................2.03 "Payment Default"..........................................6.01 "Permitted Debt"...........................................4.09 "Permitted Junior Securities"..............................10.02 "Purchase Date"............................................3.09 "Registrar"................................................2.03 "Representative"...........................................10.02 "Restricted Payments"......................................4.07 "Senior Debt".............................................10.02
Section 1.03. Trust Indenture Act Definitions Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and 17 "obligor" on the Notes and the Note Guarantees means the Company and the Guarantors, respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES Section 2.01. Form and Dating. (a) General. The Notes, including the Trustee's certificate of authentication, shall be substantially in the form of Exhibits A-1 or A-2 attached hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Notes. 18 Notes issued in global form shall be substantially in the form of Exhibits A-1 or A-2 attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A-1 attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at the principal Corporate Trust Office of the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel shall be applicable to transfers of beneficial interests in the Regulation S 19 Temporary Global Note and the Regulation S Permanent Global Notes that are held by Participants through Euroclear or Cedel. Section 2.02. Execution and Authentication. Two Officers shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent with respect to the Global Notes. 20 Section 2.04. Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. Section 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA (S) 312(a). Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act as described in Section 2.06(c)(i) hereof. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be 21 authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Temporary Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act as described in Section 2.06(c)(i) hereof. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions 22 contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; 23 (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; 24 (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Restricted 25 Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act as described in Section 2.06(c)(i) hereof, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (ii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such 26 beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a Non- U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; 27 (F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (c) above, the Regulation S Global Note, and in all other cases, the IAI Global Note. (ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; 28 and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; 29 (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. 30 (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) 31 TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT. (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, AND IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAW OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE PURCHASER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF INTEREP NATIONAL RADIO SALES, INC." 32 (iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, 33 evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (c) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. Replacement Notes If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 34 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. Section 2.10. Temporary Notes Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. 35 Section 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. Section 3.02. Selection of Notes to Be Redeemed If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. 36 Section 3.03. Notice of Redemption Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04. Effect of Notice of Redemption Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. 37 Section 3.05. Deposit of Redemption Price One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 3.07. Optional Redemption. (a) Except as set forth in clause (b) of this Section 3.07, the Company shall not have the option to redeem the Notes pursuant to this Section 3.07 prior to July 1, 2003. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on July 1 of the years indicated below:
YEAR PERCENTAGE - ---- ---------- 2003.............................. 105.000 % 2004.............................. 103.333 % 2005.............................. 101.667 % 2006 and thereafter............... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, on or prior to June 29, 2001, the Company may on any one or more occasions redeem up to 30% of the aggregate principal amount of Notes originally issued hereunder at a redemption price of 110.000% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, 38 with the net cash proceeds of an offering of common stock of the Company; provided that at least 70% of the aggregate principal amount of Notes originally issued hereunder remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 45 days of the date of the closing of such offering. (c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.08. Mandatory Redemption. Except as set forth in Sections 4.10 and 4.15 hereof, the Company shall not be required to make mandatory redemption payments, including pursuant to any sinking fund, with respect to the Notes. Section 3.09. Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an Asset Sale Offer, it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; 39 (c) that any Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date; (e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. 40 Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4. COVENANTS Section 4.01. Payment of Notes. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. Maintenance of Office or Agency. The Company shall maintain in either the Borough of Manhattan in the City of New York, or the City of Hackensack in the State of New Jersey, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in either the Borough of Manhattan in the City of New York or the City of Hackensack in the State of New Jersey for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. 41 Section 4.03. Reports. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q (commencing with the fiscal quarter ending June 30, 1998) and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the SEC's rules and regulations. In addition, following the consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. (b) For so long as any Notes remain outstanding, the Company and the Guarantors shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Section 4.04. Compliance Certificate. (a) The Company and each Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) 42 above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.05. Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. Section 4.06. Stay, Extension and Usury Laws. The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07. Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company or other Affiliate of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary 43 of the Company); (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes, except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds received by the Company since the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company), plus (iii) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment. The foregoing provisions shall not prohibit (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (v) the repurchase, redemption or other acquisition or retirement for value of any Equity 44 Interests of the Company or any Restricted Subsidiary of the Company held by (A) any employee, director or consultant of the Company (or any of its Restricted Subsidiaries) pursuant to any employee, director or consultant equity subscription agreement or stock option agreement or (B) any Employee Stock Ownership Plan (or related trust) of the Company; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $750,000 in any twelve-month period and (vi) the repurchase, redemption or other acquisition or retirement for value of any Equity Interest of the Company or any Restricted Subsidiary of the Company held by any Employee Stock Ownership Plan (or related trust) of the Company necessary in order for any such Employee Stock Ownership Plan (or related trust) of the Company to constitute a qualified plan or trust under Sections 401(a) and 501(a), respectively of the Code; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests (excluding any Equity Interests repurchased, redeemed, acquired or retired pursuant to clause (v) hereof) since the date of this Indenture shall not exceed $2.5 million. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause of Default. In the event of any such designation, all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary so designated shall be deemed to be an Investment made as of the time of such designation and shall reduce the amount available for Restricted Payments under the first paragraph of this Section 4.07 or Permitted Investments, as applicable. All such outstanding Investments shall be deemed to constitute Restricted Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation shall only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $5.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. Contributions by employees to the Company's Stock Growth Plan, as in effect on the date of this Indenture, and, if such Plan is not a Restricted Subsidiary, payments by such Plan to purchase Equity Interests of the Company, in each case, in the ordinary course of business on a basis consistent with past practice shall not constitute Restricted Payments for the purposes of this Section 4.07. 45 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the foregoing restrictions shall not apply to encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of this Indenture, (b) the New Credit Facility as in effect as of the date of this Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the New Credit Facility as in effect on the date of this Indenture, (c) this Indenture and the Notes, (d) applicable law, (e) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms hereof to be incurred, (f) customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition, (i) Liens securing Indebtedness otherwise permitted to be incurred pursuant to the provisions of Section 4.12 hereof that limit the right of the Company or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien, (j) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business and (k) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and the Company shall not issue any Disqualified Stock and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and the Guarantors may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for 46 which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this Section 4.09 shall not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of Indebtedness under the New Credit Facility; provided that the aggregate principal amount of all Indebtedness outstanding under the New Credit Facility after giving effect to such incurrence does not exceed an amount equal to $10.0 million less the aggregate amount of all Net Proceeds of Asset Sales that have been applied since the date of this Indenture to repay Indebtedness pursuant to Section 4.10 hereof; (ii) the incurrence by the Company of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company, in an aggregate principal amount not to exceed $2.5 million at any time outstanding; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company of up to $100.0 million of Indebtedness represented by the Notes and the Exchange Notes; (v) The guarantee by the Company or any of the Guarantors of Indebtedness that was permitted to be incurred by another provision of this Section 4.09; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Wholly Owned Restricted Subsidiaries; provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vi); (vii) the incurrence by the Company of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted 47 by the terms of this Indenture to be outstanding; provided, that the agreement, indenture or other documents governing such Indebtedness require such fixing or hedging of interest rate risk; (viii) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph hereof or clauses (iii), (iv), (viii) and (x) of this paragraph; (ix) the incurrence by the Company of Indebtedness with respect to performance, surety and appeal bonds in the ordinary course of business; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non- Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (x); and (xi) the incurrence by the Company of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (xi), not to exceed $5.0 million. The Company shall not incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company unless such Indebtedness is also contractually subordinated in right of payment to the Notes on substantially identical terms; provided, however, that no Indebtedness of the Company shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xi) above as of the date of incurrence thereof, or is entitled to be incurred pursuant to the first paragraph of this Section 4.09 as of the date of incurrence thereof, the Company shall, in its sole discretion, classify such item of Indebtedness on the date of its incurrence in any manner that complies with this Section 4.09. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Company as accrued. Section 4.10. Asset Sales The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) 48 receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee in the event of an Asset Sale (whether pursuant to a single transaction or a series of related transactions) that has fair market value or involves Net Proceeds in excess of $5.0 million) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 80% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash; provided that the amount of (x) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (y) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are contemporaneously (subject to ordinary settlement periods) converted by the Company or such Subsidiary into cash (to the extent of the cash received), shall be deemed to be cash for purposes of this provision. Within 180 days after the receipt of any Net Proceeds from an Asset Sale (360 days in the case of Net Proceeds that are comprised solely of Buy Out Proceeds), the Company may apply such Net Proceeds (a) to repay Indebtedness under the New Credit Facility, (b) to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business, (c) to make capital expenditures, (d) to acquire other long-term assets that are used or useful in a Permitted Business, including Media Representation Contracts, or (e) to pay Buy Out Proceeds Amounts in connection with Contract Buy Outs. Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph shall be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company shall be required to make an offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in Section 3.09 hereof, and such other pari passu Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. 49 Section 4.11. Transactions with Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $1.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary, (ii) transactions between or among the Company and/or its Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not otherwise Affiliates of the Company, (iv) any sale or other issuance of Equity Interests (other than Disqualified Stock) of the Company, (v) Restricted Payments that are permitted by the provisions of Section 4.07 hereof, (vi) the application of the proceeds from the sale of the Notes as described in the final offering memorandum, dated June 29, 1998 pertaining thereto, (vii) the performance of the Services Agreement between the Company and Media Financial Services, Inc. as in effect on the date of this Indenture, (viii) the performance of the lease of the real property located in Tuxedo Park, New York, between the Company and The Tuxedo Park Executive Conference Center Proprietorship as in effect on the date of this Indenture and (ix) payment in respect of the promissory note from Mr. Ralph C. Guild payable to the Company in the original aggregate principal amount of $389,000 as in effect on the date of this Indenture. Section 4.12. Liens. The Company shall not and shall not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. 50 Section 4.13. Line of Business. The Company shall not, and shall not permit any Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Subsidiaries taken as a whole. Section 4.14. Corporate Existence. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. Section 4.15. Offer to Repurchase Upon Change of Control. (a) Upon the occurrence of a Change of Control, the Company shall make an offer (a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder stating: (1) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no earlier than 30 and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 51 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change of Control. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Holder's Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered by such Holder, if any; provided, that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (c) Notwithstanding anything to the contrary in this Section 4.15, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and Section 3.09 hereof and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. Section 4.16. No Senior Subordinated Debt. Notwithstanding the provisions of Section 4.09 hereof, (i) the Company shall not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the Notes, and (ii) no Guarantor shall incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness of such Guarantor and senior in any respect in right of payment to the Note Guarantee of such Guarantor. Section 4.17. Payments for Consent. Neither the Company nor any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes in connection with such consent, waiver or agreement. Section 4.18. Additional Note Guarantees If the Company or any of its Restricted Subsidiaries shall acquire or create another Subsidiary after the date of this Indenture, then such newly acquired or created Subsidiary shall become 52 a Guarantor by executing a Supplemental Indenture in the form attached hereto as Exhibit F and deliver an Opinion of Counsel to the Trustee to the effect that such Supplemental Indenture has been duly authorized, executed and delivered by such Subsidiary and constitutes a valid and binding obligation of such Subsidiary, enforceable against such Subsidiary in accordance with its terms (subject to customary exceptions); provided, that all Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with this Indenture (i) shall not be subject to the requirements of this Section 4.18 and (ii) shall be released from Obligations under any Note Guarantee, in each case for so long as they continue to constitute Unrestricted Subsidiaries. ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets. (a) The Company shall not, directly or indirectly, consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person unless (i) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Registration Rights Agreement, the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, immediately after such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. (b) The Company shall not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. (c) Notwithstanding anything contrary to the contrary in this section 5.01, this Section 5.01 shall not be applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of the Guarantors. 53 Section 5.02. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default. An "Event of Default" occurs if: (a) the Company defaults in the payment when due of interest on, or Liquidated Damages with respect to, the Notes and such default continues for a period of 30 days; (b) the Company defaults in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company fails to comply with any of the provisions of Section 4.07, 4.09, 4.10 or 4.15; (d) the Company fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture or the Notes for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries, whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; 54 (f) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $5.0 million; (g) the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a Custodian of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; or (i) except as permitted by this Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under such Guarantor's Note Guarantee. 55 Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company, any Significant Subsidiary or any group of Significant Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company, any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, all outstanding Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. If an Event of Default occurs on or after July 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to July 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to such date, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable in an amount, for each of the years beginning on July 1 of the years set forth below, as set forth below (expressed as a percentage of principal amount):
YEAR PERCENTAGE ---- ---------- 1998................................... 113.333 % 1999................................... 111.667 % 2000................................... 110.000 % 2001................................... 108.333 % 2002................................... 106.667 %
Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest and Liquidated Damages, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture. 56 The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04. Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05. Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and 57 (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Section 6.07. Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09. Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or 58 composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection and the fees and expenses of the Trustee's agents and legal counsel; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: 59 (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with 60 counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest or Liquidated Damages, if any, on any Note, the Trustee may withhold the 61 notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA (S) 313(a) (but if no event described in TIA (S) 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA (S) 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA (S) 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA (S) 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust 62 to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the extent applicable. Section 7.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b). Section 7.11. Preferential Collection of Claims Against Company. The Trustee is subject to TIA (S) 311(a), excluding any creditor relationship listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to the extent indicated therein. 63 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02. Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and the Guarantors shall, subject to the satisfaction of the conditions set forth 64 in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes, in order to exercise either Legal Defeasance or Covenant Defeasance: 65 (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and Liquidated Damages, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article 8 concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors 66 of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest and Liquidated Damages, if any, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified 67 therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may amend or supplement this Indenture, the Note Guarantees or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's or a Guarantor's obligations to the Holders of the Notes by a successor to the Company or a Guarantor pursuant to Article 5 or Article 11 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (f) to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes. 68 Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company and the Guarantors in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.15 hereof), the Note Guarantees and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest or Liquidated Damages, if any, on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Without the consent of at least 75% in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, such Notes), no waiver or amendment to this Indenture may make any change in the provisions of Article 10 hereof that adversely affects the rights of any Holder of Notes. Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or 69 waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non- consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or interest on the Notes; (g) waive a redemption payment with respect to any Note, except payments required by either Section 4.10 or 4.15; (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (i) release any Guarantor from any of its obligations under its Note Guarantee or this Indenture, except in accordance with the terms of this Indenture. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note 70 or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10. SUBORDINATION SECTION 10.01. AGREEMENT TO SUBORDINATE. The Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness (including premium and Liquidated Damages, if any) evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full of all Senior Debt (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. SECTION 10.02. CERTAIN DEFINITIONS. "Designated Senior Debt" means (i) any Indebtedness outstanding under the New Credit Facility and (ii) any other Senior Debt permitted hereunder the principal amount of which is $25.0 million or more and that has been designated by the Company as "Designated Senior Debt." 71 "Permitted Junior Securities" means Equity Interests in the Company or any Guarantor or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Debt pursuant to this Article 10. "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Debt. "Senior Debt" means (i) all Indebtedness outstanding under the New Credit Facility and all Hedging Obligations with respect thereto, (ii) any other Indebtedness permitted to be incurred by the Company pursuant to this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not include (w) any liability for federal, state, local or other taxes owed or owing by the Company, (x) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in violation of this Indenture. A distribution may consist of cash, securities or other property, by set-off or otherwise. SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, in an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities: (1) holders of Senior Debt shall be entitled to receive payment in full of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt) before Holders of the Notes shall be entitled to receive any payment with respect to the Notes (except that Holders may receive and retain (i) Permitted Junior Securities and (ii) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof); and (2) until all Obligations with respect to Senior Debt (as provided in subsection (1) above) are paid in full, any distribution to which Holders would be entitled but for this Article 10 shall be made to holders of Senior Debt (except that Holders of Notes may receive and retain (i) Permitted Junior Securities and (ii) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof), as their interests may appear. SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT. The Company may not make any payment or distribution to the Trustee or any Holder in respect of Obligations with respect to the Notes and may not acquire from the Trustee or any Holder any Notes for cash or property (other than (i) Permitted Junior Securities and (ii) payments and other 72 distributions made from any defeasance trust created pursuant to Section 8.01 hereof) until all principal and other Obligations with respect to the Senior Debt have been paid in full if: (i) a default in the payment of any principal or other Obligations with respect to Designated Senior Debt occurs and is continuing beyond any applicable grace period in the agreement, indenture or other document governing such Designated Senior Debt; or (ii) a default, other than a payment default, on Designated Senior Debt occurs and is continuing that then permits holders of the Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Person who may give it pursuant to Section 10.12 hereof. If the Trustee receives any such Payment Blockage Notice, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until (i) at least 360 days shall have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest on the Note that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. The Company may and shall resume payments on and distributions in respect of the Notes and may acquire them upon the earlier of: (1) the date upon which the default is cured or waived, or (2) in the case of a default referred to in Section 10.04(ii) hereof, 179 days after the date on which the applicable Payment Blockage Notice is received if the maturity of such Designated Senior Debt has not been accelerated, if this Article 10 otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. SECTION 10.05. ACCELERATION OF SECURITIES. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Debt of the acceleration. SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Notes at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Debt as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which Senior Debt may have been issued, as their respective 73 interests may appear, for application to the payment of all Obligations with respect to Senior Debt remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 10.07. NOTICE BY COMPANY. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article 10, but failure to give such notice shall not affect the subordination of the Notes to the Senior Debt as provided in this Article 10. SECTION 10.08. SUBROGATION. After all Senior Debt is paid in full and until the Notes are paid in full, Holders of Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of Senior Debt. A distribution made under this Article 10 to holders of Senior Debt that otherwise would have been made to Holders of Notes is not, as between the Company and Holders, a payment by the Company on the Notes. SECTION 10.09. RELATIVE RIGHTS. This Article 10 defines the relative rights of Holders of Notes and holders of Senior Debt. Nothing in this Indenture shall: (1) impair, as between the Company and Holders of Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest and Liquidated Damages, if any, on the Notes in accordance with their terms; (2) affect the relative rights of Holders of Notes and creditors of the Company other than their rights in relation to holders of Senior Debt; or 74 (3) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to Holders of Notes. If the Company fails because of this Article 10 to pay principal of or interest or Liquidated Damages, if any, on a Note on the due date, the failure is still a Default or Event of Default. SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of any holder of Senior Debt to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture. SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Notes to violate this Article 10. Only the Company or a Representative may give the notice. Nothing in this Article 10 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the 75 subordination as provided in this Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. SECTION 10.14. AMENDMENTS. The provisions of this Article 10 shall not be amended or modified without the written consent of the holders of all Senior Debt. ARTICLE 11. NOTE GUARANTEES SECTION 11.01. GUARANTEE. Subject to this Article 11, each of the Guarantors hereby, jointly and severally, unconditionally and fully guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be fully and unconditionally obligated on a joint and several basis to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation 76 to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE. The Obligations of each Guarantor under its Note Guarantee pursuant to this Article 11 shall be junior and subordinated to the Senior Debt of such Guarantor on the same basis as the Notes are junior and subordinated to Senior Debt of the Company. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Guarantors only at such times as they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article 10 hereof. SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY. Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor under its Note Guarantee and this Article 11 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE. To evidence its Note Guarantee set forth in Section 11.01, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form included in Exhibit E shall be endorsed 77 by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by its President or one of its Vice Presidents. Each Guarantor hereby agrees that its Note Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors. In the event that the Company creates or acquires any new Subsidiaries subsequent to the date of this Indenture, if required by Section 4.18 hereof, the Company shall cause such Subsidiaries to execute supplemental indentures to this Indenture and Note Guarantees in accordance with Section 4.18 hereof and this Article 11, to the extent applicable. SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another corporation, entity or Person whether or not affiliated with such Guarantor unless: (a) subject to this Section 11.05, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) unconditionally assumes all the obligations of such Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, this Indenture, Registration Rights Agreement and the Note Guarantee on the terms set forth herein or therein; and (b) immediately after giving effect to such transaction, no Default or Event of Default exists. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the 78 Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 11. ARTICLE 12. MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA (S) 318(c), the imposed duties shall control. SECTION 12.02. NOTICES. Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: 79 if to the Company and/or any Guarantor: Interep National Radio Sales, Inc. 100 Park Avenue New York, NY 10017 Telecopier No.: (212) 309-9081 Attention: Chief Executive Officer and Interep National Radio Sales, Inc. 2090 Palm Beach Lakes Blvd. 3rd Floor West Palm Beach, FL 33409 Telecopier No.: (561) 616-4019 Attention: Chief Financial Officer With a copy to: Christy & Viener Rockefeller Center 620 Fifth Avenue New York, NY 10020 Telecopier No.: (212) 307-3314 Attention: Laurence S. Markowitz, Esq. If to the Trustee: Summit Bank 210 Main Street 6th Floor Hackensack, NJ 07601 Telecopier No.: (201) 646-0087 Attention: Jennifer J. Houle The Company, any Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. 80 Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA (S) 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company or any Guarantor mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA (S) 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA (S) 312(c). SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 81 (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 12.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or such Guarantor under the Notes, the Note Guarantees or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SECTION 12.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. 82 SECTION 12.11. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] 83 Dated as of July 2, 1998 INTEREP NATIONAL RADIO SALES, INC. By: /s/ William J. McEntee, Jr. ------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer GUARANTORS: MCGAVREN GUILD, INC. By: /s/ William J. McEntee, Jr. ------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer D&R RADIO, INC. By: /s/ William J. McEntee, Jr. ------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CBS RADIO SALES, INC. By: /s/ William J. McEntee, Jr. ------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer ALLIED RADIO PARTNERS, INC. By: /s/ William J. McEntee, Jr. ------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer 84 CLEAR CHANNEL RADIO SALES, LLC By: /s/ William J. McEntee, Jr. ------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CABALLERO SPANISH MEDIA LLC By: /s/ William J. McEntee, Jr. ------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer 85 Trustee: SUMMIT BANK By: /s/ Jennifer J. Houle -------------------------------------- Name: Jennifer J. Houle Title: Assistant Vice President 86 EXHIBIT A-1 (Face of Note) ================================================================================ CUSIP --------- 10% [SERIES A] [SERIES B] SENIOR SUBORDINATED NOTES DUE 2008 No. $ --- ---------- INTEREP NATIONAL RADIO SALES, INC. promises to pay to -------------------------------------------------- or registered assigns, the principal sum of --------------------------------------- Dollars on July 1, 2008. Interest Payment Dates: January 1, and July 1 Record Dates: December 15, and June 15 Dated: July 2, 1998 Interep National Radio Sales, Inc. By:_______________________________ Name: Title: This is one of the [Global] Notes referred to in the within-mentioned Indenture: Summit Bank, as Trustee By:__________________________ ================================================================================ A-1-1 (Back of Note) 10% [Series A] [Series B] Senior Subordinated Notes due 2008 [INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] [INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Interep National Radio Sales, Inc. a New York corporation (the "Company"), promises to pay interest on the principal amount of this Note at 10% per annum from July 2, 1998 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages, if any, semi-annually on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be January 1, 1999. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, if any, and Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment A-1-2 shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, Summit Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. Indenture . The Company issued the Notes under an Indenture dated as of July 2, 1998 ("Indenture") among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company limited to $100.0 million in aggregate principal amount. 5. Optional Redemption. (a) Except as set forth in subparagraph (b) of this Paragraph 5, the Company shall not have the option to redeem the Notes prior to July 1, 2003. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on July 1 of the years indicated below:
YEAR PERCENTAGE - ---- ---------- 2003................................................ 105.000 % 2004................................................ 103.333 % 2005................................................ 101.667 % 2006 and thereafter................................. 100.000 %
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, during the first 36 months after the date of the Indenture, the Company may on any one or more occasions redeem up to 30% of the aggregate principal amount of Notes originally issued under the Indenture at a redemption price of 110.000% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of an offering of common stock of the Company; provided that at least 70% of the aggregate principal amount of Notes originally issued under the Indenture remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 45 days of the date of the closing of such offering. A-1-3 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture, and such other pari passu Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee will select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents A-1-4 and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 11. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture, the Note Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes and any existing default or compliance with any provision of the Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or any Guarantor's obligations to Holders of the Notes in case of a merger or consolidation or sale of all or substantially all of the Company's assets, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to allow any Guarantor to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes. 12. Defaults and Remedies. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by the Company to comply with Section 4.07, 4.09, 4.10 or 4.15 of the Indenture; (iv) failure by the Company for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding to comply with certain other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries (or the payment of which is guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (vi) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments are not paid, discharged or A-1-5 stayed for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries; and (viii) except as permitted by the Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Guarantor's Note Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company or any of the Guarantors, as such, shall not have any liability for any obligations of the Company or such Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set A-1-6 forth in the A/B Exchange Registration Rights Agreement dated as of July 2, 1998, among the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. A-1-7 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Interep National Radio Sales, Inc. 100 Park Avenue New York, NY 10017 Attention: Chief Executive Officer A-1-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint --------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date:____________ Your Signature:_____________________________ (Sign exactly as your name appears on the face of this Note) SIGNATURE GUARANTEE: _________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-1-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: [_] Section 4.10 [_] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $________ Date:_________ Your Signature:_____________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No:______________________ SIGNATURE GUARANTEE: ___________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-1-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/ The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made: Principal Amount Amount of Amount of increase of this Global decrease in in Principal Note following Signature of Principal Amount Amount of such decrease authorized officer Date of Exchange of this Global Note this Global Note (or increase) of Trustee ---------------- -------------------- ---------------- ------------- ----------
- ---------------------------------- /1/ This should be included only if the Note is issued in global form. A-1-11 EXHIBIT A-2 (Face of Regulation S Temporary Global Note) ================================================================================ CUSIP _______ 10% SERIES A SENIOR SUBORDINATED NOTES DUE 2008 No. $ --- ----------- INTEREP NATIONAL RADIO SALES, INC. promises to pay to -------------------------------------------- or registered assigns, the principal sum of ------------------------------------- Dollars on July 1, 2008. Interest Payment Dates: January 1, and July 1 Record Dates: December 15, and June 15 Dated: July 2, 1998 Interep National Radio Sales, Inc. By: ------------------------------- Name: Title: This is one of the Global Notes referred to in the within-mentioned Indenture: Summit Bank, as Trustee By: ---------------------------- ================================================================================ A-2-1 (Back of Regulation S Temporary Global Note) 10% Series A Senior Subordinated Notes due 2008 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT. (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED A-2-2 LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, AND IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAW OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE PURCHASER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Interep National Radio Sales, Inc., a New York corporation (the "Company"), promises to pay interest on the principal amount of this Note at 10% per annum from July 2, 1998 until maturity and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages, if any, semi-annually on January 1 and July 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be January 1, 1999. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Notes under the Indenture. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the December 15 or June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as A-2-3 to principal, premium, if any, and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, if any, and Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, Summit Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. Indenture. The Company issued the Notes under an Indenture dated as of July 2, 1998 ("Indenture") among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company limited to $100.0 million in aggregate principal amount. 5. Optional Redemption. (a) Except as set forth in subparagraph (b) of this Paragraph 5, the Company shall not have the option to redeem the Notes prior to July 1, 2003. Thereafter, the Company shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on July 1 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2003........................................................ 105.000 % 2004........................................................ 103.333 % 2005........................................................ 101.667 % 2006 and thereafter......................................... 100.000 %
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, during the first 36 months after the date of the Indenture, the Company may on any one or more occasions A-2-4 redeem up to 30% of the aggregate principal amount of Notes originally issued under the Indenture at a redemption price of 110.000% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of an offering of common stock of the Company; provided that at least 70% of the aggregate principal amount of Notes originally issued under the Indenture remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 45 days of the date of the closing of such offering. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture, and such other pari passu Indebtedness. To the extent that any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee will select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in A-2-5 whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Global Note. 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 11. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture, the Note Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes and any existing default or compliance with any provision of the Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or any Guarantor's obligations to Holders of the Notes in case of a merger or consolidation or sale of all or substantially all of the Company's assets, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to allow any Guarantor to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes. 12. Defaults and Remedies. Events of Default include: (i) default for 30 days in the payment when due of interest or Liquidated Damages on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by the Company to comply with Section 4.07, 4.09, 4.10 or 4.15 of the Indenture; (iv) failure by the Company for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in principal amount A-2-6 of the Notes then outstanding to comply with certain other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries (or the payment of which is guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (vi) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries; and (viii) except as permitted by the Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Guarantor's Note Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company or any of the Guarantors, as such, shall not have any liability for any obligations of the Company or such Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. A-2-7 15. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of July 2, 1998, among the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Interep National Radio Sales, Inc. 100 Park Avenue New York, NY 10017 Attention: Chief Executive Officer A-2-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint --------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: -------------- Your Signature: ----------------------------- (Sign exactly as your name appears on the face of this Note) SIGNATURE GUARANTEE: _________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-2-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below: [ ]Section 4.10 [ ]Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $_________ Date: ------------ Your Signature: ----------------------------- (Sign exactly as your name appears on the face of this Note) Tax Identification No: ---------------------- SIGNATURE GUARANTEE: _________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-2-10 SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or of other Restricted Global Notes for an interest in this Regulation S Temporary Global Note, have been made:
Principal Amount Amount of Amount of increase of this Global decrease in in Principal Note following Signature of Principal Amount Amount of such decrease authorized officer Date of Exchange of this Global Note this Global Note (or increase) of Trustee ---------------- ------------------- ------------------ ---------------- ----------
A-2-11 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Interep National Radio Sales, Inc. 100 Park Avenue New York, NY 10017 Summit Bank 210 Main Street 6th Floor Hackensack, NJ 07601 Re: 10% Senior Subordinated Notes due 2008 ------------------------------------ Reference is hereby made to the Indenture, dated as of July 2, 1998 (the "Indenture"), among Interep National Radio Sales, Inc., as issuer (the --------- "Company"), the Guarantors and Summit Bank, as trustee. Capitalized terms used - -------- but not defined herein shall have the meanings given to them in the Indenture. ______________, (the "Transferor") owns and proposes to transfer the ---------- Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "Transfer"), -------- to __________ (the "Transferee"), as further specified in Annex A hereto. In ---------- connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE ---------------------------------------------------------------------- 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is - ----------------------------------------------------------- being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, ---------- --- accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE ---------------------------------------------------------------------- REGULATION S TEMPORARY GLOBAL NOTE, THE REGULATION S PERMANENT GLOBAL NOTE OR A - ------------------------------------------------------------------------------- DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected - ---------------------------------------- pursuant to and in accordance with Rule 903 or Rule 904 B-1 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Permanent Global Note, the Regulation S Temporary Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL ------------------------------------------------------------------- INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION - ------------------------------------------------------------------------------ OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is - ---------------------------------------------------------- being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [ ] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [ ] such Transfer is being effected to the Company or a subsidiary thereof; or (c) [ ] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) [ ] such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a B-2 certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Definitive Notes and in the Indenture and the Securities Act. 4. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL ------------------------------------------------------------------- INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. - ----------------------------------------------------------------------------- (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. B-3 ------------------------------ [Insert Name of Transferor] By: --------------------------- Name: Title: Dated: , ----------- ------- B-4 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP _________), or (ii) [ ] Regulation S Global Note (CUSIP _________), or (iii) [ ] IAI Global Note (CUSIP ________); or (b) [ ] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP ________), or (ii) [ ] Regulation S Global Note (CUSIP ________), or (iii) [ ] IAI Global Note (CUSIP ________); or (iv) [ ] Unrestricted Global Note (CUSIP ________); or (b) [ ] a Restricted Definitive Note; or (c) [ ] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-5 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Interep National Radio Sales, Inc. 100 Park Avenue New York, NY 10017 Summit Bank 210 Main Street 6th Floor Hackensack, NJ 07601 Re: 10% Senior Subordinated Notes due 2008 ------------------------------------ (CUSIP______________) Reference is hereby made to the Indenture, dated as of July 2, 1998 (the "Indenture"), among Interep National Radio Sales, Inc., as issuer (the --------- "Company"), the Guarantors and Summit Bank, as trustee. Capitalized terms used - -------- but not defined herein shall have the meanings given to them in the Indenture. ____________, (the "Owner") owns and proposes to exchange the Note[s] ----- or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the "Exchange"). In connection with -------- the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED ------------------------------------------------------------- GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In - ----------------------------------------------------------------- connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on -------------- transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED ------------------------------------------------------------- GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of - ------------------------------------------- the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes C-1 and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO ------------------------------------------------------- BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the - -------------------------------------------------- Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO ------------------------------------------------------- UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a - ---------------------------- Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES (a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED ------------------------------------------------------------- GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of - ----------------------------------------- the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO ------------------------------------------------------- BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange - ----------------------------------------------- of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [_] 144A Global Note, [_] Regulation S Global Note, [_] IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue C-2 sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. C-3 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ___________________________________ [Insert Name of Owner] By: _______________________________ Name: Title: Dated: ________________, ____ C-4 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Interep National Radio Sales, Inc. 100 Park Avenue New York, NY 10017 Summit Bank 210 Main Street 6th Floor Hackensack, NJ 07601 Re: 10% Senior Subordinated Notes due 2008 -------------------------------------- Reference is hereby made to the Indenture, dated as of July 2, 1998 (the "Indenture"), among Interep National Radio Sales, Inc., as issuer --------- (the "Company"), the Guarantors and [insert Trustee], as trustee. Capitalized ------- terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) [_] a beneficial interest in a Global Note, or (b) [_] a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). -------------- 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule D-1 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (c) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Notes or beneficial interest therein acquired by us must be effected through one of the Placement Agents. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. __________________________________________ [Insert Name of Accredited Investor] By: _______________________________ Name: Title: Dated: __________________, ____ D-2 EXHIBIT E FORM OF NOTATION OF GUARANTEE For value received, each Guarantor (which term includes any successor Person under the Indenture) has unconditionally and fully guaranteed on a joint and several basis, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of July 2, 1998 (the "Indenture") among Interep National Radio Sales, Inc., the Guarantors listed on Schedule I thereto and Summit Bank, as trustee (the "Trustee"), (a) the due and punctual payment of the principal of, premium, if any, and interest and Liquidated Damages (as defined in the Indenture), if any, on the Notes (as defined in the Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations, including Liquidated Damages, if any, of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 11 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Note in accordance with the provisions of the Indenture. [Name of Guarantor(s)] By: ________________________________ Name: Title: E-1 EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS Supplemental Indenture (this "Supplemental Indenture"), dated as of ________________, among __________________ (the "Guaranteeing Subsidiary"), a subsidiary of Interep National Radio Sales, Inc. (or its permitted successor), a New York corporation (the "Company"), the Company, the other Guarantors (as defined in the Indenture referred to herein) and Summit Bank, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of July 2, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 10% Senior Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally and fully guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or F-1 otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be fully and unconditionally obligated to pay on a joint and several basis the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors, or any Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. F-2 (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 11.05 of the Indenture, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) unconditionally assumes all the obligations of such Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture, Registration Rights Agreement and the Note Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. F-3 (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Indenture, including without limitation Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. F-4 (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE NOTE GUARANTEE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. F-5 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: _______________, ____ [Guaranteeing Subsidiary] By: _________________________________ Name: Title: INTEREP NATIONAL RADIO SALES, INC. By: _________________________________ Name: Title: [EXISTING GUARANTORS] By: ______________________________ Name: Title SUMMIT BANK as Trustee By: ______________________________ Name: Title: F-6 EX-10.1 10 REVOLVING LINE OF CREDIT AGREEMENT EXHIBIT 10.1 REVOLVING LINE OF CREDIT AGREEMENT Dated as of July 2, 1998 Among INTEREP NATIONAL RADIO SALES, INC., MCGAVREN GUILD, INC. , D&R RADIO, INC., CBS RADIO SALES, INC., ALLIED RADIO PARTNERS, INC. CABALLERO SPANISH MEDIA L.L.C., and CLEAR CHANNEL RADIO, LLC as Borrowers and VARIOUS FINANCIAL INSTITUTIONS NOW OR HEREAFTER PARTIES HERETO, as Lenders and BANKBOSTON, N.A., as Administrative Agent and SUMMIT BANK as Documentation Agent =============================================================================== This REVOLVING LINE OF CREDIT AGREEMENT (this "Credit Agreement") is dated as of July 2, 1998 among INTEREP NATIONAL RADIO SALES, INC. (the "Company"), MCGAVREN GUILD, INC., D&R RADIO, INC., CBS RADIO SALES, INC., ALLIED RADIO PARTNERS, INC., CABALLERO SPANISH MEDIA L.L.C., and CLEAR CHANNEL RADIO, LLC, (collectively, the "Subsidiary Borrowers", and, together with the Company, the "Borrowers"), BANKBOSTON, N.A., as Administrative Agent, SUMMIT BANK, as Documentation Agent, and the undersigned Lenders and other Lenders that may from time to time be parties hereto. WHEREAS, the Borrowers have requested that the Lenders make available credit facilities in the aggregate principal amount of $10,000,000 for the purposes hereinbelow described; WHEREAS, the Lenders have agreed, on the terms and conditions set forth in this Credit Agreement, to provide credit facilities to the Borrowers for such purposes. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows. ARTICLE I DEFINITIONS AND ACCOUNTING TERMS -------------------------------- Section 1.01 Certain Defined Terms. As used herein, the following terms --------------------- shall have the following meanings. "Accumulated Funding Deficiency" shall mean an accumulated funding ------------------------------ deficiency as defined in Section 302 of ERISA. "Acquisition EBITDA" shall mean, as of any date, the EBITDA generated by a ------------------ Representative Firm acquired or to be acquired by one or more of the Borrowers for the following number of Quarters: (i) if measured during the Quarter such Representative Firm is acquired or to be acquired, Acquisition EBITDA shall mean the EBITDA of such Representative Firm for the four Quarters immediately preceding the date of such acquisition; or (ii) if measured during the first Quarter following the date such Representative Firm is acquired, Acquisition EBITDA shall mean the -2- EBITDA of such Representative Firm for the three Quarters immediately preceding the date of such acquisition; or (iii) if measured during the second Quarter following the date such Representative Firm is acquired, Acquisition EBITDA shall mean the EBITDA of such Representative Firm for the two Quarters immediately preceding the date of such acquisition; or (iv) if measured during the third Quarter following the date such Representative Firm is acquired, Acquisition EBITDA shall mean the EBITDA of such Representative Firm for the Quarter immediately preceding the date of such acquisition; or (v) if measured during the fourth or subsequent Quarter following the date such Representative Firm is acquired, Acquisition EBITDA shall not include any EBITDA of such Representative Firm for any Quarter preceding the date of such acquisition. Acquisition EBITDA shall be determined from the latest audited financial statements of the Representative Firm to be acquired. The Lenders may, in their sole discretion, permit adjustments to such Acquisition EBITDA which may involve, among others things, an analysis of the amounts paid to former owners or principals with respect to wages or benefits, or Pension Plan expenses. "Additional Costs" shall have the meaning given to such term in Section ---------------- 5.01 hereof. "Affiliate" shall mean, as to any Person, any other Person which directly --------- or indirectly controls, or is under common control with, or is controlled by, such Person. 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 the 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, -------- however, that any Person which owns directly or indirectly 10% or more of the - ------- securities having ordinary voting power for the election of directors or other governing body of a corporation or 10% 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. "Agent" shall mean BankBoston, N.A., in its capacity as administrative ----- agent for the Lenders hereunder, and its successors in such capacity. -3- "Agents" shall mean, collectively, the Agent and the Documentation Agent. ------ "Aggregate Commitment" shall mean, as to each Lender, the aggregate amount -------------------- set forth opposite its name on the signature pages hereto under the heading "Revolving Credit Commitment" (as the same may be reduced or otherwise adjusted from time to time as provided in this Credit Agreement). "Annual Compliance Certificates" shall mean the certificates delivered to ------------------------------ the Lenders pursuant to Section 8.01(b) hereof. "Assignment and Acceptance" shall have the meaning given to such term in ------------------------- Section 11.06(d) hereof. "Base Rate" shall mean, for any period, a fluctuating interest rate per --------- annum as shall be in effect from time to time, which rate per annum shall at all times be equal to the rate of interest announced by BankBoston, N.A., from time to time, as its reference rate for the determination of interest rates on loans of varying maturities in Dollars to United States residents of varying degrees of creditworthiness and being quoted at such time by BankBoston, N.A., as its "base rate," which rate is not necessarily the lowest rate of interest charged by BankBoston, N.A. "Base Rate Loans" shall mean Loans which accrue interest on the basis of --------------- the Base Rate. "Base Rate Loan Interest Margin" shall have the meaning given to such term ------------------------------ in Section 2.04(b) hereof. "Borrowers" shall have the meaning given to such term in the preamble to --------- this Credit Agreement. "Business Day" shall mean any day other than a day on which commercial ------------ banks in Boston, Massachusetts or New York City are authorized or required to close. "Capital Expenditures" shall mean, for any period, amounts paid or -------------------- Indebtedness incurred by the Borrowers in connection with the purchase or lease of capital assets that would be required to be capitalized and shown on the consolidated balance sheet of the Borrowers in accordance with GAAP. "Capital Lease Obligations" shall mean, for any period, the amount of the ------------------------- liability reflecting the aggregate discounted amount of future payments under all leases which are or should be capitalized on the balance sheet of the lessee -4- calculated in accordance with GAAP pursuant to Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board. "Capital Maintenance Costs" shall mean, for any period, with respect to the ------------------------- Loans of each Lender, any costs which such Lender determines are attributable to the maintenance by such Lender or any holding company of such Lender, 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, whether in effect on the Closing Date or thereafter, of capital in respect of its maintaining Loans hereunder or its commitment to make Loans hereunder (e.g., any additional capital maintenance requirements imposed by the Board of Governors of the Federal Reserve System with respect to the Loans pursuant to Regulation D). "Closing Date" shall mean the date of this Credit Agreement. ------------ "Code" shall mean the Internal Revenue Code of 1986, as amended. ---- "Collateral" shall mean the collateral subject to the Security Documents. ---------- "Commitment. Percentage" shall mean, as to each Lender at any time, the ---------------------- percentage obtained by dividing such Lender's Revolving Credit Commitment by the Total Revolving Credit Commitment. "Commitment Termination Date" shall mean the Quarterly Date falling on or --------------------------- nearest to July 1, 2004. "Company" shall have the meaning given to such term in the preamble to this ------- Credit Agreement. "Contracts" shall mean all binding contracts or agreements between any of --------- the Borrowers and any radio, television or cable systems or network utilizes of such forms of media which grant any Borrower the right to act as agent in securing national advertising for such entity. Each such Contract shall conform, in form and substance, with the then prevailing industry practice. "Contract Buyout Disbursements" shall mean, for any period, the aggregate ----------------------------- cash payments made by any Borrower to other Persons in connection with the termination, sale, transfer, assignment or other disposition of a Contract by any such other Person to any Borrower, plus any cash payments made by any Borrower in connection with any long term Investments related to the business of the Borrowers as permitted by Section 8.15 hereof. "Contract Buyout Expense" shall mean, for any period, the accrued amount of ----------------------- any expenses incurred by any Borrower in connection with the -5- termination, sale, transfer, assignment or other disposition of a Contract by other Persons to any Borrower. "Contract Buyout Receipts" shall mean, for any period, the aggregate cash ------------------------ payments received by any Borrower from other Persons in connection with the termination, sale, transfer, assignment or other disposition of a Contract by such Borrower to any such other Person. "Contract EBITDA" shall mean, for any Contract, the product of (i) the --------------- greater of (A) the total revenue from such Contract for the most recently completed twelve-month period, or (B) the total revenue to be received from such Contract for the next twelve-month period, as determined by the Borrowers on a reasonable basis, multiplied by (ii) the EBITDA margin of the Borrowers for the ---------- -- most recently completed period of four consecutive Quarters. The Borrowers may submit a schedule of pro forma expenses for such Contract and request adjustments to the EBITDA margin which the Lenders, in their reasonable discretion, may approve. "Contract Value" shall mean, with respect to a Contract, the dollar amount -------------- produced by multiplying (i) the Average Monthly Commissions, times (ii) the number of months remaining under the applicable Contract plus two (2). The term "Average Monthly Commissions" shall mean the amount produced by dividing (i) the amount produced by multiplying (x) the commission rate stated in the applicable Contract, times (y) the annual billings which the Borrowers estimate in good faith (supported by such detail as the Lenders may reasonably require) will be generated pursuant to such Contract during the next twelve month period, or, if less than twelve months remain before the expiration of such Contract, the estimated billings to be generated during the remaining life of the Contract, by (ii) the lesser of (x) 12 and (y) the number of months remaining before the expiration of the Contract. "Contract Value Report" shall mean a report in substantially the form of --------------------- Exhibit B hereto listing Contract Values on a station by station basis, as of - ------- - the close of business on the last Business Day of the immediately preceding Quarter of the Borrowers. "Credit Agreement" shall have the meaning given to such term in the ---------------- preamble hereof. "Credit Documents" shall mean each of this Credit Agreement, the Notes, and ---------------- the Security Documents, and all other agreements or documents delivered by the Borrowers to the Lenders in connection with the transactions contemplated by this Credit Agreement. -6- "Default" shall mean an event or condition which, with notice and/or the ------- passage of time or both, would become an Event of Default hereunder. "Deferred Compensation Plan" shall mean the Company's Compensation Deferral -------------------------- Plan as in effect from time to time. "Documentation Agent" shall mean Summit Bank, in its capacity as ------------------- documentation agent for the Lenders, and its successors in such capacity. "Dollars" shall mean lawful money of the United States of America. ------- "EBITDA" shall mean, for any period, the Borrowers' operating income for ------ such period determined on a consolidated basis plus the sum of (i) all non-cash ---- charges (including, without limitation, depreciation and amortization) of the Borrowers for such period, to the extent deducted in determining such operating income, and (ii) Acquisition EBITDA for such period, if any, minus all non-cash ----- revenues of the Borrowers for such period, to the extent included in determining such operating income. For purposes of calculating EBITDA for any period, (A) there shall be included in EBITDA the Contract EBITDA for any Material Contract entered into by the Borrowers during such period multiplied by a fraction, the ---------- -- numerator of which shall be the number of days from the first day of such period through the date of such Material Contract, and the denominator of which shall be 365, and (B) there shall be excluded from EBITDA the Contract EBITDA for any Material Contract of the Borrowers cancelled or otherwise terminated during such period multiplied by a fraction, the numerator of which shall be the number of ---------- -- days from the first day of such period through the date of such cancellation or termination, and the denominator of which shall be 365. For the purposes of determining compliance with the Sections in Article VIII D hereof for the fiscal Quarters ending on or before December 31, 1998, certain expenses associated with the Florida Relocation and Expense Reduction Program, identified and reasonably acceptable to the Lenders, and in amounts not to exceed the following amounts for the following periods, will be excluded from the definition of EBITDA by adding such amounts in the calculation of EBITDA for the periods set forth in the table (the "Adjustment Table") as follows:
Aggregate Annualized Quarter or Fiscal Year Ending Adjustment to EBITDA ----------------------------- -------------------- September 30, 1998 $825,000 December 31, 1998 $500,000
"Effective Date" shall have the meaning given to such term in Section 11.10 --------------- hereof. -7- "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as ----- amended. "ESOP" shall mean the Company's Employee Stock Ownership Plan as in effect ---- from time to time. "Eurodollar Breakage Costs" shall mean, for any Lender, an amount equal to ------------------------- the excess, if any, of (i) the amount of interest which would have accrued on the principal amount paid, prepaid or converted or not borrowed for the period from the date of such payment, prepayment or conversion or failure to borrow to the last day of the 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 of such failure to borrow) had such principal amount borne interest on the basis of the Eurodollar Rate applicable to such Loan in accordance with Section 2.04(a)(ii) hereof over (ii) the interest component of the amount such Lender would be required to 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 Lender). "Eurodollar Business Day" shall mean any Business Day on which dealings in ----------------------- Dollars are carried on in the London interbank market. "Eurodollar Loan" shall mean any Loan which accrues interest on the basis --------------- of the Eurodollar Rate. "Eurodollar Loan Interest Margin" shall have the meaning given to such term ------------------------------- in Section 2.04(b) hereof. "Eurodollar Rate" shall mean, for any Interest Period for all Eurodollar --------------- Loans to which such Interest Period relates, the rate per annum obtained by dividing (x) the "London Interbank Offered Rate" for Dollar deposits, as quoted by the Agent to prime banks in the London interbank market at approximately 11:00 a.m. (London time) two Eurodollar Business Days prior to the first day of such Interest Period, in accordance with the usual practice in such market, for delivery on the first day of such Interest Period and for the number of days comprised therein, in amounts comparable to the aggregate principal amount of such Eurodollar Loans, by (y) a percentage equal to 100% minus the Eurodollar Reserve Percentage. Such rate of interest shall be rounded, if necessary, upwards to the next higher 1/16 of 1% (if such rate is not an integral multiple of 1/16 of 1%). Each determination by the Agent of any Eurodollar Rate shall, in the absence of manifest error, be conclusive. -8- "Eurodollar Reserve Percentage" shall mean, for any Interest Period for all ----------------------------- Eurodollar Rate Loans to which such Interest Period relates, a percentage equal to the daily average during such Interest Period of the maximum percentages in effect on each day of such Interest Period, as prescribed by the Board of Governors of the Federal Reserve System, for determining the maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other applicable regulation of the Board of Governors of the Federal Reserve System that prescribes reserve requirements applicable to "Eurocurrency Liabilities" as currently defined in Regulation D. "Event of Default" shall mean any of the events described in Article IX ---------------- hereof "Exchange Offer" shall mean the offer to exchange the 1998 Subordinated -------------- Notes for a new issue of notes of the Company that are registered under the Securities Act of 1933, as amended, as contemplated by the Offering Memorandum. "Federal Funds Rate" shall mean, for any period, a fluctuating interest ------------------ rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers on such day, as published for such day (or if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York in the statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication (including any such successor publication, the "Composite 3:30 p.m. Quotations"), under the caption "Federal Funds Effective Rate". If such rate is not published in the Composite 3:30 p.m. Quotations for any Business Day, the rate for such Business Day will be the arithmetic mean of the rates for the last transaction in overnight federal funds arranged prior to 9:00 a.m. (Boston, Massachusetts time) on such Business Day by each of three leading brokers of federal funds transactions in New York City selected by the Agent. "Fixed Charge Coverage" shall mean, for any period (based upon the most --------------------- recent financial statements required to be delivered pursuant to Section 8.01 hereof), the ratio of (i) EBITDA for the immediately preceding four Quarter period for which financial statements are required to be delivered as aforesaid, to (ii) the sum of (u) Total Debt Service for such immediately preceding four Quarter period, (v) income taxes paid during such immediately preceding four Quarter period, (w) Capital Expenditures made during such immediately preceding four Quarter period, and (x) Net Contract Buyout Disbursements for the immediately preceding twelve months. -9- "Florida Relocation and Expense Reduction Program" shall mean the ------------------------------------------------ identified one-time expenses incurred by the Borrowers to relocate certain personnel and assets to Florida and identified severance expenses related to severance packages for certain employees, all as set forth on Exhibit P attached hereto and as reflected in the Adjustment Table set forth in the definition of EBITDA above. "GAAP" shall mean generally accepted accounting principles as defined by ---- controlling pronouncements of the Financial Accounting Standards Board, as from time to time supplemented and amended. "Governmental Authority" shall mean any federal, state, local, foreign or ---------------------- other governmental or administrative (including self-regulatory) body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission or other similar dispute resolving panel or body, including, without limitation, those governing the regulation and protection of the environment. "Guild" shall mean Ralph C. Guild. ----- "Hedging Breakage Costs" shall mean, with respect to any prepayment made by ---------------------- the Borrowers pursuant to Section 3.01 in respect of Loans which are the subject of an Interest Rate Hedging Agreement, any costs or expenses incurred as a result of such prepayment by the bank or banks which are party to such Interest Rate Hedging Agreement, including, without limitation, (i) any contractual costs, damages or penalties required to be paid pursuant to the express terms of such Interest Rate Hedging Agreement, (ii) any Capital Maintenance Costs, and (z) any reduction in the income to be earned by such bank or banks pursuant to such Interest Rate Hedging Agreement. "Indebtedness" shall mean all obligations, contingent and otherwise, which ------------ in accordance with GAAP should be classified upon the obligor's balance sheet as liabilities, including but not limited to, Settlement Obligations, liabilities secured by any mortgage, pledge, security interest, lien, charge, or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed, and all guarantees, endorsements and other contingent obligations whether direct or indirect with respect to Indebtedness of others and the obligations to reimburse the issuer of any letters of credit, but excluding solely for the purpose of determining Total Debt Service and Total Funded Debt: indebtedness representing trade payable, liabilities which accrue but are not currently payable, indebtedness giving rise to Contract Buyout Expense, liabilities for deferred compensation owing to employees, obligations owing to terminated employees, and indebtedness owing to the Company or any Subsidiary from the Company or any Subsidiary. -10- "Interest Margin" shall have mean the Base Rate Loan Interest Margin or the --------------- Eurodollar Loan Interest Margin, whichever shall be applicable pursuant to Section 2.04(b) hereof. "Interest Period" shall mean: (i) with respect to a Eurodollar Loan, the --------------- period commencing on the date such Eurodollar Loan is made, if applicable, or on the date such Eurodollar Loan is converted from a Base Rate Loan, or, in the case of a continuation, on the last day of the immediately preceding Interest Period applicable to such Eurodollar Loan, and ending on the date which is one, two, three or six months thereafter, as the Borrowers may select as provided in Section 2.02 or Section 2.03 hereof, or (ii) with respect to a Base Rate Loan, the period commencing on the date such Base Rate Loan is made and ending on the next Quarterly Date thereafter. Notwithstanding the foregoing: (i) no Interest Period with respect to any Loan may end after the Commitment Termination Date; (ii) each Interest Period for a Eurodollar Loan which would otherwise end on a day which is not a Eurodollar Business Day shall end on the next succeeding Eurodollar Business Day unless such next succeeding Eurodollar Business Day falls in the next succeeding calendar month, in which case such Interest Period shall end on the next preceding Eurodollar Business Day; and (iii) any Interest Period for a Eurodollar Loan that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month in which such Interest Period ends) shall, subject to the foregoing clauses (i) through (ii) above, end on the last Eurodollar Business Day of the calendar month in which such Interest Period ends. "Interest Rate Hedging Agreement" shall mean an interest rate swap, cap or ------------------------------- collar agreement or similar arrangement among the Borrowers and one or more banks satisfactory to the Lenders providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations among the Borrowers and such banks, either generally or under specific contingencies, as said agreement or arrangement shall be modified and supplemented and in effect from time to time. "Investments" shall have the meaning given to such term in Section 8.15 ----------- hereof. "Lenders" shall mean BankBoston, N.A. and Summit Bank, in their capacity as ------- Lenders hereunder, and any other person which may become a Lender pursuant to Section 11.06 hereof "Letter of Credit" shall mean a letter of credit issued by the Letter of ---------------- Credit Lender for the account of the Borrowers, or any of them, in accordance with Section 2.01 hereof. -11- "Letter of Credit Exposure" shall mean, as of any date, the aggregate ------------------------- maximum amount available for drawing under all outstanding Letters of Credit without regard to whether conditions to drawing can then be satisfied. "Letter of Credit Lender" shall mean BankBoston, N.A., in its capacity as ----------------------- the issuer of a Letter of Credit. "Liens" shall have the meaning given to such term in Section 8.12 hereof ----- "Loans" shall mean Revolving Credit Loans. ----- "Majority Lenders" shall mean one or more Lenders whose Aggregate ----------------- Commitments, when added together, total at least 51% of the amount of the Total Revolving Credit Commitment. "Margin Stock" shall mean "margin stock" as defined in Regulations G and U. ------------ "Material Adverse Effect" shall mean, with respect to any Person, a ----------------------- material adverse effect upon the business, assets, financial condition or results of operations of such Person. "Material Contract" shall mean any Contract the Contract EBITDA for which ----------------- would have been equal to five percent (5%) or more of the EBITDA of the Borrowers for the period of four consecutive Quarters ended most recently prior to the date of determination. "Membership Interest Pledge Agreements" shall mean the Membership Interest ------------------------------------- Pledge Agreements among the Securing Parties and the Agent substantially in the form of Exhibit C hereto, as amended and in effect from time to time. ------- - "1940 Act" shall mean the Investment Company Act of 1940, as amended. -------- "1998 Subordinated Note Documents" shall mean the 1998 Subordinated Note -------------------------------- Indenture, the 1998 Subordinated Notes and each of the documents, instruments and other agreements evidencing, governing or guaranteeing the obligations of the Company under the 1998 Subordinated Notes, as in effect on the Closing Date and as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof and hereof. "1998 Subordinated Note Indenture" shall mean the Indenture to be executed -------------------------------- by and among the Company, the other Borrowers and Summit Bank, as trustee, providing for the issuance of the 1998 Subordinated Notes. -12- "1998 Subordinated Notes" shall mean the 10% Senior Subordinated Notes due ----------------------- 2008 of the Company issued in accordance with the terms contained in the Offering Memorandum in an aggregate principal amount outstanding on the Closing Date not to exceed $100,000,000. The 1998 Subordinated Notes shall include the notes issued pursuant to the Exchange Offer. "Net Contract Buyout Disbursements" shall mean, for any period, the excess, --------------------------------- if any, of Contract Buyout Disbursements over Contract Buyout Receipts. "Net Contract Buyout Receipts" shall mean, for any period, the excess, if ---------------------------- any, of Contract Buyout Receipts over Contract Buyout Disbursements. "New Subsidiary" shall mean any Person which becomes a Subsidiary of the -------------- Borrowers after the Closing Date. "Notice of Borrowing" shall have the meaning given to such term in Section ------------------- 2.02(a) hereof. "Notes" shall mean the Revolving Credit Notes. ----- "Obligations" shall mean, collectively, the obligations of the Borrowers ----------- hereunder in respect of principal of and interest on the Loans, together with all obligations in respect of or relating to any Letter of Credit issued hereunder, and all obligations in respect of fees and other amounts payable by the Borrowers hereunder. "Offering Memorandum" shall mean the offering memorandum dated as of June ------------------- 29, 1998, disclosing the terms and conditions of the 1998 Subordinated Notes. "Participant" shall have the meaning given to such term in Section 11.06(c) ----------- hereof. "Participation Agreement" shall have the meaning given to such term in ----------------------- Section 11.06(c) hereof. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity ---- succeeding to any or all of its functions under ERISA. "Pension Plan" shall mean the Company's KPMG Peat Marwick LLP Regional ------------ Prototype Retirement Savings Plan as adopted by the Company with its Adoption Agreement #005, dated December 22, 1994, as in effect from time to time or any successor Plan thereto having the same basic characteristics. -13- "Permitted Acquisition" shall have the meaning given to such term in --------------------- Section 8.14(b) hereof. "Permitted Investments" shall mean: (i) shares of a money market fund --------------------- which: (a) is a registered investment company under the 1940 Act; and (b) complies with Rule 270.2a7 of the 1940 Act (the "Rule") and either (A) is rated in one of the two highest rating categories by Standard & Poor's Ratings Group or Moody's Investors Service, Inc. or (B) (1) has assets of at least $200,000,000 at all times upon and after the date of acquisition of such shares, and (2) will limit its portfolio investments to instruments that are, at the time of acquisition, "First Tier Securities" or "Government Securities" as such terms are defined in the Rule; (ii) investments in certificates of deposit or Eurodollar time deposits of the Lenders or other banks organized under the laws of the United States or any State thereof having a combined capital and surplus of at least $100,000,000; (iii) investments in commercial paper given a rating of at least "A" or its equivalent by Moody's Investors Service, Inc. or Standard and Poor's Corporation or similarly rated by any successor to either of such rating services and which has a maturity of 180 days or less; (iv) Interest Rate Hedging Agreements; and (v) obligations of the United States of America or any agency thereof which are backed by the full faith and credit of the United States of America and which mature not more than one year from the date of acquisition thereof. "Permitted Liens" shall mean, with respect to any Person, (i) pledges or --------------- deposits by such Person under worker's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. Government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent; (ii) liens imposed by law, such as carriers', warehousemen's and mechanics' liens or other liens arising out of judgments or awards against such Person with respect to which such Person shall then be prosecuting in good faith an appeal or other proceedings for review (and as to which all foreclosures and other enforcement proceedings shall have been fully bonded or otherwise effectively stayed) or to the extent that payment of the obligations secured thereby shall not at the time be required to be made in accordance with the provisions of applicable law, rule, regulation or agreement, as the case may be; (iii) liens for property taxes not yet subject to penalties for non-payment which are being contested in good faith and by appropriate proceedings (and as to which all foreclosures and other enforcement proceedings shall have been fully bonded or otherwise effectively stayed); (iv) liens in favor of issuers of performance bonds issued pursuant to the request of and for the account of such Person in the ordinary course of its -14- business (but only if junior to the liens created by the Security Documents); and (v) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties (including landlord's liens), which were not incurred in connection with Indebtedness or other extensions of credit and which do not in the aggregate constitute a Material Adverse Effect with respect to such Person. "Permitted Payments" shall mean (i) contributions made to the ESOP to the ------------------ extent permitted by the terms of the ESOP, (ii) all payments required to be made by the terms of the ESOP, the Stock Growth Plan, the Pension Plan or the Deferred Compensation Plan on account of the repurchase of any stock of the Borrowers from employees who have terminated or have been terminated from their employment with the Borrowers, (iii) all payments required by the terms of any other employment agreement or applicable law or contemplated by Article VIII of the by-laws of the Company on account of the repurchase of any stock of the Borrowers from employees who have terminated or have been terminated from their employment with the Borrowers, (iv) Restricted Payments made on the Closing Date with the proceeds of the issuance of the 1998 Subordinated Notes and described in the Offering Memorandum, (v) payments of interest on the 1998 Subordinated Notes, provided that such payments are not prohibited by the subordination provisions contained in the 1998 Subordinated Note Indenture, (vi) Restricted Payments consisting of the exchange of notes pursuant to the Exchange Offer, (vii) the redemption by the Company of 1998 Subordinated Notes with the net cash proceeds of an offering of common stock of the Company, provided that such -------- redemption is made in accordance with the terms of Article 3 of the 1998 Subordinated Note Indenture, as in effect on the date of this Agreement and (viii) the redemption by the Company of the 1998 Subordinated Notes with Excess Proceeds (as defined in the 1998 Subordinated Note Indenture), provided that -------- such redemption is made in accordance with, and only as required by, Section 4.10 of the 1998 Subordinated Note Indenture, as in effect on the date of this Agreement, and provided, further that no Default or Event of Default shall have -------- ------- occurred and shall be continuing at the time of such redemption and, after giving pro forma effect to any such redemption, no Default or Event of Default shall occur and be continuing, including without limitation, any such Default or Event of Default arising as the result of a violation of the terms of Article VIII D hereof. "Permitted Seller Note Indebtedness" Permitted Seller Note Indebtedness ---------------------------------- shall mean unsecured Indebtedness, in an aggregate principal amount not to exceed $5,000,000 at any one time outstanding, arising under or related to acquisitions of Representative Firms, provided that (i) after giving effect to such Permitted Seller Note Indebtedness, no Default or Event of Default shall have -15- occurred and shall be continuing (including, without limitation, any violation of any Section in Articles 8(C) or 8(D) hereof), and (ii) any such Permitted Seller Note Indebtedness should be expressly subordinated to the Obligations pursuant to subordination documentation acceptable to the Majority Lenders in their sole discretion. "Permitted Subordinated Debt" shall mean the issuance of any subordinated --------------------------- Indebtedness for borrowed money by any Borrower after the Closing Date, provided, however that (i) all such Permitted Subordinated Debt shall be - -------- unsecured, (ii) the provisions of all such Permitted Subordinated Debt shall have been approved in writing by the Majority Lenders, (iii) the maturity date of any such Permitted Subordinated Debt is not less than two years after the Commitment Termination Date, and (iv) after giving effect to any such Permitted Subordinated Debt, no Default or Event of Default shall have occurred and shall be continuing (including, without limitation, any violation of any Section in Articles VIII C or VIII D hereof). "Person" shall mean an individual, a corporation, a partnership, a limited ------ liability company, a joint venture or adventure, a trust or estate or unincorporated organization, a joint stock company or other similar organization, a governmental or political subdivision thereof, or any other legal entity. "Plan" shall mean an employee pension benefit plan which is covered by ---- Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code, and is either (i) maintained by any of the Borrowers or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which any of the Borrowers is then making or accruing an obligation to make contributions or has within the preceding six Plan years made contributions. "Post-Default Rate" shall mean a rate per annum equal to 2% above the ----------------- highest interest rate per annum otherwise applicable to any Loan pursuant to Section 2.04 hereof. "Prior Loan Documents" shall mean that certain Amended and Restated -------------------- Revolving Line of Credit Agreement, dated as of September 19, 1997, entered into among Interep National Radio Sales, Inc., McGavren Guild, Inc., D&R Radio, Inc., Group W Radio Sales, Inc., Allied Radio Partners, Inc., McGavren Guild Radio Sales, Inc., Caballero Spanish Media L.L.C., Clear Channel Radio, LLC, and Infinity Radio Sales LLC, as borrowers, the financial institutions parties thereto, as lenders, Fleet National Bank, as administrative agent, and Summit Bank and BankBoston, N.A., as co-documentation agents, and all notes instruments, documents and agreements executed in connection therewith. -16- "Prohibited Transaction" shall mean a transaction that is prohibited under ---------------------- Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA. "Quarter" shall mean each period of three consecutive months ending on the ------- last day of each March, June, September and December. "Quarterly Compliance Certificates" shall mean the certificates delivered --------------------------------- to the Lenders pursuant to Section 8.01(a) hereof. "Quarterly Date" shall mean the last day of each March, June, September and -------------- December, the first of which shall be on September 30, 1998, or, if any such day is not a Business Day, the next succeeding Business Day. "Regulation D" shall mean Regulation D of the Board of Governors of the ------------ Federal Reserve System as the same may be amended or supplemented from time to time. "Regulation G" shall mean Regulation G of the Board of Governors of the ------------ Federal Reserve System as the same may be amended or supplemented from time to time. "Regulation T" shall mean Regulation T of the Board of Governors of the ------------ Federal Revenue System as the same may be supplemented from time to time. "Regulation U" shall mean Regulation U of the Board of Governors of the ------------ Federal Reserve System as the same may be amended or supplemented from time to time. "Regulation X" shall mean Regulation X of the Board of Governors of the ------------ Federal Reserve System as the same may be amended or supplemented from time to time. "Regulatory Change" shall mean, with respect to any Lender, any change, on ----------------- or after the Closing Date, in United States Federal, state or foreign laws or regulations (including Regulation D), or the adoption or making on or after such date of any interpretations, directives or requests applying to a class of banks including such Lender, of or under any United States Federal, state or foreign laws or regulations (whether or not having the force of law), by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Reimbursement Amount" shall have the meaning given to such term in Section -------------------- 2.01(f) hereof. -17- "Reportable Event" shall mean (i) any of the events set forth in Sections ---------------- 4043(b) (other than a Reportable Event as to which the provision of 30 days' notice to the PBGC is waived under applicable regulations), 4068(f) or 4063(a) of ERISA or the regulations thereunder, (ii) an event requiring the Borrowers to provide security to a Plan under Section 401(a)(29) of the Code, and (iii) any failure to make payments required by Section 412(m) of the Code if such failure continues for 30 days following the due date for any required payment. "Representative Firm" shall mean a broadcast media representation firm ------------------- which is engaged in the business of contracting with media systems or network utilizers of media to act as agent in securing national advertising. "Reserve Requirement" shall mean, for any Eurodollar Loan, the rate at ------------------- which the Lenders are required to maintain reserves under Regulation D against "Eurocurrency Liabilities" (as such term is used in Regulation D), including any marginal, supplemental or emergency reserves. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves actually required to be maintained by the Lenders by reason of any Regulatory Change applicable to (i) any category of liabilities which includes deposits by reference to which the Eurodollar Rate is to be determined as provided in the definition of Eurodollar Rate in this Section 1.01, or (ii) any category of extensions of credit or other assets which include Eurodollar Loans. "Restricted Payments" shall mean (i) direct or indirect distributions, ------------------- dividends or other payments by the Borrowers on account of any general or limited partnership or joint venture interest in, or any capital stock of, any of the Borrowers, including, without limitation, sinking fund or other payments on account of the redemption, retirement, purchase or acquisition of any such interests or capital stock (whether made in cash, property or other obligations), other than payment of salaries, bonuses, expense reimbursements paid in the ordinary course of business, advances to employees of the Borrowers made in the ordinary course of the Borrowers' business and not exceeding $500,000 in the aggregate, "payment in kind" distributions on preferred stock or "payment in kind" distributions on shares which have been distributed as "payment in kind" and (ii) direct or indirect payments or distributions on or in respect of the 1998 Subordinated Note Documents, whether on account of principal, interest or other sums, or in respect of the purchase, repurchase, redemption, retirement, acquisition or defeasance of any Indebtedness under the 1998 Subordinated Note Documents. "Revolving Credit Commitment" shall mean, as to each Lender, the amount set --------------------------- forth opposite its name on the signature pages hereto under the heading "Revolving Credit Commitments" (as the same may be reduced or otherwise adjusted from time to time as provided in this Credit Agreement). -18- "Revolving Credit Loans" shall mean the Loans made pursuant to Section 2.01 ---------------------- (a) hereof. "Revolving Credit Notes" shall mean the promissory notes evidencing the ---------------------- Revolving Credit Loans provided for by Section 2.01 (a) hereof. "Securing Parties" shall mean the debtors, pledgors and grantors under the ---------------- Security Documents. "Security Agreement" shall mean the Security Agreement granted by the ------------------ Securing Parties to the Agent substantially in the form of Exhibit D attached ------- - hereto, as amended and in effect from time to time. "Security Documents" shall mean the Security Agreement, the Stock Pledge ------------------ Agreements, the Membership Interest Pledge Agreements, the Trademark Collateral Assignment Agreement and all documents relating thereto. "Senior Debt" shall mean Indebtedness of the Borrowers arising under or ----------- relating to (i) any of the Credit Documents, (ii) purchase money transactions, (iii) financing leases and (iv) mortgages. "Settlement. Obligations" shall mean the aggregate amount of any ----------------------- liabilities or obligations of any of the Borrowers, whether or not contingent, arising out of any judgment, settlement or compromise of any litigation, arbitration, administrative or legal proceeding or investigation, whether pending or threatened. "Settlement Expenses" shall mean, for any period, the sum of all payments ------------------- made with respect to Settlement Obligations. "Shareholder Stock Appraisal Reports" shall mean stock appraisal reports in ----------------------------------- the form customarily prepared by the Company in connection with the Stock Growth Plan. "Solvency Certificate" shall mean a certificate of the Chief Financial -------------------- Officer or Treasurer of each of the Borrowers in substantially the form of Exhibit E hereto. - ------- - "Stock Growth Plan" shall mean the Interep Radio Store Stock Growth Plan, ----------------- effective as of January 1, 1995, as in effect from time to time. "Stock Pledge Agreements" shall mean the Stock Pledge Agreements among the ----------------------- Securing Parties and the Agent substantially in the form of Exhibit F hereto, as ------- - amended and in effect from time to time. -19- "Subsidiary" shall mean, with respect to any Person, any corporation, ---------- limited liability company, partnership, joint venture or adventure, trust or estate with respect to which: (a) in the case of a corporation, such Person owns, directly or indirectly, a majority of the outstanding capital stock of such corporation necessary to elect a majority of the Board of Directors (whether or not such Person's voting power may be diluted upon the occurrence of any contingency); (b) in the case of a limited liability company, partnership or joint venture, such Person is a general partner, joint venture, or managing member or such Person owns, directly or indirectly, a majority of the partnership, membership or other ownership interests; or (c) in the case of a trust or estate, such Person owns, directly or indirectly, the beneficial interest of such trust or estate. The Subsidiaries of the Company as of the date hereof are set forth on Schedule -------- 1.01(i) hereto. - ------- "Subsidiary Borrowers" shall have the meaning given to such term in the -------------------- preamble to this Credit Agreement. "Termination Event" shall mean (i) a Reportable Event, (ii) the termination ----------------- of a Plan, or the filing of a notice of intent to terminate a Plan, or the treatment of a Plan amendment as a termination under Section 4041 (c) of ERISA, (iii) the institution of proceedings to terminate a Plan under Section 4042 of ERISA, or (iv) the appointment of a trustee to administer any Plan under Section 4042 of ERISA. "Total Debt Service" shall mean, for any period, the Total Interest Expense ------------------ for such period plus the amount of any principal payments required to be made pursuant to Section 3.02 hereof for such period, plus any other scheduled payments of principal, interest and expenses or other charges on account of any other Indebtedness of the Borrowers during such period (including, but not limited to, Settlement Expenses and any principal portion paid with respect to Capital Lease Obligations or Permitted Seller Note Indebtedness). "Total Funded Debt" shall mean all Indebtedness of the Borrowers for ----------------- borrowed money or extensions of credit (other than in connection with operating leases) which bear interest, including, without limitation, the obligations of the Borrowers hereunder in respect of the principal of and interest on the Loans, outstanding Indebtedness pursuant to the Settlement Obligations, any -20- Permitted Seller Note Indebtedness, and any Permitted Subordinated Debt; provided, however, the amount of Permitted Subordinated Debt to be included the - -------- ------- calculation of Total Funded Debt shall include the face amount of all Permitted Subordinated Debt without any deduction for original issue discount required by GAAP. "Total Interest Expense" shall mean, for any period, the sum of the ---------------------- aggregate amount of interest accrued in respect of Indebtedness of the Borrowers (including the interest component in respect of Capital Lease Obligations). For purposes hereof, the amount of interest accrued in respect of Indebtedness for any period shall be increased (to the extent not already treated as interest expense) by the excess, if any, of amounts payable by the Borrowers arising under any Interest Rate Hedging Agreements during such period over amounts receivable by the Borrowers thereunder (or reduced by the excess, if any, of such amounts receivable over such amounts payable). Interest on any Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Borrowers to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP taking into account the provisions of Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board. "Total Leverage" shall mean, at any time, the ratio of (i) Total Funded -------------- Debt to (ii) EBITDA for the immediately preceding four Quarter period for which the most recent financial statements are required to be delivered pursuant to Section 8.01 hereof. "Total Revolving Credit Commitment" shall mean, at any time, the aggregate --------------------------------- amount of the Revolving Credit Commitments of all the Lenders (as the same may be reduced or otherwise adjusted from time to time as provided in this Credit Agreement). "Trademark Collateral Assignment Agreement" shall mean the Trademark ----------------------------------------- Collateral Assignment Agreement among the Securing Parties and the Agent substantially in the form of Exhibit G hereto, as amended and in effect from ------- - time to time. "Type" shall mean and describe, with respect to a Revolving Credit Loan, ---- whether such Revolving Credit Loan is a Base Rate Loan or a Eurodollar Loan. Section 1.02 Accounting Terms. Unless otherwise specified herein, all ---------------- accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be delivered hereunder shall be prepared, in accordance with GAAP, applied on a -21- basis consistent with the audited financial statements of the Borrowers referred to in Section 7.04 hereof. Section 1.03 Fiscal Year. To enable the ready determination of compliance ----------- by the Borrowers with the various covenants set forth in Article VIII hereof, the Borrowers agree that the fiscal year of each Borrower shall end each December 31, and the first three Quarters in each fiscal year shall end on March 31, June 30 and September 30, respectively. ARTICLE II THE LOANS --------- Section 2.01 Amounts and Types of Loans. Each Lender severally agrees to -------------------------- make Loans to the Borrowers in accordance with the following terms and conditions. (a) Revolving Credit Loans. On or after the Effective Date, each Lender ---------------------- shall make one or more Revolving Credit Loans to the Borrowers from time to time on any Business Day prior to the Commitment Termination Date, in an aggregate principal amount not to exceed at any time outstanding such Lender's Revolving Credit Commitment; provided, however, that the sum of (x) the aggregate -------- ------- principal amount of all Loans plus (y) the Letter of Credit Exposure plus (z) the aggregate principal amount of all Reimbursement Amounts shall not at any time exceed the Total Revolving Credit Commitment. The Revolving Credit Loans made by each Lender shall be evidenced by a Revolving Credit Note executed and delivered by the Borrowers and substantially in the form of Exhibit A hereto, ------- - each dated as of the Effective Date and payable to the order of such Lender in a principal amount equal to such Lender's Revolving Credit Commitment as of the Effective Date. (b) Types of Loans. The Loans, at the option of the Borrowers, may be made -------------- as, and from time to time continued as, or converted into, Base Rate Loans or Eurodollar Loans or any combination thereof. (c) Letters of Credit. Subject to the terms and conditions hereof, and ----------------- provided that no Event of Default has occurred and is continuing, the Letter of Credit Lender shall, upon the request of the Borrowers pursuant to Section 2.01(d) hereof, issue Letters of Credit for the account of the Borrowers prior to the Commitment Termination Date, provided, however, that (i) the aggregate -------- ------- face amount of all outstanding Letters of Credit shall not at any time exceed $1,000,000, and (ii) each such Letter of Credit shall terminate no later than the Commitment Termination Date. Such Letters of Credit shall only be issued in conformity with the policies and requirements of the Letter of Credit Lender existing at the time of such issuance relating to the issuance of letters of credit -22- generally for customers of the Letter of Credit Lender, including, without limitation, the use of applications, agreements, forms and other documentation customarily utilized by the Letter of Credit Lender when issuing letters of credit. (d) Procedure for Issuing Letters of Credit. The Borrowers may request --------------------------------------- that the Letter of Credit Lender issue a Letter of Credit by written notice to the Agent and the Letter of Credit Lender in accordance with the standard practices for issuance of letters of credit by the Letter of Credit Lender given to the Agent and the Letter of Credit Lender not less than five Business Days prior to the proposed date of issuance of such Letter of Credit. (e) Fees and Expenses. The Borrowers hereby agree to pay to the Letter of ----------------- Credit Lender, for its own account, sums equal to any and all customary fees charged by the Letter of Credit Lender in connection with the issuance of letters of credit for customers of the Letter of Credit Lender, together with any expenses which the Letter of Credit Lender may pay or incur relative to the issuance of any Letter of Credit, any amendment, transfer, or negotiation thereof, or any payment by the Letter of Credit Lender of a draw thereunder. (f) Reimbursement Obligation. The Borrowers hereby agree to pay to the ------------------------ Letter of Credit Lender, on the date on which the Letter of Credit Lender shall be required to pay any draft presented under any Letter of Credit, a sum (the "Reimbursement Amount") equal to: (i) the amount so paid under such Letter of Credit, plus (ii) interest on any amount remaining unpaid by the Borrowers to the Letter of Credit Lender under clause (i) for the period from and including the date on which such amount becomes payable pursuant to clause (i) until payment in full, payable on demand, at the rate of interest applicable to Base Rate Loans. If the Borrowers shall fail to pay to the Letter of Credit Lender the Reimbursement Amount on the date on which the Letter of Credit Lender shall be required to pay any draft presented under any Letter of Credit, the Letter of Credit Lender may, at its election, consider such failure to be a request for Base Rate Loans in the aggregate principal amount of the unpaid Reimbursement Amount. The Borrowers hereby authorize the Letter of Credit Lender, without further request from the Borrowers, to direct the Agent to cause the Borrowers' liability to the Letter of Credit Lender for reimbursement to be repaid from the proceeds of Base Rate Loans to be made hereunder; provided, however, that in the -------- ------- event that the Lenders do not make such Base Rate Loans for any reason, each Lender shall pay to the Agent, acting on behalf of the Letter of Credit Lender, in immediately available funds, not later than 3:00 p.m. (Boston, Massachusetts time) on the date of such payment (or if the Agent shall notify such other Lender of such payment after 1:00 p.m. (Boston, Massachusetts time), not later than 3:00 p.m. (Boston Massachusetts time) on the next succeeding Business Day), an amount equal to its ratable share of such payment based on its Commitment Percentage. Each Lender's obligation to -23- make such payment to the Agent shall be absolute and unconditional under any and all circumstances without regard to any termination or reduction of the total Revolving Credit Commitment, any demand for payment of any Obligations or any failure of any other Lender to make such payment. Promptly upon its receipt of funds from the Lenders, the Agent shall pay such amounts, in immediately available funds, to the Letter of Credit Lender, whereupon each such Lender which pays the Agent as aforesaid shall have a participation in the Letter of Credit equal to its Commitment Percentage. Section 2.02 Procedure for Making Revolving Credit Loans. ------------------------------------------- (a) Revolving Credit Loans shall be made pursuant to a notice (a "Notice of Borrowing") given by the Company, on behalf of the Borrowers, to the Agent not later than 1:00 p.m. (Boston, Massachusetts time) (y) in the case of Base Rate Loans, on the day of the requested Base Rate Loans, or (z) in the case of Eurodollar Loans, at least three Eurodollar Business Days prior to the date of the requested Eurodollar Loans. Each such Notice of Borrowing shall be given to the Agent by telephone, telecopy, telex or cable, in each case confirmed immediately in writing by the Borrowers in substantially the form of Exhibit H ------- - hereto, specifying therein (i) the requested date of such Loans (which date shall be a Business Day, in the case of Base Rate Loans, and a Eurodollar Business Day, in the case of Eurodollar Loans), (ii) the aggregate principal amount of such Loans (which must be in integral multiples of $100,000), (iii) whether such request is a request for Base Rate Loans or Eurodollar Loans, and (iv) in the case of Eurodollar Loans, the duration of the requested Interest Period. In the event the Borrowers shall fail to state the Type of Loans, or, if the Borrowers shall select Eurodollar Loans but shall fail to select an Interest Period with respect to such Loans, the Borrowers shall be deemed to have chosen Base Rate Loans. The Borrowers hereby agree that each request for Loans shall constitute a representation and warranty by the Borrowers that no Default or Event of Default has occurred and is continuing under the Credit Documents. The Agent shall notify each of the Lenders of any requested Loans promptly after the Agent receives a Notice of Borrowing requesting such Loans and of such Lender's share thereof based on its Commitment Percentage. The Borrowers agree to indemnify and hold the Agent and the Lenders harmless for any action, including the making of any Loans hereunder, or loss or expense (excluding the Lenders' or the Agent's internal costs and expenses), taken or incurred by the Agent or the Lenders in good faith reliance upon any such request for Revolving Credit Loans. (b) Not later than 3:00 p.m. (Boston, Massachusetts time) on the date specified for each borrowing hereunder, each Lender shall make available to the Agent, at its address for notices specified in Section 11.02 hereof, the amount of the Revolving Credit Loan to be made by it on such date in immediately available funds. The amounts so received by the Agent shall, subject to the -24- terms and conditions of this Agreement, be made available to the Borrowers by depositing the same, in immediately available funds, in a designated account of the Borrowers, which account is maintained at the office of the Agent, or by wiring the same, in immediately available funds, to any other account specified by the Borrowers in the Notice of Borrowing. (c) Unless the Agent shall have received a notice from a Lender prior to the date of funding any Loan stating that such Lender will not make available to the Agent the amount of the Loan to be made by it on such date, the Agent may assume that such Lender has made such amount available to the Agent on the date of such Loan in accordance with and as provided by this Section 2.02(c), and the Agent may, in reliance upon such assumption, make available on such date a corresponding amount to the Borrowers. If and to the extent such Lender shall not have made available to the Agent the amount of the Loan to be made by it on such date, and the Agent shall have made available such corresponding amount to the Borrower, such Lender agrees to pay the Agent forthwith on demand, and the Borrowers agree to repay to the Agent within thirty (30) days after demand (but only after demand for payment has first been made to such Lender and such Lender has failed to make such payment), an amount equal to such corresponding amount together with interest thereon, for each day from the date the Agent shall have made such amount available to the Borrowers until the date such amount is paid or repaid to the Agent, at the then current Federal Funds Rate, in the case of such Lender, and the higher of (i) the interest rate applicable thereto pursuant to Section 2.04 hereof and (ii) the Federal Funds Rate, in the case of the Borrowers. If such Lender shall pay to the Agent such corresponding amount, such amount so paid shall constitute such Lender's Loan for the purposes of this Credit Agreement. If the Borrowers make a repayment required by the foregoing provisions of this Section 2.02(c) and thereafter such Lender makes the payments to the Agent required by this Section 2.02(c), the Agent will promptly refund the amount of the repayment made by the Borrowers. Section 2.03 Conversion and Continuation of Loans. ------------------------------------ (a) All or any part of the principal amount of a Loan may, on any Business Day, be converted into another Type of Loan; provided, however, that Eurodollar -------- ------- Loans may be converted into Base Rate Loans only on the last day of the applicable Interest Period; provided, further, that the share of each Lender in -------- ------- the Loans being so converted shall correspond to its Commitment Percentage. (b) Base Rate Loans shall continue as Base Rate Loans unless and until such Loans are converted into Eurodollar Loans. (c) Each Eurodollar Loan shall continue as a Eurodollar Loan until the end of the then current Interest Period applicable thereto, at which time such -25- Loans shall be automatically converted into Base Rate Loans unless the Borrowers shall have given the Agent notice in accordance with Section 2.03(e) hereof requesting that such Eurodollar Loans continue as Eurodollar Loans for another Interest Period. (d) Notwithstanding anything to the contrary contained in this Section 2.03, upon the occurrence and continuation of a Default or an Event of Default, Loans may not be converted into or continued as Eurodollar Loans, unless the Majority Lenders shall instruct the Agent to notify the Borrowers, and the Agent so notifies the Borrowers in writing, that Loans may be converted into or continued as Eurodollar Loans. (e) The Borrowers shall give the Agent notice of each conversion or continuation of Loans not later than 1:00 p.m. (Boston, Massachusetts time) as follows: (y) at least three Eurodollar Business Days prior to the date of any requested conversion of a Base Rate Loan into a Eurodollar Loan, or (z) at least three Eurodollar Business Days prior to the date of any requested continuation of a Eurodollar Loan. Such notice shall be substantially in the form of Exhibit ------- I hereto, and shall be irrevocable and effective only upon receipt by the Agent. - - Such notice shall specify (i) the aggregate amount and the description of the Loans to be converted or continued, (ii) the requested date of such conversion or continuation, and (iii) the amount and Type of Loans into which such Loans, if any, are to be converted, or the amount of the Loans, if any, which are to be continued and, in the case of continued Eurodollar Loans, or Loans being converted into Eurodollar Loans, the duration of the Interest Period therefor. Section 2.04 Interest. -------- (a) The Borrowers shall pay to each Lender interest on the unpaid principal amount of each Loan made by such Lender, at the following rates per annum: (i) if such Loan is a Base Rate Loan, the Base Rate plus the Base Rate Loan Interest Margin for each day that such Loan is outstanding; or (ii) if such Loan is a Eurodollar Loan, the Eurodollar Rate for the applicable Interest Period plus the Eurodollar Loan Interest Margin. Notwithstanding the foregoing, upon the occurrence of an Event of Default hereunder, the Borrowers shall pay to each Lender interest at the Post-Default Rate on the outstanding principal balance of any Loan made by such Lender, and on any other amount payable by the Borrowers hereunder to or for the account of such Lender, until the same is paid in full or, if applicable, until such Event of Default is cured. -26- (b) The Base Rate Loan Interest Margin and the Eurodollar Loan Interest Margin shall be adjusted within ten (10) days of the receipt by the Agent of the Borrowers' Quarterly Compliance Certificates delivered pursuant to Section 8.01(a) hereof, and the adjusted Base Rate Loan Interest Margin and the adjusted Eurodollar Loan Interest Margin shall apply to all outstanding balances from the date of such adjustment forward. The Interest Margin shall be based on the computation of Total Leverage calculated from such Quarterly Compliance Certificates as follows:
Total Base Rate Loan Eurodollar Leverage Interest Margin Loan - -------- --------------- Interest Margin --------------- greater than or equal to 1.875% 2.875% 4.50:1 greater than or equal to 1.625% 2.625% 4.00:1; but less than 4.50:1 greater than or equal to 1.375% 2.375% 3.50:1 but less than 4.00:1 greater than or equal to 1.125% 2.125% 3.00:1 but less than 3.50:1 greater than or equal to 0.875% 1.875% 2.00:1 but less than 3.00:1 less than 2.00:1 0.625% 1.625%
(c) Accrued interest on each Loan shall be payable (i) in the case of a Base Rate Loan, on each Quarterly Date and, in the case of a Eurodollar Loan, on the last day of the Interest Period for such Eurodollar Loan and, if such Interest Period is longer than three months, on the day which falls three months after the first day thereof, (ii) when such Loan shall become due and payable (whether at maturity, by reason of prepayment or acceleration or otherwise) and (iii) on the date of conversion of such Loan to another Type of Loan. After the determination of any interest rate provided for herein or any change thereto, the Agent shall notify the Lenders and the Borrowers thereof (d) All computations of interest and fees hereunder shall be made by the Agent (i) in the case of fees and Eurodollar Loans, on the basis of a year of 360 days, and (ii) in the case of Base Rate Loans, on the basis of a year of 365 or 366 days, as the case may be, in each case for the actual number of days elapsed (including the first day but excluding the last day). No interest payment or interest rate charged hereunder shall exceed the maximum rate authorized from time to time by applicable law. -27- Section 2.05 Fees. ---- (a) The Borrowers shall pay to each Lender a commitment fee on the daily average unutilized amount of such Lender's Revolving Credit Commitment for the period from and including the Effective Date to, but not including, the earlier of (i) the date such Lender's Revolving Credit Commitment is terminated or (ii) the Commitment Termination Date, at a rate per annum (based on a year of 360 days) equal to .50%, if Total Leverage (calculated from the most recent Quarterly Compliance Certificate) is greater than or equal to 3.00:1, and .375% if such Total Leverage is less than 3.00:1, of the unused portion of such Lender's Revolving Credit Commitment. For purposes of calculating such commitment fee, the Revolving Credit Commitment of each Lender shall be deemed to be utilized in an amount equal to the aggregate outstanding principal amount of such Lender's Revolving Credit Loans. Accrued commitment fees under this Section 2.05(a) shall be payable in arrears on each Quarterly Date. (b) The Borrowers shall pay to the Agent, for the account of the Lenders, a Facility Fee in accordance with the terms of the commitment letters executed and delivered by the Lenders in respect of the transactions contemplated hereby. (c) The Borrowers shall pay to the Agent an Agent's fee in accordance with Section 10.09 hereof. Section 2.06 Reductions to Commitments. ------------------------- (a) Reduction. The Borrowers shall have the right to reduce, in whole or --------- in part, the unutilized Total Revolving Credit Commitment at any time or from time to time, provided that (i) the Borrowers shall give notice of each such reduction to the Agent at least two Business Days prior thereto and (ii) each partial reduction thereof shall be in an aggregate amount of not less than $100,000. Any such reduction to the Total Revolving Credit Commitment shall also reduce each Lender's Revolving Credit Commitment by an amount equal to the product of such total reduction multiplied by such Lender's Percentage Commitment in respect of the Total Revolving Credit Commitment (prior to reduction). (b) No Reinstatement. The Total Revolving Credit Commitment, and each ---------------- Lender's Revolving Credit Commitment, once terminated or reduced, may not be reinstated. Section 2.07 Several Obligations; Remedies of Lenders. The failure of any ---------------------------------------- Lender to make any Loan required to be made hereunder shall not relieve any other Lender of its obligations hereunder, but neither the Agent nor any Lender shall be responsible for the failure of any other Lender to comply with -28- the provisions of this Credit Agreement. The amounts payable by the Borrowers hereunder and under the Notes shall be a separate and independent debt owing to each Lender and the Agents, and each of the Lenders and the Agents shall, subject to the limitations contained in the Credit Documents, be entitled to protect and enforce its rights arising out of the Credit Documents, and it shall not be necessary for any other Lender or any Agent to be joined as an additional party in any proceedings for such purposes. Section 2.08 Use of Proceeds. The proceeds of the Revolving Credit Loans --------------- shall be used by the Borrowers for capital expenditures, working capital and other general business purposes of the Borrowers, including, without limitation, the acquisition of Contracts. The proceeds of any extension of credit hereunder shall not be used in violation of the provisions of Section 7.07 hereof. ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST ---------------------------------- Section 3.01 Prepayments. ----------- (a) Voluntary Payments. The Borrowers may, at any time and from time to ------------------ time, prepay, in whole or in part, the principal balance of any Loans upon not less than three Business Days' prior notice, in the case of Base Rate Loans, and five Eurodollar Business Days prior notice, in the case of Eurodollar Loans, to the Agent (which shall notify the Lenders thereof), which notice shall specify the prepayment date (which shall be a Business Day), and the amount of the prepayment (which shall be not less than $100,000) provided that interest on the principal prepaid, accrued to the prepayment date, and, in the case of a prepayment of Eurodollar Loans on a day other than the last day of an Interest Period applicable thereto, any amounts payable pursuant to Section 3.01(b) hereof shall be paid on the prepayment date. Such prepayment shall be irrevocable and effective only upon receipt by the Agent. All payments made by the Borrower pursuant to this Section 3.01 (a) shall be applied first, to the amount of any interest outstanding pursuant to such Loan and any amounts payable pursuant to Section 3.01(b) hereof, and second, to the amount of the principal balance of such Loan. (b) Breakage Costs. If the Borrowers make any payment of principal with -------------- respect to any Eurodollar Loans on any day other than the last day of the Interest Period applicable to such Eurodollar Loans, the Borrowers shall pay to the Lenders any Eurodollar Breakage Costs incurred by the Lenders on account of such payment. In addition, if the Borrowers make any payment of principal with respect to Loans which are the subject of an Interest Rate Hedging Agreement, the Borrowers shall pay all Hedging Breakage Costs incurred by the -29- any Lender which is a party to such Interest Rate Hedging Agreement with any such Borrower. Section 3.02 Mandatory Prepayments. If, after giving effect to any --------------------- termination or reduction of the Revolving Loan Commitments pursuant to Section 2.06(a), the aggregate outstanding principal balance of the Revolving Credit Loans exceeds the Total Revolving Credit Commitment, the Borrowers shall repay Revolving Credit Loans on the date of such termination or reduction in an aggregate principal amount equal to such excess. Section 3.03 Records of Loans and Payments. Each Lender is hereby ----------------------------- authorized by the Borrowers to set forth in writing on a schedule attached to each Note of such Lender (or on any continuation thereof) the amount and date of each Loan made by such Lender to the Borrowers hereunder, and the amount of each payment on account of principal or interest of such Loans received by such Lender, provided, however, that any failure by such Lender to make any such -------- ------- notation shall not affect the obligations of the Borrowers under such Note or hereunder in respect of such Loans. ARTICLE IV PAYMENT PROCEDURES; DISTRIBUTIONS TO LENDERS -------------------------------------------- Section 4.01 Procedure For Making Payments. Except to the extent ----------------------------- otherwise provided herein, all payments of principal, interest and other amounts to be made by the Borrowers hereunder and under the Notes shall be made in Dollars, in immediately available funds, to the Agent not later than 11:00 a.m. (Boston, Massachusetts time) on the date on which such payment shall become due without set-off, recoupment, counterclaim or deduction of any nature whatsoever. Any such payment made after such time on such due date shall be deemed to have been made on the next succeeding Business Day. Any Lender may (but shall not be obligated to) debit the amount of any such payment which is not made by such time and date to any ordinary deposit or checking account of the Borrowers or any of them maintained with such Lender. Except as otherwise required by the terms of this Credit Agreement, the Borrowers may, at the time of making each payment hereunder or under any Note, specify to the Agent the Loans or other amounts payable by the Borrowers hereunder to which such payment is to be applied (but in the event that the Borrowers fail to so specify, or if an Event of Default has occurred and is continuing, the Lenders may apply such payment as they may elect in their sole discretion). Each payment hereunder shall be paid promptly to the Agent at its address for notices as set forth in Section 11.02. Whenever any payment of principal of, or interest on, the Base Rate Loans or of fees shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. Whenever any payment of principal of, or interest on, the -30- Eurodollar Loans shall be due on a day which is not a Eurodollar Business Day, the date for payment thereof shall be extended to the next succeeding Eurodollar Business Day unless such Eurodollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Eurodollar Business Day. Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided ------------------ herein: (i) Loans should be advanced by the Lenders pro rata according to their respective Commitment Percentages, as applicable, and each payment made by the Borrowers on account of such Loans shall be paid to the Agent and distributed to the Lenders pro rata according to their respective Commitment Percentages, and shall be applied to each Loan first, to any accrued but unpaid interest, and second, to the principal balance of each Loan. Each payment of fees due to be paid by the Borrowers pursuant to Section 2.05(a) shall be made to the Lenders pro rata in accordance with their respective Commitment Percentages. Section 4.03 Sharing of Payments, Etc. ------------------------ Each of the Borrowers agrees that, in addition to (and without limitation of) any right of set-off, banker's lien or counterclaim which a Lender may otherwise have, each Lender shall be entitled, upon the occurrence and during the continuance of a Default or Event of Default, to offset balances held by it for the account of any of the Borrowers at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Lender's Loans hereunder, which is not paid when due (regardless of whether such balances are then due to the Borrowers), whereupon it shall promptly notify the Borrowers and the Agent thereof, provided that such Lender's failure to give such notice shall not affect the validity thereof If a Lender shall obtain payment of any principal of, or interest on any Loan made by it to the Borrowers under this Credit Agreement through the exercise of any right of set-off, banker's lien, counterclaim or similar right or otherwise, and, as a result of such payment, such Lender shall have received a greater percentage of the amounts then due from the Borrowers to such Lender than it would otherwise be entitled to receive pursuant to its Commitment Percentage, such Lender shall promptly purchase from any other Lender which receives less than its Commitment Percentage a participation in the Loans made by such other Lender in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expense which may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the Commitment Percentage of each Lender. To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. The Borrowers agree that any Lender so purchasing a participation in the Loans made by other Lenders may exercise all rights of set-off, banker's lien, counterclaim or similar rights with respect to such participation as fully as -31- if such Lender were a direct holder of Loans in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise and retain the benefits of exercising any such right with respect to any other indebtedness or obligation of the Borrowers. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a set-off to which this Section 4.03 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 4.03 to share in the benefits of any recovery on such secured claim. Section 4.04. Withholding Taxes. All payments by the Borrowers of ----------------- principal of and interest on the Notes and of all other amounts payable under this Credit Agreement are payable without deduction for or on account of any present or future taxes, duties or other charges levied or imposed by any Governmental Authority or by any political subdivision or taxing authority thereof or therein through withholding or deduction with respect to any such payments. If any such taxes, duties or other charges are so levied or imposed, the Lender or the Agent, as the case may be, so affected shall notify the Agent and the Borrowers thereof as promptly as practicable after it obtains knowledge thereof, and the Borrowers will pay additional interest or will make additional payments in such amounts so that every net payment of principal of and interest on the Notes and of all other amounts payable by them under this Credit Agreement, after withholding or deduction for or on account of any such present or future taxes, duties or other charges, will not be less than the amount provided for herein; provided, however, that the failure of the Lender or the -------- ------- Agent so affected to give such notice shall not affect the obligations of the Borrowers under this Section 4.04. The Borrowers shall furnish promptly to the Agent official receipts evidencing the payment of such taxes, duties or other charges. ARTICLE V YIELD PROTECTION AND ILLEGALITY ------------------------------- Section 5.01 Additional Costs in Respect of Loans. ------------------------------------ (a) The Borrowers shall pay to the Agent from time to time such amounts as any Lender may determine to be necessary to compensate it for any costs incurred by such Lender, which such Lender determines are attributable to its making or maintaining any Loans hereunder or its commitment to make such Loans hereunder, or any reduction in any amount receivable by such Lender hereunder in respect of such Loans (collectively "Additional Costs"), resulting from any Regulatory Change which: -32- (i) changes the basis of taxation of any amounts payable to such Lender under this Credit Agreement or the Notes in respect of such Loans; or (ii) imposes any reserve, special deposit or other requirement (other than any reserve included in the Eurodollar Reserve Percentage with respect to Eurodollar Loans) or modifies any reserve, special deposit, minimum capital, capital ratio or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender (including any deposits referred to the definition of "Eurodollar Rate" in Section 1.01 hereof), or any commitments of such Lender; or (iii) imposes any other similar or like condition affecting this Credit Agreement or the commitments of such Lender. Each Lender shall notify the Agent and the Borrowers of any event which shall entitle such Lender to compensation pursuant to this Section 5.01(a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. Each Lender will furnish the Agent and the Borrowers with a statement setting forth the basis and amount of each request by such Lender for compensation under this Section 5.01(a). If any Lender requests compensation from the Borrowers under this Section 5.01(a), the Borrowers may, by notice to such Lender, require that any Loan for which compensation is requested be converted into a different Type of Loan in accordance with Section 2.03 hereof. (b) Without limiting the effect of the foregoing provisions of this Section 5.01, in the event that, by reason of any Regulatory Change, any Lender 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 Lender (which includes deposits by reference to which the interest rate on any Eurodollar Loans is determined as provided in this Credit Agreement) or a category of extensions of credit or other assets of such Lender (which includes any Eurodollar Loans), or (ii) becomes subject to restrictions on the amount of such category of liabilities or assets which it may hold, then, if such Lender so elects by notice to the Borrowers (with a copy to the Agent), the obligation of such Lender to make the Type of Loans which are subject to such Additional Costs or such restrictions, and to convert any Loan into such Type of Loan, shall be suspended until the date such Regulatory Change ceases to be in effect. (c) Without limiting the effect of the foregoing provisions of this Section 5.01 (but without duplication), the Borrowers shall pay directly to each Lender from time to time on request such amounts as such Lender may determine to be necessary to compensate such Lender for Capital Maintenance -33- Costs with respect to its Loans (such compensation to include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of such Lender to a level below that which such Lender could have achieved but for such law, regulation, interpretation, directive or request). Each Lender will notify the Borrowers that it is entitled to compensation pursuant to this Section 5.01(c) as promptly as practicable after it determines to request such compensation. (d) Determinations by any Lender for purposes of this Section 5.01 of the effect of any Regulatory Change on its costs of making or maintaining Loans or maintaining its commitments or on amounts receivable by it in respect of Loans or such commitments, and of the additional amounts required to compensate such Lender in respect of any Additional Costs, shall be conclusive absent manifest error. Section 5.02 Limitation on Types of Loans. Anything herein to the ---------------------------- contrary notwithstanding, if, with respect to any Eurodollar Loans: (i) the Agent determines (which determination shall be conclusive) that quotations of interest rates for the relevant deposits referred to in the definition of "Eurodollar Rate" in Section 1.01 hereof are not being provided in the relevant amounts or for the relevant maturities for purposes of determining the rate of interest for such Loans as provided in this Credit Agreement; or (ii) a Lender reasonably determines and notifies the Agent, the Borrowers and the other Lenders that the relevant rates of interest referred to in the definition of "Eurodollar Rate" in Section 1.01 hereof do not adequately cover the cost to such Lender of making or maintaining such Loans; then, and so long as such condition remains in effect, the Lenders shall be under no obligation to make Eurodollar Loans and the Borrowers shall not be entitled to convert Base Rate Loans into Eurodollar Loans, and upon the expiration of any Interest Period applicable to Eurodollar Loans, such Loans shall convert to Base Rate Loans. Section 5.03 Illegality. Notwithstanding any other provision of this ---------- Credit Agreement to the contrary, in the event that it becomes unlawful for any Lender to (i) honor its obligation to make a particular Type of Loan hereunder, or (ii) maintain a particular Type of Loan hereunder, then such Lender shall promptly notify the Agent and the Borrowers thereof (which notice shall include a statement explaining the nature of such unlawfulness) and such Lender's obligation to make such Type of Loan shall be suspended until such time as such Lender may again make and maintain such Type of Loan, and such Lender's -34- outstanding Loans constituting such Type of Loan shall be converted into another Type of Loan in accordance with Section 2.03 hereof. Section 5.04 Compensation. ------------ (a) The Borrowers shall pay to each Lender, upon the request of such Lender, such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, costs or expenses incurred by it as a result of: (i) any payment, prepayment or conversion of a Eurodollar Loan for any reason (including, without limitation, the acceleration of the Loans pursuant to Article IX hereof) on a date other than the last day of an Interest Period for such Loan; or (ii) any failure by the Borrowers for any reason (including, without limitation, the failure of any of the conditions precedent specified in Article VI hereof to be satisfied) to borrow a Eurodollar Loan to be made by such Lender on the date for such borrowing specified in the relevant Notice of Borrowing under Section 2.02 hereof. (b) Such compensation shall include Eurodollar Breakage Costs in the case of any payment, prepayment or conversion of, or failure to borrow, any Loan made or to be made as a Eurodollar Loan. Section 5.05 Replacement of Lenders. If any Lender requests compensation ---------------------- pursuant to Section 5.01 or 4.04, or such Lender's obligation to make or continue, or to convert Loans into any other Type of Loan shall be suspended pursuant to Section 5.02 or Section 5.03, the Borrowers, upon three Business Days' notice to the Agent and such Lender, may request that such Lender transfer the administration of this Credit Agreement and such Lender's Notes to another lending office of such Lender, or require that such Lender transfer all of its right, title and under this Credit Agreement and such Lender's Notes to any bank or financial institution identified by the Borrowers with the consent of the Agent (which consent shall not be unreasonably withheld); provided, however, -------- ------- that such proposed transferee agrees to assume all of the obligations of such Lender for consideration equal to the outstanding principal amount of such Lender's Loans, together with interest thereon to the date of such transfer, and satisfactory arrangements are made for payment to such Lender of all other amounts payable hereunder to such Lender on or prior to the date of such transfer (as if all of such Lender's Loans were being prepaid in full on such date). The agreements of the Borrowers contained in Sections 11.03 and 11.04 (without duplication of any payments made to such Lender by the -35- Borrowers or the proposed transferee) shall survive for the benefit of any Lender replaced under this Section 5.05 with respect to the time period prior to such replacement. ARTICLE VI CONDITIONS PRECEDENT TO MAKING LOANS ------------------------------------ Section 6.01 Initial Loans. The obligation of each Lender to make the ------------- initial Revolving Credit Loan is subject to the satisfaction of the following conditions precedent on or prior to the date of such initial advance. (a) Execution. This Credit Agreement shall have been duly authorized, --------- executed and delivered by each of the Borrowers, the Lenders and the Agents, each Borrower shall have executed and delivered to each Lender its respective Revolving Credit Note evidencing the Revolving Credit Loans to be made by such Lender hereunder. (b) Signatures. Each of the Borrowers shall have certified to the Agent ---------- (with copies to be provided for each Lender) the name and signature of each of the persons authorized (i) to sign on its respective behalf this Credit Agreement, the Notes, the Security Documents and other Credit Documents to which it is a party, and (ii) to borrow under this Credit Agreement. The Lenders may conclusively rely on such certifications until they receive notice in writing from any Borrower, as the case may be, to the contrary. (c) Proof of Action. The Agent shall have received evidence satisfactory --------------- to the Agent of all necessary action taken by each of the Borrowers to authorize the execution, delivery and performance of such of the Credit Documents to which it is a party. (d) Opinions of Counsel to the Borrowers. The Agent shall have received an ------------------------------------ opinion of Christy & Viener, special New York counsel to the Borrowers, substantially in the form of Exhibit J hereto. ------- - (e) Security Documents. Each Borrower shall have duly authorized, ------------------ executed, delivered, filed, registered and recorded such Security Documents, notices, financing statements and other instruments as the Agent may have reasonably requested, at any time and from time to time, in order to perfect the liens required pursuant to the Credit Documents. (f) Contract Value Report. The Borrowers shall have delivered to the Agent --------------------- an updated Contract Value Report as of March 31, 1998. -36- (g) Solvency Certificate. The Agent shall have received a Solvency -------------------- Certificate demonstrating that, after giving effect to the Credit Documents, each of the Borrowers is solvent. (h) Certain Fees. The Borrowers shall have paid to the Agents any fees due ------------ pursuant to Section 2.05 hereof. (i) Regulations G, T, U and X. Each Lender shall be satisfied that the ------------------------- making of any Loan shall not violate Regulations G, T, U or X (or any successor provisions) and no order, judgment or decree of any Governmental Authority shall enjoin or restrain, or purport to enjoin or restrain, any Lender from making any Loan. (j) Other Documents. The Borrower shall have delivered to the Agent such --------------- other documents and papers relating to the Credit Documents and the transactions contemplated hereby as any Lender or the Agent shall reasonably request. (k) Payment of Prior Indebtedness. The Borrowers shall have paid in full ----------------------------- all of their obligations under the Prior Loan Documents and the commitments of the Lenders thereunder shall have terminated. (l) No Litigation. There shall be no litigation, proceeding, inquiry or ------------- other action seeking an injunction or other restraining order, damages or other relief by any Governmental Authority or any Person, or investigation by any Governmental Authority pending or existing with respect to, or known to any of the Borrowers to be threatened with respect to, any of the Borrowers or any of their respective assets or any of the Credit Documents or any of the transactions contemplated thereby, as to which, in the view of the Lenders, could reasonably be expected to have a Material Adverse Effect, and there shall have occurred no development in any action, suit, proceeding, investigation or arbitration previously disclosed to the Lenders pursuant to this Credit Agreement as to which, in the view of the Lenders, there is a reasonable possibility of such an effect. (m) No Material Adverse Change. Except as set forth in Schedule 6.01(m) -------------------------- -------- ------- attached hereto, since the date of the most recent financial statements delivered to the Agent in connection with this Credit Agreement, there shall have been no change in the business or assets or in the financial condition of the Borrowers, singly or taken as a whole, that could reasonably be expected to have a Material Adverse Effect on the Borrowers, and none of the Borrowers shall have entered into any transaction outside of the ordinary course of business which is material to such Borrower. -37- (n) Consents and Approvals. The Lenders shall be satisfied that the ---------------------- execution, delivery and performance by the Borrowers of the Credit Documents (including the application of the proceeds of the Loans) and the grant of the security interests in the Collateral pursuant to the Security Documents) do not and will not require any registration with, consent or waiver or approval of, or notice to, or other action, with or by, any Governmental Authority or other Person, except filings required for the perfection of security interests granted pursuant to the Security Documents and except for consents previously obtained. (o) No Violation. Neither the execution, delivery nor performance by any ------------ of the Borrowers of any of the Credit Documents to which such Borrower is, or is to be, a party, nor the compliance with any of the terms and provisions of any thereof, nor the consummation of any of the transactions contemplated therein (i) will contravene any provision of any law, statute, rule, regulation, order, writ, injunction or decree of any Governmental Authority, (ii) will, to the best of Borrowers' knowledge after reasonable investigation, conflict or be inconsistent with, or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute (with notice or lapse of time or both) a default under, or (other than the Liens created by the Security Documents) result in the creation, imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of any Borrower pursuant to any contractual obligation, or (iii) will violate any provision of any of the organizational documents of any Borrower. (p) Organizational Documents. The Lenders shall have received copies of ------------------------ (i) the organizational documents and good standing certificates of each of the Borrowers and any agreements entered into, or to be entered into, by any Borrower governing the terms and relative rights of its capital stock or any agreements entered into by stockholders relating to any Borrower, and (ii) resolutions of the board of directors or other governing body under applicable law of each Borrower approving and authorizing the execution, delivery and performance of this Credit Agreement and each of the other Credit Documents to which it is, or is to be, a party and any other documents, instruments and certificates required to be executed by it in connection herewith or therewith and approving and authorizing the execution, delivery and payment of the Notes to be issued by it and the Liens to be created by it, as the case may be, and the other transactions contemplated by this Credit Agreement, certified, in each case, as true and complete by an appropriate corporate officer or Governmental Authority, and the provisions of the foregoing shall be satisfactory in form and substance to each of the Lenders. (q) Financial Statements. The Borrowers shall have delivered to the -------------------- Lenders (i) the Borrowers' most recent audited consolidated balance sheet and related consolidated statements of earnings and retained earnings for the most -38- recent audited fiscal year, together with any notes to such financial statements, (ii) the Borrowers' unaudited consolidated balance sheets and related consolidated statements of earnings and retained earnings for the period ending March 31, 1998, and (iii) such other financial statements as the Lenders may reasonably request. (r) Investigation Satisfaction. The Agent and the Lenders shall have -------------------------- completed their review of the assets, business operations and business plan of the Borrowers, and shall have determined that the same (including, without limitation, the business plan) are satisfactory to the Agent and the Lenders. (s) Equity Purchase. All equity interests held by Providence Media --------------- Partners L.P. in any Borrower and any such equity interests held by any Affiliate of Providence Media Partners L.P. shall have been repurchased either by the Company or an Affiliate of the Company for an aggregate purchase price not to exceed $15,000,000. (t) Subordinated Debt Issuance. The Borrowers shall have received not less -------------------------- than $100,000,000 as proceeds of the issuance of the 1998 Subordinated Notes. Section 6.02 All Revolving Credit Loans. The obligation of each Lender to -------------------------- make each Revolving Credit Loan hereunder (which shall not include any conversion or continuation of any outstanding Loan) is subject to the additional conditions precedent that: (i) no Default or Event of Default shall have occurred and be continuing or shall occur as a result of any such requested Loan; (ii) the representations and warranties in Article VII hereof and in each of the Credit Documents shall be true and correct on and as of the date of the making of, and after giving effect to, such Loan with the same force and effect as if made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date; and (iii) the Borrowers shall have delivered to the Agent a Notice of Borrowing satisfactory to the Agent. ARTICLE VII REPRESENTATIONS AND WARRANTIES ------------------------------ Each of the Borrowers represents and warrants as follows: Section 7.01 Existence and Power. Each of the Borrowers is a corporation ------------------- or a limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and, except as set forth on Schedule 7.01 attached hereto, is duly qualified to transact business -------- ---- and is in good standing in all jurisdictions in which such qualification is necessary in view of the properties and assets owned and presently intended to -39- be owned and the business transacted and presently intended to be transacted by it, except for qualifications the lack of which, singly or in the aggregate, have not had and are not reasonably expected to have a Material Adverse Effect, and each of the Borrowers has full power, authority and legal night to make and perform each of the Credit Documents to which it is a party. Section 7.02 Subsidiaries and Affiliates. Schedule 1.01(i) contains a --------------------------- -------- ------- complete and correct list, as of the date hereof, of all Subsidiaries of the Company and a description of the legal nature of such Subsidiaries, the nature of the ownership interests (shares of stock, membership or general or limited partnership or other interests) in such Subsidiaries and the holders of such interests and as of the Closing Date the Company and each of its Subsidiaries owns all of the ownership interests of its Subsidiaries indicated in such Schedule. 1.01(i) as being owned by the Company or such Subsidiary, as the case - -------- ------- may be, and all such ownership interests are validly issued and, in the case of shares of stock, fully paid and non-assessable. Schedule 7.02 hereto contains a -------- ---- complete and correct list, as of the Closing Date, of all Affiliates of the Company or its Subsidiaries which are not Subsidiaries of the Company or its Subsidiaries, the nature of the respective ownership interests in each such Affiliate, and the holder of each such interest. Section 7.03 Authority, No Conflict. The making and performance by each ---------------------- of the Borrowers of such of the Credit Documents to which it is a party, and each extension of credit hereunder, have been duly authorized by all necessary action and do not and will not: (i) subject to the consummation of the action described in Section 7.12 hereof, violate any provision of any laws, orders, rules or regulations presently in effect, or any provision of any of such Borrower's charter, certificate, by-laws or operating agreement presently in effect; or (ii) to the best of Borrowers' knowledge after reasonable investigation, result in the breach of, or constitute a default or require any consent (except for the consents described on Schedule 7.03 hereto, each of -------- ---- which has been duly obtained) under, any existing indenture or other agreement or instrument to which any Borrower is a party or their respective properties may be bound or affected; or (iii) result in, or require, the creation or imposition of any Lien (other than those contemplated by the Security Documents) upon or with respect to any of the properties or assets now owned or hereafter acquired by any of the Borrowers. Section 7.04 Financial Condition. The Borrowers have furnished to each ------------------- Lender the audited consolidated balance sheets of the Company and its Subsidiaries as at December 31, 1997, and the related consolidated statements of operations, stockholders' equity (deficiency) and cash flows for the fiscal year ended on said date, said financial statements having been audited by Arthur Andersen & Co., LLP, whose opinion shall be unqualified. All financial statements referred to above are complete and correct in all material respects and fairly present the financial condition of the Borrowers on said date. None of -40- the Borrowers had on said date any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments or operations which are substantial in amount, except as referred to, or reflected or provided for in said financial statements. From the date of the most recent financial statements delivered to the Lenders, there has been no change in the financial condition or the businesses or operations of the Borrowers, singly or taken as a whole on a consolidated basis, which could reasonably be expected to have a Material Adverse Effect on the Borrowers. Section 7.05 Litigation, Etc. Except as disclosed to the Lenders on --------------- Schedule 7.05, there are no lawsuits or other proceedings pending against any - -------- ---- Borrower or any of their respective properties or assets before any court or arbitrator or by or before any governmental commission, bureau or other regulatory authority that, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect on the Borrowers. No Borrower is in default under, or in violation of or with respect to, any laws or orders, or any material provision of any rules or regulations, or any writ, injunction or decree of any court, arbitrator, governmental commission, bureau or other regulatory authority, except for minor defaults which, if continued unremedied, are not reasonably expected to have a Material Adverse Effect on the Borrowers. Section 7.06 Titles and Liens. Except as set forth on Schedule 8.12, each ---------------- -------- ---- of the Borrowers has good title to its properties and assets, free and clear of all Liens except those permitted by Section 8.12 hereof. Section 7.07 Regulations G, T, U and X. No part of the proceeds of the ------------------------- Loans will be used to purchase or carry any Margin Stock in violation of Regulation U or to extend credit for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulations G, T, U or X. Section 7.08 Taxes. Except as is otherwise set forth in Schedule 7.01 ----- -------- ---- hereof, each of the Borrowers has filed all tax returns which are required to be filed under any law applicable thereto, and has paid, or made provision for the payment of, all taxes shown to be due pursuant to said returns or pursuant to any assessment received by any of the Borrowers, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. Section 7.09 Other Credit Agreements. Schedule 8.10 (Existing ----------------------- -------- ---- Indebtedness) and Schedule 8.12 (Existing Liens) attached hereto contain -------- ---- complete and correct lists, as at the date hereof, of all credit agreements, indentures, purchase agreements, obligations in respect of letters of credit, -41- guarantees and other instruments presently in effect (including Capital Lease Obligations) providing for, evidencing, securing or otherwise relating to any Indebtedness of the Borrowers, and such lists, as of the date hereof, correctly set forth the names of the debtor or lessee and creditor or lessor with respect to the Indebtedness outstanding or to be outstanding thereunder, the rate of interest or rent, a description of any security given or to be given therefor, and the maturity or maturities or expiration date or dates thereof Section 7.10 Full Disclosure. As of the Closing Date, none of the --------------- financial statements referred to in Section 7.04 hereof contains any untrue statement of a material fact, nor do such financial statements and such written statements, taken as a whole, omit to state a material fact necessary to make the statements contained therein not misleading. Section 7.11 No Default. None of the Borrowers is in default in the ---------- payment or performance or observance of any contract, agreement or other instrument to which it is a party or by which it or its properties or assets may be affected or bound, which default, either alone or in conjunction with all other such defaults, has had or could reasonably be expected to have a Material Adverse Effect on the Borrowers. Section 7.12 Approval of Regulatory Authorities. No approval or consent ---------------------------------- of, or filing or registration with, any Federal, state or local commission or other regulatory authority is required in connection with the execution, delivery and performance by any of the Borrowers of any of the Credit Documents to which it is a party. All such described action required to be taken as a condition to the execution and delivery of such of the Credit Documents to which any of the Borrowers is a party has been duly taken by all such commissions and authorities or other Persons, as the case may be, and all such action required to be taken as a condition to the initial advance hereunder has been or will be duly taken prior to such initial advance. Section 7.13 Binding Agreements. The Credit Documents constitute the ------------------ legal, valid and binding obligations of each of the Borrowers which is a party thereto, enforceable in accordance with their respective terms (except for limitations on enforceability under bankruptcy, reorganization, insolvency and other similar laws affecting creditors' rights generally, and limitations on the availability of the remedy of specific performance imposed by the application of general equitable principles). Section 7.14 Collective Bargaining Agreements. There are no collective -------------------------------- bargaining agreements between any of the Borrowers and any trade or labor union or other employee collective bargaining agent. -42- Section 7.15 Investments. Schedule 7.15 attached hereto contains a ----------- -------- ---- complete and correct list, as of the Closing Date, of all Investments in amounts in excess of $50,000 of the Borrowers (other than Investments in Subsidiaries or overnight cash management Investments made on behalf of the Company or its Subsidiaries) showing the respective amounts of each such Investment and the respective entity in which each such Investment has been made. Section 7.16 Real Property. As of the Closing Date, none of the Borrowers ------------- owns any real property. Section 7.17 Intellectual Property. The Borrowers own or have a valid --------------------- right to use the patents, patent rights or licenses, trademarks, trademark applications, trademark rights and trade names or trade name rights or franchises now being used or necessary to conduct its business, all of which, as of the Closing Date, are listed on the attached Schedule 7.17. The conduct of -------- ---- the businesses of the Borrowers as now operated does not conflict with any valid patents, patent rights or licenses, trademarks, trademark rights and trade names and trade name rights or franchises of others in any manner that could result in a Material Adverse Effect on the Borrowers. Section 7.18 Principal Places of Business. The principal place of ---------------------------- business and chief executive offices of each Borrower is located at 100 Park Avenue, New York, New York 10017. The Borrowers maintain no records relating to Collateral at any address other than their respective Chief Executive Offices (other than copies of materials, the originals of which are maintained at such Chief Executive Offices), nor do the Borrowers maintain, store or keep any material Collateral at any location other than such office. Section 7.19 Investment Company Act; Public Utility Holding Company Act. ---------------------------------------------------------- None of the Borrowers is an "investment company" or a "company controlled by an investment company" within the meaning of the 1940 Act, or a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. Section 7.20 1998 Subordinated Note Documents. True and complete copies -------------------------------- of the 1998 Subordinated Note Documents have been delivered to the Lenders, and each of the 1998 Subordinated Note Documents have been duly executed and delivered by the parties thereto and are in full force and effect. All Obligations constitute "Senior Indebtedness" (or the equivalent term) under and as described in the 1998 Subordinated Note Documents and the Offering Memorandum. No default has occurred and is continuing under the 1998 Subordinated Note Documents. -43- ARTICLE VIII COVENANTS --------- From and after the Closing Date until the payment in full of all Obligations hereunder and the performance of all other obligations of the Borrowers under the Credit Documents, each of the Borrowers agrees that, unless the Lenders shall otherwise consent in writing: A. Informational Covenants: ----------------------- Section 8.01 Financial Information. The Company, on behalf of the --------------------- Borrowers, shall deliver to each Lender: (a) As soon as available and in any event within 60 days of the end of each Quarter of each fiscal year of the Borrowers: (i) consolidated statements of income and loss for such Quarter and for the period from the beginning of such fiscal year to the end of such Quarter and (ii) the related consolidated balance sheets of the Borrowers as of the end of such Quarter (which financial statements shall set forth in comparative form the corresponding figures as at the end of and for the corresponding Quarter in the preceding fiscal year), all in reasonable detail and, accompanied by a Quarterly Compliance Certificate in the form of Exhibit K hereto of the Chief Financial Officer or Treasurer of the ------- - Company certifying, on behalf of the Borrowers, such financial statements, subject, however, to year-end audit adjustments, which certificate shall include a statement that the Chief Financial Officer or Treasurer signing the same has no knowledge, except as specifically stated, that any Default or Event of Default has occurred and is continuing; provided, however, that the financial -------- ------- statements for the last Quarter of each fiscal year shall be delivered at the time the financial statements referred to in Section 8.01(b) hereof shall be due. (b) As soon as available and in any event within 120 days after the end of each fiscal year of the Borrowers: (i) audited consolidated statements of income and loss and sources and applications of funds of the Borrowers for such fiscal year and (ii) the related consolidated balance sheets of the Borrowers, as of the end of such fiscal year (which financial statements shall set forth in comparative form the corresponding figures as at the end of and for the preceding fiscal year), all in reasonable detail and accompanied by (x) an opinion of independent certified public accountants of nationally recognized standing selected by the Borrowers as to said financial statements, together with a certificate of such accountants stating that, in making the examination necessary for said opinion, they obtained no knowledge, except as specifically stated, of any failure by the Borrowers to perform or observe any of its covenants relating to financial matters contained in this Credit Agreement, and it being understood that the examination of such accountants cannot be relied -44- upon to give them knowledge of any such Default or Event of Default except as it relates to accounting and auditing matters, (y) an Annual Compliance Certificate in the form of Exhibit L hereto of the Chief Financial Officer or Treasurer of ------- - the Company stating that, on behalf of the Borrowers, such financial statements are correct and complete and fairly present the financial condition and results of operations of the respective entities covered thereby as at the end of and for such fiscal year and that the officer signing the same has no knowledge, except as specifically stated, that any Default or Event of Default has occurred and is continuing. (c) Promptly after becoming available, copies of all financial statements which any of the Borrowers shall have sent to their respective shareholders generally (other than tax returns, unless specifically requested under clause (h) of this Section 8.01), and copies of all documents, if any, which any of the Borrowers shall have filed with any Governmental Authority, including, without limitation, the Securities and Exchange Commission. (d) At the time of delivery of the financial statements required in subsections (a) and (b) of this Section 8.01, a Contract Value Report. (e) Prior to the last day of each fiscal year, a revised annual budget for the Borrowers, on a consolidated and consolidating basis, for the following fiscal year, satisfactory in form to the Lenders. (f) Within 30 days of receipt by the Company, Shareholder Stock Appraisal Reports. (g) As soon as possible, and in any event within five (5) days after any senior executive of any of the Borrowers shall have obtained knowledge of the occurrence of a Default or Event of Default, a statement describing such Default or Event of Default and the action which is proposed to be taken with respect thereto. (h) As soon as possible, and in any event within five (5) days after any senior executive shall have obtained knowledge of a default under any 1998 Subordinated Note Document, a statement describing the same. (i) As soon as possible, and in any event within five (5) days, copies of all amendments entered into and waivers granted in respect of the 1998 Subordinated Note Documents and copies of all notices and other communications received by the Company from, or given by the Company to, the trustee under the 1998 Subordinated Note Indenture or any holder of a 1998 Subordinated Note. -45- (j) From time to time, with reasonable promptness, such further information or financial reports (including, without limitation, audit letters) regarding the business, affairs and financial condition of the Borrowers or any of their respective Affiliates, as any Lender may reasonably request. B. Affirmative Covenants: ---------------------- Section 8.02 Taxes and Claims. Each of the Borrowers will pay and ---------------- discharge all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties or assets belonging to it, prior to the date on which penalties attach thereto, and all other lawful claims which, if unpaid, might become a Lien (other than Permitted Liens) upon the property of any of the Borrowers, provided, that none of the Borrowers shall -------- be required to pay any such tax, assessment, charge, levy, fee or other claim the payment of which is being contested in good faith and by proper proceedings if it maintains adequate reserves with respect thereto. Section 8.03 Insurance. Each of the Borrowers will maintain insurance --------- issued by responsible companies in such amounts and against such risks as is prudent in the Company's reasonable discretion. The Company, on behalf of the Borrowers, will furnish to any Lender, upon the request of such Lender from time to time, full information as to the insurance maintained in accordance with this Section 8.03. Without limiting the generality of the foregoing, within 45 days after the Closing Date, the Company shall deliver to the Agent copies of all insurance policies, certificates and endorsements, which shall name the Agent (for the benefit of the Lenders) as loss payee. Section 8.04 Maintenance of Existence. Except as permitted by Section 8.14 ------------------------ hereof, each of the Borrowers will preserve and maintain its existence and corporate structure and all of its rights, privileges and franchises, except where a failure to do so, singly or in the aggregate, is not reasonably expected to have a Material Adverse Effect on the Borrowers taken as a whole. Section 8.05 Maintenance of and Access to Properties. Each of the --------------------------------------- Borrowers will keep all of its properties and assets necessary to its business in good working order and condition, ordinary wear and tear excepted, and, upon reasonable advance notice, will permit and assist representatives of the Lenders to inspect such properties, to confer with its officers, employees, directors and agents, and to examine and make extracts from its books and records, during normal business hours. Section 8.06 Compliance with Applicable Laws. Each of the Borrowers will ------------------------------- comply with the requirements of all applicable laws, rules, regulations and -46- orders of any governmental body or regulatory authority, a breach of which could reasonably be expected, singly or in the aggregate, to have a Material Adverse Effect on the Borrowers taken as a whole. Section 8.07 Litigation. The Company, on behalf of each of the Borrowers, ---------- will promptly give to the Lenders notice in writing of all litigation and of all proceedings before any courts, arbitrators or governmental or regulatory agencies against any of the Borrowers or, to the knowledge of any of the Borrowers, otherwise affecting any of the Borrowers or any of their respective properties or assets, except litigation or proceedings which, if adversely determined, could reasonably be expected, singly or in the aggregate, to have a Material Adverse Effect on the Borrowers taken as a whole. Following the initial notice of each such litigation or proceeding, supplementary notices of all material developments in respect thereof shall be given to the Lenders from time to time in like manner. Section 8.08 New Subsidiaries. Promptly upon the acquisition or formation ---------------- of any New Subsidiary or the issuance of new stock and/or other ownership interest in any existing Subsidiary, the Borrowers shall notify the Agent of such acquisition, formation or issuance and cause (by documentation satisfactory to the Lenders) (i) the capital stock of and/or other ownership interests in such New Subsidiary or existing Subsidiary held by any Borrower to be pledged or otherwise assigned and delivered with stock powers executed in blank to the Agent, as additional collateral under the Security Documents, (ii) such New Subsidiary to undertake all of the obligations of a "Borrower" as defined under this Credit Agreement and of a "Securing Party" under the Security Documents, and to create on its revenues and assets all of the Liens to be created by a "Securing Party" under the Security Documents, and (iii) all such filings and recordings in public offices as the Lenders shall determine to be desirable in order to perfect the Liens in favor of the Agent on the properties of such New Subsidiary created under the Security Documents as contemplated by clause (ii) above to be effected. Each such New Subsidiary shall thereafter be a "Borrower," a " Borrower Subsidiary" and a "Securing Party" for all purposes of the Credit Documents. Section 8.09 [INTENTIONALLY OMITTED] C. Negative Covenants: ------------------ Section 8.10 Indebtedness. Except as otherwise permitted in this Credit ------------ Agreement, none of the Borrowers shall create, incur or suffer to exist any Indebtedness except: (i) Indebtedness created by this Credit Agreement; -47- (ii) Indebtedness in respect of Capital Lease Obligations, and Indebtedness incurred to finance the purchase price of property or equipment, so long as the aggregate principal amount of all such Indebtedness outstanding at any one time does not exceed $2,500,000. (iii) Indebtedness under the 1998 Subordinated Note Documents in an aggregate principal amount not to exceed $100,000,000 minus the amount of ----- any payment, prepayment, purchase, repurchase, redemption, retirement, or other acquisition of, or cancellation or discharge of, any 1998 Subordinated Notes (excluding, for purposes of this reduction, the exchange of notes pursuant to the Exchange Offer); (iv) current liabilities of the Borrowers, other than for money borrowed, incurred in the ordinary course of business; (v) indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment thereof shall not at the time be required to be made in accordance with the terms of applicable law, rules, regulations or contracts, as the case may be, and indebtedness secured by liens of carriers, warehousemen, mechanics and material men permitted by Section 8.12 hereof, (vi) liabilities for deferred compensation owing to employees of the Borrowers; (vii) obligations owing to terminated employees of the Borrowers; (viii) Permitted Seller Note Indebtedness; and (ix) Permitted Subordinated Debt. As of the Closing Date, all Indebtedness of the Borrowers other than pursuant to clause (ii) above is set forth on Schedule 8.10 attached hereto. -------- ---- Section 8.11 Contingent Liabilities. Except as set forth on Schedule 8.11 ---------------------- -------- --- attached hereto, or as otherwise permitted in this Credit Agreement, none of the Borrowers shall, directly or indirectly (including, without limitation, by means of causing a bank to open a letter of credit), guarantee, endorse, contingently agree to purchase or to furnish funds for the payment or maintenance of, or otherwise be or become contingently liable upon or with respect to, the Indebtedness of any other Person, or guarantee the payment of dividends or other distributions upon the stock or other ownership interests of any other Person, or agree to purchase, sell or lease (as lessee or lessor) property, products, materials, supplies or services primarily for the purpose of enabling a -48- debtor to make payment of its obligations or to assure a creditor against loss, except endorsements of negotiable instruments for deposit or collection in the ordinary course of business. Section 8.12 Liens. None of the Borrowers shall create or suffer to exist ----- any mortgage, pledge, security interest, conditional sale or other title retention agreement, lien, charge or encumbrance upon any of its assets, now owned or hereafter acquired, securing any Indebtedness (all such security being herein called "Liens"), except: (i) Liens securing Indebtedness permitted by Section 8.10 hereof; (ii) Liens provided for by the Security Documents; (iii) Permitted Liens; (iv) Liens existing on the Closing Date and listed in Schedule 8.12 -------- ---- hereof, and (v) the renewal, extension or refunding of any of the foregoing liens securing an amount not exceeding the amount thereof remaining unpaid immediately prior to such renewal, extension or refunding. In addition, none of the Borrowers shall enter into or permit to exist any undertaking by it or affecting any of its properties whereby any of the Borrowers shall agree with any Person (other than the Lenders or the Agent) not to create or suffer to exist any Liens in favor of any other Person. As of the Closing Date, all Liens of any of the Borrowers, except for Permitted Liens and Liens permitted pursuant to clause (ii) above, are set forth on Schedule 8.12 attached hereto. -------- ---- Section 8.13 Leases. None of the Borrowers shall incur, assume or have ------ outstanding any obligation to pay rent under leases (as lessee, guarantor or otherwise) except: (i) obligations under leases by one Subsidiary to another Subsidiary or the Company; (ii) obligations under leases of equipment and other real or personal property for use in the ordinary course of business; and (iii) Capital Lease Obligations to the extent permitted by Section 8.10 hereof. -49- All leases in respect of real estate to which any of the Borrowers are a party as of the Closing Date are set forth on Schedule 8.13 attached hereto. -------- ---- The Company shall give prompt notice to the Agent of any leases entered into after the Closing Date. Section 8.14 Mergers, Acquisitions and Dispositions. -------------------------------------- (a) Except as set forth in Section 8.14(b), none of the Borrowers shall consolidate or merge with any Person, or sell, lease, license, assign, transfer or otherwise dispose of any part of its business, assets or rights; provided, -------- however, that, unless a Default or Event of Default has occurred and is - ------- continuing: (i) the Borrowers may make dispositions in the ordinary course of business (including dispositions of obsolete or worn-out property and other property reasonably determined by the management of the disposing entity to be not used or useful in its business); and (ii) the Company or a Subsidiary may merge with another wholly-owned Subsidiary Borrower or the Company provided that such wholly-owned Subsidiary Borrower or the Company shall be the surviving entity. (b) None of the Borrowers shall purchase or acquire assets from, or the business or assets of, any other Person, except: (i) the purchase of assets in the ordinary course of business as conducted on the Closing Date by the Borrowers; or (ii) the acquisition of all or any part of the business or assets of, or merger with any Representative Firm (a "Permitted Acquisition"), provided, however, that: (w) after giving pro forma effect to any such merger or - -------- ------- acquisition, (including the incurrence by any Borrower of any Indebtedness in connection therewith) (A) no Default or Event of Default shall have occurred and shall be continuing and (B) no Default shall occur under Article VIII D hereof as of the last day of the most recent Quarter (assuming for this purpose that the merger or acquisition was completed on the first day of the four Quarter period ending on such day); (x) prior to such merger or acquisition, the Borrowers shall have furnished to the Lenders the terms of such merger or acquisition, including a reasonably detailed description of such business or assets; (y) if the assets so acquired consist of stock of any Person, such Person acquired shall immediately agree to become a "Borrower" and "Subsidiary Borrower" in accordance with Section 8.08 hereof; and (z) after giving effect to such merger or acquisition, Guild will hold at least the same percentage of common or voting stock of the Company as he held prior to such merger or acquisition. Section 8.15 Investments. Except as otherwise permitted in this Credit ----------- Agreement, and except for Permitted Investments, investments by the Company in any Subsidiary Borrower, and long-term investments related to the business of the Borrowers in the aggregate amount outstanding at any time not to exceed $250,000, none of the Borrowers shall, directly or indirectly, make or permit to -50- remain outstanding any advances, loans (other than advances to employees of the Borrowers made in the ordinary course of the Borrowers' business and not exceeding $200,000 in the aggregate), accounts receivable (other than accounts receivable arising in the ordinary course of business of the Borrowers, including, without limitation, any accounts receivable arising from the purchase of Contracts), or purchase or own any stocks, bonds, notes, debentures, interests or securities (including, without limitation, any interests in any partnership, joint venture or joint adventure), or guarantee any Indebtedness or other obligations of any Person except as expressly permitted by Section 8.11 of this Credit Agreement (all such transactions being herein called "Investments"). Section 8.16 Restricted Payments. None of the Borrowers shall, directly or ------------------- indirectly, make any Restricted Payment, except that the Company may make Permitted Payments, and a Subsidiary may make dividend payments to the Company. Section 8.17 Business. -------- (a) None of the Borrowers shall engage in any business other than that of a Representative Firm. (b) The Company will not (i) permit any Subsidiary identified as "inactive" in Schedule 8.17(b) attached hereto or identified by the Company "inactive" in -------- ------- any written notice furnished to the Agent at any time after the date hereof to conduct or engage in any business or operations of any kind, to own any property other than its nominal capitalization and rights under immaterial agreements or contracts that do not require any payments by such Subsidiary, to incur or assume or permit to exist any Indebtedness or to make or permit to exist any Investment (other than Investments in nominal aggregate amounts), or (ii) create or acquire at any time after the date hereof any direct or indirect Subsidiaries other than Subsidiaries that are created or acquired (A) pursuant to or in connection with any Permitted Acquisitions, and (B) in compliance with Section 8.08 hereof. Section 8.18 Transactions with Affiliates. None of the Borrowers shall ---------------------------- effect any transaction with any of its Affiliates that is not a Borrower hereunder unless (i) the Lenders shall have received notice of any such transaction which exceeds $100,000 and (ii) any such transaction is entered into on a basis which is no less favorable to such Borrower than would be obtainable in connection with a comparable transaction at arms' length dealing with an unrelated third party. -51- Section 8.19 Material Change to Corporate Structure. None of the Borrowers -------------------------------------- shall amend, modify or supplement any of the provisions of its charter or by- laws as presently in effect. Section 8.20 Issuance of Stock. ----------------- (a) The Borrowers shall not permit any Subsidiary to issue any shares of stock or other ownership interests in such Subsidiary if, after giving effect thereto, the percentage of ownership interests in such Subsidiary held by one or more of the Borrowers immediately prior to such issuance would be decreased. (b) In the event that an Event of Default has occurred and is continuing, the Company may not issue any shares of capital stock or other equity interest unless the net cash proceeds thereof are paid to the Lenders for application against the Obligations hereunder Section 8.21 Amendments or Termination of 1998 Subordinated Note Documents. ------------------------------------------------------------- None of the Borrowers shall enter into, agree to or otherwise permit any amendment, supplement or other modification to any 1998 Subordinated Note Document. D. Financial Covenants: ------------------- Section 8.22 Total Leverage. At all times during each of the periods -------------- listed below, the Borrowers shall, on a consolidated basis, maintain a ratio of (i) (a) Total Funded Debt, less (b) the aggregate amount of cash and Permitted ---- Investments of the Borrowers in excess of $5,000,000 to (ii) EBITDA (measured for the immediately preceding four Quarters for which the most recent financial statements are required to be delivered pursuant to Section 8.01 hereof) of not more than the amount listed below opposite each such period:
PERIOD MAXIMUM ------ ------- Closing Date - December 31, 1999 4.75:1 January 1, 2000 - December 31, 2000 4.50:1 January 1, 2001 - December 31, 2001 4.25:1 January 1, 2002 and thereafter 4.00:1
Section 8.23 Interest Coverage. At all times during each of the periods ----------------- listed below, the Borrowers shall, on a consolidated basis, maintain a ratio of (i) EBITDA (measured for the immediately preceding four Quarters for which the most recent financial statements are required to be delivered pursuant to Section 8.01 hereof) to (ii) Total Interest Expense of not less than the amount listed below opposite each such period:
PERIOD LIMIT ------ ----- Closing Date - December 31, 1999 1.60:1
-52- January 1, 2000 - December 31, 2000 1.75:1 January 1, 2001 and thereafter 2.00:1
Section 8.24. Senior Leverage. At all times during the periods listed --------------- below, the Borrowers shall, on a consolidated basis, maintain a ratio of (i) Senior Debt to (ii) EBITDA (measured for the immediately preceding four Quarters for which the most recent financial statements are required to be delivered pursuant to Section 8.01 hereof) of not more than the amount listed below opposite such period:
PERIOD LIMIT ------ ----- Closing Date - December 31, 1999 2.00:1 January 1, 2000 - December 31, 2000 1.85:1 January 1, 2001 and thereafter 1.75:1
Section 8.25 Fixed Charge Coverage. At all times, the Borrowers shall, on --------------------- a consolidated basis, maintain a Fixed Charge Coverage of not less than 1.05 to 1. Section 8.26 Aggregate Contract Value. At all times, the Borrowers shall, ------------------------ on a consolidated basis, maintain an aggregate Contract Value for all of the Borrowers' Contracts of not less than $150,000,000. Section 8.27 Capital Expenditures. The Borrowers shall not, on a -------------------- consolidated basis, make Capital Expenditures for any fiscal year (commencing with the fiscal year ending December 31, 1998) in excess of the sum of (i) $1,750,000 and (ii) the difference, if any, between $1,750,000 and the aggregate amount of Capital Expenditures for the immediately preceding fiscal year. ARTICLE IX DEFAULTS -------- Section 9.01 Events of Default. If any one of the following events shall ----------------- occur and be continuing (each, an "Event of Default"): (a) Failure of the Borrowers to pay when due any amount payable pursuant to the Credit Documents; or (b) Failure by any of the Borrowers to perform or observe any of the terms or provisions of this Credit Agreement (other than Sections 8.01, 8.02, 8.03, 8.05, 8.06, 8.07, and 8.08, but including Section 8.01(g) hereof);or (c) Failure by any Borrower to perform or observe any of the terms or provisions of Sections 8.01 (excluding Section 8.01(g)), 8.02, 8.03, 8.05, 8.06, 8.07 or 8.08 hereof or failure by any of the Borrowers to perform or observe any of the -53- terms or provisions contained in the other Credit Documents to which it is a party (and not referred to in paragraph (b) above), and such failure continues unremedied for 30 days; or (d) Any representation or warranty contained in any of the Credit Documents, or in any certificate, statement or other document furnished to the Lenders or the Agent pursuant thereto (including, without limitation, any amendment to any of the foregoing), or any certification made or deemed to have been made by any Borrower to the Agent or any Lender hereunder, shall prove to have been incorrect in any material respect, when made or deemed made, or (e) A default shall have occurred and be continuing beyond any applicable grace period under any Indebtedness of any Borrower which Indebtedness has an outstanding balance exceeding $200,000, and such default shall be sufficient to permit the holder or holders of such Indebtedness (or a trustee or agent on its or their behalf) to accelerate the maturity thereof or to enforce any Lien provided for by such Indebtedness, or such Indebtedness shall become due by its terms and shall not be promptly paid or extended; or (f) (i) any default or event of default shall occur under any 1998 Subordinated Note Document, (ii) any holder or holders of any 1998 Subordinated Note (or any representatives of any such holders) shall exercise, purport to exercise, give any notice of its intention to exercise, or become entitled by the terms of any 1998 Subordinated Note Document to exercise (A) any right to accelerate any 1998 Subordinated Note or (B) any right to require any payment, prepayment, purchase, repurchase, redemption, retirement, acquisition or defeasance of any 1998 Subordinated Note not permitted by this Credit Agreement, or (iii) any Borrower shall make, offer to make or become obligated to make or offer to make any payment, prepayment, purchase, repurchase, redemption, retirement, acquisition or defeasance of any 1998 Subordinated Note not permitted by this Credit Agreement, including any optional prepayment or repurchase thereof, or any prepayment or repurchase thereof upon a change in control or upon a sale of assets; (g) Any Borrower 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) admit in writing its inability, or be generally unable, to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v) commence a voluntary case under the Federal bankruptcy laws (as now or hereafter in effect), (vi) file a petition seeking to take advantage of any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, (vii) acquiesce in writing to, or fail to controvert in a timely and appropriate manner, any petition filed against any -54- Borrower in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing; or (h) A case or other proceeding shall be commenced, without the application, approval or consent of any Borrower, in any court of competent jurisdiction, seeking the liquidation, reorganization, dissolution, winding up, or composition or readjustment of debts of any Borrower, the appointment of a trustee, receiver, custodian, liquidator or the like of such Borrower or of all or any substantial part of its assets, or any other similar action with respect to such Borrower under the laws of bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 45 consecutive days, or an order for relief against any Borrower shall be entered in an involuntary case under the Federal bankruptcy laws (as now or hereafter in effect); or (i) A judgment for the payment of money in excess of $200,000 shall be rendered against any Borrower and such judgment shall remain unsatisfied and in effect for any period of 30 consecutive days without a stay of execution or (if a stay is not provided for by applicable law) without having been fully bonded, or (j) (i) Any Termination Event shall occur; (ii) any Accumulated Funding Deficiency, whether or not waived, shall exist with respect to any Plan; (iii) any Person shall engage in any Prohibited Transaction involving any Plan; (iv) one or more of the Borrowers in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a multiemployer Plan resulting from such Borrower's complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such Plan; (v) any of the Borrowers shall fail to pay when due an amount which is payable by it to the PBGC or to a Plan under Title IV of ERISA; (vi) a proceeding shall be instituted by a fiduciary of any Plan against any of the Borrowers to enforce Section 515 of ERISA and such proceeding shall not have been dismissed within 30 days thereafter, or (k) Guild shall cease to own (beneficially or directly) stock of the Company having at least 10.75% of the votes that may be cast by the holders of all classes of stock of the Company; or (l) Guild shall cease to be a trustee of the ESOP or the Stock Growth Plan, unless a determination is made by the Board of Directors of the Company that the removal of Guild is prudent, in which case the Board of Directors shall immediately notify the Lenders in writing describing the nature and circumstances giving rise to such determination; or (m) Guild shall cease to perform services in his current capacities with the -55- Company and a replacement employee satisfactory to the Majority Lenders is not hired by the Company within 180 days. THEREUPON, the Majority Lenders may direct the Agent to do any one or more of the following: (i) by notice to the Borrowers, terminate the Revolving Credit Commitments of the Lenders hereunder (if then outstanding), (ii) declare the unpaid principal of and accrued interest on the Notes, and all other amounts payable hereunder, to be forthwith due and payable, whereupon the same shall be and become forthwith due and payable, without presentment or demand for payment, notice of nonpayment, protest or further notice or demand of any kind, all of which are hereby expressly waived by the Borrowers, provided, however, that the -------- ------- Revolving Credit Commitments hereunder shall forthwith terminate and the unpaid principal of and accrued interest on the Notes, and all other amounts payable hereunder, shall automatically become due and payable upon the occurrence of any event specified in clauses (g) or (h) above without any such notice or other action, all of which are hereby expressly waived by the Borrowers, and (iii) exercise any or all of the rights of the Agent or the Lenders under the Credit Documents or under applicable law (including all rights as a secured party, for the benefit of the Lenders, under the Security Documents). ARTICLE X THE AGENT --------- Section 10.01 Appointment, Powers and Immunities. ---------------------------------- (a) Each Lender hereby appoints and authorizes the Agent to act as its agent hereunder with such powers as are specifically delegated to the Agent by the terms of the Credit Documents, together with such other powers as are reasonably incidental thereto. The Agent shall not have any duties or responsibilities except those expressly set forth in the Credit Documents and shall not be a trustee for any Lender. The Agent shall not be responsible to any of the Lenders for any recitals, statements, representations or warranties contained in any of the Credit Documents, or in any certificate or other document referred to or provided for in, or received by, any of the Lenders under the Credit Documents, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of the Credit Documents (including, without limitation, for the creation or perfection of any security interests granted by the Security Documents) or any other document referred to or provided for therein or for any failure by the Borrowers to perform any of their obligations thereunder. The 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 it with reasonable care. Neither the Agent nor any of its directors, officers, employees or agents shall be liable or responsible for any action taken or omitted to be taken by it or them hereunder or under the -56- Security Documents or in connection herewith or therewith, except for its or their own gross negligence or willful misconduct. (b) Maintenance of Books and Records. The Agent shall maintain books and -------------------------------- records in which shall be recorded: (i) the names and addresses of the Lenders and the Revolving Credit Commitments of, and the principal amount of Obligations owing to, each Lender from time to time; (ii) all other appropriate debits and credits as provided in this Credit Agreement, including, without limitation, all interest, fees (including attorneys' fees and disbursements to the extent reimbursable hereunder), expenses, charges and other Obligations; and (iii) all payments of Obligations made by the Borrowers or for the Borrowers' account. All entries in such books and records shall be made in accordance with the Agent's customary accounting practices as in effect from time to time. The Agent will render periodic statements to the Borrowers detailing all relevant transactions for billing purposes. Each and every such statement shall be deemed final, binding and conclusive upon the Borrowers in all respects as to all matters reflected therein, unless the Borrowers, within 15 days after the date such statement is rendered, delivers to the Agent written notice of any objections which the Borrowers may have to any such statement. In that event, only those items expressly objected to in such notice shall be deemed to be disputed by the Borrowers. Notwithstanding the foregoing, the Agent's entries in the books and records evidencing Loans and other financial accommodations made from time to time shall be final, binding and conclusive upon the Borrowers as to the existence and amount of the Obligations recorded in such books and records. Section 10.02 Reliance by Agent By Lenders. The Agent shall be entitled to ---------------------------- rely upon any certification, notice or other communication (including any received 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, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Agent. As to any matters not expressly provided for by this Credit Agreement, the 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 Lenders. Any instructions given by the Majority Lenders to the Agent and any action taken or not taken pursuant thereto shall be binding on all of the Lenders, and no Lender shall take any action or exercise any rights under any of the Credit Documents which is inconsistent with any instructions given to the Agent by the Majority Lenders. Section 10.03 No Knowledge of Defaults. The Agent shall not be deemed to ------------------------ have knowledge of the occurrence of a Default or Event of Default unless the Agent has received notice from a Lender or the Borrowers specifying such Default or Event of Default and stating that such notice is a "Notice of Default". In the event that the Agent receives such a notice of the occurrence of a Default -57- or Event of Default, the Agent shall give prompt notice thereof to the Lenders. The Agent shall (subject to Section 10.07 hereof) take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Lenders, provided that, unless and until the Agent shall have received such directions, the Agent may take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. Section 10.04 Rights as a Lender. With respect to its Revolving Credit ------------------ Commitment and the Loans made by it, BankBoston, N.A., in its capacity as a Lender hereunder, shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include BankBoston, N.A. in its individual capacity. BankBoston, N.A. and its Affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Borrowers and any of their Affiliates as if it were not acting as Agent, and BankBoston, N.A. and its Affiliates may accept fees and other consideration from the Borrowers for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. Section 10.05 Indemnification. The Lenders agree to indemnify the Agent, --------------- ratably in accordance with the aggregate principal amount of the Obligations held by the Lenders (or, if no Loans are at the time outstanding, ratably in accordance with their respective Commitment Percentages), 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 Agent, in any way relating to or arising out of the Credit Documents or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including, without limitation, the costs and expenses which the Borrowers are obligated to pay under Sections 11.03 and 11.04 hereof) or the enforcement of any of the terms hereof or of any such other documents, provided, however, that -------- ------- no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Agent. Section 10.06 Non-Reliance on Agent and Other Lenders. Each Lender agrees --------------------------------------- that it has, independently and without reliance on the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrowers and the decision to enter into this Credit Agreement, and that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own -58- analysis and decisions in taking or not taking action under the Credit Documents or any other document contemplated by or referred to herein. The Agent shall not be required to keep itself informed as to the performance or observance by the Borrowers of the provisions of this Credit Agreement or to inspect the properties or books of the Borrowers. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrowers (or any of their Affiliates) which may come into the possession of the Agent or any of its Affiliates; provided, however, that the Agent shall deliver to the Lenders copies of any - -------- ------- documents or writings received by the Agent pursuant to Section 6.01 hereof. Section 10.07 Failure to Act. Except for action expressly required of the -------------- Agent hereunder, the Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Section 10.08 Resignation or Removal of Agent. Subject to the appointment ------------------------------- and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving notice thereof to the Lenders and the Borrowers, and the Agent may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the night to appoint a successor Agent. If no successor Agent she have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Agent has given notice of resignation or the removal of the retiring Agent by the Majority Lenders, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a bank organized under the laws of the United States of America or any State having a combined capital and surplus of at least $100,000,000. Upon the acceptance of an appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After the retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article X 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 the Agent. Section 10.09 Agency Fee. So long as the Commitments are outstanding and ---------- until payment in full of all Obligations hereunder, the Borrowers shall pay to the Agent an annual Agent's fee payable on the first Business Day of each calendar year in accordance with the terms of that certain letter dated of even date herewith. Such fees, once paid, shall be non-refundable. -59- ARTICLE XI MISCELLANEOUS ------------- Section 11.01 No Waiver, Confidentiality. -------------------------- (a) No failure on the part of the Agent or any Lender to exercise, and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Credit Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Credit Agreement 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 other remedies provided by law. (b) The Agent and each of the Lenders hereby acknowledge that the written information to be furnished to them by the Borrowers pursuant to this Credit Agreement and the documents related hereto may be non-public information. In addition to any duty of confidentiality imposed on the Agent or any Lender by applicable law, each of the Agent and each Lender hereby agrees that it will keep all such information expressly marked "Confidential" and furnished to it confidential in accordance with reasonable, customary, safe and sound banking practices, and will not knowingly make any disclosure to any other person of such information until the same she have become public, except (i) in connection with disputes arising out of this Credit Agreement or the Security Documents (including, without limitation, litigation involving the Borrowers, the Agent or the Lenders) and with the obligations of any of the Agent or such Lender under law or regulation, (ii) pursuant to subpoenas or similar process, (iii) to governmental authorities or examiners, (iv) to independent auditors or counsel, (v) to any corporate Affiliate of any of the Agent or such Lender, or (vi) to any participant or proposed participant or assignee or proposed assignee hereunder so long as such participant or proposed participant or assignee or proposed assignee (a) is not in the same general type of business as the Borrowers on the date of such disclosure and (b) agrees in writing to accept such information subject to the restrictions provided in this Section 11.01(b). The Agent and the Lenders further agree to use such information solely for the purpose of their respective evaluations of the transactions contemplated hereby and their respective ongoing relationships with the Borrowers. Neither the Agent nor any Lender shall be liable or responsible for the breach or violation of this Section 11.01(b) which breach or violation is caused by any other Person (including any other Lender). Section 11.02 Notices. All notices and other communications provided for ------- herein shall be by telegraph, cable or in writing and telecopied, telegraphed, cabled, mailed or delivered to the intended recipient at the "Address for Notices" -60- specified in Schedule 11.02 attached hereto or at such other address as shall be -------- ----- designated by such party in a notice to each other party. Except as otherwise provided in Section 2.02 hereof, all notices and other communications hereunder shall be deemed to have been duly given when transmitted by telecopier, delivered to the telegraph or cable office, or personally delivered or, in the case of a mailed notice, four Business Days after the date deposited in the mails, postage prepaid, in each case given or addressed as aforesaid. Section 11.03 Expenses, Etc. The Borrowers shall pay or reimburse each of ------------- the Lenders and the Agent for: (i) the reasonable fees and expenses of Bingham Dana LLP incurred in connection with any amendment, modification or waiver of any of the terms of the Credit Documents or any other documents contemplated thereby or referred to therein; (ii) all reasonable costs and expenses of the Lenders and the Agent (including reasonable attorneys' fees) incurred in connection with the enforcement of any of the Credit Documents or the other documents contemplated by or referred to herein; and (iii) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of the Credit Document or any other document referred to herein. Section 11.04 Indemnification. The Borrowers shall (to the fullest extent --------------- permitted by applicable law) indemnify the Agent, the Lenders and each Affiliate thereof and their respective directors, officers, employees, attorneys and agents from, and hold each of them harmless against, any and all losses, liabilities, claims or damages to which any of them may become subject, insofar as such losses, liabilities, claims or damages arise out of, or in any way relate to, or result from any actual or proposed use by the Borrowers of the proceeds of any of the Loans and/or the negotiation, execution, delivery or performance of the Credit Documents, or from any investigation, litigation or other proceeding (including any threatened investigation or proceeding) relating to the foregoing, and the Borrowers shall reimburse the Agent and each Lender, and each Affiliate thereof and their respective directors, officers, employees, attorneys and agents, upon demand, for any expenses (including legal fees) incurred in connection with any such investigation or proceeding (but excluding any such losses, liabilities, claims, damages, or expenses to the extent caused by action taken which constitutes the gross negligence or willful misconduct of the Person to be indemnified). If and to the extent that the obligations of the Borrowers under the preceding sentence may be unenforceable for any reason, the Borrowers shall make the maximum contribution to the payment and satisfaction of each of the losses, liabilities, claims, damages and expenses referred to above as may be permitted by applicable law. Section 11.05 Amendments, Etc. No amendment or waiver of any provision of --------------- the Credit Documents, nor any consent to waive strict compliance with such provisions, shall in any event be effective unless the same shall be -61- agreed or consented to in writing by the Majority Lenders, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent -------- ------- shall, unless the same shall be in writing and signed by all the Lenders: (a) increase the Revolving Credit Commitment of any of the Lenders, extend the Commitment Termination Date, or subject the Lenders to any additional obligations; (b) reduce the principal of, or interest on, or fees with respect to, the Obligations; (c) postpone any date fixed for payment of principal of, or interest on, the Obligations or the Notes; (d) change the Commitment Percentages of any of the Lenders or the aggregate unpaid principal amount of the Obligations, or the number of Lenders which shall be required for the Lenders or any of them to take any action under this Credit Agreement; (e) release all or a significant portion of the Collateral; (f) modify the definition of Majority Lenders; or (g) change any provision contained in Section 4.03, Articles V or VI, Section 11.03 or this Section 11.05. Section 11.06 Successors and Assigns. ---------------------- (a) This Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. (b) The Borrowers may not sell or assign their rights or obligations hereunder or under the Notes without the prior consent of all of the Lenders and the Agent. (c) At any time after the Effective Date, any Lender or Lenders may, with the consent of the Agent and the Borrowers (not to be unreasonably withheld), sell a participation interest in a portion of its rights and obligations under such Lenders' Revolving Credit Commitment and Notes to one or more commercial banks or investment companies that enter into participations of the type contemplated by this Section 11.06 in the ordinary course of their business and that qualify as "accredited investors," as such term is defined under Regulation D under the Securities Act of 1933, as amended (each, a "Participant"), such Participant's rights against such Lender to be set forth in a participation agreement (a "Participation Agreement"); provided, however, that the aggregate -------- ------- amount of such participation must be in an amount not less than $5,000,000. All amounts payable by the Borrowers to any Lender under Article V hereof shall be determined as if such Lender had not sold any such participation and as if such Lender were funding all of its Revolving Credit Commitments and Loans in the same way that it is funding the Revolving Credit Commitments and Loans in which no participation have been sold. In no event shall a Lender that sells a participation agree to be obligated to the Participant under its Participation Agreement to refrain from taking any action hereunder or under any of such Lender's Notes, except that such Lender may -62- agree in such Participation Agreement that it will not, without the consent of such Participant, agree to (i) extend the Commitment Termination Date, (ii) reduce the principal of, or interest on, the Obligations or under the Notes or any fees hereunder, (iii) postpone any date fixed for payment of the principal of, or interest on, the Obligations or under the Notes, or (iv) consent to any release of all or a significant portion of the Collateral. Any Lender selling a participation hereunder shall promptly notify the Borrowers, the other Lenders, and the Agent of the effectiveness thereof. (d) At any time after the Effective Date, a Lender or Lenders may assign a portion of their rights and obligations under such Lenders' Revolving Credit Commitments and Notes to one or more commercial banks (each, an "assignee") pursuant to an Assignment and Acceptance Agreement substantially in the form of Exhibit M hereto (an "Assignment and Acceptance"); provided, however, that (i) - ------- - -------- ------- such Lenders shall have submitted in writing to the Borrowers and the Agent a request that each of the Borrowers and the Agent consent to the choice of the assignee, (ii) the Borrowers and the Agent shall have consented in writing to the choice of the assignee prior to the time of effectiveness of such assignment, such consent not to be unreasonably withheld, (iii) such assignment must be in an aggregate amount of not less than $5,000,000, and (iv) the parties to each assignment shall execute and deliver to the Agent, for its approval, acceptance and recording in the books and records maintained pursuant to Section 10.01(b) hereof, an Assignment and Acceptance, together with a processing and recordation fee of $2,500. Upon such execution, delivery, approval, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto, and to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and under the Notes and (ii) the Lender assignors thereunder shall, to the extent that rights and obligations hereunder have been assigned by them pursuant to such Assignment and Acceptance, relinquish their rights and be released from their obligations hereunder and under the Notes. Any Lender making an assignment hereunder shall promptly notify the Borrowers of the effectiveness thereof In the event of any such assignment, the Borrowers shall, against receipt of the existing Notes of the assigning Lenders, issue new Notes to the assignee and, in the case of a partial assignment, to such assignors, in either case appropriately reflecting such assignment. (e) By executing and delivering an Assignment and Acceptance, the assignor thereunder and the assignee thereunder shall confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in, or in connection with, this -63- Credit Agreement or the Security Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Credit Agreement or the Security Documents or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of their obligations under this Credit Agreement, the Security Documents or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Credit Agreement, together with copies of the financial statements referred to in Sections 7.04 and 8.01 hereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, the assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Credit Agreement; (v) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Credit Agreement and the Security Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Credit Agreement and the Security Documents are required to be performed by it as a Lender. (f) The Agent shall retain a copy of each Assignment and Acceptance delivered to and accepted by it and shall record in its books and records the names and addresses of each Lender and the Revolving Credit Commitments of, and the principal amount of the Loans owing to, such Lender from time to time. The Borrowers, the Agent and the Lenders may treat each Person whose name is so recorded as a Lender hereunder for ail purposes of this Credit Agreement. (g) A Lender may furnish any information concerning any of the Borrowers in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants). (h) Notwithstanding anything in the foregoing to the contrary, each Lender may, without complying with any restrictions set forth in this Section 11.06, sell participations in or assign all or any part of its rights and obligations under such Lender's Revolving Credit Commitment under this Credit Agreement and the Notes to any Affiliate of such Lender or to any Federal Reserve Bank. Section 11.07 Survival. The obligations of the Borrowers under Sections -------- 11.03 and 11.04, and the obligations of the Lenders under Section 10.05 hereof, shall survive the repayment of the Loans. -64- Section 11.08 Joint and Several. The Obligations of the Borrowers ----------------- hereunder, including, without limitation, the liability of the Borrowers for the payment of all fees, costs, expenses, Additional Costs, and any compensation required to be paid pursuant to Section 5.04, constitute the joint and several obligation and liability of each of the Borrowers. Section 11.09 Senior Indebtedness. The Obligations, including, without ------------------- limitation, the obligations of the Borrowers to pay when due (whether at stated maturity, by acceleration or otherwise) the principal of and interest on the Loans to be made by the Lenders to the Borrowers pursuant to Section 2.01 hereof, and the obligations of the Borrowers with respect to Interest Rate Hedging Agreements, shall constitute "Senior Indebtedness" as such term is defined in all documents to which any Borrower shall be a party. Section 11.10 Conditions to Effectiveness. This Credit Agreement shall --------------------------- become effective on the first day (the "Effective Date") on which (i) this Credit Agreement shall have been duly executed by the parties hereto and (ii) the conditions precedent to the initial extension of credit under Article VI hereof shall have been satisfied. Section 11.11 Counterparts. This Credit 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 Credit Agreement by signing any such counterpart. SECTION 11.12 WAIVER OF JURY TRIAL. THE BORROWERS HEREBY WAIVE TRIAL BY -------------------- JURY IN ANY JUDICIAL PROCEEDING TO WHICH ANY OF THEM IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THE CREDIT DOCUMENTS OR THE RELATIONSHIP ESTABLISHED HEREUNDER. Section 11.13 Entire Agreement. The Credit Documents embody the entire ---------------- agreement among the Borrowers and the Lenders and supersede all prior agreements, representations, understandings and courses of dealing, if any, relating to the subject matter hereof. Section 11.14 Governing, Law. The Credit Documents shall be governed by, -------------- and construed in accordance with, the law of The Commonwealth of Massachusetts. Section 11.15 Captions, Etc. Captions, section headings and the table of ------------- contents appearing herein are included solely for convenience of reference and -65- are not intended to affect the interpretation of any provision of this Credit Agreement. [remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed as of the day and year first above written. THE COMPANY: INTEREP NATIONAL RADIO SALES, INC. By: /s/ Marc G. Guild --------------------------------------- Name: Marc G. Guild Title: President, Marketing Division THE SUBSIDIARIES: McGAVREN GUILD, INC. By: /s/ William J. McEntee, Jr. ---------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer D&R RADIO, INC. By: /s/ William J. McEntee, Jr. ---------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CBS RADIO SALES, INC. By: /s/ William J. McEntee, Jr. ---------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer ALLIED RADIO PARTNERS, INC. By: /s/ William J. McEntee, Jr. ---------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CABALLERO SPANISH MEDIA L.L.C. By: /s/ William J. McEntee, Jr. ---------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CLEAR CHANNEL RADIO, LLC By: /s/ William J. McEntee, Jr. ---------------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer THE ADMINISTRATIVE AGENT: BANKBOSTON, N.A., as Administrative Agent By: /s/ Jay Michael MacKeen --------------------------------------- Name: Jay Michael MacKeen Title: Vice President THE LENDERS: REVOLVING CREDIT COMMITMENT - ---------- $5,000,000 BANKBOSTON, N.A., as Lender By: /s/ Jay Michael MacKeen --------------------------------------- Name: Jay Michael MacKeen Title: Vice President $5,000,000 SUMMIT BANK, as Lender By: /s/ Kenneth Stoddard --------------------------------------- Name: Kenneth Stoddard Title: Vice President THE DOCUMENTATION AGENT SUMMIT BANK, as Documentation Agent By: /s/ Kenneth Stoddard --------------------------------------- Name: Kenneth Stoddard Title: Vice President EX-10.2 11 LLC MEMBERSHIP INTEREST PLEDGE AGREEMENT EXHIBIT 10.2 LLC MEMBERSHIP INTEREST PLEDGE AGREEMENT This LLC MEMBERSHIP INTEREST PLEDGE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this "Agreement"), dated as of July 2, 1998, is made by INTEREP NATIONAL RADIO SALES, INC. ("Interep") and MCGAVREN GUILD, INC. ("MG" and, together with Interep, the "Pledgors"), in favor of BANKBOSTON, N.A., as administrative agent (the "Secured Party") for the Lenders that may, from time to time, be parties to that certain Credit Agreement (as defined below). WHEREAS, the Pledgors, CLEAR CHANNEL RADIO, LLC and CABALLERO SPANISH MEDIA L.L.C (each, an "LLC" and collectively, the "LLCs"), among others, are the Borrowers pursuant to that certain Revolving Line of Credit Agreement, dated of even date herewith (the "Credit Agreement"; capitalized terms not otherwise defined herein shall have the meanings given such term in the Credit Agreement) with the Agent, SUMMIT BANK, as documentation agent, and the Lenders. WHEREAS, it is a condition precedent to the effectiveness of the Credit Agreement that the Pledgors shall pledge their membership interests in the LLCs to secure the payment and performance of all of the Secured Obligations (as hereinafter defined). WHEREAS, the Pledgors are the legal and beneficial owner of the membership interests of the LLCs (collectively, the "Pledged Interests"), which interests constitute the percentage of all of the membership interests of the LLCs identified in Schedule A. -------- - NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Pledge. The Pledgors hereby pledge and grant to the Secured ------ Party, for the ratable benefit of the Lenders, a continuing first priority security interest in all of the Pledgors' now existing or hereafter arising right, title and interest in and to the following property 2 (collectively, the "Pledged Collateral") to secure all of the Secured Obligations: (i) the Pledged Interests; (ii) all distributions, refunds or returns of capital, repayments of loans or advances, fees, income, profits and other property, interests or proceeds from time to time received, receivable or otherwise distributed or owing to the Pledgors in respect of, or in exchange for, any or all of the Pledged Interests (collectively, "Distributions"); and (iii) all Proceeds (as defined under the Uniform Commercial Code (the "UCC") as in effect in any relevant jurisdiction or under other relevant law) of any of the foregoing (i)-(ii), including, without limitation, obligations to pay amounts in respect of any Pledged Shares and any other amounts at any time paid or payable under or in connection with any of the Pledged Collateral. Section 2. Secured Obligations. This Agreement secures, and the Pledged ------------------- Collateral is collateral security for, the prompt payment and performance in full when due, whether at stated maturity, by acceleration or otherwise (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy or the operation of the automatic stay under Section 362(a) of the Bankruptcy Code), of (i) all obligations of the Borrowers now or hereafter existing under or in respect of the Credit Documents (as defined in the Credit Agreement) and (ii) all obligations of the Pledgors now or hereafter existing under or in respect of this Agreement (the obligations described in clauses (i) and (ii) are collectively referred to as the "Secured Obligations"). Section 3. No Release. Nothing set forth in this Agreement shall (i) ---------- relieve the Pledgors from the performance of any term, covenant, condition or agreement on the Pledgors' part to be performed or observed under or in respect of any of the Pledged Collateral or from any liability to any person or entity under or in respect of any of the Pledged Collateral, or (ii) impose any obligation on the Secured Party to perform or observe any such term, covenant, condition or agreement on the Pledgor's part to be so performed or observed, or (iii) impose any liability on the Secured Party for any act or omission on the part of the Pledgors relating thereto 3 or for any breach of any representation or warranty on the part of the Pledgors contained in this Agreement or any other Credit Document. The obligations of the Pledgors contained in this Section 3 shall survive the termination of this Agreement and the discharge of the Pledgors' other obligations hereunder. Section 4. Supplements; Further Assurances. At any time and from time to ------------------------------- time, at the expense of the Pledgors, the Pledgors shall promptly execute and deliver all further instruments and documents, including supplemental or additional UCC-1 financing statements, and take all further action that may be necessary or that the Secured Party may request, in order to perfect and protect any pledge or security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. Section 5. Representations and Warranties. The Pledgors represent and ------------------------------ warrant as follows: (i) The Pledgors are, and at the time of any delivery of any Pledged Collateral to the Secured Party will be, the legal and beneficial owner of the Pledged Collateral. All Pledged Collateral is and will be owned by the Pledgors free and clear of any lien or other encumbrance except for the lien created by this Agreement. (ii) The Pledgors have full power, authority and legal right to pledge all the Pledged Collateral pursuant to this Agreement. (iii) No consent of any party, and no consent, authorization, approval, or other action by, and no notice to or filing with, any governmental authority or other person or entity is required either (a) for the pledge by the Pledgors of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Pledgors, (b) for the exercise by the Secured Party of the voting or other rights provided for in this Agreement, or (c) for the exercise by the Secured Party of the remedies in respect of the Pledged Collateral pursuant to this Agreement. 4 (iv) Each of the Pledgors' chief executive office and principal place of business is 100 Park Avenue, New York, New York. (v) As of the date hereof, (a) the Pledged Interests of the LLCs identified in Schedule A constitute the percentage of membership interests of the LLC s as identified in Schedule A, and (b) Schedule A constitutes a ---------- ---------- true and complete description of the Pledged Interests. (vi) The membership interests in the LLCs are not evidenced by any written certificate. The Pledgors have caused to be filed with the Secretary of State of the State of New York, and with the county clerk of the county in which the chief executive office and principal place of business of each Pledgor, UCC-1 financing statements evidencing the lien and pledge created by this Agreement, have amended each LLC's operating agreement to allow for the pledge of the Pledged Interests and have caused each LLC to record the Secured Party's security interest on the books and records of such LLC and such actions create a valid and perfected first priority security interest in the Pledged Collateral securing the payment of the Secured Obligations. (vii) There are no other members to any LLC. The Pledgors have consented to the Secured Party, upon the occurrence of an Event of Default, exercising any rights of membership in each LLC and consented to Secured Party electing to become a successor member in each LLC. This Agreement constitutes the legal, valid and binding obligation of the Pledgors, enforceable against the Pledgors in accordance with its terms. (viii) All information set forth herein relating to the Pledged Collateral is accurate and complete in all respects. (ix) The Pledgors at all times will be the sole beneficial owner of the Pledged Collateral. Section 6. Voting Rights: Distributions: Etc. --------------------------------- (a) So long as no Event of Default shall have occurred and be continuing: 5 (i) The Pledgors shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Interests or any part thereof for any purpose not inconsistent with the terms or purpose of this Agreement or any of the other Credit Documents; provided, however, that the -------- ------- Pledgors shall not in any event exercise such rights in any manner which may have an adverse effect on the value of the Pledged Collateral or the security intended to be provided by this Agreement. (ii) Except as otherwise provided in this Agreement, the Pledgors shall be entitled to receive and retain, and to utilize free and clear of the lien of this Agreement, any and all Distributions. (b) Upon the occurrence and during the continuance of an Event of Default: (i) All rights of the Pledgors to exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 6(a)(i) hereof shall immediately cease, and all such rights shall thereupon become vested in the Secured Party, which shall thereupon have the sole right to exercise such voting and other consensual rights. (ii) All rights of the Pledgors to receive Distributions which it would otherwise be authorized to receive and retain pursuant to Section 6(a)(ii) hereof shall cease, and all such rights shall thereupon become vested in the Secured Party, which shall thereupon have the sole right to receive and hold as Pledged Collateral such Distributions. (c) The Pledgors shall, at the Pledgors' expense, from time to time, execute and deliver to the Secured Party appropriate instruments as the Secured Party may request in order to permit the Secured Party to exercise the voting and other rights which it may be entitled to exercise pursuant to Section 6(b)(i) hereof and to receive all Distributions which it may be entitled to. receive under Section 6(b)(ii) hereof. (d) All Distributions which are received by the Pledgors contrary to the provisions of Section 6(b)(ii) hereof shall be received in trust for the benefit of the Secured Party, shall be segregated from other funds of the 6 Pledgors and shall immediately be paid over to the Secured Party as Pledged Collateral in the same form as so received (with any necessary endorsement). Section 7. Additional Covenants of Pledgors. -------------------------------- (a) The Pledgors shall not (i) sell, convey, assign or otherwise dispose of, or grant any option, right or warrant with respect to, any of the Pledged Collateral, (ii) create or a permit to exist any lien or other encumbrance upon or with respect to any Pledged Collateral other than the lien and security interest granted to the Secured Party under this Agreement, (iii) amend, modify or terminate the Operating Agreement of any LLC, or (iv) permit any LLC to merge, dissociate, liquidate, consolidate or change its legal form, except as expressly permitted by the Credit Agreement. (b) The Pledgors shall (i) cause the LLCs not to issue any membership interests in addition to or in substitution for the Pledged Interests, except to the Pledgors, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional membership interests which are required to be pledged hereunder. (c) The Pledgors shall deliver to the Secured Party, immediately upon receipt thereof, copies of all notices, certificates, documents, and instruments received with respect to the Pledged Collateral. (d) The Pledgors shall use any distributions from the LLCs for the purposes of payment of estimated or actual federal or state income taxes with respect to the Pledged Interests solely to pay such taxes and shall hold any such distributions not used for the payment of such taxes in trust for the Secured Party. (e) The Pledgors hereby waive any restriction on the transfer of the Pledgors' interests as members in each LLC. (f) Neither Pledgor will, without giving the Secured Party at least forty- five (45) days prior written notice, change its corporate name or the name under which it conducts its business, change the address of its chief executive office and principal place of business or change the location of its records and books of account. 7 Section 8. Remedies upon Default: Decisions Relating to Exercise ------------------------------------------------------ of Remedies. - ----------- (a) If any Event of Default shall have occurred and be continuing, the Secured Party shall have the right. in addition to other rights and remedies provided for herein or otherwise available to it to be exercised from time to time, (i) to retain and apply the Distributions to the Secured Obligations, (ii) to exercise all the rights and remedies of a secured party on default under the UCC in effect in any applicable jurisdiction at that time, (iii) to exercise all, rights of the Pledgors as a member of any LLC and/or become a successor member to such LLC, and (iv) to exercise any other rights or remedies pursuant to the Credit Documents, and the Secured Party may also in its sole discretion, without notice except as specified below, sell the Pledged Collateral or any part thereof (including, without limitation, any partial interest in the Pledged Interests) in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Secured Party's offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Pledged Collateral. The Secured Party or any of its affiliates may be the purchaser of any or all of the Pledged Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold at such sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price of any Pledged Collateral. Each purchaser at any such sale shall acquire the property sold absolutely free from any claim or right on the part of the Pledgors, and the Pledgors hereby waive (to the full extent permitted by law) all rights of redemption, stay and/or appraisal which they now have or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Pledgors acknowledge and agree that, to the extent notice of sale shall be required by law, 5 days' notice to the Pledgors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Pledgors hereby waive any claims against the Secured 8 Party arising by reason of the fact that the price at which any Pledged Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Secured Party accepts the first offer received and does not offer such Pledged Collateral to more than one offeree. (b) In addition to any of the other rights and remedies hereunder, the Secured Party shall have the right to institute a proceeding seeking specific performance in connection with any of the agreements or obligations hereunder. Section 9. Application of Proceeds. All Distributions held from time to ----------------------- time by the Secured Party and all cash proceeds received by the Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral pursuant to the exercise by the Secured Party of its remedies as a secured creditor as provided herein shall be applied from time to time by the Secured Party as follows: First, to the payment of all costs and expenses, fees, commissions and ----- taxes of such sale, collection or other realization, including, without limitation, reasonable compensation to the Secured Party's agents and counsel; Second, to the indefeasible payment in full in cash of the Secured ------ Obligations; and Third, to the Pledgors, or its successors or assigns or to whomsoever may ----- be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds. Section 10. Obligations Absolute. All obligations of the Pledgors -------------------- hereunder shall be absolute and unconditional irrespective of (i) any bankruptcy, reorganization or the like of any Borrower, (ii) any lack of validity or enforceability of the Credit Documents, (iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of, or any consent to any departure from, the Credit Documents, (iv) any exchange, release or non- perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guaranty, for all or any of the Secured Obligations; or (v) any other circumstances 9 which might otherwise constitute a defense available to, or a discharge of, the Borrowers. The Pledgors hereby waive any and all suretyship defenses. Section 11. Expenses. Upon demand, the Pledgors will pay to the Secured -------- Party the amount of any and all reasonable out of pocket expenses, including the reasonable fees and expenses of its counsel and the reasonable fees and expenses of any experts and agents, which the Secured Party may incur in connection with (i) the collection of the Secured Obligations, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Collateral, (iii) the exercise or enforcement of any of the rights of the Secured Party hereunder, or (iv) the failure by the Pledgors to perform or observe any of the provisions hereof. All amounts payable by the Pledgors under this Section shall be due upon demand and shall be part of the Secured Obligations. The Pledgors' obligations under this Section shall survive the termination of this Agreement and the discharge of the Pledgors' other obligations hereunder. Section 12. No Waiver; Cumulative Remedies. ------------------------------ (a) No failure on the part of the Secured Party to exercise, no course of dealing with respect to, and no delay on the part of the Secured Party in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein provided are cumulative and are not exclusive of any remedies provided by law. (b) In the event the Secured Party shall have instituted any proceeding to enforce any right, power or remedy under this instrument by foreclosure, sale, entry or otherwise. and such proceeding shall have been discontinued or abandoned for any reason, then and in every such case, the Pledgors and the Secured Party shall be restored to their respective former positions and rights hereunder with respect to the Pledged Collateral, and all rights, remedies and powers of the Secured Party shall continue as if no such proceeding had been instituted. Section 13. The Secured Party May Perform: The Secured Party Appointed ---------------------------------------------------------- Attorney-in-Fact. If either Pledgor shall fail to do any act or - ---------------- 10 thing that it has covenanted to do hereunder or any warranty on the part of the Pledgors contained herein shall be breached, the Secured Party may (but shall not be obligated to) do the same or cause it to be done or remedy any such breach, and may expend funds for such purpose. Any and all amounts so expended by the Secured Party shall be paid by the Pledgor promptly upon demand therefor, with interest at the Post-Default Rate during the period from and including the date so expended to the date of repayment. Each Pledgor's obligations under this Section shall survive the termination of this Agreement and the discharge of the Secured Obligations. Upon the occurrence and continuation of an Event of Default, each Pledgor appoints the Secured Party its attorney-in-fact with an interest, with full authority in the place and stead of such Pledgor and in the name of such Pledgor, or otherwise, from time to time in the Secured Party's discretion, to take any action and to execute any instrument consistent with the terms of this Agreement and the other Credit Documents which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement. The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term of this Agreement. Each Pledgor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof. Section 14. Indemnity. --------- (a) Indemnity. The Pledgors agree to indemnify, reimburse and hold the --------- Secured Party and its respective successors, assigns, employees, agents and servants (collectively, "Indemnitees") harmless from and against any and all liabilities, obligations, damages. injuries, penalties, claims, demands, actions, suits, judgments and any and all reasonable out of pocket costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) of whatsoever kind and nature imposed on, asserted against, or incurred by any of the Indemnitees in any way relating to or arising out of this Agreement or in any way connected with the administration of the transactions contemplated hereby or the enforcement of any of the terms hereof, or the preservation of any rights hereunder; provided that the Pledgors shall have no -------- obligation to an Indemnitee hereunder to the extent it is finally judicially determined that such indemnified liabilities arise solely from the gross negligence or willful misconduct of such Indemnitee. Upon written notice by any Indemnitee of the assertion of an indemnified claim hereunder, the Pledgors shall assume full responsibility for the defense thereof. If any 11 action, suit or proceeding arising from any of the foregoing is brought against any Indemnitee, the Pledgors shall, if requested by such Indemnitee, resist and defend such action, suit or proceeding or cause the same to be resisted and defended by counsel reasonably satisfactory to such Indemnitee. Each Indemnitee shall, unless any other Indemnitee has made the request described in the preceding sentence and such request has been complied with, have the right to employ its own counsel (or internal counsel) to investigate and control the defense of any matter covered by the indemnity set forth in this Section, and the fees and expenses of such counsel shall be paid by the Pledgors; provided -------- that, only to the extent no conflict exists between or among the Indemnitees, as reasonably determined by the Indernnitees, the Pledgors shall not be obligated to pay the fees and expenses of more than one counsel for all Indemnitees as a group with respect to any indemnified claim. (b) Contribution. If and to the extent that the obligations of the ------------ Pledgors under this Section are unenforceable for any reason, the Pledgors hereby agree to make the maximum contribution to the payment and satisfaction of such obligations that is permissible under applicable law. (c) Survival. The obligations of the Pledgors contained in this Section -------- shall survive the termination of this Agreement and the discharge of the Secured Obligations. (d) Reimbursement. Any amounts paid by any Indemnitee as to which such ------------- Indemnitee has the right to reimbursement shall constitute Secured Obligations secured by the Pledged Collateral. Section 15. Modification in Writing. No amendment, modification. ----------------------- supplement, termination or waiver of or to any provision of this Agreement, nor consent to any departure by the Pledgors therefrom, shall be effective unless the same shall be in writing and signed by the Secured Party. Any such amendment, modification, supplement, termination, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Pledgors in any case shall entitle the Pledgors to any other or further notice or demand in similar or other circumstances. Section 16. Termination. When all the Secured Obligations (other than ----------- Secured Obligations in the nature of continuing indemnities and 12 expense reimbursement obligations not yet due and payable) have been indefeasibly paid in full in cash and have been terminated, this Agreement shall terminate. Upon termination of this Agreement, the Secured Party shall, upon the written request and at the expense of the Pledgors, forthwith assign, transfer and deliver to the Pledgors, against receipt and without recourse to or warranty by the Secured Party, such of the Pledged Collateral as may be in the possession of the Secured Party and as shall not have been sold or otherwise applied pursuant to the terms hereof, and shall execute UCC termination statements on Form UCC-3. The Secured Party shall have no responsibility to undertake any other actions upon termination of this Agreement except as provided in this Section. Section 17. Notices. Except as otherwise provided herein, any notice or ------- other communication required or permitted to be given under this Agreement shall be in writing and may be personally delivered, telecopied, or sent by overnight courier service or United States mail to the respective party, addressed to it at the address for notices specified in accordance with Section 11.02 of the Credit Agreement or to such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices and other communications shall be deemed to have been given when delivered in person, or received by telecopy or overnight mail; or three Business Days after deposit in the United States mail; provided -------- that notices to the Secured Party shall not be effective until received by the Secured Party. Section 18. Assignment. This Agreement shall be binding upon the ---------- Pledgors, their successors, and assigns, and shall inure, together with the rights and remedies of the Secured Party hereunder, to the benefit of the Secured Party and each of its successors, transferees and assigns. No other Persons (including, without limitation, any other creditor of the Pledgors) shall have any interest herein or any right or benefit with respect hereto. The Pledgors may not assign their rights or obligations under this Agreement to any other Person. The Secured Party may assign or otherwise transfer its rights under this Agreement or any indebtedness held by it secured by this Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Secured Party, subject however, to the provisions of the Credit Documents. 13 Section 19. Governing Law. This Agreement shall be governed by, and shall ------------- be construed and enforced in accordance with, the laws of the Commonwealth of Massachusetts, without regard to principles of conflicts of laws. Section 20. Consent to Jurisdiction. All judicial proceedings brought ----------------------- against the Pledgors with respect to this Agreement may be brought in any state or federal court of competent jurisdiction in the Commonwealth of Massachusetts and, by execution and delivery of this Agreement, the Pledgors accept for themselves and in connection with their respective properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts. SECTION 21. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO IRREVOCABLY WAIVE ----------------------- TRIAL BY JURY IN CONNECTION WITH ANY MATTER ARISING OUT OF THIS AGREEMENT. Section 22. Severabilitv of Provisions. Any provision of this Agreement -------------------------- which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 23. Execution in Counterparts. This Agreement and any amendments, ------------------------- waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement. Section 24. Headings. The Section headings used in this Agreement are for -------- convenience of reference only and shall not affect the construction of this Agreement. 14 IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly executed and delivered as of the date first above written. INTEREP NATIONAL RADIO SALES, INC. By: /s/ Marc G. Guild ----------------------------------- Name: Mark G. Guild Title: President, Marketing Division MCGAVREN GUILD, INC. By: /s/ William J. McEntee, Jr. ----------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer ACCEPTED: BANKBOSTON, N.A., as Administrative Agent By: /s/ Jay Michael MacKeen --------------------------- Name: Jay Michael MacKeen Title: Vice President 15 SCHEDULE A ---------- Interep - -------
LLC Percentage of all such ---- Interests in LLC ---------------- Caballero Spanish Media L.L.C. 95% Clear Channel Radio, LLC 95%
MG - --
LLC --- Caballero Spanish Media L.L.C. 5% Clear Channel Radio, LLC 5%
EX-10.3 12 SECURITY AGREEMENT EXHIBIT 10.3 SECURITY AGREEMENT This SECURITY AGREEMENT (the "Security Agreement"), dated as of July 2, 1998, among INTEREP NATIONAL RADIO SALES, INC., (the "Company"), MCGAVREN GUILD, INC., D&R RADIO, INC., CBS RADIO SALES, INC., ALLIED RADIO PARTNERS, INC., CABALLERO SPANISH MEDIA L.L.C. AND CLEAR CHANNEL RADIO, LLC (collectively, and together with the Company, the "Securing Parties"), and BANKBOSTON, N.A., as administrative agent (the "Agent") for the Lenders from time to time parties to the Credit Agreement (as defined below). WHEREAS, pursuant to a certain Revolving Line of Credit Agreement, dated as of the date hereof (as amended, restated, modified and supplemented and in effect from time to time, the "Credit Agreement"), among the Securing Parties, the Lenders, the Agent, and SUMMIT BANK, as documentation agent, the Lenders have agreed to make certain loans to the Securing Parties, each of which will derive benefit, directly and indirectly, from such loans; WHEREAS, it is a condition precedent to the agreement of the Lenders to make loans under the Credit Agreement that each of the Securing Parties shall have executed and delivered to the Agent certain Security Documents, including, without limitation, this Security Agreement; and WHEREAS, this Security Agreement is given by the Securing Parties in favor of the Agent and the Lenders to secure the payment and performance of all of the Secured Obligations (as hereinafter defined). NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows. Section 1. Certain Definitions. As used herein, the following terms shall --------- ------------------- have the following meanings: "Collateral" shall mean: ---------- 2 (i) all personal property and fixtures of each of the Securing Parties, whether now or hereafter existing or now owned or hereafter acquired by any Securing Party and whether the same is now contemplated, anticipated or foreseeable, and wherever located, of every kind and description, tangible or intangible, including without limitation, the following, to the extent now owned or hereafter acquired by such Securing Party: (a) all goods (which shall mean and include all inventory, merchandise, raw materials, supplies, work in process, finished goods, and other tangible personal property held for processing, sale or lease or furnished or to be furnished under contracts of service or used or consumed in any Securing Parties' business) as well as all goods in transit, all returned or rejected goods, and all documents which represent any of the foregoing; (b) all accounts (which shall mean and include all accounts receivable, notes, drafts, acceptances and other instruments representing or evidencing a right to payment for goods sold or leased or for services rendered whether or not earned by performance) and all books, records, ledgers, print-outs, file materials and other papers relating thereto; (c) all equipment, machinery, tools, dies, molds, furniture, furnishings, fixtures and all tangible personal property similar to any of the foregoing; (d) all general intangibles, including, without limitation, tradenames, customer lists, goodwill, computer programs, computer records, computer software, computer data, trade secrets, intellectual property, trademarks (and all goodwill connected with and symbolized by such trademarks), patents, licenses, ledger sheets, files, records, and data processing records relating to any accounts; (e) all chattel paper of every kind and description, including additions thereto and substitutions therefor; 3 (f) all rights to payment of money arising under contracts (whether written or oral or otherwise), including, without limitation, amounts due from affiliates, all tax refunds of every kind and nature including loss carryback refunds, insurance policies and proceeds, factoring agreements, all rights to deposits or advance payments and all rights to receive surplus funds, if any, which are payable to any Securing Party following the termination of any employee pension plan; (g) all documents, documents of title, and instruments (whether negotiable or non-negotiable); (h) all Investment Property (as such term is defined in the Uniform Commercial Code as enacted in the Commonwealth of Massachusetts); (i) all liens, guaranties and securities for any of the foregoing; and (j) all products of, accessions to, and proceeds of any of the foregoing. provided, however, the Collateral shall not include the Borrowers' rights, title - -------- ------- or interest in or to the Contracts (as that term is defined in the Credit Agreement); provided, further, however, that the Collateral shall include all of -------- ------- ------- the Borrowers' rights, title or interest in or to any or all proceeds or rights to payment arising under or relating to such Contracts. All of such property in (a) through (j) above is collectively referred to as the "Collateral". "Secured Obligations" shall mean (i) the obligations of the Securing --------------------- Parties under this Agreement (including, without limitation, the obligation of the Securing Parties to repay any and all sums advanced by the Agent or any Lender, at its or their option, in payment of taxes, assessments or other charges and expenses, or to satisfy Liens, other than those created hereby, on or in the Collateral or any part thereof) and (ii) the obligations of the Securing Parties to pay, when due (whether at stated maturity, by acceleration or otherwise), the principal of and interest on the Loans made and to be made to the Securing Parties under 4 the Credit Agreement and the Notes evidencing the same, and the commitment fees and Agent's fees and all other amounts payable by any Securing Party to the Agent and/or the Lenders thereunder. Except as otherwise defined herein, all capitalized terms which are used in this Agreement which are defined in the Credit Agreement shall have the respective meanings assigned to such terms in the Credit Agreement. Section 2. Grant of Security Interest. As security for the prompt --------- -------------------------- payment, observance and performance when due (by acceleration or otherwise) of the Secured Obligations, each of the Securing Parties hereby grants to the Agent, for the ratable benefit of the Lenders, a continuing first priority security interest in, a continuing lien upon and/or a right of set-off against all of the Collateral. Section 3. Representations, Warranties and Covenants of the Securing ---------- --------------------------------------------------------- Parties. - ------- A. Perfection. At any time and from time to time, upon demand of the Agent, each Securing Party will: (1) Deliver and pledge (or cause to be delivered and pledged) to the Agent, endorsed and/or accompanied by such further instruments of assignment and transfer in such form and substance as the Agent may reasonably request, any and all cash equivalents (other than balances in bank accounts), instruments, securities, investments, documents and/or chattel paper included in or evidencing or otherwise relating to the Collateral owned or held by such Securing Party as the Agent may specify; (2) Execute and deliver to the Agent a mortgage or mortgages (satisfactory in form and substance to the Agent) creating Liens in favor of the Agent securing the Secured Obligations on any real property (including, without limitation, leasehold interests) of the Securing Parties, or such portion thereof as may be specified by the Agent, and take such action as may be necessary to duly file and/or record such Liens in such public office or offices, and take such other actions (including using reasonable efforts for a reasonable period of time to obtain consents and acknowledgments of landlords and other third parties) as may be 5 necessary or desirable (in the opinion of the Agent), in order for such Liens to constitute valid and effective Liens on such real property as security for the Secured Obligations, subject to no equal or prior Liens (other than Permitted Liens and the other Liens permitted by, and subject to, Section 8.12 of the Credit Agreement); (3) To the extent any of the Collateral owned or held by such Securing Party consists of property which constitutes fixtures under the laws of the jurisdiction in which such property is located, use reasonable efforts for a reasonable period of time to furnish or cause to be furnished to the Agent valid and effective waivers of interest in such Collateral by all landlords, lessors, mortgagees, co-owners, encumbrances or other parties in interest with respect to the real property upon which such Collateral is located; (4) If and to the extent determined by the Agent, at the direction of the Majority Lenders, to be desirable to protect the interests of the Agent and the Lenders (and in any event with respect to Contracts only after a Default or Event of Default and an acceleration by the Agent pursuant to Article IX of the Credit Agreement), notify each obligor upon any credit or other obligation included in the Collateral at any time owing to such Securing Party, in such manner as the Agent may specify; and (5) Permit representatives of the Agent or any Lender, during business hours, to inspect the inventory and other properties constituting Collateral of such Securing Party and to inspect and make abstracts from its books and records pertaining to the Collateral, allow the Agent or any Lender to speak with representatives or employees of such Securing Party, and assist the Agent or such Lender's representative obtaining any information requested by the Agent or such Lender. B. Necessary Filings. With the exception of landlord consents and waivers ----------------- and fixture filings. all filings, registrations and recordings necessary, appropriate or reasonably requested by the Agent to create, preserve, protect and perfect the security interest granted by the Securing Parties to the Agent hereby in respect of the Collateral and required to be made on or before the date hereof have been accomplished. The security interest granted to the Agent for the benefit of the Lenders pursuant to this Security Agreement in and to the Collateral constitutes and hereafter 6 will constitute a perfected security interest therein, superior and prior to the rights of all persons therein and subject to no other Liens except Liens which are permitted by, and subject to, Section 8.12 of the Credit Agreement. C. Insurance. Each of the Securing Parties will maintain insurance issued --------- by responsible companies, satisfactory to the Agent, in such amounts and against such risks as is response usually carried by owners of similar businesses and properties in the same general areas in which such Securing Party operates; provided, however, that, if any Event of Default or Default shall be continuing, - -------- ------- the Securing Parties will insure the Collateral or will cause the Collateral which is tangible property to be insured against such risks as the Agent, at the direction of the Majority Lenders, may from time to time reasonably require, such insurance to be in such forms and amounts and with such companies as may be satisfactory to the Agent and the Majority Lenders. To the extent available from applicable insurers, all policies of such insurance shall, unless otherwise specified by the Agent, be written for the benefit of the Securing Parties and the Agent (for its own benefit and that of the Lenders) as their interests may appear and shall provide that such insurance may not be canceled by reason of the act or neglect of any Securing Party and shall provide that the rights of the Agent and Lenders are independent of any breach of condition by the named insured, and all such policies or certificates evidencing the same, shall be furnished to the Agent. Each Securing Party hereby assigns to the Agent as part of the Collateral all returned or unearned premiums which may be due upon the cancellation of any of such policies for any reason whatsoever and hereby directs the insurer thereunder to pay to the Agent any amounts so due. Each Securing Party will cause the carriers of its insurance to issue loss payee and additional insured or mortgagee clauses in favor of the Agent with respect to such insurance and to cause such carriers to give not less than ten days' prior notice to the Agent of the cancellation or non-renewal of any of such policies. D. Liens. The Securing Parties will not, without the prior written consent of the Majority Lenders: (1) Permit any of the Collateral to be levied upon under legal process or be subject to any Lien of whatsoever nature (except for those created hereby, Permitted Liens and other Liens to the 7 extent permitted by, and subject to, Section 8.12 of the Credit Agreement) unless promptly discharged; or (2) Cause or permit anything to be done which may materially impair the value of the Collateral (other than normal wear and tear with respect to property and fixtures included in the Collateral and dispositions permitted by Section 8.14 of the Credit Agreement) or the Liens granted and/or intended to be granted hereby. E. Notations. Each of the Securing Parties will keep and stamp or --------- otherwise mark any and all documents and chattel paper and its individual books and records relating to the Collateral in such manner as the Agent may reasonably require. F. Place of Business/Location of Collateral. Each of the Securing Parties ---------------------------------------- represents and warrants to the Lenders that the chief executive office and principal place of business of such Securing Party, and the place where such Securing Party keeps all of its books and records, is specified in Schedule I hereof. All tangible evidence and all receivables, contracts and general intangibles of each Securing Party and the only original books of account and records of such Securing Party relating thereto are, and will continue to be, kept at such chief executive office and principal place of business, or at such new location for such chief executive office and principal place of business as such Securing Party may establish in accordance with the last sentence of this Section F. All Collateral of each Securing Party is located at one of the locations for such Securing Party listed on Schedule I hereof, and will remain located at any one of such locations unless the Securing Party shall have given the Agent at least 45 days prior written notice of its intention to remove Collateral from such location clearly describing the proposed new location which shall be in the United States of America. No Securing Party shall establish a new location for its chief executive office and principal place of business nor shall it change its corporate name or the name under which it is conducting business, until (i) it shall have given to the Agent not less than 45 days prior written notice of its intention to do so, clearly describing such new location (which shall be in the United States of America) or name, and providing such other information in connection therewith as the Agent may reasonably request, and (ii) with respect to such new location or name, the Securing Parties shall have taken all actions satisfactory to the Agent to maintain the perfection and proof of the 8 security interest of the Agent for the benefit of the Lenders in the Collateral intended to be granted hereby, including, without limitation, obtaining waivers of landlord's or warehouseman's liens with respect to such new location. Section 4. Further Assurances, Etc. Each of the Securing Parties will, --------- ------------------------ from time to time and at their own expense, promptly execute, acknowledge, witness and deliver and file and/or record, or cause the execution, acknowledgment, witnessing, and delivery and the filing and/or recordation of, such specific and further assignments of Collateral and such other documents or instruments, and shall take or cause to be taken such other action as the Agent may reasonably request for the perfection against such Securing Party and all third parties whomsoever of the Liens created hereby, or for the continuation and protection thereof, and promptly furnish to the Agent evidence satisfactory to the Agent of such action. Without limiting the generality of the foregoing, each of the Securing Parties promptly upon the execution and delivery of this Agreement, and at any time and from time to time thereafter upon the request of the Agent, will execute, acknowledge, witness and deliver such financing and continuation statements, notices, and additional security agreements, make such notations on its records, and take such other action as the Agent may reasonably request for the purpose of so perfecting, maintaining and protecting such Liens and shall cause this Agreement, any amendment or supplement hereto or thereto and each such financing and continuation statement, notice and additional security agreements to be filed and/or recorded in such manner and in such places as may be required by applicable law or as the Agent may reasonably request for such purpose. After written notice to the Securing Parties, each of the Securing Parties hereby authorizes the Agent to effect any filing and/or recording which the Agent or the Majority Lenders has requested pursuant to this Section 4 without the signature of such Securing Party, to the extent permitted by applicable law. The Agent shall give the Securing Parties written notice subsequent to any such filing and/or recording. Section 5. Actions by Agent. The Agent may, at any time and from time to --------- ---------------- time, at its option, after having given notice of its intention to do so to the Securing Parties, perform any act which is undertaken by any of the Securing Parties to be performed by such Securing Party hereunder but which such Securing Party shall have failed to perform, and the Agent may take any other action which the Agent may deem necessary for the 9 maintenance, preservation or protection of any of the Collateral or the security interests therein, and the Agent is hereby irrevocably appointed attorney-in- fact of each of the Securing Parties for this purpose. All moneys advanced by the Agent in connection with any of the foregoing, together with interest thereon at the highest rate then in effect pursuant to the Credit Agreement from the date of such advance to the date of the repayment thereof, shall be repaid by the Securing Parties to the Agent upon demand, and shall constitute additional Secured Obligations secured hereby. The making of any such advance by the Agent shall not, however, relieve any of the Securing Parties of liability for any default hereunder until the full amount of all such moneys so advanced and such interest thereon shall have been repaid by the Securing Parties to the Agent and such default shall have otherwise been cured. Section 6. Rights and Remedies Upon Default. --------- -------------------------------- A. Rights and Remedies Generally. Upon the occurrence and during the ----------------------------- continuance of any Event of Default, the Agent shall have all the rights and remedies of a secured party under the Massachusetts Uniform Commercial Code, or other applicable law, including the power of sale upon notice, and all rights provided herein, all of which rights and remedies shall, to the fullest extent permitted by law, be cumulative, provided that the Agent shall not notify -------- obligors on Contracts of the exercise of any right unless the Agent shall have accelerated the Obligations pursuant to Article IX of the Credit Agreement. B. Specific Rights and Remedies. Without limiting the generality of the ---------------------------- foregoing: (1) After an Event of Default shall have occurred and while it shall be continuing, each of the Securing Parties will at the request of the Agent cause all payments made under or in respect of accounts or other obligations owed to such Securing Party to be paid directly to the Agent. The Agent shall hold all such payments as additional Collateral hereunder. Neither the Agent nor any Lender shall be liable to any Person for any incorrect or improper payment made pursuant to this Section 6.B(1) in the absence of gross negligence or willful misconduct. (2) Each of the Securing Parties hereby constitutes the Agent its true and lawful attorney, irrevocably and with full power of substitution, in the name of such Securing Party or otherwise, upon the occurrence and 10 during the continuance of any Event of Default, (i) to give notice at any time to each account debtor or other obligor of the fact of assignment of the respective account or other obligation under this Agreement, (ii) to demand, receive, compromise, sue for, and give acquaintance for, any and all moneys and claims for money due and to become due under or arising out of such accounts and other obligations, (iii) to endorse any checks or other instruments or orders in connection therewith, (iv) to file any claims or take any actions or institute any proceedings which the Agent may deem to be necessary or advisable in its sole and complete discretion and to compromise, litigate or settle the same and (v) to take any other action which by the terms of this Agreement is to be taken by such Securing Party. (3) (a) Upon the occurrence and during the continuance of any Event of Default, the Agent may do any one or more of the following acts: (i) exercise all of the rights and remedies of a mortgagee and secured party under the provisions of applicable law; (ii) institute legal proceedings for the specific performance of any covenant or agreement herein undertaken by each of the Securing Parties, or for aid in the execution of any power or remedy herein granted; (iii) institute legal proceedings to foreclose upon and against any of the Liens created hereby; (iv) institute legal proceedings for the sale, under a judgment or decree of any court of competent jurisdiction, of any of the Collateral; (v) institute legal proceedings for the appointment of a receiver or receivers pending foreclosure hereunder or the sale of any of the Collateral under the order of a court of competent jurisdiction or under other legal process; (vi) personally, or by agents or attorneys, enter into and upon any premises wherein the Collateral or any part thereof may then be situated and take possession of all or any part thereof or render it unusable; and, without being responsible (except for gross negligence or willful misconduct) for loss or damage, hold, store, 11 and keep idle, or operate, lease, or otherwise use or permit the use of the same or any part thereof, for such time and upon such terms as the Agent may deem to be in the best interests of the Lenders, and demand, collect, and retain all hire, earnings and all other sums due and to become due in respect of the same from any party whomsoever, accounting only for net earnings, if any, arising from such use, after charging against all receipts from the use of the same and from any subsequent sale thereof, by court proceedings or pursuant to clause (vii) of this Section 6.B(3)(a), all reasonable costs and expenses of, and damages or losses by reason of, such use and/or sale; and/or (vii) personally, or by agents or attorneys, enter upon and into any place wherein the same may then be located and take possession of any part or all of the Collateral, with or without process of law and without being responsible for loss or damage (except such as results from the Agent's gross negligence or willful misconduct), and sell, lease or otherwise dispose of all or any part of the same, free from any and all claims of any of the Securing Parties at law, in equity, or otherwise, at one or more public or private sales, in such place or places, at such time or times, for cash or credit and upon such terms as the Agent or the Majority Lenders may determine, with or without any previous demand or notice to any of the Securing Parties or advertisement and demand, and any right or equity of redemption otherwise required by law is hereby waived by each of the Securing Parties to the fullest extent permitted by applicable law. The power of sale hereunder shall not be exhausted by one or more sales, and the Agent may from time to time adjourn any sale to be made pursuant to this Section 6. (b) If the Agent shall demand possession of the Collateral or any part thereof pursuant hereto, each of the Securing Parties will, at its own expense, forthwith cause the Collateral or any part thereof designated by the Agent to be assembled and made available and/or delivered to the Agent at any place designated by the Agent. (c) In the event that any mandatory requirement of applicable law shall obligate the Agent to give prior notice to any of the Securing Parties of any of the foregoing acts, each of the Securing Parties agrees that a notice sent to the Company in writing by certified U.S. mail, return receipt requested, at least five days before the date of any such act, at the 12 Company's address specified in Schedule 11.02 of the Credit Agreement (or such other address as shall have been notified to the Agent in writing), shall be deemed to be reasonable notice of such act and, specifically, reasonable notification of the time and place of any public sale hereunder and reasonable notification of the time after which any private sale or other intended disposition to be made hereunder is to be made. (d) The Agent shall apply the proceeds from the sale or other disposition of the Collateral in accordance with the terms and provisions of the Credit Agreement. (e) No sale or other disposition of all or any part of the Collateral by the Agent pursuant to this Section 6.B(3) shall be deemed to relieve any of the Securing Parties of its obligations in respect of any Secured Obligations except to the extent the proceeds thereof are finally and irrevocably applied by the Agent to the payment of such Secured Obligations. Section 7. Possession Until Default. Until an Event of Default shall --------- ------------------------ occur, except as otherwise provided in this Agreement or in the other Security Documents and other documents referred to herein, the Securing Parties will have the right to the possession and enjoyment of the Collateral subject to and upon the terms of this Agreement. Section 8. Waiver bv Securing Parties. To the fullest extent it may --------- -------------------------- lawfully so agree, each of the Securing Parties agrees that it will not at any time insist upon, claim, plead, or take any benefit or advantage of any appraisement, valuation. stay, extension, moratorium, redemption or similar law now or hereafter in force in order to prevent, delay, or hinder the enforcement hereof or the absolute sale of any part of the Collateral or the possession thereof by any purchaser at any sale pursuant to Section 6.B(3) above; and each of the Securing Parties, for itself and all who claim through it, as far as it or they now or hereafter lawfully may do so, hereby waives the benefit of all such laws, and all right to have the Collateral marshaled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Agreement may order the sale of the Collateral as an entirety. Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, each of the Securing Parties hereby: (i) authorizes the Agent, in its sole discretion and without notice to or demand upon any of the Securing Parties and without otherwise affecting the obligations of any of the 13 Securing Parties hereunder or in respect of the Secured Obligations, from time to time to take and hold other collateral (in addition to the Collateral) for payment of the Secured Obligations, or any part thereof, and to exchange, enforce or release such other collateral or any part thereof and to accept and hold any endorsement or guarantee of payment of the Secured Obligations or any part thereof and to release or substitute any endorser or guarantor or any other Person granting security for or in any other way obligated upon any Secured Obligations or any part thereof and/or to modify or terminate the terms of subordination of any Indebtedness subordinated to any of the Secured Obligations; and (ii) waives and releases any and all right to require the Agent to collect any of the Secured Obligations from any specific item or items of the Collateral, from any other Person liable as guarantor or in any other manner in respect of any of the Secured Obligations or from any other collateral. Section 9. Purchase By Agent or Lenders. At any public or private sale --------- ---------------------------- pursuant to Section 6.B(3) hereof, the Agent or any Lender or their respective agents may to the extent permitted by applicable law bid for and purchase the Collateral offered for sale, may make payment on account thereof as hereinafter provided in this Section 9, and, upon compliance in full with the terms of such sale, may hold, retain, and dispose of such property without further accountability therefor to any of the Securing Parties or any other party. In any such sale to the Agent or any Lender, the Agent or such Lender may, for the purposes of making payment for the Collateral or any part thereof so purchased, use any claim for the Secured Obligations then due and payable to it as a credit against the purchase price. Section 10. No Representation, Etc. Anything herein contained to the ---------- ---------------------- contrary notwithstanding, neither the Agent, nor any of the Lenders nor any of their respective nominees or assignees shall have any obligation or liability by reason of or arising out of this Agreement to make any inquiry as to the nature or sufficiency of, to present or file any claim with respect to, or to take any action to collect or enforce the payment of, any amounts to which it may be entitled at any time or times by virtue of this Agreement. The Agent and the Lenders make no representations or warranties with respect to the Collateral or any part thereof, and the Agent and the Lenders shall not be chargeable with any obligations or liabilities of any of the Securing Parties or any other Person with respect thereto. 14 Section 11. Remedies. Each right, power, and remedy herein specifically ---------- -------- granted to the Agent or otherwise available to it shall be cumulative, and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or otherwise; and each right, power and remedy, whether specifically granted herein or otherwise existing, may be exercised at any time and from time to time as often and in such order as may be deemed expedient by the Agent in its sole and complete discretion; and the exercise or commencement of exercise of any right, power, or remedy shall not be construed as a waiver of the right to exercise, at the same time or thereafter, the same or any other right, power or remedy. No delay or omission by the Agent in exercising any such right or power, or in pursuing any such remedy, shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of any of the Securing Parties or an acquiescence therein. No waiver by the Agent of any breach or default of or by any of the Securing Parties hereunder shall be deemed to be a waiver of any other or similar, previous or subsequent breach or default. Section 12. Notices. All notices, requests and demands will be given to ---------- ------- or made upon the respective parties hereto in writing (the term "in writing" ------------ shall include reference to communications by telex, telegram, cable or telecopier provided the same are promptly confirmed by letter) in accordance with Section 11.02 of the Credit Agreement or as to any party at such other address as may be designated by it in a written notice to all other parties. All notices, requests, consents and demands hereunder will be effective when personally delivered or when duly deposited in the mails, delivered to the telegraph office or telexed or telecopied, addressed as aforesaid. Section 13. Amendments, Etc. This Agreement may not be amended or ---------- --------------- modified except by written agreement of the Securing Parties (or the Company on their behalf pursuant to Section 16 hereof) and the Agent (at the direction of the Majority Lenders), and no consent or waiver hereunder shall be valid unless in writing and signed by the Person or Persons giving such consent or waiver; provided, however, that any amendment or modification that releases all or a - --------- ------- significant portion of the Collateral hereunder shall require the consent of each of the Lenders. Section 14. Indemnity. Each of the Securing Parties hereby agrees to ---------- --------- assume liability for, and does hereby agree to indemnify, protect, save 15 and keep harmless the Agent and the Lenders and each of their respective agents and servants, from and against, any and all liabilities, obligations. losses. damages, penalties, claims, actions, suits and reasonable costs and expenses (including, without limitation, those referred to in clause (i) of Section 6.B(3) hereof), of whatsoever kind or nature, imposed on, incurred by or asserted against the Agent, the Lenders, or their respective agents and servants, in any way relating to or arising out of this Agreement, or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition. merchantability, fitness, sale, return or other disposition of any Collateral (other than by reason of the respective indemnitees' own gross negligence or willful misconduct). Without limiting the generality of the foregoing, each of the Securing Parties hereby jointly and severally agrees to reimburse the Agent and the Lenders for all costs, liabilities or expenses reasonably incurred by them pursuant to any of the duties hereby or thereby created or in the exercise of any duty, right, remedy or power herein or therein imposed or conferred upon any of them (other than any such costs, liabilities and expenses resulting from the Agent's or such Lender's gross negligence or willful misconduct). The obligations of the Securing Parties contained in this Section 14 shall survive the termination of this Agreement and the discharge of the Securing Parties' other obligations under the other Credit Documents. Section 15. Miscellaneous. ---------- ------------- A. Successors. This Agreement shall be binding upon and shall inure to ---------- the benefit of each of the Securing Parties, the Agent and the Lenders and their respective successors and assigns; provided, however, that none of the Securing -------- ------- Parties may assign its rights or obligations hereunder without the prior written consent of all of the Lenders. B. 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. C. Governing Law. This Agreement shall be construed in accordance with ------------- and governed by the law of The Commonwealth of Massachusetts. 16 D. Headings. The section headings used herein have been inserted for -------- convenience of reference only and do not constitute matters to be considered in interpreting this Agreement. E. Assignments. Subject to the provisions of Section 11.06 of the Credit ----------- Agreement, it is understood that the Lenders may from time to time assign their rights in respect of the Secured Obligations. and the word "Lenders" when used herein shall be deemed to mean the Lenders and their respective successors and assignees. F. Severability. Any provision of this Agreement which is prohibited or ------------ unenforceable in any in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or effecting the validity or enforceability of such provision in any other jurisdiction. G. Senior Indebtedness. The obligations of the Securing Parties hereunder ------------------- shall constitute "Senior Indebtedness" and "Senior Debt" as such terms are defined in all documents to which any Securing Party is a party. Section 16. Securing Parties Other Than The Company. Each of the Securing ---------- --------------------------------------- Parties (other than the Company, except for purposes of clause (iv) below) hereby irrevocably; (i) appoints the Company its attorney-in-fact, with full power and authority in the name and on behalf of such Securing Party or otherwise, to amend, modify or waive any and all provisions of this Agreement and to grant consents and give instructions hereunder; (ii) expressly ratifies, consents to and adopts any and all agreements which the Company may hereafter make with the Agent and/or any of the Lenders with respect to the Collateral owned or held by such Securing Party: (iii) authorizes the Agent to deliver all such Collateral to the Company or to make such other dispositions thereof as the Company has instructed or may instruct and agrees that any and all such agreements and instructions of the Company shall be applicable to such Collateral exactly as if such Collateral were owned or held by the Company; and (iv) to the fullest extent permitted by applicable law, waives any and all notices of every kind to which such Securing Party might otherwise be entitled, or of demand for payment or the payment of any Secured Obligations, or of the presentment or dishonor of any instrument for the payment of money at any time in connection with any 17 Secured Obligations, or of protest and/or non-payment thereof, or of any exchange, sale, release or other handling or disposition of all or any such Collateral, or otherwise. Without limiting the generality of the foregoing: (a) none of the Securing Parties other than the Company shall have the right to receive from the Agent any statement, report or other notice, to object to any disposition or application of its Collateral, to obtain injunctive or other relief by reason of the Agent's handling or disposition of such Collateral, or to recover losses caused to such Securing Party by reason of the Agent's failure to furnish to such Securing Party other than the Company any statement or other information with respect to such Collateral or any other Collateral; and (b) no agreement or consent of any Securing Party other than the Company shall be required for any amendment or modification of this Agreement. Section 17. Termination: Release. When all the Secured Obligations (other ---------- -------------------- than Secured Obligations in the nature of continuing indemnitees or expense reimbursement obligations not yet due and payable) have been paid in full and have been terminated and the Revolving Credit Commitments of each of the Lenders to make any Loan under the Credit Agreement have expired, this Agreement shall terminate. Upon termination of this Agreement or any release of Collateral in accordance with the provisions of the Credit Agreement, the Agent shall, upon the request and at the expense of the Company, forthwith assign, transfer and deliver to the Company, against receipt and without recourse to or warranty by the Agent or the Lenders, such of the Collateral to be released (in the case of a release) as may be in possession of the Agent and which shall not have been sold or otherwise applied pursuant to the terms hereof, in the order of and at the expense of the Securing Parties, and proper instruments (including UCC termination statements on Form UCC-3) acknowledging the termination of this Agreement or the release of such Collateral, as the case may be. Section 18. Credit Agreement Provisions. For purposes hereof, the ---------- --------------------------- provisions of Sections 10.09, 11.03 and 11.04 of the Credit Agreement are hereby incorporated, mutatis mutandis, as if set forth herein in fall. So long as any ------- --------- Secured Obligations shall remain outstanding hereunder, such provisions. as so incorporated, shall survive the payment in full of the Loans, and the termination of the Credit Agreement. 18 Section 19. Future Advances. This Security Agreement shall secure payment ---------- --------------- of any amounts advanced from time to time pursuant to the Credit Agreement. The parties hereto have caused this Agreement to be duly executed as of the day and year first above written. INTEREP NATIONAL RADIO SALES, INC. By: /s/ Marc G. Guild ---------------------------------- Name: Mark G. Guild Title: President, Marketing Division MCGAVREN GUILD, INC. By: /s/ William J. McEntee, Jr. ---------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer D&R RADIO, INC. By: /s/ William J. McEntee, Jr. ---------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CBS RADIO SALES, INC. By: /s/ William J. McEntee, Jr. ---------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer 19 ALLIED RADIO PARTNERS, INC. By: /s/ William J. McEntee, Jr. ---------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CABALLERO SPANISH MEDIA L.L.C. By: /s/ William J. McEntee, Jr. ---------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer CLEAR CHANNEL RADIO, LLC By: /s/ William J. McEntee, Jr. ---------------------------------- Name: William J. McEntee, Jr. Title: Vice President and Chief Financial Officer 20 SCHEDULE 1 ---------- PLACE OF BUSINESS LOCATION OF COLLATERAL Securing Parties - ---------------- Interep National Radio Sales, Inc. McGavren Guild, Inc. D & R Radio, Inc. CBS Radio Sales, Inc. Allied Radio Partners, Inc. Caballero Spanish Media L.L.C. Clear Channel Radio, LLC Chief Executive Office and Principal Place of Business for All Securing Parties - ------------------------------------------------------------------------------- 100 Park Avenue, New York, NY 10017 Locations of Collateral ----------------------- 100 Park Avenue New York, NY 10017 31 St. James Ave., Suite 809 Boston, MA 02116 10880 Wilshire Blvd, Suite 1215 Los Angeles, CA 90024 The Bellevue 200 Broad Street Broad & Walnut Streets, 9th Fl. Philadelphia, PA 19102 4800 S.W. Macadam Avenue, Suite 200 Portland. OR 97201 21 2505 Second Avenue, Suite 602 Seattle, WA 98121 Platinum Tower 400 Interstate North Parkway Suite 400 Atlanta, GA 30339 205 North Michican Avenue, Suite 2015 Chicago, IL 60601 Travelers Tower 1 26555 Evergreen Road Southfield, MI 48076 2090 Palm Beach Lakes Blvd. West Palm Beach, FL 33409 60 South Sixth Street Suite 3110 Minneapolis, MN 55402 1300 Coral Way, Suite 204 Miami, FL 33145 118 Broadway, Suite 617 San Antonio, TX 78205 505 Sansome Street, 2nd Floor San Francisco, CA 94111 515 Olive Street, Suite 1507 St. Louis, MO 63101 5000 Quorum, Suite 700 Dallas, TX 75240-7509 3500 Maple Avenue, Suite 1320 Dallas, TX 75219 EX-10.4 13 STOCK PLEDGE AGREEMENT EXHIBIT 10.4 STOCK PLEDGE AGREEMENT This STOCK PLEDGE AGREEMENT (the "Agreement"), dated as of July 2, 1998, by INTEREP NATIONAL RADIO SALES, INC. (the "Company") in favor of BANKBOSTON, N.A., (the "Agent"), as administrative agent for the Lenders from time to time parties to the Credit Agreement (as defined below). WHEREAS, pursuant to a certain Revolving Line of Credit Agreement, dated as of the date hereof, among the Company, MCGAVREN GUILD, INC., D&R RADIO, INC., CBS RADIO SALES, INC., ALLIED RADIO PARTNERS, INC., CABALLERO SPANISH MEDIA L.L.C. and CLEAR CHANNEL RADIO, LLC, the Agent, SUMMIT BANK, as documentation agent, and the Lenders (as amended, restated, modified and supplemented and in effect, from time to time, the "Credit Agreement"; capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement), the Lenders have agreed to make certain Loans to the Borrowers, each of which will derive benefit, directly and indirectly, from such Loans; and WHEREAS, it is a condition precedent to the agreement of the Lenders to make Loans under the Credit Agreement that, among other things, the Company shall have executed and delivered to the Agent certain Security Documents, including, without limitation, this Stock Pledge Agreement; and WHEREAS, this Stock Pledge Agreement is given by the Company in favor of the Agent and the Lenders to secure the payment and performance of all of the Secured Obligations (as hereinafter defined). NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Pledge. As security for the prompt payment, observance and ------ performance when due (by acceleration or otherwise) of the Secured Obligations, the Company hereby pledges and grants to the Agent, for the 2 equal and ratable benefit of the Lenders, a continuing first priority security interest in all of the Company's right, title and interest in and to, whether now existing or hereafter acquired, the following property (collectively, the "Pledged Collateral"): (i) the shares of capital stock of any Subsidiary held by the Company and listed on Schedule I hereto (the "Pledged Shares") (which to the extent permitted by law are, and shall remain at all times until this Agreement terminates, certificated securities) and, if incorporated in a jurisdiction which permits certificates, the certificates representing the Pledged Shares and in all cases any interest of the Company in the entries on the books of any financial intermediary pertaining to the Pledged Shares; (ii) all additional shares of stock of such Subsidiaries from time to time acquired by the Company in any manner (which to the extent permitted by law are, and shall remain at all times until this Agreement terminates, certificated securities) (which shares shall be deemed to be part of the Pledged Shares) and, if incorporated in a jurisdiction which permits certificates, the certificates representing such additional shares and in all cases any interest of the Company in the entries on the books of any financial intermediary pertaining to such additional shares; (iii) all dividends, cash, options, warrants, rights, instruments, distributions, returns of capital, income, profits and other property, interests or proceeds from time to time received, receivable or otherwise distributed to the Company in respect of or in exchange for any or all of the Pledged Shares (collectively, "Distributions"); and (iv) all Proceeds (as defined under the Uniform Commercial Code as in effect in any relevant jurisdiction or under other relevant law) of any of the foregoing, and in any event including, without limitation, any and all (i) proceeds of any insurance, indemnity, warranty or guarantee payable to the Agent or to the Company from time to time with respect to any of the Pledged Collateral, (ii) payments (in any form whatsoever) made or due and payable to the Company from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Pledged Collateral by any Governmental Authority (or any 3 person acting on behalf of a Governmental Authority), (iii) instruments representing obligations to pay amounts in respect of Pledged Shares (iv) products of the Pledged Collateral, and (v) other amounts from time to time paid or payable under or in connection with any of the Pledged Collateral. Section 2. Secured Obligations. This Agreement secures, and the Pledged ------------------- Collateral is collateral security for, the prompt payment and performance in full when due, whether at stated maturity, by acceleration or otherwise, of (i) the obligations of the Company under this Agreement (including, without limitation, the obligation of the Company to repay any and all sums advanced by the Agent or any Lender, at its or their option, in payment of taxes, assessments or other public charges and expenses, or to satisfy Liens, other than those created hereby, on or in the Pledged Collateral or any part thereof which, if not paid, might encumber the Pledged Collateral or any part thereof) and (ii) the obligations of the Borrowers to pay, when due (whether at stated maturity, by acceleration or otherwise), the principal of and interest on the Loans made and to be made to the Borrowers under the Credit Agreement and the Notes evidencing the same, and the commitment fees and Agents' fees and all other amounts payable by any Borrower to the Agents and/or the Lenders thereunder ((i) and (ii) being collectively referred to as the "Secured Obligations"). Section 3. No Release. Nothing set forth in this Agreement shall relieve ---------- the Company from the performance of any term, covenant, condition or agreement on the Company's part to be performed or observed under or in respect of any of the Pledged Collateral or from any liability to any person or entity under or in respect of any of the Pledged Collateral or impose any obligation on the Agent or any Lender to perform or observe any such term, covenant, condition or agreement on the Company's part to be so performed or observed or impose any liability on the Agent or any Lender for any act or omission on the part of the Company relating thereto or for any breach of any representation or warranty on the part of the Company contained in this Agreement or any other Credit Document or in respect of the Pledged Collateral or made in connection herewith or therewith. The obligations of the Company contained in this Section 3 shall survive the termination of this Agreement and the discharge of the Company's other obligations hereunder and under the other Credit Documents. 4 Section 4. Delivery of Pledged Collateral. ------------------------------ (a) All certificates, agreements or instruments representing or evidencing the Pledged Collateral, to the extent not previously delivered to the Agent, shall immediately upon receipt thereof by the Company be delivered to and held by the Agent on behalf of the Lenders pursuant hereto. All Pledged Collateral shall be in suitable form for transfer by delivery and shall be accompanied by duly executed instruments of transfer or assignment in blank (with signatures appropriately guaranteed), all in form and substance satisfactory to the Agent. The Agent shall have the right, at any time after the occurrence and during the continuance of an Event of Default and without notice to the Company, to endorse, assign or otherwise transfer to or to register in the name of the Agent or any of its nominees any or all of the Pledged Collateral. In addition, the Agent shall have the right at any time to exchange certificates representing or evidencing Pledged Collateral for certificates of smaller or larger denominations. (b) If any Subsidiary is incorporated in a jurisdiction which does not permit the use of certificates to evidence equity ownership, then the Company shall cause such Subsidiary, to the extent permitted by applicable law, to record such pledge on the stock register of the issuer, execute any customary stock pledge forms or other documents necessary or appropriate to complete the pledge and give the Agent the right to transfer such Pledged Shares under the terms hereof and provide to the Agent an opinion of counsel, in form and substance satisfactory to it, confirming such pledge. (c) Notwithstanding anything to the contrary in this Agreement, if any Pledged Shares (whether now owned or hereafter acquired) are uncertificated securities, the Company shall promptly notify any Agent thereof, and shall promptly take all actions required to perfect the security interests of the Agent under applicable law (including, in any event, under Sections 8-106 and 9- 115 of the Massachusetts Uniform Commercial Code, if applicable). The Company further agrees to take such actions as the Agent deems reasonably necessary or desirable to effect the foregoing and to permit the Agent to exercise any of its rights and remedies hereunder, and agrees to provide an opinion of counsel reasonably satisfactory to the Agent with respect to any such pledge of uncertificated securities promptly upon request of the Agent. 5 Section 5. Supplements; Further Assurances. ------------------------------- (a) At any time and from time to time, at the expense of the Company, the Company shall promptly execute and deliver all further instruments and documents, including supplemental or additional UCC-1 financing statements, and take all further action that may be necessary or that the Agent or any Lender may request, in order to perfect and protect any pledge or security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. (b) The Company shall, upon obtaining any Pledged Shares, promptly (and in any event within 5 Business Days) deliver to the Agent a pledge amendment in substantially the form of Schedule II hereto (each, a "Pledge Amendment"), in ----------- respect of the additional Pledged Shares which are to be pledged pursuant to this Agreement, and confirming the attachment of the Lien hereby created on and in respect of such Pledged Collateral, and shall deliver to the Agent duly executed instruments of transfer or assignments in blank (with signatures appropriately guaranteed), all in form and substance satisfactory to the Agent. The Company hereby authorizes the Agent to attach each Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on any Pledge Amendment delivered to the Agent shall for all purposes hereunder be considered Pledged Collateral. Section 6. Representations and Warranties. The Company represents and ------------------------------ warrants as follows: (i) The Company is, and at the time of any delivery of any Pledged Collateral to the Agent pursuant to Section 4 of this Agreement will be, the legal and beneficial owner of the Pledged Collateral. All Pledged Collateral is on the date hereof and will be, subject to Section 8 hereof, so owned by the Company free and clear of any Lien or other encumbrance except for the Lien created by this Agreement or Liens permitted pursuant to the Credit Agreement. (ii) The Company has full power, authority and legal right to pledge all the Pledged Collateral pursuant to this Agreement. (iii) To our knowledge, no consent of any party (including, without limitation, any stockholders or creditors of the Company) 6 and no consent, authorization, approval, or other action by, and no notice to or filing with, any Governmental Authority or other person or entity is required either (x) for the pledge by the Company of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Company, (y) for the exercise by the Agent of the voting or other nights provided for in this Agreement, or (z) for the exercise by the Agent of the remedies in respect of the Pledged Collateral pursuant to this Agreement. (iv) To our knowledge, all of the Pledged Shares have been, and to the extent hereafter issued will be upon such issuance, duly authorized and validly issued and fully paid and nonassessable. (v) The Company's chief executive office and principal place of business is at the address set forth in Schedule 11.02 to the Credit Agreement. (vi) To our knowledge, as of the date hereof, (x) the Pledged Shares identified in Schedule I constitute the percentage of the issued and ---------- outstanding shares of capital stock of the Subsidiaries as identified in Schedule I, and (y) Schedule I constitutes a true and complete description ---------- ---------- of the Pledged Shares. (vii) The Company has delivered to the Agent all certificates representing the Pledged Shares and such delivery and pledge of the Pledged Collateral pursuant to this Agreement creates a valid and perfected first priority security interest or the comparable interest under foreign law in the Pledged Collateral securing the payment of the Secured Obligations pursuant to the Uniform Commercial Code in effect in each applicable jurisdiction. This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to general principles of equity and bankruptcy, insolvency, fraudulent conveyance, moratorium or similar laws of general application affecting the rights and remedies of creditors. (viii) All information set forth herein relating to the Pledged Collateral is accurate and complete in all respects. 7 (ix) The pledge of the Pledged Collateral pursuant to this Agreement does not violate Regulation G, T, U or X or any other provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator or Governmental Authority, or the certificate of incorporation or bylaws of the Company. (x) The Company at all times will be the beneficial owner of the Pledged Collateral. Section 7. Voting Rights, Distributions: Etc. --------------------------------- (a) So long as no Event of Default shall have occurred and be continuing: (i) The Company shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Shares or any part thereof for any purpose not inconsistent with the terms or purpose of this Agreement or any of the other Credit Documents; provided, however, that the -------- ------- Company shall not in any event exercise such rights in any manner which may have a material adverse effect on the value of the Pledged Collateral or the security intended to be provided by this Agreement. (ii) Subject to the provisions of Section 1 hereof and the terms of the Agreement, the Company shall be entitled to receive and retain, and to utilize free and clear of the Lien of this Agreement, any and all Distributions; provided, however, that any and all such Distribution -------- ------- consisting of rights or interests in the form of shares of stock shall be, and shall be forthwith delivered to the Agent to hold as, Pledged Collateral and shall, if received by the Company, be received in trust for the benefit of the Lenders, be segregated from the other property or funds of the Company, and be forthwith delivered to the Agent as Pledged Collateral in the same form as so received (with any necessary endorsement and stock powers executed in blank). (iii) The Agent shall be deemed without further action or formality to have granted to the Company all necessary consents relating to voting rights and shall, if necessary, upon written request of the Company and at the Company's sole expense, from 8 time to time execute and deliver (or cause to be executed and delivered) to the Company all such instruments as the Company may reasonably request in order to permit the Company to exercise the voting and other rights which it is entitled to exercise pursuant to Section 7(a)(i) hereof and to receive the Distributions which it is authorized to receive and retain pursuant to Section 7(a)(ii) hereof. (b) Upon the occurrence and during the continuance of an Event of Default: (i) All rights of the Company to exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 7(a)(i) hereof without any action or the giving of any notice shall cease, and all such rights shall thereupon become vested in the Agent, which shall thereupon have the sole right to exercise such voting and other consensual rights. (ii) All rights of the Company to receive Distributions which it would otherwise be authorized to receive and retain pursuant to Section 7(a)(ii) hereof shall cease and all such rights shall thereupon become vested in the Agent, which shall thereupon have the sole right to receive and hold as Pledged Collateral such Distributions. (c) The Company shall, at its own expense, from time to time execute and deliver to the Agent appropriate instruments as the Agent or any Lender may request in order to permit the Agent to exercise the voting and other rights which it may be entitled to exercise pursuant to Section 7(b)(i) hereof and to receive all Distributions which it may be entitled to receive under Section 7(b)(ii) hereof. (d) All Distributions which are received by the Company contrary to the provisions of Section 7(b)(ii) hereof shall be received in trust for the benefit of the Lenders, shall be segregated from other funds of the Company and shall immediately be paid over to the Agent as Pledged Collateral in the same form as so received (with any necessary endorsement). Section 8. Transfers and Other Liens;, Additional Equity Interests; -------------------------------------------------------- Principal Office. - ---------------- 9 (a) The Company shall not (i) sell, convey, assign or otherwise dispose of, or grant any option, right or warrant with respect to, any of the Pledged Collateral, (ii) create or a permit to exist any Lien or other encumbrance upon or with respect to any Pledged Collateral other than the Lien and security interest granted to the Agent for the benefit of the Lenders under this Agreement, or (iii) permit any Subsidiary to merge, consolidate or change its legal form, except as expressly permitted by the Credit Agreement and, in the case of any Subsidiary the shares in which have been pledged hereunder, unless (i) all of the outstanding capital stock of the surviving or resulting corporation is, upon such merger or consolidation, pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding shares of any other constituent corporation, or (ii) the surviving or resulting corporation is the Company and any cash, securities or other property distributed in connection therewith is distributed to the Company. (b) The Company shall (i) cause each Subsidiary not to issue any shares of stock in addition to or in substitution for the Pledged Shares issued by such Subsidiaries, except to the Company, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock which are required to be pledged hereunder. (c) The Company shall not change its chief executive office and principal place of business, and shall not change its corporate name or the name under which it is conducting business, without giving the Agent not less than 45 days prior written notice of such change. Section 9. Reasonable Care. The Agent shall be deemed to have exercised --------------- reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equivalent to that which the Agent, in its individual capacity, accords its own property consisting of similar instruments or interests, it being understood that the Agent shall not have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any person or entity with respect to any Pledged Collateral. Section 10. Remedies upon Default; Decisions Relating to Exercise ----------------------------------------------------- 10 of Remedies. - ----------- (a) If any Event of Default shall have occurred and be continuing, the Agent shall be entitled to exercise any of the rights, powers and remedies (whether vested in it by this Agreement or by any other Credit Document or by law) for the protection and enforcement of the rights of the Lenders in respect of the Pledged Collateral, and the Agent may, at the instruction of the Majority Lenders, in addition to other rights and remedies provided for herein or otherwise available to it to be exercised from time to time, do any one or more of the following acts, which the Company hereby agrees to be commercially reasonable: (i) retain and apply the Distributions to the Secured Obligations as provided for in Section 11 hereof, (ii) transfer all or any part of the Pledged Collateral into the Agent's name or the name of its nominee or nominees, and (ii) exercise all the rights and remedies of a secured party on default under the Uniform Commercial Code in effect in any applicable jurisdiction at that time, and the Agent may also in its sole discretion, without notice except as specified below, sell the Pledged Collateral or any part thereof (including, without limitation, any partial interest in the Pledged Shares) in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Agent may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Pledged Collateral. The Agent, any Lender or any of their respective affiliates may be the purchaser of any or all of the Pledged Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold at such sale, to use and apply any of the Secured Obligations owed to such person or entity as a credit on account of the purchase price of any Pledged Collateral payable by such Person at such sale. Each purchaser at any such sale shall acquire the property sold absolutely free from any claim or right on the part of the Company, and the Company hereby waives (to the full extent permitted by law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Company acknowledges and agrees that, to the extent notice of sale shall be required by law, 5 days' notice to the Company of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification to the Company. The Agent shall not be obligated to make any sale of 11 Pledged Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Company hereby waives any claims against the Agent or any Lender arising by reason of the fact that the price at which any Pledged Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Agent accepts the first offer received and does not offer such Pledged Collateral to more than one offeree. (b) The Company recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws, the Agent may be compelled, with respect to any sale of all or any part of the Pledged Collateral, to limit purchasers to Persons who will agree, among other things, to acquire the Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. The Company acknowledges that any such private sales may be at prices and on terms less favorable to the Agent than those obtainable through a public sale without such restrictions (including, without limitation, a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would agree to do so. (c) If the Agent determines to exercise its right to sell any or all of the Pledged Collateral, upon written request, the Company shall from time to time furnish to the Agent all such information as the Agent may request in order to determine the number of Pledged Shares included in the Pledged Collateral which may be sold by the Agent as exempt transactions under the Securities Act and the rules of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. 12 (d) The Company recognizes that, by reason of certain prohibitions contained in laws, rules, regulations or orders of any foreign governmental authority, the Agent may be compelled, with respect to any sale of all or any part of the Pledged Collateral, to limit purchasers to those who meet the requirements of such foreign governmental authority. The Company acknowledges that any such sales may be at prices and on terms less favorable to the Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agree that any such restricted sale shall be deemed to have been made in a commercially reasonable manner and that the Agent shall have no obligation to engage in public sales. (e) In addition to any of the other rights and remedies hereunder, the Agent shall have the right to institute a proceeding seeking specific performance in connection with any of the agreements or obligations hereunder. Section 11. Application of Proceeds. All Distributions held from time to ----------------------- time by the Agent for the benefit of the Lenders and all cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral pursuant to the exercise by the Agent of its remedies as a secured creditor as provided in Section 10 hereof shall be applied from time to time by the Agent in accordance with the terms and provisions of the Credit Agreement. Section 12. Expenses. The Company shall upon demand pay to the Agent and -------- any Lender the amount of any and all reasonable out of pocket expenses, including the reasonable fees and expenses of its counsel and the reasonable fees and expenses of any experts and agents, which the Agent or such Lender may incur in connection with (i) the collection of the Secured Obligations, (ii) the administration of this Agreement, (iii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Collateral, (iv) the exercise or enforcement of any of the rights of the Agent or such Lender hereunder or (v) the failure by the Company to perform or observe any of the provisions hereof. All amounts payable by the Company under this Section 12 shall be due upon demand and shall be part of the Secured Obligations. The Company's obligations under this Section shall survive the termination of this Agreement and the discharge of the Company's other obligations hereunder. 13 Section 13. No Waiver; Cumulative Remedies. ------------------------------ (a) No failure on the part of the Agent or any Lender to exercise, no course of dealing with respect to, and no delay on the part of the Agent or any Lender in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein provided are cumulative and are not exclusive of any remedies provided by law. (b) In the event the Agent shall have instituted any proceeding to enforce any right, power or remedy under this instrument by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Agent, then and in every such case, the Company and the Agent shall be restored to their respective former positions and rights hereunder with respect to the Pledged Collateral, and all rights, remedies and powers of the Agent shall continue as if no such proceeding had been instituted. Section 14. The Agent May Perform; The Agent Appointed Attorney-in-Fact. ----------------------------------------------------------- If the Company shall fail to do any act or thing that it has covenanted to do hereunder or any warranty on the part of the Company contained herein shall be breached, the Agent may (but shall not be obligated to) do the same or cause it to be done or remedy any such breach, and may expend funds for such purpose. Any and all amounts so expended by the Agent shall be paid by the Company promptly upon demand therefor, with interest at the highest rate then in effect under the Credit Agreement during the period from and including the date so expended to the date of repayment. The Company's obligations under this Section 14 shall survive the termination of this Agreement and the discharge of the Company's other obligations hereunder and under the Credit Documents. The Company hereby appoints the Agent its attorney-in-fact with an interest, with full authority in the place and stead of the Company and in the name of the Company, or otherwise, from time to time in the Agent's discretion to take any action and to execute any instrument consistent with the terms of this Agreement and the other Credit Documents which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement. The foregoing grant of authority is a power of attorney coupled with an interest and such 14 appointment shall be irrevocable for the term of this Agreement. The Company hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof other than anything that constitutes gross negligence or willful misconduct by such attorney. Section 15. Indemnity. --------- (a) Indemnity. The Company hereby agrees to assume liability for, and does --------- hereby agree to indemnify, protect, save and keep harmless the Agent, the Lenders and their respective agents and servants, from and against, any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits and reasonable costs and expenses of whatsoever kind or nature, imposed on, incurred by or asserted against the Agent, the Lenders or their respective agents and servants, in any way relating to or arising out of this Agreement, or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, merchantability, fitness, sale, return or other disposition of any Pledged Collateral (other than by reason of the respective indemnitees' own gross negligence or willful misconduct). Without limiting the generality of the foregoing, the Company hereby agrees to reimburse the Agent and the Lenders for all costs, liabilities or expenses reasonably incurred by them pursuant to any of the duties hereby or thereby created or in the exercise of any duty, right, remedy or power herein or therein imposed or conferred upon them (other than any such costs, liabilities and expenses resulting from the Agent's gross negligence or willful misconduct). (b) Survival. The obligations of the Company contained in this Section 15 -------- shall survive the termination of this Agreement and the discharge of the Company's other obligations hereunder and under the other Credit Documents. Section 16. Amendments; Etc. This Agreement may not be amended or --------------- modified except by written agreement of the Company and the Agent (with the consent of the Majority Lenders), and no consent or waiver hereunder shall be valid unless in writing and signed by the Person or Persons giving such consent or waiver, provided that any amendment or modification that releases all or a significant portion of the Pledged Collateral hereunder shall require the consent of each of the Lenders. 15 Section 17. Termination. When all the Secured Obligations (other than ----------- Secured Obligations in the nature of continuing indemnities and expense reimbursement obligations not yet due and payable) have been indefeasibly paid in full in cash and have been terminated this Agreement shall terminate. Upon termination of this Agreement, the Agent shall, upon the request and at the expense of the Company, forthwith assign, transfer and deliver to the company, against receipt and without recourse to or warranty by the Agent or the Lenders, such of the Pledged Collateral as may be in the possession of the Agent and as shall not have been sold or otherwise applied pursuant to the terms hereof, on the order of and at the expense of the Company, and proper instruments (including UCC termination statements on Form UCC-3) acknowledging the termination of this Agreement. Section 18. Notices. All notices, requests and demands will be given to ------- or made upon the respective parties hereto in writing (the term "in writing" to ---------- include reference to communications by telex, telegram, cable or telecopier provided the same are promptly confirmed by letter) at their respective addresses specified in Schedule 11.02 of the Credit Agreement or as to any party at such other address as may be designated by it in a written notice to all other parties. All notices, requests, consents and demands hereunder will be effective when personally delivered or when duly deposited in the mails, delivered to the telegraph office or telexed or telecopied, addressed as aforesaid. Section 19. Assignment. Subject to the provisions of Section 11.06 of the ---------- Credit Agreement, it is understood that the Lenders may from time to time assign their rights in respect of the Secured Obligations, and the word "Lenders" when used herein shall be deemed to mean the Lenders and their respective successors and assignees. Section 20. Governing Law. This agreement shall be governed by, and shall ------------- be construed and enforced in accordance with, the laws of The Commonwealth of Massachusetts. Section 21. Severability of Provisions. Any provision of this Agreement -------------------------- which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 16 Section 22. Execution in Counterparts. This Agreement and any amendments, ------------------------- waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement. Section 23. Headings. The Section headings used in this Agreement are for -------- convenience of reference only and shall not affect the construction of this Agreement. Section 24. Credit Agreement Provisions. For purposes hereof, the --------------------------- provisions of Sections 10.09, 11.03 and 11.04 of the Credit Agreement are hereby incorporated, mutatis mutandis, as if set forth herein in full. So long as any ------- -------- Secured Obligations shall remain outstanding hereunder, such provisions, as so incorporated, shall survive the payment in full of the Loans, and the termination of the Credit Agreement. Section 25. Future Advances. This Agreement shall secure payment of any --------------- amounts advanced from time to time pursuant to the Credit Agreement. IN WITNESS WHEREOF, the Company has caused this Stock Pledge Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. INTEREP NATIONAL RADIO SALES, INC. By: /s/ Marc G. Guild ---------------------------------- Name: Mark G. Guild Title: President, Marketing Division SCHEDULE I ----------
CERT- NUMBER NUMBER OF CLASS OF PAR IFICATE OF OUTSTANDING ISSUER STOCK VALUE NO(S) SHARES PLEDGED SHARES - ---------------- ----------------- ------------------ ------------------ ------------------ ---------------------- McGavren Common No par 3 200 200 Guild, Inc. Common No par 4 43.25 43.25 Common No par 166 6.75 6.75 D&R Radio, Common No par 10 196 196 Inc. CBS Radio Common No par 1 10 10 Sales, Inc. Allied Radio Common $1.00 par 7 1790 1790 Partners, Inc.
2 SCHEDULE II ----------- PLEDGE AMENDMENT ---------------- This Pledge Amendment, dated , , is delivered pursuant to ---------- --- Section 5(b) of the Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to the Stock Pledge Agreement, dated as of September 19, 1997, between, among others, the undersigned and BankBoston, N.A., as agent (the "Agreement"; capitalized terms defined therein being used herein as therein defined). and that the Pledged Shares listed on this Pledge Amendment shall be deemed to be and shall become part of the Pledged Collateral and shall secure all Secured Obligations. INTEREP NATIONAL RADIO SALES, INC. By: -------------------------------------- Name: Title: EX-10.5 14 AGREEMENT OF LEASE EXHIBIT 10.5 AGREEMENT OF LEASE between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA Landlord, and INTEREP NATIONAL RADIO SALES, INC., Tenant, Dated: As of December 31, 1992 PREMISES: -------- Entire Fifth (5th) Floor Portion of Sixth (6th) Floor 100 Park Avenue New York, New York TABLE OF CONTENTS
Page ---- ARTICLE 1 RENT............................................. 1 ARTICLE 2 PREPARATION OF THE DEMISED PREMISES.............. 3 ARTICLE 3 ADJUSTMENTS OF RENT.............................. 4 ARTICLE 4 ELECTRICITY...................................... 13 ARTICLE 5 USE.............................................. 15 ARTICLE 6 ALTERATIONS AND INSTALLATIONS.................... 15 ARTICLE 7 REPAIRS.......................................... 19 ARTICLE 8 REQUIREMENTS OF LAW.............................. 21 ARTICLE 9 INSURANCE, LOSS, REIMBURSEMENT, LIABILITY........ 22 ARTICLE 10 DAMAGE BY FIRE OR OTHER CAUSE.................... 25 ARTICLE 11 ASSIGNMENT, MORTGAGING, SUBLETTING, ETC.......... 27 ARTICLE 12 CERTIFICATE OF OCCUPANCY......................... 36 ARTICLE 13 ADJACENT EXCAVATION; SHORING..................... 36 ARTICLE 14 CONDEMNATION..................................... 36 ARTICLE 15 ACCESS TO DEMISED PREMISES; CHANGES.............. 38 ARTICLE 16 CONDITIONS OF LIMITATION......................... 39 ARTICLE 17 RE-ENTRY BY LANDLORD; INJUNCTION................. 41 ARTICLE 18 DAMAGES.......................................... 42 ARTICLE 19 LANDLORDS RIGHT TO PERFORM TENANT'S OBLIGATIONS.. 44
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Page ---- ARTICLE 20 QUIET ENJOYMENT.................................. 44 ARTICLE 21 SERVICES AND EQUIPMENT........................... 44 ARTICLE 22 DEFINITIONS...................................... 47 ARTICLE 23 INVALIDITY OF ANY PROVISION...................... 48 ARTICLE 24 BROKERAGE........................................ 49 ARTICLE 25 SUBORDINATION.................................... 49 ARTICLE 26 CERTIFICATE OF TENANT............................ 52 ARTICLE 27 LEGAL PROCEEDINGS; WAIVER OF JURY TRIAL.......... 52 ARTICLE 28 SURRENDER OF PREMISES............................ 53 ARTICLE 29 RULES AND REGULATIONS............................ 53 ARTICLE 30 CONSENTS AND APPROVALS........................... 53 ARTICLE 31 NOTICES.......................................... 54 ARTICLE 32 NO WAIVER........................................ 54 ARTICLE 33 CAPTIONS......................................... 55 ARTICLE 34 INABILITY TO PERFORM............................. 55 ARTICLE 35 NO REPRESENTATIONS BY LANDLORD................... 56 ARTICLE 36 NAME OF BUILDING................................. 56 ARTICLE 37 RESTRICTIONS UPON USE............................ 56 ARTICLE 38 ARBITRATION...................................... 56 ARTICLE 39 INDEMNITY........................................ 57
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Page ---- ARTICLE 40 MEMORANDUM OF LEASE.............................. 57 ARTICLE 41 SECURITY......................................... 57 ARTICLE 42 MISCELLANEOUS.................................... 60 ARTICLE 43 EXTENSION OF TERM................................ 62 ARTICLE 44 RIGHT OF FIRST OFFERING.......................... 65 ARTICLE 45 LAYOUT AND FINISH................................ 67 ARTICLE 46 TENANT'S WORK CREDIT............................. 70 ARTICLE 47 EXISTING LEASE................................... 71
SCHEDULES A - Floor Plan B - Rules and Regulations C - Cleaning Specifications D - Approved Contractors E - Freight Elevator Rules and Regulations F - Air Conditioning Specifications iii AGREEMENT OF LEASE, made as of the 31st day of December, 1992, between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an office at 10 Rockefeller Plaza, 15th Floor, New York, New York 10020 (hereinafter referred to as "Landlord") and INTEREP NATIONAL RADIO SALES, INC., a New York corporation, having an office at 100 Park Avenue, New York, New York, Attention: Chief Financial Officer (hereinafter referred to as "Tenant"). W I T N E S S E T H: ------------------- Landlord hereby leases and Tenant hereby hires from Landlord, in the building (hereinafter referred to as the "Building") known as 100 Park Avenue, New York, New York, the following space: the entire rentable space on the fifth (5th) floor and a portion of the rentable space on the sixth (6th) floor as shown hatched on the plans annexed hereto as Schedule A (which space is hereinafter referred to as "the demised premises"); for a term commencing April 1, 1993 (such date on which the term of the Lease commences is hereinafter referred to as the "Commencement Date"), and which shall end on March 31, 2005 (such date on which the term of the Lease expires is hereinafter referred to as the "Expiration Date") or until such term shall sooner cease and terminate as hereinafter provided. The parties hereto, for themselves, their heirs, distributees, executors, administrators, legal representatives, trustees, successors and assigns, hereby covenant as follows: ARTICLE 1 RENT 1.01. Tenant shall pay to Landlord a fixed annual rent (hereinafter referred to as "fixed annual rent") at the rate of: (i) ONE MILLION EIGHT HUNDRED SIXTEEN THOUSAND TWO HUNDRED SIXTY-FOUR and 40/100 ($1,816,264.40) DOLLARS per annum for the period commencing on the Commencement Date and ending on the last day of the month immediately preceding the month in which occurs the third (3rd) anniversary of the Commencement Date; (ii) ONE MILLION NINE HUNDRED FORTY-NINE THOUSAND FIVE HUNDRED NINETY-TWO and 40/100 ($1,949,592.40) DOLLARS per annum for the period commencing on the first day of the month in which occurs the third (3rd) anniversary of the Commencement Date and ending on the last day of the month immediately preceding tho month in which occurs the sixth (6th) anniversary of the Commencement Date; 1 (iii) TWO MILLION EIGHTY-TWO THOUSAND NINE HUNDRED TWENTY and 40/100 ($2,082,920.40) DOLLARS per annum for the period commencing on the first day of the month in which occurs the sixth (6th) anniversary of the Commencement Date and ending on the last day of the month immediately preceding the month in which occurs the ninth (9th) anniversary of the Commencement Date; and (iv) TWO MILLION TWO HUNDRED SIXTEEN THOUSAND TWO HUNDRED FORTY-EIGHT and 40/100 ($2,216,248.40) DOLLARS per annum for the period commencing on the first day of the month in which occurs the ninth (9th) anniversary of the Commencement Date and ending on the Expiration Date. Tenant agrees to pay the fixed annual rent in lawful money of the United States of America, in equal monthly installments in advance on the first day of each calendar month during said term, at the office of Landlord or such other place in the United States of America as Landlord may designate, without any setoff or deduction whatsoever, except such deduction as may be occasioned by the occurrence of any event permitting or requiring a deduction from or abatement of rent as specifically set forth in Articles 10 and 14 hereof. Should the obligation to pay fixed annual rent commence on any day other than on the first day of a mouth, then the fixed annual rent for such month shall be prorated on a per diem basis. 1.02. Tenant shall pay the fixed annual rent and additional rent as above and as hereinafter provided, by good and sufficient check (subject to collection) drawn on a New York City bank which is a member of the New York Clearing House Association or a successor thereto. All sums other than fixed annual rent payable, by Tenant hereunder shall be deemed additional rent (for default in the payment of which Landlord shall have the same remedies as for a default in the payment of fixed annual rent), and shall be payable on demand, unless other payment dates are hereinafter provided. 1.03. If Tenant shall fail to pay when due any installment of fixed annual rent or any payment of additional rent for a period of 10 days after such installment or payment shall have become due, Tenant shall pay interest thereon at the Interest Rate (as such term is defined in Article 22 hereof), from the date when such installment or payment shall have become due to the date of the payment thereof, and such interest shall be deemed additional rent. 1.04. If any of the fixed annual rent or additional rent payable under the terms and provisions of this Lease shall be or become uncollectible reduced or required to be refunded because of any Legal Requirement (as such term is defined in Article 22 hereof), Tenant shall enter into such reasonable agreement(s) and take such other reasonable steps (without additional expense to Tenant), as Landlord may request and as may be, legally permissible to permit Landlord to collect the maximum rents which from time to time during the this Lease (a) the rents shall become and thereafter be payable in accordance with the amounts reserved herein for the periods following such termination and (b) Tenant shall pay to Landlord, to the maximum extent legally permissible, an amount (the "Uncollected Rent") equal to (i) the rents which would 2 have been paid pursuant to this Lease, but for such legal rent restriction less (ii) the rents paid by Tenant during the period such legal rent restriction was in effect; provided that (a) if Tenant is not in default under any of the terms and conditions of this Lease and (b) if the amount of Uncollected Rent exceeds six (6) times the monthly installments of fixed annual rent payable thereafter, then Tenant shall pay to Landlord the Uncollected Rent in twelve (12) equal monthly installments, commencing on the first (1st) day of the month after the termination of such legal rent restriction and continuing thereafter on the first (1st) day of each month during such twelve, (12) month period until Tenant shall have paid to Landlord the entire amount of Uncollected Rent, provided that in the event that the Lease shall expire or be, terminated after the termination of such legal rent restriction and prior to the full payment of the Uncollected Rent, the entire unpaid amount thereof shall immediately be due and payable by Tenant to Landlord. 1.05. Notwithstanding anything to the contrary in Section 1.01 hereof, the fixed annual rent payable hereunder (but expressly excluding any additional rent payable hereunder) shall be abated for the period (the "abatement period") commencing on the Commencement Date and ending April 30, 1994. ARTICLE 2 PREPARATION OF THE DEMISED PREMISES 2.01. Tenant acknowledges that Tenant has inspected the demised premises and is fully acquainted with the, demised premises and the condition thereof and agrees to accept the demised premises absolutely "as is" in their condition and state of repair existing as of the date hereof and further agrees that Landlord shall not be required to perform any work, supply any materials or incur any expense to prepare the demised premises for Tenant's occupancy, except that Landlord (i) has performed the work detailed A(1) through A(4) hereafter all of which Tenant acknowledges has been satisfactorily completed as of the date of execution hereof, and (ii) shall perform, promptly following the date, of execution hereof, at Landlord's sole, cost and expense, the work and installations detailed B(l) hereafter (hereinafter referred to as "Landlord's Work"), all of which work is being or has been (as the case may be) performed in the sixth (6th) floor portion (hereinafter called the "6th Floor Space,") of the demised promises using materials of a manufacture, material, design, capacity and finish and otherwise in a manner, selected by Landlord as the standard of the Building (hereinafter called "Building Standard"): A(1). Demolish the 6th Floor Space except for core areas; A(2). Remove asbestos from the 6th Floor Space as required by law and as required by the performance of Landlord's Work; A(3). Provide and install three new Building Standard bathrooms in the 6th Floor Space which shall comply with both Local Law 58 and the Americans with 3 Disabilities Act of 1990, Public Law 101-336, 42 U.S.A. Secs. 12110 et seq. ("Disabilities Act"); and A(4). Replace existing lotline windows in the 6th Floor Space with now Building Standard clear glass windows, compatible with the clear glass windows in the balance of the 6th floor. B(1). Demise the 6th Floor Space as per plan annexed hereto as Schedule A. 2.02. Tenant acknowledges that Tenant agrees to accept the fifth (5th) floor portion of the demised promises absolutely "as is" in the condition and state of repair existing as of the date hereof and further agrees that Landlord shall not be required to perform any work, supply any materials or incur any expense to prepare the fifth (5th) floor portion of the demised promises for Tenant's occupancy. 2.03. In addition to Landlord's Work to the 6th Floor Space, Landlord shall within a reasonable time after the completion of Tenant's Work decorate the common areas on the sixth (6th) floor of the Building to the extent customary and standard for the decorating of such common areas in first-class office buildings comparable to the Building. ARTICLE 3 ADJUSTMENTS OF RENT 3.01. For the purposes of this Article 3, the following definitions shall apply: (a) The term "Base Tax" shall be deemed to mean fifty (50%) Percent of the aggregate of (i) the Taxes (as hereinafter defined) for the New York City real estate tax fiscal year commencing on July 1, 1992 and ending June 30, 1993 and (b) the Taxes for the New York City real estate tax fiscal year commencing on July 1, 1993 and ending June 30, 1994. (b) The term "Tenant's Tax Proportionate Share" shall be deemed to mean 8.07 (8.07%) percent. For the purpose of this calculation, the parties hereto have agreed that the demised premises shall be deemed to have a rentable area of 66,664 rentable square foot. (c) The term "Taxes" shall mean all real estate taxes, assessments, governmental levies, municipal taxes, county taxes or any other governmental charge, general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind or nature whatsoever, which are or may be assessed, levied or imposed upon all or any part of the Land, the Building and the sidewalks, plazas or streets in front of or adjacent thereto, including any tax, excise or fee measured by or payable with respect to any rent, and levied against Landlord and/or the Land and/or Building, under the laws of the United States, the State of New York, or any 4 political subdivision thereof. If, due to a future change in the method of taxation or in the taxing authority, a new or additional real estate tax, or a franchise, income, transit, profit or other tax or governmental imposition, however designated, shall be levied against Landlord (in its capacity as the owner or lessee of the Land and/or Building), and/or the Land and/or Building, in addition to, or in substitution in whole or in part for any tax which would constitute "Taxes", or in lieu of additional Taxes, such tax or imposition shall be deemed for the purposes hereof to be included within the term "Taxes". The term "Taxes" shall in no event include (i) any taxes included as Operating Expenses (as hereinafter defined), (ii) any estate or inheritance taxes, (iii) except as set forth in the preceding sentence, any taxes based on Landlord's income, or (iv) except as set forth in the preceding sentence, any franchise taxes relating to or arising out of the corporate status of Landlord. To the extent that Taxes hereunder may include income or franchise taxes, the same shall be determined as though the Land and Building (or Landlord's leasehold interest therein) were Landlord's only asset and the revenues derived therefrom were Landlord's only income. (d) The term "Tax Year" shall mean each period of twelve months, commencing on the first day of July of each such period, in which occurs any part of the term of this Lease or such other period of twelve months occurring during the term of this Lease as hereafter may be duly adopted as the fiscal year for real estate tax purposes of the City of New York. (e) The term "Operating Year" shall mean the full calendar year in which the term of this Lease commences and each succeeding calendar year thereafter. (f) The term "Base Year" shall mean the calendar year 1993. (g) "Operating expenses" shall mean the total of all the costs and expenses incurred or borne by Landlord in connection with the operation and maintenance of the Building, and the services provided tenants therein, including all expenses incurred as a result of Landlord's compliance with any of its obligations hereunder. Operating expenses shall include, without being limited thereto, the following (i) salaries, wages, medical, surgical and general welfare benefits (including group life insurance) and pension payments of employees of the managing agent for the Building (or, in the event of a successor Landlord or a change, in the agreement practices of Landlord, the employees of such managing agent or Landlord) engaged in the operation and maintenance of the Building; (ii) payroll taxes, workmen's compensation, uniforms and dry cleaning for the employees referred to in subdivision (i); (iii) the cost of all charges for steam, heat, ventilation, air-conditioning and water (including water and sewer rentals) furnished to the Building (including common areas thereof), together with any taxes on any such utilities; (iv) the cost of all charges for rent, casualty, war risk (if obtainable, from the United States government), liability and other types of insurances (v) the cost of all building and cleaning supplies and charges for telephone for the Building and cleaning of the Building, including common areas; (vi) the cost of all charges for management, cleaning and service contracts for any areas of the Building; (vii) the cost of Building electric current (for the purposes of this clause (vii), the cost of Building electric current shall be deemed to mean the Cost of all 5 e1ectricity purchased, including any taxes thereon or fuel or other adjustments in connection therewith, for use in the Building other than that which is furnished to the demised space of tenants in the Building; the parties agree that forty (40%) percent of the Building's payment to the Public utility for the purchase of electricity shall be deemed to be payment for Building electric current); (viii) the cost relating to the elevators and escalators; (ix) the cost relating to protection and security; (x) the cost relating to lobby decorations and interior and exterior landscape maintenance; (xi) repairs, replacements and improvements performed after the Base Year which are appropriate for the continued operation of the Building as a first class office building (no such capital expenditures incurred during the Base Year shall be included in Operating Expenses for the Base Year nor shall any unamortized portion of such expenditure incurred during the Base Year be included in Operating Expenses of any subsequent Operating Year); (xii) painting of non- tenanted areas; (xiii) professional and consulting fees; (xiv) association fees or dues; (xv) the cost of capital expenditures made to the Building by reason of the laws and requirements of any public authorities or the requirements of insurance bodies incurred after the Base Year (no such capital expenditures incurred during the Base Year shall be included in Operating Expenses for the Base Year nor shall any unamortized portion of such expenditure incurred during the Base Year be included in Operating Expenses of any subsequent Operating Year), provided, however, that if under generally accepted accounting principles consistently applied, any of the costs referred to in clause (xi) or this clause (xv) are required to be, capitalized, then such capitalized costs, together with interest on the, Amortized portion thereof at the Interest Rate (as defined in Section 22.03 hereof) at the time of Landlord having incurred said costs, shall be amortized or depreciated, as the case may be, over a period of time which shall be the shorter of (A) the useful life of the item in question, as reasonably determined by Landlord; or (B) ten (10) years; and (xvi) the rental value of Landlord's Building office and any other promises in the Building utilized by the personnel of either Landlord or Landlord's affiliates or contractors (to the extent that the amount of such rental value is customary and standard for owners of first-class office buildings in midtown Manhattan comparable to the Building), in connection with the repair, replacement, maintenance, operation and/or security thereof, and all Building office expenses, such as telephone, utility, stationery and similar expenses incurred in connection therewith. The term "Operating Expenses", as used and defined under, this Subsection (g), shall not, however, include the following item: (1) depreciation and amortization (except as provided above in this Section 3.01(g); (2) Interest on and amortization of debts; (3) the cost of tenant improvements made for new or existing tenants of the Building and all other costs incurred in preparing space for now or existing tenants; (4) leasing or brokerage commissions in connection with the procurement of tenants or other occupants of the Building; 6 (5) financing or refinancing costs; (6) the cost of any work or services performed for any tenants of the Building, to the extent that such work or services are in excess of the work or services which Landlord is required to furnish or actually furnishes to Tenant under this Lease; (7) Taxes; (8) franchise, gains, inheritance, or income taxes imposed upon Landlord; (9) any rent, additional rent or other charges under any ground leases or superior leases; (10) salaries and fringe and other benefits of personnel above the grade of building manager and all other expenses and taxes relating thereto; (11) expenses in an amount equal to proceeds of insurance, condemnation, refund, credit, warranty or indemnity received by Landlord, to the extent such proceeds are compensation for expenses which would otherwise be included in Operating Expenses; provided, however, in the event that any reimbursement refund or credit in received or receivable by Landlord in a later Operating Year, Tenant's Proportionate Share of such reimbursement (less the cost incurred by Landlord in obtaining the same) shall be applied against the Operating Expenses for such later Operating Year as and when received, or if such later Operating Year is not one for which Tenant shall be obligated to make a payment towards Operating Expenses, Landlord shall refund such amount to Tenant within thirty (30) days after Landlord's receipt of such reimbursement; (12) any other expenditure which would otherwise be an Operating Expense, to the extent Landlord in reimbursed directly therefor by a tenant, including Tenant (excluding, however, any reimbursement from any tenant pursuant to rent provisions in the nature of an operating expense escalation); (13) any costs representing an amount paid to an affiliate of Landlord to the extent that same is in excess of the amount which would have been paid in the absence of such relationship; (14) advertising and promotional expenditures; (15) the costs and expenses of any judgment, settlement or arbitration award resulting from any tort liability of Landlord and any attorneys' fees or other expenses incurred in connection therewith, except that the cost of performing any repair, 7 alteration or other work which would otherwise be includable in Operating Expenses to the extent included in any such Judgment, settlement or arbitration award shall not be excluded hereby; (16) the cost of installing, maintaining and operating any observatory, broadcasting facility, newsstand, athletic or recreational club or other similar specialty service, provided, however, this exclusion shall not apply to the cost of any building services furnished to an area of space leased to another tenant and used by such tenant for such purposes, except as otherwise provided in clause (6) of this Section 3.01(g); (17) cost of alterations and improvements made to cure conditions existing as of the Commencement Date, which conditions, as of the Commencement Date, constitute a violation of Legal Requirements (as defined in Article 22 hereof) in effect as of the Commencement Dates provided, however, that costs to comply with any re-interpretation, amendment or modification of such Legal Requirements which are enacted, adopted or enforced after the Commencement Date shall be includable in Operating Expenses); (18) costs and expenses otherwise included in Operating Expenses to the extent incurred due to any misrepresentations expressly made herein by Landlord; (19) salaries paid to personnel in commercial concessions operated in the Building by Landlord or any affiliate of Landlord; (20) the cost of any reconstruction made in accordance with Articles 10 and 14 of this Lease, except that in connection therewith, any amount equal to the deductibles under Landlord's insurance policies, provided such deductibles are not substantially higher than the deductibles customarily carried by landlords of first-class office buildings in midtown Manhattan comparable to the Building, may be included in Operating Expenses; and (21) capital expenditures (which for the purposes hereof, shall mean expenditures which, in accordance with generally accepted accounting principles consistently applied, are or should be capitalized on the books of Landlord) other than those expressly set forth in Sections 3.01(g)(xi) and (xv) hereof. If Landlord shall purchase any item of capital equipment or make any capital expenditure designed to result in savings or reductions in Operating Expenses, then the cost thereof shall be included in Operating Expenses. The costs of capital equipment or capital expenditures are so to be included in Operating Expenses for the Operating Year in which the costs are incurred and subsequent Operating Years, on a straight line basis, to the extent that such items are amortized over such period of time as reasonably can be estimated as the time in which such savings or reductions in Operating Expenses are expected to equal Landlord's costs for such 8 capital equipment or capital expenditure, with an interest factor equal to the Interest Rate at the time of Landlord's having incurred said costs. If Landlord shall lease any such item of capital equipment designed to result in savings or reductions in Operating Expenses, then the rentals and other costs paid or incurred in connection with such leasing shall be included in Operating Expenses for the Operating Year in which they were incurred. If during all or part of the Base Year or any Operating Year, Landlord shall not furnish any particular item(s) of work or service (which would constitute an Operating Expense hereunder) to portions of the Building (including without limitation the demised premises) due to the fact that such portions are not occupied or leased, or because such item of work or service is not required or desired by the tenant (including without limitation Tenant) or such portion, or such tenant is itself obtaining and providing; such item of work of service, or for any other reasons, then, for the purposes of computing the additional rent payable hereunder pursuant to paragraphs A and 3 of Section 3.02 hereof, the amount of the expenses for such item(s) for such period shall be deemed to be increased by an amount equal to the additional operating and maintenance expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such item(s) of work or services to such portion of the Building. (h) The term "Tenant's Proportionate Share" shall be deemed to mean 8.72 (8.72%) percent. For the purpose of this calculation, the parties hereto have agreed that the demised premises shall be deemed to have a rentable area of 66,664 rentable square feet. (i) "Tenant's Proportionate Share of Increase" shall mean the percentage set forth in Section 3.01(h) multiplied by the increase, in Operating Expenses for an Operating Year over Operating Expenses in the Base Year. (j) "Tenant's Projected Share of Increase," shall mean Tenant's Proportionate Share of Increase, for the prior Operating Year and the reasonably estimated increase in costs for the current Operating Year divided by twelve (12) and payable monthly by Tenant- to Landlord as additional rent. If, however, Landlord shall furnish any such estimate for an Operating Year subsequent to the commencement thereof (provided that Landlord will furnish no more than three (3) such estimates during any Operating Year), then (a) until the first day of the month following the month in which such estimate is furnished to Tenant, Tenant shall pay to Landlord on the first day of each month an amount equal to the monthly sum payable by Tenant to Landlord under this Section in respect of the last month of the preceding Operating Year; (b) promptly after such estimate is furnished to Tenant, Landlord shall give notice to Tenant stating whether the installments of Tenant's Projected Share of Increase previously made for such Operating Year were greater or less than the installments of Tenant's Projected Share of Increase to be made for such Operating Year in accordance with such estimate, and (i) if there shall be a deficiency, Tenant shall pay the amount thereof within 10 days after demand therefor, or (ii) if there shall have been an overpayment, Landlord shall promptly either refund to Tenant the amount thereof or permit Tenant to credit the amount thereof against subsequent payments under 9 this Article 3; and (c) on the first day of the month following the month in which such estimate is furnished to Tenant, and monthly thereafter throughout the remainder of such Operating Year, Tenant shall pay to Landlord an amount equal to Tenant's Projected Share of Increase as shown on such estimate. If the aggregate installments of Tenant's Projected Share of increase for any Operating year shall exceed Tenant's Proportionate Share of increase for such Operating Year by an amount in excess of ten (10%) percent, such excess shall bear interest at the Interest Rate from the date the aggregate excess exceeded such ten (10%) percent to the date the excess is refunded or credited by Landlord to Tenant. (k) The term "Escalation Statement" shall mean a statement setting forth in reasonable detail the amount payable by Tenant for a specified Tax Year or Operating Year (as the case may be) pursuant to this Article 3. 3.02. A. After the expiration of the Base Year, Landlord shall furnish Tenant a statement setting forth the Operating Expenses incurred for such Base Year. After the expiration of any Operating Year, Landlord shall furnish Tenant an Escalation Statement setting forth Tenant's Proportionate Share of Increase with respect to the Operating Expenses incurred for such Operating Year. Within thirty (30) days after receipt of such Escalation Statement for any Operating Year, Tenant shall pay Tenant's Proportionate Share of Increase to Landlord as additional rent to the extent set forth in Section 3.02B hereof. B. Commencing with the first Operating Year for which Landlord shall be entitled to receive Tenant's Proportionate Share of Increase, Tenant shall pay to Landlord as additional rent for the then Operating Year, Tenant's Projected Share of Increase. If the Escalation Statement furnished by Landlord to Tenant pursuant to Section 3.02A above at the end of the then Operating Year shall indicate that Tenant's Projected Share of Increase exceeded Tenant's Proportionate Share of Increase, Landlord shall forthwith either (i) pay the amount of excess directly to Tenant concurrently with the notice or (ii) permit Tenant to credit the amount of such excess against the subsequent payments of rent due hereunder; if such statement furnished by Landlord to Tenant hereunder shall indicate that Tenant's Proportionate Share of Increase exceeded Tenant's Projected Share of Increase for the then Operating Year, Tenant shall within ten (10) Business Days pay the amount of such excess to Landlord. 3.03. A. Tenant shall pay as additional rent for each Tax Year a sum (hereinafter referred to as "Tenant's Tax Payment") equal to Tenant's Tax Proportionate Share of the amount by which the Taxes for such Tax Year exceed the Base Tax. Tenant's Tax Payment for each Tax Year shall be due and payable in two (2) equal installments, in advance, on the first day, of each June and December during each Tax Year, based upon the Escalation Statement furnished prior to the commencement of such Tax Year, until such time as a new Escalation Statement for a subsequent Tax Year shall become effective. If an Escalation Statement is furnished to Tenant after the commencement of a Tax Year in respect of which such Escalation Statement is rendered, Tenant shall, within 15 days thereafter, pay to Landlord an amount equal to the amount of any underpayment of Tenant's Tax Payment with respect to such Tax Year and, 10 in the event of an overpayment, Landlord shall permit Tenant to credit against subsequent payments under this Section 3.03 the amount of Tenant's overpayment. If there shall be any increase in Taxes for any Tax Year, whether during or after such Tax Year, Landlord shall furnish a revised Escalation Statement for such Tax Year, and Tenant's Tax Payment for such Tax Year shall be adjusted and paid substantially in the same manner as provided in the preceding sentence. If during the term of this Lease, taxes are required to be paid (either to the appropriate taxing authorities or as tax escrow payments to a superior mortgagee) in full or in monthly, quarterly, or other installments, on any other date or dates than as presently required, then at Landlord's option, Tenant's Tax Payments shall be correspondingly accelerated or revised so that said Tenant's Tax Payments are due at least 30 days prior to the date payments are due to the taxing authorities or the superior mortgagee. The benefit of any discount for any early payment or prepayment of Taxes shall accrue solely to the benefit of Landlord and such discount shall not be subtracted from Taxes. B. If the real estate tax fiscal Year of The City of New York shall be changed during the term of this Lease, any Taxes for such fiscal year, a part of which is included within a particular Tax Year and a part of which is not so included, shall be apportioned on the basis of the number of days in such fiscal year included in the particularTax Year for the purpose of making the computations under this Section 3.03. C. If Landlord shall receive a refund of Taxes for any Tax Year, Landlord shall permit Tenant to credit against subsequent payments under this Section 3.03, Tenant's Tax Proportionate Share of the refund (after deducting all reasonable or customary costs incurred by Landlord to obtain such refund which have not been previously recovered); but not to exceed Tenant's Tax Payment paid for such Tax Year. D. If the Base Tax is reduced as a result of a certiorari proceeding or otherwise Landlord shall adjust the amounts previously paid by Tenant pursuant to the provisions of Section 3.03 hereof, and Tenant shall pay the amount of said adjustment within thirty (30) days after demand setting forth the amount of said adjustment. 3.04. Tenant shall pay to Landlord upon demand, as additional rent, any occupancy tax or rent tax now in effect or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord. 3.05. In the event that the Commencement Date shall be other than the first day of a Tax Year or an Operating Year or the date of the expiration or other termination of this Lease shall be a day other than the last day of a Tax Year or an Operating Year, then in such event in applying the provisions of this Article 3 with respect to any Tax Year or Operating Year in which such event shall have occurred, appropriate adjustments shall be made to reflect the occurrence of such event on a basis consistent with the principles underlying the provisions of this Article 3 taking into consideration the portion of such Tax Year or Operating Year which shall have elapsed after the term hereof commences in the case of the Commencement Date, and 11 prior to the date of such expiration or termination in the case of the Expiration Date or other termination. 3.06. Payments shall be made pursuant to this Article 3 notwithstanding the fact that an Escalation Statement is furnished to Tenant after the expiration of the term of this Lease, except as otherwise set forth in Section 3.08 hereof. 3.07. In no event shall the fixed annual rent ever be reduced by operation of this Article 3 and the rights and obligations of Landlord and Tenant under the provisions of this Article 3, with respect to any additional rent shall survive the termination of this Lease. 3.08. Landlord's failure to render an Escalation Statement with respect to any Tax Year or Operating Year shall not prejudice Landlord's right to thereafter render an Escalation Statement with respect thereto or with respect to any subsequent Tax Year or Operating Year; provided, however, that in the event that Landlord shall have failed to render any Escalation Statement prior to the expiration of the two (2) year period following the Expiration Date, then Landlord shall be deemed to have waived its right to any unpaid additional rent in connection with such Escalation Statement. 3.09. Each Escalation Statement shall be conclusive and binding upon Tenant unless within 30 days after receipt of such Escalation Statement Tenant shall notify Landlord that it disputes the correctness of such Escalation Statement ("Tenant's Dispute Notice"). After Tenant delivers Tenant's Dispute Notice, Tenant shall have the right during normal business hours and upon not less than five (5) Business Days' (as defined in Article 22 hereof) prior written notice to Landlord, to examine (or cause its accountants to examine) such of Landlord's books and records as are relevant to the Escalation Statement in question, provided such examination is commenced within fifteen (15) days after Tenant's Dispute Notice is given and is concluded within twenty (20) days after said books and records are made available to Tenant. In making such examination, Tenant agrees, and shall cause its accountant (and such other agents of Tenant who may be accompanying the accountant) to agree to keep confidential any and all information contained in such books and records. Any dispute relating to any Escalation Statement, not resolved within ninety (90) days after the giving of such Escalation Statement, may be submitted to arbitration by either party pursuant to Article 38 hereof. Pending the determination of such dispute, Tenant shall pay additional rent in accordance with the Escalation Statement that Tenant is disputing, without prejudice to Tenant's position. 3.10. If Landlord shall pay or incur any costs or expenses in contesting any Taxes for any Tax Year (other than any such year for which such Taxes comprise all or part of the Base Tax) or in connection with any challenge to the assessed valuation of all or part of the Building or the parcel of land on which the Building is constructed (the "Land") or otherwise in connection with any endeavor to lower the Taxes for any Tax Year (other than any such year for which such Taxes comprise all or part of the Base Tax), and such contest, challenge or endeavor has the effect of reducing the Taxes for any Tax Year, then, within twenty (20) days after request 12 by Landlord, Tenant shall pay to Landlord Tenant's Tax Proportionate Share of the aggregate amounts of such costs and expenses so paid or incurred by Landlord. ARTICLE 4 ELECTRICITY 4.01. Subject to the provisions of this Article 4, Tenant and Landlord agree that Landlord shall make available for Tenant's use within the demised premises up to six (6) watts connected load per rentable square foot of electric energy (the "Electric Capacity") and Tenant will pay Landlord or Landlord's designated agent, as additional rent for the supplying of such electric energy, the sum of (i) an amount computed by applying Tenant's consumption and demand for the billing period in question (as measured by the meter installed in the demised promises) to Landlord's Rate, as such term is hereinafter defined, plus, (iii) ten (10%) percent of such amount. As used herein, the term "Landlord's Rate" shall mean the rate classification of the public utility serving the Building pursuant to which Landlord purchases electricity for the Building. Where more than one (1) meter measures the service of Tenant in the Building of which the demised premises forms a part, the service rendered through each meter may be computed and billed separately in accordance with the rates herein. Bills therefor shall be rendered at such times as Landlord may elect and the amount, as computed from a meter, shall be deemed to be, and be paid as, additional rent within twenty (20) days of rendition thereof. Each electric bill shall be conclusive and binding upon Tenant unless, within thirty (30) days after receipt of such electric bill, Tenant shall notify Landlord that it disputes the correctness of such electric bill (hereinafter called "Tenant's Electric Dispute Notice"). After Tenant delivers Tenant's Electric Dispute Notice, Tenant shall have the right during normal business hours and upon not less than five (5) Business Days ' (as defined in Article 22 hereof) prior written notice to Landlord, to examine (or cause its accountants to examine) such of Landlord's books and records as are relevant to the calculation of the electric bill in question, provided such examination is commenced within fifteen (15) days after Tenant's Electric Dispute Notice is given and is concluded within twenty (20) days after said books and records are made available to Tenant. In making such examination, Tenant agrees; and shall cause its accountant (and such other agents of Tenant who may be accompanying the accountant) to agree to keep confidential any and all information contained in such books and records. If any tax is imposed or Landlord's receipt from the sale or resale of electric energy or gas or telephone service to Tenant by any federal, state or municipal authority, Tenant covenants and agrees that where permitted by law, Tenant's pro rate share of such taxes shall be passed on to, and included in the bill of, and paid by, Tenant to Landlord. In no event shall the cost to Tenant for the supply of electric energy be less than 110% of the aggregate cost to Landlord for the supply of electric energy to Tenant at the demised premises (including any meter company charges, taxes, fuel adjustment charges and other charges and expenses to which Landlord is subject). If any meters or other equipment must be installed to furnish electric service to the demised premises on a submetered basis, as herein provided, the same shall be installed by Landlord at Landlord's expense. 13 4.02. Landlord shall not be liable in any way to Tenant for any failure or defect in the supply or character of electric energy, steam or other utilities furnished to the demised premises by reason of any requirement, act or omission of the public utility serving the. Building with electricity or steam or other utilities or for any other reason. Tenant's use of electric energy in the demised premises shall not at any time exceed the capacity of any of the electrical conductors, machinery and equipment in or otherwise serving the demised premises. In order to ensure that such capacity is not exceeded and to avert possible adverse effect upon the electric service in the Building, Tenant agrees not to connect any additional electrical equipment, fixtures, machinery or appliances of any type to the Building electric distribution system, other than lamps, typewriters and other small office machines which consume comparable amounts of electricity, without Landlord's prior written consent, which consent shall not be unreasonably withhold. Any additional risers, feeders, or other equipment proper or necessary to supply Tenant's electrical requirements, upon written request of Tenant, will be installed by Landlord, at the sole cost and expense of Tenant, if, in Landlord's sole judgment, the same are necessary and 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, repair or expense or interfere, with or disturb other tenants or occupants. Landlord agrees that Tenant's use of electric energy which does not exceed in the aggregate the Electric Capacity shall not exceed the electric capacity of the lines, feeders, cables and other equipment furnishing electric power to (as opposed to within) the demised premises. 4.03. Landlord reserves the right to discontinue furnishing electric energy to Tenant at any time upon sixty (60) days' written notice to Tenant, and from and after the effective date of such termination, Landlord shall no longer be obligated to furnish Tenant with electric energy, provided, however, that such termination date shall be extended for a time reasonably necessary for Tenant to make arrangements to obtain electric service directly from the public utility company servicing the Building. If Landlord exercises such right of termination, this Lease shall remain unaffected thereby and shall continue in full force and effect, and thereafter Tenant shall diligently arrange to obtain electric service directly from the public utility company servicing the Building, and may utilize the then existing electric feeders, risers and wiring serving the demised premises to the extent available and safely capable of being used for such purpose and only to the extent of Tenant's then authorized connected load. Landlord shall be obligated to pay no part of any cost required for Tenant's direct electric service including without limitation the cost of obtaining the same. 4.04. To the extent that Landlord shall receive any rebates or refunds of payments to the public utility furnishing electric service to the Building on account of energy saving light fixtures installed on the portion of the demised premises located on the 5th floor, Tenant shall be entitled thereto, and Landlord shall promptly remit the same to Tenant or at Landlord's option, if the same is possible, advise the public utility to pay the same directly to Tenant. 14 ARTICLE 5 USE 5.01. The demised premises shall be used solely as and for executive, sales and general offices, and for no other purpose. 5.02. Tenant shall not use or permit the use of the demised premises or any part thereof in any way which would violate any of the covenants, agreements, terms, provisions and conditions of this Lease or for any unlawful purposes or in any unlawful manner or in violation of the Certificate of Occupancy for the demised premises or the Building, and Tenant shall not suffer or permit the demised premises or any part thereof to be used in any manner or anything to be done therein or anything to be brought into or kept therein which, in the reasonable judgment of Landlord, shall in any way impair or tend to impair the character, reputation or appearance of the Building as a high quality office building, impair or interfere with or tend to impair or interfere, with any of the Building services or the proper and economic heating, cleaning, air-conditioning or other servicing of the Building or the demised premises, or impair or interfere with or tend to impair or interfere with the use, of any of the other areas of the Building by, or occasion discomfort, inconvenience or annoyance to, any of the other tenants or occupants of the Building. Tenant shall not install any electrical or other equipment of any kind which causes any such impairment, interference, discomfort, inconvenience or annoyance. ARTICLE 6 ALTERATIONS AND INSTALLATIONS 6.01. Tenant shall make no alterations, installations, additions or improvements in or to the demised premises without Landlord's prior written consent. Nothing contained herein shall be construed to require Tenant to obtain Landlord's consent for painting, wall and floor coverings and other purely cosmetic or decorative changes to be performed in the demised premises; provided, however, that Tenant shall (i) give Landlord reasonable prior notice of the performance of any such activities (for informational purposes only) and (ii) perform (or cause its contractor to perform) the same in compliance with all Legal Requirements and (iii) maintain (or cause its contractor to maintain) adequate insurance in connection with such performance. Tenant agrees that Tenant will not at any time during the term, of this Lease, either directly or indirectly, use any contractors and/or labor and/or materials if the use of such contractors and/or labor and/or materials would or will create any difficulty with other contractors and/or labor engaged by Tenant or Landlord or others in the maintenance and/or operation of the Building or any part thereof. Landlord shall provide upon request a list of contractors approved for work in the Building (hereinafter called the "Approved List"). There shall be at least three (3) contractors for each trade on the Approved List at all times. Landlord hereby agrees, except as provided in the next sentence, not to unreasonably withhold or delay its consent to Tenant's. request for approval of any contractor or tradesman not on the Approved List, provided Tenant supplies 15 Landlord with reasonable information about such tradesman or contractor. Notwithstanding the foregoing, with respect to the mechanical,' electrical, sanitary, heating, ventilating, air-conditioning, plumbing, lift-safety or other systems of the Building, Tenant agrees to use only contractors on the Approved List. All such work, alterations, installations, additions and improvements shall be done at Tenant's sole expense and at such times and in such manner as Landlord may from time to time designate. Prior to commencement of any alterations as to which Landlord's consent is required, Landlord may request and Tenant shall upon such request provide to Landlord proof reasonably satisfactory to Landlord of Tenant's financial capacity to complete the performance of such alterations and pay the entire cost thereof including without limitation all contractors and suppliers utilized in connection therewith. Landlord agrees that with respect to non-structural alterations which do not affect the exterior of the Building or any portions of the Building outside the demised premises or adversely affect any Building systems, Landlord shall not unreasonably withhold or delay its approval. Any Tenant's work in the demised premises shall be effected solely in accordance with plans and specifications first approved in writing by Landlord. Tenant shall reimburse Landlord promptly upon demand for any reasonable out-of- pocket costs and expenses incurred by Landlord (including, without limitation, the commercially reasonable fees of any architect or engineer or any independent third party employed by Landlord, but excluding attorneys' fees if any) in connection with Landlord's review of such Tenant's plans and specifications. Provided that Tenant makes reference to the following time limitation in its submission of plans and specifications and the consequences of Landlord's failure to abide thereby, Landlord's failure to respond to Tenant' s submission within two (2) weeks thereof (or to specify' the reasons for any disapproval) shall be ftemod approval. The date of submission shall be the date of Landlord's receipt thereof. Any such approved alterations and improvements shall be performed in accordance with the foregoing and the following provisions of this Article 6: 1. All work shall be done in a good and workmanlike manner. 2. In the event Tenant shall employ any contractor to do in the demised premises any work permitted by this Lease, such contractor and any subcontractor shall agree to employ only such labor as will not result in jurisdictional disputes or strikes or result in causing disharmony with other workers employed at the Building. Tenant will inform Landlord in writing of the names of any contractor or subcontractor Tenant proposes to use in the demised premises at least ten (10) days prior to the beginning of work by such contractor or subcontractor. 3. All such alterations shall be effected in compliance with all applicable laws, ordinances, rules and regulations of governmental bodies having or asserting jurisdiction in the demised premises and in accordance with Landlord's Rules and Regulations with respect to alterations. 16 4. Tenant shall keep the Building and the demised premises free and clear of all liens for any work or material claimed to have been furnished to Tenant or to the demised premises on Tenant's behalf, and all work to be performed by Tenant shall be done in a manner which will not unreasonably interfere with or disturb other tenants or occupants of the Building. 5. During the progress of the work to be done by Tenant, said work shall be subject to inspection by representatives of Landlord which shall be permitted access and the opportunity to inspect, at reasonable times, but this provision shall not in any way whatsoever create any obligation on Landlord to conduct such an inspection. 6. Tenant agrees to pay to Landlord or its managing agent, as additional rent, promptly upon being billed therefor, Landlord's reasonable out- of-pocket costs and expenses (including, without limitation, the fees of any architect or engineer employed by Landlord, but excluding attorneys' fees if any) for Landlord's field supervision and coordination in connection with such work. 7. Prior to commencement of any work, Tenant shall furnish to Landlord certificates evidencing the existence of: (i) workmen's compensation insurance covering all persons employed for such work; and (ii) reasonable comprehensive general liability and property damage insurance naming Landlord, its designees and Tenant as insureds, with coverage of at least $3,000,000 single limit. Notice is hereby given that Landlord shall not be liable for any labor or materials furnished or to be furnished to Tenant upon credit, and that no mechanic's or other lien for any such labor or materials shall attach to or affect the reversion or other estate or interest of Landlord in and to the demised premises. 6.02. Any mechanic's lien, filed against the demised premises or the Building for work claimed to have been done for or materials claimed to have been furnished to Tenant shall be discharged by Tenant at its expense within thirty (30) days after such filing, by payment, filing of the bond required by law or otherwise. 6.03. All alterations, installations, additions and improvements made and installed by Landlord, if any, shall be the property of Landlord and shall remain upon and be surrendered with the demised premises as a part thereof at the end of the term of this Lease. 6.04. All alterations, installations, additions and improvements made and installed by Tenant, or at Tenant's expense, upon or in the demised premises which are of a permanent nature and which cannot be removed without damage to the demised premises or 17 Building shall become and be the property of Landlord, and shall remain upon and be surrendered with the demised premises as a part thereof at the end of ' the term of this Lease. Notwithstanding the foregoing, Landlord may require Tenant to remove any "non-standard Building alteration" (as hereinafter defined) and to restore the affected portions of the demised premises to their condition immediately prior to the making of an such non-standard Building alteration. If Landlord requires removal of any non-standard Building alteration, the same shall be removed from the demised premises by Tenant prior to the expiration of the Lease at Tenant's sole cost and expense. For the purposes hereof, a "non- standard Building alteration" shall include: auditoriums or similar type special use areas, vaults, atriums, kitchen equipment or cafeterias, internal stairways, slab reinforcements which reduce the height of the finished coiling within the demised premises or impede the installation of duct work and other normal installations above the finished ceiling, and any installations which are unusually difficult or costly to remove. 6.05. Where furnished by or at the expense of Tenant all furniture, furnishings and trade fixtures, including without limitation, murals, business machines and equipment, counters, screens, grille work, special paneled doors, cages, partitions, metal railings, closets, paneling lighting fixtures and equipment, drinking fountains, refrigeration and air-handling equipment, and any other movable property shall remain the property of Tenant which may at its option remove all or any part thereof at any time prior to the expiration of the term of this Lease. In case Tenant shall decide not to remove any part of such property, Tenant shall notify Landlord in writing not less than three (3) months prior to the expiration of the term of this Lease, specifying the items of property which it has decided not to remove. If, within thirty (30) days after the service of such notice, Landlord shall request Tenant to remove any of the said property, Tenant shall at its expense remove the same in accordance with such request. As to such property which Landlord does not request Tenant to remove, the same shall be, if left by Tenant, deemed abandoned by Tenant and thereupon the same shall become the property of Landlord. 6.06. If any alterations, installations, additions, improvements or other property which Tenant shall have the right to remove or be requested by Landlord to remove as provided in Sections 6.04 and 6.05 hereof (herein in this Section 6.06 called the "property") are not removed on or prior to the expiration of the term of this Lease, Landlord shall have the right to remove the property and to dispose of the same without accountability to Tenant (provided that Landlord acts reasonably under the circumstances) and at the sole cost and expense of Tenant. In case of any damage to the demised premises or the Building resulting from the removal of the property, which damage is not caused by or due to the gross negligence or willful misconduct of Landlord, its agents, servants or employees, Tenant shall repair such damage or, in default thereof, shall reimburse Landlord for Landlord's cost in repairing such damage. This obligation shall survive any termination of this Lease. 6.07. Tenant shall keep records of Tenant's alterations, installations, additions and improvements costing in excess of $5,000 and of the cost thereof. Tenant shall, within forty-five (45) days after demand by Landlord, furnish to Landlord copies of such records and 18 cost if Landlord shall require same in connection with any proceeding to reduce the assessed valuation of the Building, or in connection with any proceeding instituted pursuant to Article 14 hereof or for any other reason or purpose contemplated by this Lease. ARTICLE 7 REPAIRS 7.01. A. Tenant shall take good care of the demised premises and the fixtures and appurtenances therein and at its sole cost and expense make all repairs thereto as and when needed to preserve the same in good working order and condition. With respect to the Building systems serving the demised premises, Tenant shall be responsible for (i) repair and maintenance of Tenant's internal air-distribution system to the point at which the same connects to the main distribution duct for the demised premises, (ii) repair and maintenance of the internal electrical system to the panel box serving the demised premises, and (iii) repair and maintenance of all plumbing fixtures and lines in and serving the demised premises to the point at which the same join the main vertical risers of the Building. All such repairs and maintenance with respect to such Building systems shall be performed by contractors or tradesmen set forth on the Approved List. As to work which does not involve Building systems, Landlord hereby agrees not to unreasonably withhold or delay its consent to Tenant's request for approval of any contractor or tradesman not on the Approved List, provided Tenant supplies Landlord with reasonable information with respect to such contractor or tradesman. Except as otherwise provided in Section 9.05 hereof, all damage or injury to the demised premises and to its fixtures appurtenances and equipment or to the, Building or to its fixtures, appurtenances and equipment caused by Tenant moving property in or out of the Building or by installation or removal of furniture, fixtures or other property, shall be repaired, restored or replaced promptly by Tenant at its sole cost and expense, which repairs, restorations and replacements shall be, in quality and class equal to the original work or installations. If Tenant fails to make such repairs, restoration or replacements, same may be made by Landlord at the expense of Tenant and such expense shall be collectible as additional rent and shall be paid by Tenant within 15 days after rendition of a bill therefor. B. The exterior walls of the Building, the portions of any window sills outside the windows, and the 'windows are not part of the premises demised by this Lease and Landlord reserves all rights to such parts of the Building. C. Except as provided for in this Lease, Landlord shall maintain the Building to the extent customary and standard within the real estate industry for first-class office buildings in midtown Manhattan comparable to the Building and in connection therewith (but without being limited thereby), shall keep and maintain in good order and repair the following items, but only to the extent that such items affect Tenant in the conduct of Tenant's business and its use and enjoyment of, and access to and from the demised premises: (a) the lobbies and common corridors of the Building; (b) the roof, exterior, load- bearing columns, the structural 19 integrity of the slab floors and foundation of the Building; (c) the HVAC, electric, elevator, plumbing, fire protection and other common Building systems servicing the demised premises to the point of connection where the same enter (or connect with the riser, conduit, direct line, or shaft, as the case may be, that enters) the demised premises; (d) the exterior windows; and (e) the exterior walls; provided, however, that with respect to all of the foregoing Landlord shall not be responsible for repair of (and Tenant shall be solely responsible and liable therefor) any damage, defects or deficiencies thereof which shall be caused by Tenant's equipment, alterations or installations, or which shall result from acts or omissions of Tenant, its contractors, employees, agents, representatives, licensees, subtenants or invitees. 7.02. Tenant shall not place a load upon any floor of the demised premises exceeding the floor load per square foot area which such floor was designed to carry and which is allowed by law. If Tenant shall desire a floor load in excess of that which the affected floors are designed to carry Landlord agrees (provided Landlord's architects, in their sole discretion, find that the work necessary to increase such floor load does not adversely affect the structure of the Building, and further provided that such work will not interfere with the amount or availability of any space adjoining alongside, above or below the demised promises, or interfere with the occupancy of other tenants in the Building), to strengthen and reinforce the same so as to give the live load desired, provided Tenant shall submit to Landlord the plans showing the locations of and the desired floor live load for the areas in question, and provided further, that Tenant shall agree to pay for or reimburse Landlord on demand for the cost of such strengthening and reinforcement as well as any other costs to and expenses of Landlord occasioned by or resulting from such strengthening or reinforcement. 7.03. Business machines and mechanical equipment used by Tenant which cause vibration, noise, cold or heat that may be transmitted to the Building structure or to any leased space to such a degree as to be objectionable to Landlord or to any other tenant in the Building shall be placed and maintained by Tenant at its expense in settings of cork, rubber or spring type vibration eliminators sufficient to absorb and prevent such vibration or noise, or prevent transmission of such cold or heat. The parties hereto recognize that the operation of elevators, air-conditioning and heating equipment will cause some vibration, noise, heat or cold which may be transmitted to other parts of the Building and demised premises. Landlord shall be under no obligation to endeavor to produce such vibration, noise, heat or cold, unless (i) such vibration, noise, heat or cold is greater than the vibration, noise, heat or cold affecting the fifth (5th) floor portion of the demised premises as of the date hereof and (ii) the same unreasonably interferes with Tenant's use and occupancy of the demised premises. 7.04. Except as otherwise specifically provided in this Lease, there shall be no allowance to Tenant for a diminution of rental value and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from the making of any repairs, alterations, additions or improvements in or to any portion of the Building or the demised premises or in or to fixtures, appurtenances or equipment thereof. In making any repairs, alterations, additions or improvements in or to the demised premises pursuant to this Section 20 7.04, Landlord shall use reasonable efforts, to the extent reasonably practicable, to minimize interference with Tenants use and occupancy of the demised premises; provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium-pay rates or to incur any other overtime, costs or expenses whatsoever in the making of such repairs, alterations, additions or improvements. ARTICLE 8 REQUIREMENTS OF LAW 8.01. Tenant at Tenant's expense shall comply with all laws, orders and regulations of federal, state, county and municipal authorities, and with any direction of any public officer or officers pursuant to law which shall impose any violation, order or duty upon Landlord or Tenant with respect to the demised premises, or the use, or occupation thereof, except that Tenant shall not hereby be under any obligation to comply with any law, order, regulation or direction of any public authority requiring any structural alteration within the demised premises, unless such structural alteration is required by reason of (i) any cause or condition which has been created by or at the insistence of Tenant, its agents, servants or employers; (ii) Tenant's particular use of the demised premises; or (iii) the manner of conduct of Tenant's business or operation of its installations, equipment or other property therein; or (iv) the breach of any of Tenant's obligations hereunder. With respect to structural alterations required to comply with laws, orders, regulations or directions of any public authority for which Tenant is not responsible pursuant to the preceding sentence, Landlord shall (to the extent that the performance, the roof is required for Tenant' s use, of the demised premises or access thereto as contemplated hereby) be, responsible for the performance thereof at Landlord's cost and expense (subject to recoupment thereof in accordance with Article 3 hereof). 8.02. Notwithstanding the provisions of Section 8.01 hereof, Tenant, at its own cost and expense, may contest, in any manner permitted by law (including appeals to a court, or governmental department or authority having jurisdiction in the matter), the validity or the, enforcement of any governmental act, regulation or directive with which Tenant is required to comply pursuant to this Lease, and may defer compliance therewith provided that: (a) such noncompliance shall not subject Landlord to criminal prosecution or subject the Land and/or Building to lien or sale; (b) such noncompliance shall not be in violation of any fee mortgage, or of any ground or underlying lease or any mortgage thereon; (c) Tenant shall first furnish to Landlord proof reasonably satisfactory to Landlord of Tenant's financial capacity to complete and pay for the required work and to indemnify and protect Landlord against any loss or injury by reason of such noncompliance; and 21 (d) Tenant shall promptly and diligently prosecute such contest. Landlord, without expense or liability to it, shall cooperate with Tenant and execute any documents or pleadings required for such purpose, provided that Landlord shall reasonably be satisfied that the facts set forth in any such documents or pleadings are accurate. ARTICLE 9 INSURANCE, LOSS, REIMBURSEMENT, LIABILITY 9.01. Tenant shall not do or permit to be done any act or thing upon the demised premises, which will invalidate or be in conflict with New York standard fire insurance policies covering the Building, and fixtures and property therein, or which would increase the rate of fire insurance applicable to the Building to an amount higher than it otherwise would be; and Tenant shall neither do nor permit to be done any act or thing upon the demised premises which shall or might subject Landlord to any liability or responsibility for injury to any person or persons or to property by reason of any business or operation being carried on within the demised premises; but nothing in this Section 9.01 shall prevent Tenant's use of the demised premises for the purposes stated in Article 5 hereof, and Landlord represents that Tenant's use of the demised premises for the purposes stated in Section 5.01 hereof will not invalidate or be in conflict with or increase the rate of such New York standard fire insurance policies. 9.02. If, as a result of any act or omission by Tenant or violation of this Lease, the rate of fire insurance applicable to the Building shall be increased to an amount higher that it otherwise would be, then in addition to any other remedies which Landlord has hereunder for any such violations of the terms of this Lease, Tenant shall reimburse Landlord for all increases of Landlord's fire insurance premiums so caused; such reimbursement to be additional rate payable upon the first day of the month following any outlay by Landlord for such increased fire insurance premiums. In any action or proceeding wherein Landlord and Tenant are parties, a schedule or "makeup" of rates for the Building or demised premises issued by the body making fire insurance rates for the demised premises, shall be presumptive evidence of the facts therein stated and of the several items and charges in the fire insurance rate then applicable to the demised premises. 9.03. Except for any obligation that Landlord may have for repairs in accordance with the provisions of Section 7.01C hereof, Landlord or its agents shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building, or from the pipes, appliances or plumbing works or from the, roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature, unless any of the foregoing shall be caused by or due to the negligence of Landlord, its agents, servants or employees. 22 9.04. Landlord or its agents shall not be liable for any damage which Tenant may sustain, if at any time any window of the demised premises is broken or temporarily or permanently (restricted to windows on a lot line, if permanently) closed, darkened or bricked up for any reason whatsoever, except only Landlord's arbitrary acts if the result is permanent, and Tenant shall not be entitled to any compensation therefor or abatement of rent or to any release from any of Tenant's obligations under this Lease, nor shall the same constitute an eviction. Landlord shall exercise reasonable efforts, to the extent reasonably practicable, to minimize the time during which such temporary closing, darkening or bricking up of such windows shall affect the conduct of Tenant's business in the demised premises but shall not be obligated in connection therewith to do any work on an overtime or premium pay basis. Tenant agrees that Landlord shall be permitted at any time to install film on the inside of the windows of the Building to reduce the usage of energy in the Building, provided that such film shall not unreasonably darken such windows or unreasonably detract from the appearance of the demised premises. Tenant consents to such installation and agrees that Landlord shall have no liability with respect to any closing or darkening of the windows of the demised premises in connection therewith. 9.05. Tenant shall reimburse Landlord for all expenses, damages or fines incurred or suffered by Landlord, (i) by reason of any breach, violation or nonperformance by Tenant, or its agents, servants or employees, of -any covenant or provision of this Lease, or (ii) by reason of damage to persons or property caused by moving property of or for Tenant in or out of the Building, or by the installation or removal of furniture or other property of or for Tenant unless caused by Landlord's negligence or the negligence of Landlord's agents, employees or contractors, or (iii) by reason of or arising out of the carelessness, negligence or improper conduct of Tenant, or its agents, servants or employees, in the use or occupancy of the demised premises. Subject to the provisions of Section 8.02 hereof, where applicable, Tenant shall have the right, at Tenant's own cost and expense, to participate in the defense of any action or proceeding brought against Landlord, and in negotiations for settlement thereof if, pursuant to this Section 9.05, Tenant would be obligated to reimburse Landlord for expenses, damages or fines incurred or suffered by Landlord. 9.06. Tenant shall give Landlord notice in case of fire or accidents in the demised premises promptly after Tenant is aware of such event. 9.07. Tenant agrees to look solely to Landlord's estate and interest in the Land and Building (and the proceeds resulting from the sale thereof, provided Tenant has commenced a legal action or proceeding against Landlord with respect to such proceeds on or before the date Tenant shall have been given notice of such sale or such earlier date as Tenant has actual knowledge thereof), or the lease of the Building, or of the Land and Building, and the demised premises, for the satisfaction of any right or remedy of Tenant for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord, in the event of any liability by Landlord, and no other property or assets of Landlord and no property of any partner, shareholder or principal of Landlord shall be subject to levy, execution, attachment, or other enforcement procedure for the satisfaction of Tenant's remedies under or with respect to this 23 Lease, the relationship of Landlord and Tenant hereunder, or Tenant's use and occupancy of the demised premises, or any other liability of Landlord to Tenant. 9.08. (a) Landlord agrees that, if obtainable, it will include in its fire insurance policies appropriate clauses pursuant to which the insurance companies (i) waive all right of subrogation against Tenant with respect to losses payable under such policies and (ii) agree 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 losses covered by such policies. But should any additional premiums be exacted for any such clause or clauses, Landlord shall be released from the obligation hereby imposed unless Tenant shall agree to pay such additional premium. (b) Tenant agrees to include, if obtainable, in its fire insurance policy or policies on its furniture, furnishings, fixtures and other property removable by Tenant under the provisions of this Lease appropriate clauses pursuant to which the insurance company or companies (i) waive the right of subrogation against Landlord and any tenant of space in the Building with respect to losses payable under such policy or policies and/or (ii) agree that such policy or 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 losses covered by such policy or policies. But should any additional premium be exacted for any such clause or clauses, Tenant shall be released from the obligation hereby imposed unless Landlord or the other tenants shall agree to pay such additional premium. (c) Provided that Landlords' right of full recovery under its policy or policies aforesaid is not adversely affected or prejudiced thereby, Landlord hereby waives any and all right of recovery which it might otherwise have against Tenant, its servants, agents and employees, for loss or damage occurring to the Building and the fixtures, appurtenances and equipment therein, to the, extent the same is covered by Landlord's insurance, notwithstanding that such loss or damage may result from, the negligence or fault of Tenant, its servants, agents or employees. Provided that Tenant's right of full recovery under its aforesaid policy or policies is not adversely affected or prejudiced thereby, Tenant hereby waives any and all right of full recovery which it might otherwise have against Landlord, its servants, agents and employees, and against every other tenant in the Building who shall have executed a similar waiver as set forth in this Section 9.08(c) for loss or damage to, Tenant's furniture, furnishings, fixtures and other property removable by Tenant under the provisions hereof to the extent that the same is covered by Tenant's insurance, notwithstanding that such loss or damage may result from the negligence or fault of Landlord, its servants, agents or employees, or such other tenant and the servants, agents or employees thereof. (d) Landlord and Tenant hereby agree to advise the other promptly if the clauses to be included in their respective insurance policies pursuant to subdivisions 9.08(a) and (b) hereof cannot be obtained. Landlord and Tenant hereby also agree to notify the other promptly of any cancellation or change of the terms of any such policy which would affect such clauses. 24 9.09. Tenant covenants and agrees to provide on or before the Commencement Date and to keep in force during the term hereof for the benefit of Landlord and Tenant a comprehensive general liability insurance policy protecting Landlord and Tenant against any liability whatsoever, occasioned by any occurrence on or about the demised premises or any appurtenances thereto. Such policy is to be written by good and solvent insurance companies reasonably satisfactory to Landlord, and shall be in such limits as Landlord may reasonably require, and as of the date of this Lease Landlord reasonably requires limits of liability thereunder of not loss than the amount of Three Million ($3,000,000) Dollars single limit for bodily or personal injury (including death) and in the amount of Three Hundred Thousand (S300,000) Dollars in respect of property damage. Such insurance may be, carried under a blanket policy covering the, demised premises and other locations of Tenant, if any. Prior to the time such insurance is first required to be carried by Tenant and thereafter, at least fifteen (15) days prior to the effective date of any such policy, Tenant agrees to deliver to Landlord either a duplicate original of the aforesaid policy or a certificate evidencing such insurance. Said policy or certificate, as the case may be, shall contain an endorsement that such insurance may not be cancelled except upon ten (10) days' notice to Landlord Tenant's failure, to provide and keep in force the aforementioned insurance shall be regarded as a material default hereunder entitling Landlord to exercise any or all of the remedies provided in this Lease in the event of Tenant's default. 9.10. Landlord shall maintain at all times during the term of this Lease (i) a comprehensive general liability insurance policy and (ii) a fire and property insurance policy in each case with limits customary and standard within the real estate industry for owners of first-class office buildings in midtown Manhattan comparable to the Building. ARTICLE 10 DAMAGE BY FIRE OR OTHER CAUSE 10.01. If the Building or the demised premises shall be partially or totally damaged or destroyed by fire or other cause, then whether or not the damage or destruction shall have resulted from the fault or neglect of Tenant, or its employees, agents, or visitors (and if this Lease shall not have been terminated as in this Article 10 hereinafter provided), Landlord shall repair the damage and restore and rebuild the Building and/or the demised premises, at its expense (without limiting the rights of Landlord under any other provisions of this Lease), with reasonable dispatch after notice to it of the damage or destruction; provided, however, that Landlord shall not be required to repair or replace any of Tenant's property. 10.02. If the Building or the demised premises shall be, partially damaged or partially destroyed by fire or other cause, then the rents payable hereunder shall be abated to the extent that the demised premises shall have been rendered untenantable for the period from the date of such damage or destruction to the date the damage shall be repaired or restored. 25 If the demised premises or a major part thereof shall be totally (which shall be deemed to include substantially totally) damaged or destroyed or rendered completely (which shall be deemed to include substantially completely) untenantable on account of fire or other cause, the rents shall abate as of the date of the damage or destruction and until Landlord shall repair, restore and rebuild the Building and the demised promises, provided, however, that should Tenant reoccupy a portion of the demised promises during the period the restoration work is taking place and prior to the date that the same are made completely tenantable, rents allocable, to such portion shall be payable by Tenant from the date of such occupancy. 10.03. If the Building or the demised premises shall be totally damaged or destroyed by fire or other cause, or if the Building shall be so damaged or destroyed by fire or other cause (whether or not the demised premises are damaged or destroyed) as to require a reasonably estimated expenditure of more than fifty (50%) percent of the full insurable value of the Building immediately prior to the casualty, then in either such case Landlord may terminate, this Lease by giving Tenant notice to such effect within one hundred eighty (180) days after the date of the casualty. In case of any damage or destruction mentioned in this Article 10, Tenant may terminate this Lease by notice to Landlord, if Landlord has not completed the making of the required repairs and restored and rebuilt the Building and the demised premises within twelve (12) months from the date of such damage or destruction, or within such period after such date (not exceeding three (3) month ) as shall equal the aggregate period Landlord may have been delayed in doing so by adjustment of insurance, labor trouble, governmental controls, act of God, or any other cause beyond Landlord's reasonable control. 10.04. No damages compensation or claim shall be payable by Landlord for inconvenience, loss of business or annoyance, arising from any repair or restoration of any portion of the demised premises or of the Building pursuant to this Article 10. 10.05. Tenant, at no expense to Tenant, shall fully cooperate with Landlord and its insurance companies in connection with the collection by Landlord of any insurance proceeds (including, without limitation, rent insurance proceeds) payable in respect of any damage or destruction to the Building or the demised premises by fire or other casualty and -shall comply with all reasonable requests of Landlord and its insurance companies in connection therewith, including, without limitation, the execution of any affidavits or proofs of loss required by any insurance companies. 10.06. Landlord will not carry separate insurance of any kind on Tenant's property, and, except as provided by law or by reason of its breach of any of its obligations hereunder, shall not be obligated to repair any damage thereto or replace the same. Tenant shall maintain insurance on Tenant's property, and Landlord shall not be obligated to repair any damage thereto or replace the same. 10.07. The provisions of this Article 10 shall be considered an express agreement governing any cause of damage or destruction of the demised premises by fire or other casualty, 26 and Section 227 of the Real Property Law of the State of New York, providing for such a contingency in the absence of an express agreement, and any other law of like import, now or hereafter in force, shall have no application in such case. ARTICLE 11 ASSIGNMENT, MORTGAGING, SUBLETTING, ETC. 11.01. Tenant shall not (a) assign or otherwise transfer this Lease or the term and estate hereby granted, (b) sublet the demised premises or any part thereof or allow the same to be used or occupied by others or in violation of Article 5, or (c) mortgage, pledge or encumber this Lease or the demised premises or any part thereof in any manner by reason of any act or omission on the part of Tenant without, in each instance, obtaining the prior consent of Landlord, except as otherwise expressly provided in this Article 11. Tenant shall not advertise, or authorize a broker to advertise, for a subtenant or an assigns, without obtaining the prior consent of Landlord, which consent shall not be unreasonably withhold or delayed. For purposes of this Article 11, (i) the transfer of a majority of the issued and outstanding capital stock of any corporate tenant, or of a corporate subtenant, or the transfer of a majority of the total interest in any partnership tenant or subtenant, however accomplished, whether in a single transaction or in a series of related or unrelated transactions, shall be deemed an assignment of this Lease, or of such sublease, as the case may be, except that the transfer of the outstanding capital stock of any corporate tenant, or subtenant, shall be deemed not to include the sale of such stock by persons or parties, through the "over-the-counter market" or through any recognized stock exchange, other than those deemed, "insiders" within the meaning of the Securities Exchange Act of 1934 as amended, (ii) a takeover agreement shall be deemed a transfer of this Lease, (iii) any person or legal representative of Tenant, to whom Tenant's interest under this Lease passes by operation of law, or otherwise, shall be bound by the provisions of this Article 11, and (iv) a material modification or amendment affecting the basic terms of a sublease or an extension thereof shall be deemed a sublease. 11.02. Notwithstanding anything to the contrary contained herein, Landlord's consent shall not be required and the terms and provisions of Section 11.01 hereof shall not be applicable with respect to an assignment of this Lease or the subletting of all or a portion of the demised premises to any corporation or other entity which shall be an "affiliate", "subsidiary", or "successor" of Tenant (as such terms are hereinafter defined), provided and on condition that (x) (i) in the event of an assignment, the affiliate or subsidiary to Tenant or transferee has a net worth immediately following such transfer at least equal to or in excess of the lesser of (A) the net worth of Tenant immediately prior to such transfer, or (B) the net worth of Tenant as of the date hereof, and (ii) in the event of a sublease, the affiliate, subsidiary or successor to Tenant or transferee has reasonably sufficient financial worth considering the financial obligations under the sublease and, in case of either (A) or (B), proof thereof, reasonably satisfactory to Landlord, shall be delivered to Landlord at least (10) days prior to the effective date of such transfer, and (y) such transaction is for a bona fide business purpose and not, either directly or indirectly, 27 principally for the purpose, of transferring the leasehold created hereby to a corporation or entity other than an affiliate, subsidiary or successor. For the purpose of this Section 11.02, an "affiliate" or "subsidiary" or "successor" of Tenant shall mean the following: (i) An "affiliate" shall mean any corporation or other entity which, directly or indirectly, controls or is controlled by or is under common control with Tenant. For this purpose, "control" shall mean ownership of a 50% or greater equity interest in and the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation or other entity; (ii) "subsidiary" shall mean any corporation not less the 50% of whose outstanding voting stock shall, at the time, be owned directly or indirectly by Tenant. Any cessation of the affiliate or subsidiary relationship between Tenant and the entity in question shall constitute an assignment or subletting, as the case may be, which shall be subject to all of the terms, provisions and conditions of this Article 11; and (iii) A "successor" of Tenant shall mean (x) a corporation in which or with which Tenant is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation of corporations, provided that by operation of law or by effective provisions contained in the instruments of merger or consolidation, the liabilities of the corporations participating in such merger or consolidation are assumed by the corporation surviving such merger or created by such consolidation or (y) a corporation or other entity to which this Lease is assigned together and in connection with a transfer of all or substantially all of Tenant's assets. 11.03. Any assignment or transfer, whether made with Landlord's consent as required by Section 11.01 or without Landlord's consent pursuant to Section 11.02, shall be made only if, and shall not be effective until, the assignee shall execute, acknowledge and deliver to Landlord a recordable agreement, in form and substance reasonably satisfactory to Landlord, whereby the assignee shall assume the obligations and performance of this Lease and agree to be bound by and upon all of the covenants, agreements, terms, provisions and conditions hereof on the part of Tenant to be performed or observed and whereby the assignee shall agree that the provisions of Section 11.01 hereof shall, notwithstanding such an assignment or transfer, continue to be binding upon it in the future. Tenant covenants that, notwithstanding any assignment or transfer, whether or not in violation of the provisions of this Lease, and notwithstanding the acceptance of fixed annual rent by Landlord from an assign or transferee or any other party, Tenant shall remain jointly and severally liable for the payment of the fixed annual rent due and to become due under this Lease and for the performance of all of the covenants, agreements, terms, provisions and conditions of this Lease on the part of Tenant to be performed or observed. 28 11.04. The joint and several liability of Tenant and any successor in interest to Tenant for the due performance of the obligations under this Lease shall not be discharged, released or impaired in any respect by an agreement or stipulation made by Landlord or any grantee or assignee of Landlord, by way of mortgage, or otherwise, extending the time of or modifying any of the obligations contained in this Lease, or by any waiver or failure of Landlord to enforce any of the obligations under this Lease, and Tenant and any successor in interest to Tenant shall continue to be liable hereunder. If any such agreement or modification operates to increase the obligations of a tenant under this Lease, the liability under this Section 11.04 of the tenant named in the Lease, or any of its successors in interest (unless such party shall have expressly consented in writing to such agreement or modification), shall continue to be no greater than if such agreement or modification had not been made. In the event of an assignment, to charge Tenant named in this Lease and its successors in interest, no demand or notice of any default shall be required; Tenant and each of its successors in interest hereby expressly waives any such demand or notice. 11.05. Notwithstanding anything to the contrary contained in this Article 11, if Tenant desires to assign this Lease or sublet all or part of the demised premises, Tenant shall give notice thereof to Landlord (herein called "Tenant's Article 11 Offer Notice "), which notice shall set forth in the case of a subletting: (a) the area proposed to be sublet, (b) the term of the proposed subletting and the date the area to be sublet is intended to be vacated by Tenant, and (c) the rents (hereafter called the "Proposed Rent Rate") pursuant to which Tenant is willing to enter into a sublease with a third party. In the case of a proposed assignment, Tenant's Article 11 Offer Notice shall set forth Tenant's intention to (x) assign the Lease in whole, it being understood and agreed that partial assignments of the Lease are not permitted hereunder, (y) the proposed date upon which the demised premises are intended to be vacated by Tenant, and (z) all financial and other material terms of the proposed assignment (herein called the "Proposed Assignment Components"). Tenant's Article 11 Offer Notice shall be, deemed an offer from Tenant to Landlord whereby Landlord may, at its option, (i)(A) terminate this Lease if the proposed transaction is an assignment of the Lease or a sublease of all or substantially all of the demised premises, or (B) accept an assignment of this Lease from Tenant, and Tenant shall then promptly execute and deliver to Landlord, or Landlord's designee if so elected by Landlord, an assignment in form reasonably satisfactory to Landlord's counsel, and the terms of such assignment may, at Landlord's election, be either (z) the Proposed Assignment Components set forth in the proposed assignment, or (y) the terms contained in this Lease, or (ii)(A) terminate this Lease with respect to the space covered by the proposed sublease if the, proposed transaction is a sublease of part of the demised premises, or accept a sublease from Tenant with respect to the space covered by the proposed sublease, and Tenant shall then promptly execute and deliver to Landlord, or Landlord's designee if so elected by Landlord, a sublease in form reasonably satisfactory to Landlord's counsel and in compliance with the provisions of Section 11.11 hereof. Said options may be exercised by Landlord by notice to Tenant at any time, within thirty (30) days after such Tenant's Article 11 Notice has been received by Landlord, and during such thirty (30) day period Tenant shall not assign this Lease or sublet such space to any person except Landlord. In the event that this Lease shall be assigned to Landlord or Landlord's designee or if the demised 29 premises shall be sublet to Landlord or Landlord's designee pursuant to this Section 11.05 the provisions of any such sublease or assignment and the obligations of Landlord and the rights of Tenant with respect thereto shall not be binding upon or otherwise affect the rights of any holder of a superior mortgage or of a superior lease unless such holder shall elect by written notice to Tenant to succeed to the position of Landlord or its design, as the case may be, thereunder. 11.06. If Landlord exercises its option to terminate this Lease in the case where Tenant desires either to assign this Lease or sublet all or substantially all of the demised premises, then, this Lease shall end and expire on the date that such assignment or sublet was to be effective or commence, as the case may be, and the fixed annual rent and additional rent shall be paid and apportioned to such date. 11.07. If Landlord exercises its option to terminate this Lease with respect to the space covered by Tenant's proposed sublease in any case where Tenant desires to sublet part of the demised premises, then (a) this Lease shall end and expire with respect to such part of the demised premises on the date that the proposed sublease was to commence; and (b) from and after such date the fixed annual rent and additional rent shall be adjusted, based upon the proportion that the rentable area of the demised premises remaining bears to the total rentable area of the demised premises. 11.08. In the event Landlord does not exercise any of its options pursuant to Section 11.05 hereof and provided that Tenant is not in default of any of Tenant's obligations under this Lease beyond any applicable grace period, Landlord's consent to the proposed assignment or sublease shall not be unreasonably withhold, provided and upon condition that: (a) Tenant shall request, in writing Landlord's consent to each subletting or assignment, which request shall be accompanied by (i) a statement from Tenant listing the items set forth in clauses (a), (b) and (c) of Section 11.05 hereof with respect to a proposed subletting, or clauses (z), (y) and (z) of Section 11.05 hereof with respect to a proposed assignment, which shall demonstrate that the aggregate financial value of the components of such proposed assignment or such proposed sublease comparable to the Proposed Rent Rate or the Proposed Assignment Components, as the case may be, shall be equal to at least ninety (90%) percent of the aggregate financial value of the Proposed Rent Rate or the Proposed Assignment Components, as the case may be, set forth in Tenant's Article 11 Offer Notice, and the area proposed to be sublet and the term of the proposed subletting or the proposed assignment shall be substantially the same as the Area and term set forth in Tenant's Article 11 Offer Notice; and that the effective or commencement date of such transaction shall be at least thirty (30) days after the giving of such notice; (ii) a statement setting forth in reasonable detail the identity of the proposed assignee, or subtenant, and the nature of its business and that its proposed use of the demised premises shall be for general and/or executive offices; and (iii) a current financial report or annual report with respect to the proposed assignee or subtenant, including, without limitation, its most recent financial report. If Landlord shall 30 approve such proposed subtenant or assignee, Tenant shall submit to Landlord the proposed assignment or sublease prior to the execution thereof. In the event that Landlord shall request reasonable additional information with respect to the proposed assignee or subtenant, then Tenant shall promptly provide such information to Landlord; (b) the proposed subtenant or assignee is a reputable party whose financial net worth, credit and financial responsibility is, considering the responsibilities involved, reasonably satisfactory to Landlord; (c) the intended use of the demised premises is, in Landlord's reasonable judgment, in keeping with the standards of the Building; (d) the proposed subtenant or assignee is not then an occupant of any part of the Building or a party who dealt with Landlord or Landlord's agent (directly or through a broker) with respect to space in the Building during the 6 months immediately preceding Tenant's request for Landlord's consent, and if Tenant supplies Landlord with a list of proposed assignees or subtenants, Landlord shall notify Tenant if such proposed assignees or subtenants would violate the provisions of this clause (d); (e) all costs incurred with respect to providing reasonably appropriate means of ingress and egress from the sublet space or to separate the sublet space from the remainder of the demised premises shall, subject to the provisions of Article 6 with respect to alterations, installations, additions or improvements, be borne by Tenant; (f) each sublease shall specifically state that (i) it is subject to all the terms, covenants, agreements, provisions, and conditions of this Lease, (ii) the subtenant or assignee, as the case may be, shall not have the right to a further assignment thereof or sublease or assignment thereunder, or to allow the demised premises to be used by others, without the consent of Landlord in each instance, which consent, Landlord agrees, shall not be unreasonably withheld or delayed, provided that such subtenant or assignee shall satisfy the conditions applicable to Tenant in this Article 11 with respect to subleases and assignments, including affording Landlord rights and benefits with respect to the proposed assignment or subletting by such subtenant at least equal to those set forth in Section 11-05 hereof in the event of a proposed subletting or assignment by Tenant, and that the proposed assignment or sublease complies with the provisions of this Article 11; (g) Tenant shall, together with requesting Landlord's consent hereunder, have paid Landlord any reasonable out-of-pocket costs incurred by Landlord to review the proposed assignment or subletting including reasonable attorneys fees incurred by Landlord; (h) Tenant shall have complied with the provisions in Section 11.05 and Landlord shall not have made any of the elections provided for therein; 31 (i) the proposed subtenant or assignee is not (i) a retail, off-the-street office or branch of a bank, trust company, safe deposit business, savings and loan association or loan company; (ii) an employment or recruitment agency; (iii) a school, college, university or educational institution whether or not for profit; or (iv) a government or any subdivision or agency thereof; (j) in the case of a subletting of a portion of the demised premises, the portion so sublet shall be regular in shape and suitable in location and configuration for normal renting purposes; (k) the proposed assignment shall be for a consideration which shall reflect the fair market value of the leasehold interest being assigned (in the case of an assignment) or the proposed subletting shall be at a rental rate which shall reflect the fair market rental value of the space being sublet (in case of a subletting) and in no event shall Tenant publicly advertise or list with brokers at a lower rental rate than Landlord is charging for comparable, space (however, the foregoing shall not be deemed to prohibit Tenant from advising a broker of the price for subrental for which Tenant is prepared to consummate an assignment or sublease); (l) the form of proposed sublease shall comply with the applicable provisions of this Article 11; and (m) the space in question, the term, the rental and other terms and conditions of the sublease are substantially the same as those contained in Tenant's Article 11 Offer Notice. In the event that Tenant's Article 11 Offer Notice sets forth the information required pursuant to Section 11.08(a) above, Landlord shall approve or disapprove Tenant's request for Landlord's consent to the proposed assignment or subletting as soon as practicable and in any event within thirty (30) days after Landlord's receipt of the request therefor. 11.09.(a) In the event that in connection with Tenant's request for Landlord's consent pursuant to Section 11.08 hereof, Tenant submits to Landlord a statement (hereinafter called "Tenant's Statement") pursuant to Section 11.08(a) with respect to the proposed subletting or assignment set forth in Tenant's Article 11 Offer Notice and the aggregate, financial value of the components of such proposed assignment or sublease comparable to the Proposed Rent Rate, or the Proposed Assignment Components, as the, case may be, is equal to less than ninety (90%) percent of the aggregate financial value to Tenant of the Proposed Rent Rate or the Proposed Assignment Components, as the case may be, set forth in the Tenant's Article 11 Offer Notice, or the area proposed to be, sublet or the term of the proposed subletting or the proposed assignment are not substantially the same as the area or term set forth in Tenant's Article 11 Offer Notice, then, in such. event, Tenant's request for consent pursuant to Section 32 11.08 hereof shall be, deemed an offer from Tenant to Landlord as to which Landlord shall have the options set forth in Section 11.05 hereof. (b) If Landlord fails to exercise any of its options under Section 11.05 hereof, and Tenant fails to request Landlord's consent to an assignment or sublease on the, terms and conditions set forth in Tenant's Article 11 Offer Notice within one hundred eighty (180) days from the date of Landlord's response to Tenant's Article 11 Offer Notice, or if Landlord fails to exercise any of its options under Section 11.05 hereof, and consents to a proposed assignment or sublease, and Tenant fails to execute and deliver the assignment or sublease to which Landlord consented within one hundred eighty (180) days after the giving of such consent, then, in any event, Tenant shall again comply with all of the provisions and conditions of Article 11 hereof before assigning this Lease or subletting all or part of the demised premises. 11.10. With respect to each and every sublease, or subletting authorized by Landlord under the provisions of this Lease, it is further agreed: (a) No subletting shall be for a term (including any renewal or extension options contained in the sublease) ending later than one day prior to the Expiration Date of this Lease; (b) No sublease shall be valid, and no subtenant shall take possession of the demised premises or any part thereof, until an executed counterpart of such sublease (and all ancillary documents executed in connection with, with respect to or modifying such sublease) has been delivered to Landlord; (c) Each sublease shall provide that it is subject and subordinate to this Lease and to any matters to which this Lease is or shall be subordinate, and that in the event of termination, reentry or dispossess by Landlord under this Lease, Landlord may, at its option, take over all of the right, title and interest of Tenant, as sublessor, under such sublease, and such subtenant shall, at Landlord's option, attorn to Landlord, except that Landlord shall not be (I) liable for any previous act or omission of Tenant under such sublease, (ii) subject to any credit, offset, claim, counterclaim, demand or defense which such subtenant may have against Tenant, (iii) bound by any previous modification of such sublease or by any previous prepayment of more than one, (1) month's rent, (iv) bound by any covenant of Tenant to undertake or complete any construction of the demised premises or any portion thereof, (v) required to account for any security deposit of the subtenant other than any security deposit actually delivered to Landlord by Tenant, (vi) bound by any obligation to make any payment to such subtenant or grant any credits, except for services, repairs, maintenance and restoration provided for under the sublease to be performed after the date of such attornment, (vii) responsible for any monies owing by Landlord to the credit of Tenant or (viii) required to remove any person occupying the demised premises or any part thereof. 33 11.11. If Landlord should elect to have Tenant execute and deliver a sublease to Landlord pursuant to Section 11.05 of this Lease, said sublease to Landlord shall be in a form reasonably satisfactory to Landlord's and Tenant's counsel and on all the terms contained in this Lease, except that: (i) The rental terms, if elected by Landlord, may be either at (x) the Proposed Rent Rate set forth in the proposed sublease, or (y) the rental terms contained in this Lease on a per rentable square foot basis, as elected by Landlord in such notice; (ii) The sublease shall not provide for any work to be done for the subtenant or for any Initial rent concessions or contain provisions inapplicable to a sublease, except that in the case of a subletting of a portion of the demised premises Tenant shall reimburse subtenant for the cost of erecting such demising walls as are necessary to separate the subleased premises from the remainder of the demised premises and to provide access thereto, (iii) The subtenant thereunder shall have the right to underlet the subleased premises, in whole or in part, without Tenant's consent, (iv) The subtenant thereunder shall have the right to make, or cause to be made any changes, alterations, decorations, additions and improvements that subtenant may desire or authorize, (v) Such sublease shall expressly negate any intention that any estate created by or under such sublease be merged with any other estate held by either of the parties thereto, (vi) Any consent required of Tenant, as lessor under that sublease, shall be deemed granted if consent with respect thereto is granted by Landlord, (vii) There shall be no limitation as to the use of the sublet premises by the subtenant thereunder, (viii) Any failure of the subtenant thereunder to comply with the provisions of said sublease, other than with respect to the payment of rent to Tenant, shall not constitute a default thereunder or hereunder if Landlord has consented to such noncompliance, and (ix) Such sublease shall provide that Tenant's obligations with respect to vacating the demised premises and removing any changes, alterations, decorations, additions or improvements made in the subleased premises shall be limited to those which accrued and related to such as were made prior to the effective date of the sublease. 34 11.12. If Landlord shall give its consent to any assignment of this Lease or to any sublease, Tenant shall in consideration therefor, pay to Landlord, as additional rent: (i) in the case of an assignment, an amount equal to fifty (50%) percent of all sums and other considerations paid to Tenant by the assignee for or by reason of such assignment (including, but not limited to, sums paid for the sale of Tenant's fixtures, leasehold improvements, equipment, furniture, furnishings or other personal property, less, in the case of a sale of any of the foregoing other than leasehold improvements, the then not unamortized or undepreciated cost thereof determined on the basis of Tenant's federal income tax returns), less the reasonable brokerage fees and commissions, advertising fees and attorneys' fees paid by Tenant to independent third parties in connection with such assignment; and (ii) in the case of a sublease, fifty (50%) percent of any rents, additional charge or other consideration payable under the sublease to Tenant by the subtenant which is in excess of the fixed annual rent and additional rent accruing during the term of the sublease in respect of the subleased space (at the rate per square foot payable by Tenant hereunder) pursuant to the terms hereof (including, but not limited too sums paid for the sale or rental of Tenant's fixtures, leasehold improvements, equipment, furniture or other personal property, less, in the case of the sale of any of foregoing other than leasehold improvements, the then net unamortized or undepreciated cost thereof determined on the basis of Tenant, federal income tax returns), less (x) the reasonable brokerage fees and commissions, advertising fees and attorneys' fees paid by Tenant to independent third parties in connection with such sublease, and (y) the reasonable costs incurred by Tenant to segregate the subleased space from the remainder of the- demised premises and to provide access thereto. The sums payable under this Section 11.12 shall be paid to Landlord as and when paid by the subtenant or assignee to Tenant. 11.13. Landlord's consent to any sublease or assignment shall not be deemed or construed to modify, amend or affect the terms and provisions of this Lease, or Tenant's obligations hereunder, which shall continue to apply to the occupants thereof, as if the sublease or assignment had not been made. Notwithstanding any assignment or sublease, Tenant shall remain fully liable for the payment of fixed annual rent and additional rents and for the other obligations of this Lease on the part of Tenant to be performed or observed. In the event that Tenant defaults in the payment of any rent, Landlord is authorized to collect any rents due or accruing from any subtenant or other occupant of the demised premises and to apply the net amounts collected to the fixed annual rent and additional rent reserved herein, and the receipt of any such amounts by Landlord from an assignee or subtenant, or other occupant of any part of the demised promises, shall not be deemed or construed as releasing Tenant from Tenant's obligations hereunder or the acceptance of that party as a direct tenant. 35 ARTICLE 12 CERTIFICATE Of OCCUPANCY 12.01. Tenant will not at any time use or occupy the demised premises in violation of the Certificate of Occupancy issued for the Building. ARTICLE 13 ADJACENT EXCAVATION; SHORING 13.01. If an excavation or other substructure work shall be made upon land adjacent to the demised premises, 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 purposes of doing such work as shall be necessary to preserve the wall of or the Building of which the demised premises form a part from injury or damage and to support the same by proper foundations without any claim for damages or indemnity against Landlord, or diminution or abatement of rent. ARTICLE 14 CONDEMNATION 14.01. In the event that the whole of the demised premises shall be lawfully condemned or taken in any manner for any public or quasi-public use, this Lease and the term and estate hereby granted shall forthwith cease and terminate as of the date of vesting of title. In the event that only a part of the demised premises shall be so condemned or taken, then, effective as of the date of vesting of title, the fixed annual rent under Article 1 hereunder and additional rents under Article 3 hereunder shall be abated in an amount thereof apportioned according to the area of the demised premises so condemned or taken. In the event that only a part of the Building shall be so condemned or taken, then (a) Landlord (whether or not the demised premises be affected) may, at Landlord's option, terminate this Lease and the term and estate hereby granted as of the date of such vesting of title by notifying Tenant in writing of such termination within 60 days following the date on which Landlord shall have received notice of vesting of title, or (b) if such condemnation or taking shall be of a substantial part of the demised premises or of a substantial part of the means of access thereto and the remaining portion of the demised premises shall not be reasonably sufficient for Tenant to continue the operation of its business, Tenant may, at Tenant's option, by delivery of notice in writing to Landlord within thirty (30) days following the date on which Tenant shall have received notice of vesting of title, terminate this Lease and the term and estate hereby granted as of the date of vesting of title, or (c) if neither Landlord nor Tenant elects to terminate this Lease, as aforesaid, this Lease shall be and remain unaffected by such condemnation or taking, except that the fixed annual rent payable under Article 1 and additional rents payable under Article 3 shall be abated to the extent hereinbefore -36- provided in this Article 14. In the event that only a part of the demised premises shall be so condemned or taken and this Lease and the term and estate hereby granted with respect to the remaining portion of the demised premises are not terminated as hereinbefore provided, Landlord will, with reasonable diligence and at its expense, restore the remaining portion of the demised premises as nearly as practicable to the same condition as it was in prior to such condemnation or taking. 14.02. In the event of its termination in any of the cases hereinbefore provided, this Lease and the term and estate hereby granted shall expire as of the date of such termination with the same effect as if that were the Expiration Date, and the fixed annual rent and additional rents payable hereunder shall be apportioned as of such date. 14.03. In the event of any condemnation or taking hereinbefore mentioned of all or a part of the Building, Landlord shall be entitled to receive the entire award in the condemnation proceeding, including any award made for the value of the estate vested by this Lease in Tenant, and Tenant hereby expressly assigns to Landlord any and all right, title and interest of Tenant now or hereafter arising in or to any such award or any part thereof, and Tenant shall be entitled to receive no part of such award. 14.04. It is expressly understood and agreed that the provisions of this Article 14 shall not be applicable to any condemnation or taking for governmental occupancy for a limited period. 14.05. In the event of any taking of less than the whole of the Building which does not result in a termination of this Lease, or in the event of a taking for a temporary use or occupancy of all or any part of the demised premises which does not result in a termination of this Lease, Landlord, at its expense, and whether or not any award or awards shall be sufficient for the purpose, shall proceed with reasonable diligence to repair, alter and restore the, remaining parts of the Building and the demised premises to substantially their former condition to the extent that the same may be feasible and so as to constitute a complete and tenantable Building and demised premises. 14.06. In the event of a taking or condemnation for a temporary use or occupancy of all or any part of the demised premises during the term of this Lease, Tenant shall be entitled, except as hereinafter set forth, to receive, that portion of the award or payment for such taking or condemnation which represents compensation for the use and occupancy of the demised premises, for the taking of Tenant's property and for moving expenses, and Landlord shall be entitled to receive that portion of such award or payment which represents reimbursement for the cost of restoration of the demised premises. This Lease shall be and remain unaffected by such taking or condemnation and Tenant shall continue to be responsible for all of its obligations hereunder insofar as such obligations are not affected by such taking or condemnation and shall continue to pay in full the fixed annual rent and additional rent when due undo this Lease. If the period of temporary use or occupancy shall extend beyond the Expiration Date of this Lease, that -37- part of the award which represents compensation for the use and occupancy of the demised premises (or a part thereof) shall be divided between Landlord and Tenant so that Tenant shall receive so much thereof as represents the period up to and including such Expiration Date and Landlord shall receive so much thereof as represents the period after such Expiration Date. 14.07. In the event any part of the demised premises be taken to effect compliance with any law or requirement of public authority other than in the manner hereinabove provided in this Article 14, then (i) if such compliance is the obligation of Tenant under this Lease, Tenant shall not be entitled to any diminution or abatement of rent or other compensation from Landlord therefor, but (ii) if such compliance is the obligation of Landlord under this Lease, the fixed annual rent hereunder shall be reduced and additional rents under Article 3 shall be adjusted in the same manner as is provided in Section 14.01 according to the reduction in rentable area of the demised premises resulting from such taking. ARTICLE 15 ACCESS TO DEMISED PREMISES; CHANGES 15.01. Tenant shall permit Landlord to erect, use and maintain pipes, ducts and conduits in and through the demised premises, provided the same are installed adjacent to and are placed in box enclosures or concealed behind walls and ceilings of the demised premises and do not adversely affect (except to a de minimus extent) the Building systems affecting the demised premises. Landlord shall to the extent reasonably practicable install such pipes, ducts and conduits by such methods and at such locations as will not materially interfere with or impair Tenant's layout or use of the demised premises. Landlord or its agents or designees shall have the right, upon reasonable prior notice (except in the case of emergency) to Tenant or any authorized employee of Tenant at the demised premises, to enter the demised premises, at reasonable times during business hours, for the making of such repairs or alterations as Landlord may deem necessary for the Building or which Landlord shall be required to or shall have the right to make by the provisions of this Lease or any other lease in the Building or in connection with the removal of asbestos from the demised premises and, subject to the foregoing, shall also have the right to enter the demised premises for the purpose of inspecting them or exhibiting them to prospective purchasers or lessees of the entire Building or to prospective mortgagees of the fee or of the Landlord's interest in the property of which the demised premises are a part or to prospective assignees of any such mortgages or to the holder of any mortgage on the Landlord's interest in the property, its agents or designees. Landlord shall be allowed to take all material into and upon the demised premises that may be required for the repairs or alterations above mentioned as the same is required for such purpose, without the same constituting an eviction of Tenant in whole or in part, and the rent reserved shall in no wise abate while said repairs or alterations are being made by reason of loss or interruption of the business of Tenant because of the prosecution of any such work. Landlord shall exercise reasonable diligence so as to minimize the disturbance but nothing contained herein shall be deemed to require Landlord to perform the same on an overtime or premium pay basis. In connection with the removal of asbestos from the -38- demised premises, Landlord agrees to repair and restore the demised premises to their condition and state of repair existing as of the commencement of such asbestos removal. Tenant agrees that, subject to the provisions of Section 9.04 hereof, Landlord shall have the right at any time to install in the Building on the insides of the windows thereof, a film to reduce the usage of energy in the Building. Tenant agrees that the foregoing provisions of this Section shall apply to the installation, maintenance of replacement of such film. 15.02. Landlord reserves the right, without the same constituting an eviction and without incurring liability to Tenant therefor, to change the arrangement and/or location of public entrances, passageways, doors, doorways, corridors, elevators, stairway, toilets or other public parts of the Building; provided, however, that access to the Building shall not be cut off and that - -------- ------- there shall be no unreasonable obstruction of access to the demised premises or unreasonable interference with the use or enjoyment thereof or applicable Legal Requirements. 15.03. Landlord reserves the right to light from time to time all or any portion of the demised premises at night for display purposes at Landlord's sole cost and expense. 15.04. Landlord may, during the (12) months prior to expiration of the term of this Lease, exhibit the demised premises to prospective tenants at any reasonable time or times upon reasonable prior notice (except in the case of an emergency), which notice may be oral, and Landlord shall exercise reasonable efforts, so as to minimize any interference with the. conduct of Tenant's business in the demised premises. 15.05. If Tenant shall not be personally present to open and permit an entry into the demised premises at any time when for any reason an entry therein shall be urgently necessary by reason of fire or other emergency, Landlord or Landlord's agents may, if necessary, forcibly enter the same without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord's agents shall accord reasonable care to Tenant's property) and without in any manner affecting the obligations and covenants of this Lease. ARTICLE 16 CONDITIONS Of LIMITATION 16.01. This Lease and the term and estate hereby granted are subject to the limitation that whenever Tenant shall make an assignment of the property of Tenant for the benefit of creditors, or shall file a voluntary petition under any bankruptcy or insolvency law or any involuntary petition alleging an act of bankruptcy or insolvency shall be filed against Tenant under any bankruptcy or insolvency law, or whenever a petition shall be filed by or against Tenant under the reorganization provisions of the United States Bankruptcy Act or under the provisions of any law of like import, or whenever a petition shall be filed by Tenant under the arrangement provisions of the United States Bankruptcy Act or under the provisions of any law of like import or whenever a permanent receiver of Tenant or of or for the property of Tenant -39- shall be appointed, then, Landlord may, (a) at any time after receipt of such notice of the occurrence of any such event, or (b) if such event occurs without the acquiescence of Tenant, at any time after the event continues for thirty (30) days, give Tenant a notice of intention to end the term of this Lease at the expiration of five (5) days from the date of service of such notice of intention, and upon the expiration of said five (5) day period, this Lease and the term and estate hereby granted, whether or not the term shall theretofore have commenced, shall terminate with the same effect as if that day were the Expiration Date, but Tenant shall remain liable for damages as provided in Article 18. 16.02. This Lease and the term and estate hereby granted are subject to further limitation as follows: (a) whenever Tenant shall default in the payment of any installment of fixed annual rent, or in the payment of any additional rent or any other charge payable by Tenant to Landlord, on any day upon which same ought to be paid, and such default shall continue for ten (10) days after Landlord shall have given Tenant a notice specifying such default, or (b) whenever Tenant shall do or permit anything to be done, whether by action or inaction, contrary to any of Tenant's obligations hereunder, and if such situation shall continue and shall not be remedied by Tenant within thirty (30) days after Landlord shall have given to Tenant a notice specifying the same, or, in the case of a happening or default which cannot with due diligence be cured within a period of thirty (30) days, if Tenant shall not (i) within said thirty (30) day period advise Landlord of Tenant's intention to duly institute all steps necessary to remedy such situation, and (ii) duly institute within said thirty (30) day period, and thereafter diligently and continuously prosecute to completion all steps necessary to remedy the same, or (c) whenever any event shall occur or any contingency shall arise whereby this Lease or the estate hereby granted or the unexpired balance of the term hereof would, by operation of law or otherwise, devolve upon or pass to any person, firm or corporation other than Tenant, except as expressly permitted by Article 11, or (d) whenever Tenant shall default in the due keeping, observing or performance of any covenant, agreement, provision or condition of Article 5 hereof on the part of Tenant to be kept, observed or performed and if such default shall continue and shall not be remedied by Tenant within five (5) days after Landlord shall have given to Tenant a notice specifying the same, or (e) whenever a default of the kind set forth in Subsection 16(a), (b), (c) or (d) hereof shall occur and if either (i) Tenant shall cure, after notice, such default within any applicable grace period or (ii) Landlord shall, in its sole discretion, permit Tenant to cure, such default after the applicable grace period has expired, and if a similar -40- default shall occur more than three (3) times within the next three hundred sixty-five (365) days, whether or not such similar default or defaults is or are cured within the applicable grace period, then in any of said cases set forth in the foregoing Subsections (a), (b), (c), (d), and Landlord may give to Tenant a notice of intention to end the term of this Lease at the expiration of three (3) days from the date of the service of such notice of intention and upon the expiration of said three (3) days this Lease and the term and estate hereby granted, whether or not the term shall theretofore have commenced, shall terminate with the same effect as if that day were the Expiration Date, but Tenant shall remain liable for damages as provided in Article 18. ARTICLE 17 RE-ENTRY BY LANDLORD; INJUNCTION 17.01. If Tenant shall default in the payment of any installment of fixed annual rent, or of any additional rent, on any date upon which the same ought to be paid, and if such default shall continue beyond the expiration of any applicable grace period after Landlord shall have given to Tenant a notice specifying such default, or if this Lease shall expire as in Article 16 provided, Landlord or Landlord's agents and employees may immediately or at any time thereafter re-enter the demised premises, or any part thereof, either by summary dispossess proceedings or by any suitable action or proceeding at law, without being liable to indictment, prosecution or damages therefrom, to the end that Landlord may have, hold and enjoy the demised premises again as and of its first estate and interest therein. The word re-enter, as herein used, is not restricted to its technical legal meaning. In the event of any termination of this Lease under the provisions of Article 16 or if Landlord shall re-enter the demised premises under the provisions of this Article 17 or in the event of the termination of this Lease, or of re-entry, by or under any summary dispossess or other proceedings or action or any provision of law by reason of default hereunder on the part of Tenant, Tenant shall thereupon pay to Landlord the fixed annual rent and additional rent payable by Tenant to Landlord up to the time of such termination of this Lease, or of such recovery of possession of the demised premises by Landlord, as the case may be, and shall also pay to Landlord damages as provided in Article 18. 17.02. In the event of a breach or threatened breach of Tenant of any of its obligations under this Lease, Landlord shall also have the right of injunction. The special remedies to which Landlord may resort hereunder are cumulative and are not intended to be exclusive of any other remedies or means of redress to which Landlord may lawfully be entitled at any time and Landlord may invoke any remedy allowed at law or in equity as if specific remedies were not provided for herein. 17.03. If this Lease shall terminate under the provisions of Article 16, or if Landlord shall re-enter the demised premises under the provisions of this Article 17, or in the event of the termination of this Lease, or of entry, by or under any summary dispossess or other -41- proceeding or action or any provision of law by reason of default hereunder on the part of Tenant, Landlord shall be entitled to retain all moneys, if any, paid by Tenant to Landlord, whether as advancement, security or otherwise,but such moneys shall be credited by Landlord against any fixed annual rent or additional rent due from Tenant at the time of such termination or re-entry or, at Landlord's option against any damages payable by Tenant under Articles 16 and 18 or pursuant to law. 17.04. Tenant hereby' expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord obtaining possession of the demised premises, by reason of the violation by Tenant of any of the covenants and conditions of this Lease or otherwise. ARTICLE 18 DAMAGES 18.01. If this Lease is terminated under the provisions of Article 16, or if Landlord shall re-enter the demised premises under the provisions of Article 17, or in the event of the termination of this Lease, or of re-entry, by or under any summary dispossess or other proceeding or action or any provision of law by reason of default hereunder on the part of Tenant, Tenant' shall pay to Landlord as damages, at the election of Landlord, either: (a) a sum which at the time of such termination of this Lease or at the time of any such re-entry by Landlord, as the case may be, represents the then present value of the excess, if any, of (1) the aggregate of the fixed annual rent and the additional rent payable hereunder which would have been payable by Tenant (conclusively presuming that additional rent on account of increases in Taxes and Operating Expenses shall increase, at the average of the rates of increase thereof previously experienced by Landlord during the period (not to exceed three (3) years) prior to such termination) for the period commencing with such earlier termination of this Lease or the date of any such re-entry, as the case may be, and ending with the Expiration Date, had this Lease not so terminated or had Landlord not so re-entered the demised premises, over (2) the aggregate rental value of the demised premises for the same period, or (b) sums equal to the fixed annual rent and the additional rent payable hereunder which would have been payable by Tenant had this Lease not so terminated, or had Landlord not so re-entered the demised premises, payable upon the due dates therefor specified herein following such termination or such re-entry and until the -42- Expiration Date; provided, however, that if Landlord shall re-let the -------- ------- demised premises during said period, Landlord shall credit Tenant with the net rents received by Landlord from such re-letting, such not rents to be determined by first deducting from the gross rents as and when received by Landlord expenses incurred in terminating this Lease or in re-entering the demised premises and in securing possession thereof, as well as the expenses of re-letting, including altering and preparing the demised premises for now tenants, brokers' commissions, and all other reasonable expenses properly chargeable against the demised premises and the rental thereof; it being understood that any such re-letting may be, for a period shorter or longer than the remaining term of this Lease; but in no event shall Tenant be, entitled to receive any excess of such net rents over the sums payable by Tenant to Landlord hereunder, or shall Tenant be entitled in any suit for the collection of damages pursuant to this subsection to a credit. in respect of any net rents from a re-letting, except to the extent that such net rents are actually received by Landlord. If the demised premises or any part thereof should be, re-lot in combination with other space, then proper apportionment on a square foot basis shall be made of the rent received from such re-letting and of the expenses of re-letting. If the demised premises or any part thereof be re-let by Landlord for the unexpired portion of the term of this Lease, or any part thereof, before, presentation of proof of such damages to any court, commission or tribunal, the amount of rent reserved upon such re-letting shall, prima facie both fair and ----- ----- reasonable rental value for the demised premises, or part thereof, so re-let during the term of the re-letting. 18.02. Suit or suits for the recovery of such damages, or any installments thereof, may be brought by Landlord from time to time at its election, and nothing contained herein shall be, deemed to require Landlord to postpone suit until the date when the term of this Lease, would have expired if it had not been so terminated under the provision of Article 16 or under any provision of law, or had Landlord not re-entered the demised premises. Nothing herein contained shall be construed to limit or preclude recovery by Landlord against Tenant of any sums or damages to which, in addition to the damages particularly provided above, Landlord may lawfully be entitled by reason of any default hereunder on the part of Tenant. Nothing herein contained shall be construed to limit or prejudice the right of Landlord to prove for and obtain as liquidated damages by reason of the termination of this Lease or re-entry of the demised premises for the default of Tenant under this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which such damages are to be proved whether or not such amount be greater, equal to, or less than any of the sums referred to in Section 18.01. -43- ARTICLE 19 LANDLORDS RIGHT TO PERFORM TENANT'S OBLIGATIONS 19.01. If Tenant shall default in the observance or performance of any term or covenant on Tenant's part to be observed or performed under or by virtue of any of the terms or provisions in any Article of this Lease, (a) Landlord may remedy such default for the account of Tenant, immediately and without notice in case of emergency, or in any other case only provided that Tenant shall fail to remedy such default with all reasonable dispatch after Landlord shall have notified Tenant in writing of such default and the applicable grace period for curing such default shall have expired; and (b) if Landlord makes any expenditures or incurs any obligations for the payment of money in connection with such default including, but not limited to, reasonable attorneys' fees in instituting, prosecuting or defending any action or proceeding, such sums or obligations incurred, with interest at the Interest Rate, shall be deemed to be additional rent hereunder and shall be paid by Tenant to Landlord upon rendition of a bill to Tenant therefor. ARTICLE 20 QUIET ENJOYMENT 20.01. Landlord covenants and agrees that subject to the terms and provisions of this Lease, if, and so long as, Tenant keeps and performs each and every covenant, agreement, term, provision and condition herein contained on the part or on behalf of Tenant to be kept or performed, then Tenant's right under this Lease shall not be cut off or ended before the expiration of the term of this Lease, subject however, to (i) the obligations of this Lease, and (ii) as provided in Article 25 hereof with respect to ground and underlying leases and mortgages which affect this Lease. ARTICLE 21 SERVICES AND EQUIPMENT 21.01. Landlord shall, at its cost and expense: (a) Provide necessary elevator facilities on Business Days (as hereinafter defined in Article 22) during "regular hours" (that is between the hours of 8:00 A.M. and 6:00 P.M.) and shall have at least one elevator in Tenant's elevator bank subject to call at all other times. At Landlord's option, the elevator shall be operated by automatic control or manual control, or by a combination of both of such methods. Landlord shall provide freight elevator service to the demised premises at no charge for casual deliveries on a first come first served basis (i.e., no advance scheduling) during those hours of Business Days during which freight elevator service is regularly provided. Freight elevator service shall also be provided to the -44- demised premises on a reserved basis at all other times, upon the payment of Landlord's then established charges therefor which shall be additional rent hereunder. The use of all elevators shall be on a non-exclusive basis and shall be subject to Landlord's Freight Elevator Rules and Regulations which in their current form are annexed hereto as Schedule E. (b) Maintain and operate the heating system and shall, subject to the design specifications of the heating system and to energy conservation requirements of, and voluntary energy conservation programs sponsored by, governmental authorities, furnish heat (hereinafter called "Heat service") to the demised premises. Heat service shall be provided, as may be required for comfortable occupancy of the demised premises during regular hours on Business Days during the heating season. If Tenant shall require Heat service during hours other than regular hours or on days other than Business Days (hereinafter called "After Hours"), Landlord shall furnish such After Hours Heat service upon reasonable advance notice from Tenant, and Tenant shall pay, on demand, Landlord's established charges therefor. Landlord's current charge for such After Hours Heat service is $275.00 per hour per floor, which charge shall be subject to increases from time to time in the same percentage as increases in Landlord's costs. (c) Supply air conditioning (hereinafter referred to as "A/C service") to the demised premises, subject to the design specifications of the systems annexed hereto as Schedule F and to energy conservation requirements of, and voluntary energy conservation programs sponsored by, governmental authorities, during regular hours of Business Days from May 15 to October 15. If Tenant shall require A/C service during After Hours, Landlord shall furnish such After Hours A/C service upon reasonable advance notice from Tenant, and Tenant shall pay, on demand, Landlord's established charge therefor. Landlord's current charge for such After Hours A/C service is $325.00 per hour per floor, which charge shall be subject to increases from time to time in the same percentage as increases in Landlord's costs. If Tenant's manner of us and occupancy are consistent with the design specifications of the air-conditioning system (i.e., electrical usage not ---- exceeding 5 watts per square foot of ceiling area, etc.) and, notwithstanding that the same are not exceeded, the A/C service provided to those portions of the demised premises located proximately to core facilities is inadequate in accordance with usual Building Standards, Landlord shall at Landlord's expense provide such supplemental air-conditioning to the 6th floor Space as may be required to provide design conditions. (d) Provide cleaning and janitorial services on Business Days in accordance with the cleaning specifications annexed hereto as Exhibit C. Tenant shall pay to Landlord on demand the costs incurred by Landlord for (a) extra cleaning work in the demised premises required because of (i) misuse or neglect on the part of Tenant or its employees or visitors, (ii) use of portions of the demised premises for preparation, serving or consumption of food or beverages, data processing, or reproducing operations, private lavatories or toilets or other special purposes requiring greater or more difficult cleaning work than office areas, (iii) unusual quantity of interior glass surfaces, (iv) non- Building Standard materials or finishes installed by Tenant or at its request and (b) removal from the demised premises and the Building of so much of any refuse and rubbish of Tenant as shall exceed that ordinarily accumulated daily in the -45- routine of business/sales office occupancy. Landlord, its cleaning contractor and their employees shall have After Hours access to the demised premises and the free use of light, power and water in the demised premises as reasonably required for the purpose of cleaning the demised premises in accordance with Landlord's obligations hereunder. (e) Furnish water for lavatory and drinking and office cleaning purposes ("Customary Water Uses"). If Tenant requires, uses or consumes water for any other purposes, Tenant agrees to Landlord installing a meter or meters or other means to measure Tenant's water consumption, and Tenant further agrees to reimburse Landlord for the cost of the meter or meters and the installation thereof, and to pay for the maintenance of said meter equipment and/or to pay Landlord's cost of other means of measuring such water consumption by Tenant. Tenant shall reimburse Landlord for the cost of all water consumed (for other than Customary Water Uses), as measured by said meter or meters or as otherwise measured, including sewer rents. 21.02. Any use of the demised premises, or any part thereof, or rearrangement of partitioning in a manner that interferes with normal operation of the heat and air-conditioning systems (hereinafter called the systems) servicing the same, may require changes in such systems. Such changes, when so occasioned, shall be made by Tenant, at its expense, subject to Landlord's prior written approval of such changes, which approval shall not be unreasonably withhold or delayed. Tenant shall not make any change, alteration, addition or substitution to the air-conditioning system without Landlord's prior written approval, which may be withhold for any reason. 21.03. If any permit or license shall be required for the operation of any air-conditioning unit in or serving the demised premises, Landlord shall have the option of obtaining the same on Tenant's behalf and at Tenant's expense, or by written notice to Tenant requiring Tenant, at Tenant's expense, to obtain and maintain any such permit or license. 21.04. Landlord reserves the right without any liability whatsoever or except as hereinafter in this Section 21.04 provided, abatement of fixed annual rent, or additional rent, to stop the heating, air-conditioning, elevator, plumbing, electric and other systems when necessary by reason of accident or emergency or for repairs, alterations, replacements or improvements. Landlord shall use reasonable efforts, to the extent reasonably practicable, to perform such repairs, alterations, replacements or improvements in a manner which shall minimize interference with the conduct of Tenant's business and Tenant's use, occupancy and enjoyment of the demised premises, provided, however, that Landlord shall have no obligation to employ contractors or labor at overtime or other premium-pay rates or to incur any other overtime costs or expenses whatsoever. No such stoppage or interruption shall result in any liability from Landlord to Tenant or entitle Tenant to any diminution or abatement of rent or other compensation nor shall this Lease or any of the obligations of Tenant be affected or reduced by reason of any such stoppage or interruption; provided, however, that if such stoppage or interruption is not the result of any act or omission of Tenant or its agents, contractors or employees and if such interruption renders the demised premises untenantable for more than seven (7) consecutive Business Days -46- ("Untenantability Period"), and during such Untenantability Period, Tenant shall not have been using or occupying the demised premises for the conduct of its business, and Tenant shall have given Landlord notice thereof, then as Tenant's sole remedy, fixed rent and additional rent shall abate hereunder from and after the day following the expiration of such Untenantability Period until the earlier of such time as the demised premises is rendered tenantable or Tenant uses or occupies any portion of the demised premises for the conduct of its business. Neither this Lease nor any of the obligations of Tenant shall otherwise be affected or reduced by reason of such interruption, curtailment or suspension. 21.05. Landlord may fix, in its own reasonable discretion taking into account the security of the Building, at any time and from time to time, the hours during which and the regulations under which laundry, linen towels, drinking water, ice or other similar supplies and services to tenants in the Building are to be furnished or other deliveries (including food and beverages) are made and Landlord furthermore expressly reserves the right to exclude from the Building, in its own reasonable discretion taking into account the security of the Building, any person, firm or corporation attempting to furnish any of such supplies or services. Nothing contained herein shall be deemed to limit Tenant's rights utilizing its own employees to obtain or furnish the foregoing. It is also understood that Tenant or regular office employees of Tenant who are not employed by any supplier of such food or beverages or by any person, firm or corporation engaged in the business of purveying such food or beverages, may personally bring food or beverages into the Building for consumption within the demised premises by employees of Tenant, but not for resale to or for consumption by any other tenant. Landlord may fix in its absolute discretion, at any time and from time to time, the hours during which, and the regulations under which, foods and beverages may be brought into the Building by persons other than the regular employees of Tenant. 21.06. Tenant agrees to employ such office maintenance contractors as Landlord may from time to time designate, for all waxing, polishing, lamp replacement, cleaning and maintenance work in the demised premises, provided that the quality thereof and the charges therefor are reasonably comparable to that of other contractors. Tenant shall not employ any other contractor without Landlord's prior written consent. 21.07. Landlord will not be required to furnish any other services, except as otherwise provided in this Lease. ARTICLE 22 DEFINITIONS 22.01. The term "Landlord" as used in this Lease means only the owner, or the mortgagee in possession, for the time being of the Land and Building (or the owner of a lease of the Building or of the Land and Building), so that in the event of any transfer of title to said Land and Building or said lease, or in the event of a lease of the Building, or of the Land and Building, -47- upon notification to Tenant of such transfer or lease the said transferor Landlord shall be and hereby is entirely freed and relieved of all future covenants, obligations and liabilities of Landlord hereunder, and it shall be deemed and construed as a covenant running with the land without further agreement between the parties or their successors in interest, or between the parties and the transferee of title to said Land and Building or said lease, or the said lessee of the Building, or of the Land and Building, that the transferee or the lessee has assumed and agreed to carry out any and all such covenants, obligations and liabilities of Landlord hereunder. 22.02. The term "Business Days" as used in this Lease shall exclude Saturdays, Sundays and all days observed by the Federal, State or local government as legal holidays as well as all other days recognized as holidays under applicable union contracts. 22.03. "Interest Rate" shall mean a rate per annum equal to the lesser of (a) 2% above the commercial lending rate announced from time to time by Chemical Bank (New York, New York), as its prime rate for ninety (90) day unsecured loans, or (b) the maximum applicable legal rate, if any. 22.04. "Legal Requirements" shall mean laws, statutes and ordinances (including building codes and zoning regulations, and ordinances) and the orders, rules, and regulations, directives and requirements of all federal, state, county, city and borough departments, bureaus, boards, agencies, offices, commissions and other subdivisions thereof, or of any official thereof, or of any other governmental public or quasi-public authority, whether now or hereafter in force, which may be applicable to the Land or Building or the demised premises or any part thereof, or the sidewalks, curbs or areas adjacent thereto and all requirements, obligations and conditions of all instruments of record on the date of this Lease. ARTICLE 23 INVALIDITY OF ANY PROVISION 23.01. If any term, covenant, condition or provision of this Lease or the application thereof to any circumstance or to any person, firm or corporation shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Lease or the application thereof to any circumstances or to any person, firm or corporation other than those as to which any terms, covenant, condition or provision is held invalid or unenforceable, shall not be affected thereby and each remaining term, covenant, condition and provision of this Lease shall be valid and shall be enforceable to the fullest extent permitted by law. -48- ARTICLE 24 BROKERAGE 24.01. Tenant covenants, represents and warrants that Tenant hat had no dealings or communications with any broker, or agent other than Cushman & Wakefield, Inc. (which is representing Landlord) and Julien J. Studley, Inc. (which is acting as broker only with respect to the 6th Floor Space) in connection with the consummation of this Lease, and Tenant covenants and agrees to pay, hold harmless and indemnify Landlord from and against any and all cost, expense (including reasonable attorneys' fees) or liability for any compensation, commissions or charges claimed by any broker or agent, other than the brokers set forth in this Section 24.01, with respect to this Lease or the negotiation thereof. Landlord covenants, represents and warrants that Landlord has had no dealings or communications with any broker or agent purporting to represent either Tenant or Landlord in connection with this Lease except the brokers named in this Section 24.01 and Landlord covenants and agrees to pay, hold harmless and indemnify Tenant from and against any and all cost, expense (including reasonable attorneys' fees) or liability for any compensation, commissions or charges resulting from a breach of the foregoing representation. Landlord agrees to pay the brokers named in this Section 24.01 any commissions which may be due to such brokers in connection with this Lease pursuant to separate agreements. ARTICLE 25 SUBORDINATION 25.01. Subject to the provisions of Section 25.05 hereof, this Lease is and shall be subject and subordinate to all ground or underlying leases which may now or hereafter affect the real property of which the demised premises forms a part and to all mortgages which may now or hereafter affect such leases or such real property, and to all renewals, modifications, replacements and extensions thereof. The provisions of this Section 25.01 shall be self operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute and deliver at its own cost and expense any instrument, in recordable form if required, that Landlord, the lessor of any such ground or underlying lease or the holder of any such mortgage or any of their respective successors in interest may request to evidence such subordination. Any lease to which this Lease is, at the time referred to, subject and subordinate, is sometimes herein called "Superior Lease" and the lessor of a Superior Lease or its successor in interest, at the time referred to, is sometimes herein called "Superior Lessor"; and any mortgage to which this Lease is, at the time referred to, subject and subordinate, is sometimes herein called "Superior Mortgage" and the holder of a Superior Mortgage or its successor in interest, at the time referred to, is sometimes herein called "Superior Mortgagee". As of the date hereof there are no Superior Leases and the only Superior Mortgage to which this Lease is subject and subordinate is that certain Mortgage and Security Agreement dated March 30, 1990 between Asahi International, Ltd., as mortgagee, and Landlord, as mortgagor. -49- 25.02. In the event of a termination of any ground or underlying lease, or if the interests of Landlord under this Lease are transferred by reason of, or assigned in lieu of, foreclosure or other proceedings for enforcement of any mortgage, or if the holder of any mortgage acquires a lease in substitution therefor, then Tenant under this Lease will, at the option to be exercised in writing by the lessor under such ground or underlying lease or such mortgagee or purchaser, assignee or lessee, as the case may be, either (i) attorn to it and will perform for its benefit all the terms, covenants and conditions of this Lease on Tenant's part to be performed with the same force and effect as if said lessor, such mortgagee or purchaser, assignee or lessee, were the landlord originally named in this Lease, or (ii) enter into a new lease with said lessor or such mortgagee or purchaser, assignee or lessee, as landlord, for the remaining term of this Lease, and otherwise on the same terms and conditions and with the same options, if any, then remaining. The foregoing provisions of clause (i) of this Section 25.02 shall enure to the benefit of such lessor, mortgagee, purchaser, assignee or lessee, shall be self operative upon the exercise of such option, and no further instrument shall be required to give effect to said provisions. Tenant, however, upon demand of any such lessor, mortgagee, purchaser, assignee or lessee agrees to execute, from time to time, instruments in confirmation of the foregoing provisions of this Section 25.02, satisfactory to any such lessor, mortgagee, purchaser, assignee or lessee, acknowledging such attornment and setting forth the terms and conditions of its tenancy. 25.03. Anything herein contained to the contrary notwithstanding, under no circumstances shall the aforedescribed lessor under the ground lease or mortgagee or purchaser, assignee or lessee, as the case may be, whether or not it shall have succeeded to the interests of the landlord under this Lease, be: (a) liable for any act, omission or default of any prior landlord (however the foregoing shall not be deemed to exculpate such successor from its own defaults to the extent that a preexisting default shall continue after the succession contemplated hereby and after such additional period as might reasonably be required for the cure thereof assuming reasonable diligence); or (b) subject to any offsets, claims or defenses which Tenant might have against any prior landlord; or (c) bound by any rent or additional rent which Tenant might have paid to any prior landlord for more than one month in advance or for more than three months in advance where such rent payments are payable at intervals of more than one month; or (d) bound by any modification, amendment or abridgment of the Lease, or any cancellation or surrender of the same, made without its prior written approval. 25.04. If, in connection with the financing of the Building, a Superior Mortgagee shall request reasonable modifications in this Lease as a condition of approval thereof, Tenant -50- shall not unreasonably withhold, delay or defer making such modifications, provided that same does not (i) conflict with Tenant's use of the demised premises as permitted hereunder; (ii) increase Tenant's obligations (including financial obligations) hereunder (except to a de minimis extent), or (iii) decrease Tenant's rights hereunder (except to a de minimis extent). 25.05. (a) Landlord shall make a reasonable effort to obtain for Tenant from the holder of the existing Superior Mortgage affecting the Building, an agreement (hereinafter called a "Non-Disturbance Agreement") on the usual form of such holder providing in substance that so long as Tenant is not in default of any of its obligations under this Lease beyond applicable grace periods, Tenant's occupancy of the demised premises shall not be disturbed notwithstanding foreclosure of such existing Superior Mortgage. If Landlord fails to obtain a Non-Disturbance Agreement signed by such existing Superior Mortgagee within forty-five (45) days after the date hereof, then Tenant may (during the five (5) day period occurring after such forty-five (45) day period), upon ten (10) days' written notice, terminate this Lease, and if Landlord fails to furnish such Non-Disturbance Agreement during such ten (10) day notice period, this Lease shall terminate upon expiration of such ten (10) day notice period. Landlord shall be deemed to have fulfilled its obligations hereunder by submitting to Tenant a Non-Disturbance Agreement on the foregoing form, signed by such existing Superior Mortgagee. If Tenant fails within twenty (20) days after submission of the Non-Disturbance Agreement to countersign and return the same, Landlord or such existing Superior Mortgages, as the case may be, may, without liability hereunder or further obligation under this Section 25.05, declare such Non-Disturbance Agreement null and void. If Tenant exercises its option to terminate this Lease as provided in this Section 25.05(a), then, notwithstanding the provisions of Article 47 hereof, the Existing Lease shall once again be deemed in full force and effect as between the parties hereto. (b) With respect to future Superior Mortgages and future Superior Leases which may be executed on or after the date of this Lease, the subordination of this Lease thereto pursuant to, the provisions of Section 25.01 hereof shall be conditioned upon the execution and delivery by and between Tenant and any such Superior Mortgagee or Superior Lessor of a Non-Disturbance Agreement on the customary form of such Superior Mortgagee or Superior Lessor which shall provide in substance that so long as no default exists hereunder beyond any applicable grace period, Tenant shall not be disturbed in its possession of the demised premises pursuant to the provisions of this Lease. Tenant agrees to execute such Non-Disturbance Agreements and return same to Landlord within ten (10) days after Landlord's written request therefor. If Tenant shall fail to execute, acknowledge and return any such Non-Disturbance Agreements within such ten (10) day period, then (x) the provisions of Section 25.01 shall apply, and (y) this Lease shall be subordinate to such future Superior Mortgages or future Superior Leases, as the case may be, pursuant to the terms and conditions of the Lease and such Non-Disturbance Agreement shall at Landlord's option and upon notice to Tenant be deemed void. -51- ARTICLE 26 CERTIFICATE OF TENANT 26.01. Tenant agrees, at any time and from time to time, as requested by Landlord, upon not less than ten (10) Business Days' prior notice, to execute and deliver to Landlord a statement certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), certifying the dates to which the fixed annual rent and additional rent have been paid; and stating whether or not, to the best knowledge of Tenant, Landlord is in default in performance of any of its obligations under this Lease, and, if so, specifying each such default of which Tenant may have knowledge, it being intended that any such statement delivered pursuant hereto may be relied upon by others with whom Landlord may be dealing. 26.02. Tenant agrees that, except for the first month's rent hereunder, it will pay no rent under this Lease more than thirty (30) days in advance of its due date, if so restricted by any existing or future ground lease or mortgage to which this Lease is subordinated or by an assignment of this Lease to the ground lessor or the holder of such mortgage, and, in the event of any act or omission by Landlord, Tenant will not exercise any right to terminate this Lease or to remedy the default and deduct the cost thereof from rent due hereunder until Tenant shall have given written notice of such act or omission to the ground lessor and to the holder of any mortgage on the fee or the ground lease who shall have furnished such lessor's or holder's last address to Tenant, and until a reasonable period for remedying such act or omission shall have elapsed following the giving of such notices, and following the time when such lessor or holder shall have the right pursuant to such superior instrument to cure the same, during which time such lessor or holder shall have the right, but shall not be obligated, to remedy or cause to be remedied such act or omission. Tenant shall not exercise any right pursuant to this Section 26-02 if the holder of any mortgage or such aforesaid lessor commences to cure such aforesaid act or omission within a reasonable time and diligently prosecutes such cure thereafter. ARTICLE 27 LEGAL PROCEEDINGS; WAIVER OF JURY TRIAL. 27.01. Landlord and Tenant do hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the demised premises, and/or any other claims (except claims for bodily injury or damage to physical property), and any emergency statutory or any other statutory remedy. It is further mutually agreed that in the event Landlord commences any summary proceeding for non-payment of rent, Tenant will not interpose and does hereby waive the right to interpose any counterclaim of whatever nature or description in -52- any such proceeding, unless Tenant's failure to interpose such a counterclaim would otherwise bar Tenant from asserting such counterclaim in a separate action or proceeding. ARTICLE 28 SURRENDER OF PREMISES 28.01. Upon the expiration or other termination of the term of this Lease, Tenant shall quit and surrender to Landlord the demised premises, broom clean, in good order and condition, ordinary wear and tear and damage by fire, the elements or other casualty excepted, and Tenant shall remove all of its property as herein provided. Tenant's obligation to observe, or perform this covenant shall survive the expiration or other termination of the term of this Lease but if Landlord shall fail to assert a claim under this Section 28.01 within one (1) year after the Expiration Date the same shall be deemed to have been waived. ARTICLE 29 RULES AND REGULATIONS 29.01. Tenant and Tenant's servants, employees and agents shall observe faithfully and comply strictly with the Rules and Regulations set forth in Schedule 8 attached hereto and made part hereof entitled "Rules and Regulations" and such other and further reasonable Rules and Regulations as Landlord or Landlord's agents may from time to time adopt; provided, however, ----------------- that in case of any conflict or inconsistency between the provisions of this Lease and of any of the Rules and Regulations as originally or as hereafter adopted, the provisions of this Lease shall control. Reasonable written notice of any additional Rules and Regulations shall be given to Tenant. Nothing in this Lease contained shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations or the terms, covenants or conditions in any other lease, against any other tenant of the Building, and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors or licensees. Landlord shall not enforce any of the Rules and Regulations against Tenant in an unfairly discriminatory manner. ARTICLE 30 CONSENTS AND APPROVALS 30.01. Wherever in this Lease Landlord's consent or approval is required, if Landlord shall delay or refuse such consent or approval, Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim, for money damages (nor shall Tenant claim any money damages by way of setoff, counterclaim or defense) -53- based upon any claim or assertion by Tenant that Landlord unreasonably withhold or unreasonably delayed its consent or approval. Tenant's sole remedy shall be an action or proceeding to enforce any such provision, for specific performance, injunction or declaratory judgment. In no event shall the foregoing be deemed to exculpate Landlord from liability for claims for damages if the Landlord shall be found by final Judgment from which all further appeal has been exhausted, in withholding or delaying a consent or approval, despite its agreement not to do so unreasonably, to have acted maliciously or in bad faith. ARTICLE 31 NOTICES 31.01. Any notice or demand, consent, approval or disapproval, or statement required to be given by the terms and provisions of this Lease, or by any law or governmental regulation, either by Landlord to Tenant or by Tenant to Landlord, shall be in writing. Unless otherwise required by such law or regulation, such notice or demand shall be given, and shall be deemed to have been served and given when such notice or demand is mailed by registered or certified mail deposited enclosed in a securely closed postpaid wrapper, in a United States Government general or branch post office, or official depository within the exclusive care and custody thereof, addressed to either party, at its address set forth on page 1 of this Lease. After Tenant shall occupy the demised premises, the address of Tenant for notices, demands, consents, approvals or disapprovals shall be the Building. Either party may, by notice as aforesaid, designate a different address or addresses for notices, demands, consents, approvals or disapprovals. Copies of any notices to Tenant shall be sent to Christy & Viener, 620 Fifth Avenue, New York, New York 10020-2402, Attention: Richard B. Salomon, Esq. 31.02. In addition to the foregoing, either Landlord or Tenant may, from time to time, request in writing that the other party serve a copy of any notice or demand, consent approval or disapproval, or statement, on one other person or entity designated in such request, such service to be effected as provided in Section 31.01 hereof. ARTICLE 32 NO WAIVER 32.01. No agreement to accept a surrender of this shall be valid unless in writing signed by Landlord. No employee of Landlord or of Landlord's agents shall have any power to accept the keys of the demised premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord's agent shall not operate as a termination of this Lease or a surrender of the demised premises. In the event of Tenant at any time desiring to have Landlord sublet the demised premises for Tenant's account, Landlord or Landlord's agents are authorized to receive said keys for such purpose without releasing Tenant from any of the obligations under this Lease. The failure of Landlord to seek redress for violation of, or to insist -54- upon the strict performance of, any covenant or condition of this Lease or any of the Rules and Regulations set forth herein, or hereafter adopted by Landlord, shall not prevent a subsequent act, which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by Landlord of rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach. The failure of Landlord to enforce any of the Rules and Regulations set forth herein, or hereafter adopted, against Tenant and/or any other tenant in the Building shall not be deemed a waiver of any such Rules and Regulations, provided that Landlord does not enforce any such Rules and Regulations against Tenant in an unfairly discriminatory manner. No provision of this Lease shall be deemed to have been waived by Landlord, unless such waiver be in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on the account of the earliest stipulated rent, nor shall any endorsement or payment of rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy in this Lease provided. 32.02. This Lease contains the entire agreement between the parties, and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. ARTICLE 33 CAPTIONS 33.01. The captions are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Lease nor the intent of any provision thereof. ARTICLE 34 INABILITY TO PERFORM 34.01. If, by reason of (1) strike, (2) labor troubles, (3) governmental preemption in connection with a national emergency, (4) any rule, order or regulation of any governmental agency, (5) conditions of supply or demand which are affected by war or other national, state or municipal emergency, or any other cause constituting force majeure or (6) any cause beyond Landlord's reasonable control (excluding lack of funds), Landlord shall be unable to fulfill its obligations under this Lease or shall be unable to supply any service which Landlord is obligated to supply, Landlord shall have no liability in connection therewith and this Lease and Tenant's obligation to pay rent hereunder shall in no wise be affected, impaired or excused except as otherwise set forth in Section 21.04 hereof. -55- ARTICLE 35 NO REPRESENTATIONS BY LANDLORD 35.01. Landlord or Landlord's agents have made no representations or promises with respect to the Building or demised premises except as herein expressly set forth. ARTICLE 36 NAME OF BUILDING 36.01. Landlord shall have the full right at any time to name and change the name of the Building and to change the designated address of the Building. The Building may be named after any person, firm, or otherwise, whether or not such name is, or resembles, the name of a tenant of the Building. ARTICLE 37 RESTRICTIONS UPON USE 37.01. It is expressly understood that no portion of the demised premises shall be used as, or for (i) the retail, off-the-street operation of a bank, trust company, savings bank, industrial bank, savings and loan association or personal loan bank (or any branch office or public accommodation of any of the foregoing), or (ii) a public stenographer or typist, barber shop, beauty shop, beauty parlor or shop, telephone or telegraph agency, telephone or secretarial service, messenger service, travel or tourist agency, employment agency, public restaurant or bar, commercial document reproduction or offset printing service, public vending machines, retail, wholesale or discount shop for sale of merchandise, retail service shop, labor union, school or classroom, governmental or quasi-governmental bureau, department or agency, including an autonomous governmental corporation, a firm whose principal business is real estate brokerage, or a company engaged in the business of renting office or desk space. ARTICLE 38 ARBITRATION 38.01 In each case specified in this Lease in which resort to arbitration shall be required, such arbitration (unless otherwise specifically provided in other Sections of this Lease) shall be in New York City in accordance with the Commercial Arbitration Rules of the American Arbitration Association and the provisions of this Lease. The decision and award of the arbitrators shall be in writing, shall be final and conclusive on the parties, and counterpart copies thereof shall be delivered to each of the parties. In rendering such decision and awards, the arbitrators. shall not add to, subtract from or otherwise modify the provisions of this Lease. -56- Judgment may be had or the decision and award of the arbitrators so rendered in any court of competent jurisdiction. ARTICLE 39 INDEMNITY 39.01. Tenant shall indemnify, defend and save Landlord, its agents, and employees and any mortgages of Landlord's interest in the Land and/or the Building and any lessor under any superior lease harmless from and against any liability or expense arising from the use or occupation of the demised promises by Tenant or anyone in the demised promises with Tenant's permission, or from any breach of this Lease by Tenant. Landlord shall indemnify, defend and save Tenant, its agents and employees harmless from and against any liability or expense arising from (x) the negligent use of the public areas of the Building located outside of the demised premises by Landlord or its employees or agents or (y) the negligent performance of any repair, operation or maintenance in the demised premises by Landlord or its employees or agents. ARTICLE 40 MEMORANDUM OF LEASE 40.01. Tenant shall, at the request of Landlord execute and deliver a statutory form of memorandum of this Lease for the purpose of recording, but said memorandum of this Lease shall not in any circumstances be deemed to modify or to change any of the provisions of this Lease. In no event shall Tenant record this Lease. ARTICLE 41 SECURITY 41.01. Tenant has deposited with Landlord upon execution hereof the sum of $175,000.00 as security for the faithful performance and observance by Tenant of the terms, provisions, covenants and conditions of this Lease; it is agreed that in the event Tenant defaults in respect of any of the terms, provisions, covenants and conditions of this Lease, including, but not limited to, the payment of fixed annual rent and additional rent, Landlord may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of any fixed annual rent and additional rent or any other sum as to which Tenant is in default or for any sum which Landlord may expend or may be required to expend by reason of Tenant's default in respect of any of the terms, provisions, covenants and conditions of this Lease, including but not limited to, any damages or deficiency accrued before or after summary proceedings or other re-entry by Landlord. In the event that Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, the security shall be returned to Tenant -57- after the date fixed as the end of the Lease and after delivery of entire possession of the demised premises to Landlord. In the event of a sale of the Land and Building or leasing of the Building, of which the demised premises form a part, Landlord shall have the right to transfer the security to the vendee or lessee and Landlord shall thereupon be released by Tenant from all liability for the return of such security and Tenant agrees to look solely to the new landlord for the return of said security; and it is agreed that the provisions hereof shall apply to every transfer or assignment made of the security to a new landlord. Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the monies deposited herein as security and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. In the event Landlord applies or retains any portion or all of the security deposited, Tenant shall forthwith restore the amount so applied or retained so that at all times except as provided in the following sentence the amount deposited shall be $175,000.00. On the date occurring thirty (30) days prior to the expiration of the abatement period (as defined in Section 1.5 hereof) the, security to be retained by Landlord hereunder shall be increased to $350,000.00 and Tenant shall on or before such date provide Landlord with such additional funds as may be necessary to maintain the security deposit at such amount. The cash security required to be maintained under this Lease shall be hold in an interest-bearing account, the interest on which, less an administration fee in the amount of one (1%) percent per annum of the principal amount thereof, shall be paid to Tenant annually. 41.02. In lieu of the cash security deposit provided for in Section 41.01 hereof Tenant may deliver to Landlord and, shall, except as otherwise provided herein, maintain in effect at all times during the term hereof, an irrevocable letter of credit, in form and substance reasonably satisfactory to Landlord in the amount of the security deposit required hereunder issued by a banking corporation satisfactory to Landlord and having its principal place of business or its duly licensed branch or agency in the State of Now York. Such letter of credit shall have an expiration date no earlier than the first anniversary of the date of issuance thereof and shall be automatically renewed from year to year unless terminated by the issuer thereof by notice to Landlord given not less than 45 days prior to the expiration thereof. Except as otherwise provided herein, Tenant shall, throughout the term of this Lease deliver to Landlord, in the event of the termination of any such letter of credit, replacement letters of credit in lieu thereof (each such letter of credit and such extensions or replacements thereof, as the case may be, is hereinafter referred to as a "Security Letter") no later than 45 days prior to the expiration date of the preceding Security Letter. The term of each such Security Letter shall be not less than one year and shall be automatically renewable from year to year as aforesaid. If Tenant shall fail to obtain any replacement of a Security Letter within the time limits set forth in this Section 41.2, Landlord may draw down the full amount of the existing Security Letter and retain the same as security hereunder. 41.03. In the event Tenant defaults in respect to any of the terms, provisions, covenants and conditions of this Lease, including, but not limited to, the payment of fixed annual rent and additional rent, Landlord may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of any fixed annual rent and additional rent or -58- any other sum as to which Tenant is in default or for any sum which Landlord may expend or may be required to expend by reason of Tenant's default in respect of any of the terms, provisions, covenants, and conditions of this Lease, including but not limited to, any damages or deficiency accrued before or after summary proceedings or other re-entry by Landlord. To insure that Landlord may utilize the security represented by the Security Letter in the manner, for the purpose, and to the extent provided in this Article 41, each Security Letter shall provide that the full amount thereof may be drawn down by Landlord upon the presentation to the issuing bank of Landlord's sight draft drawn on the issuing bank. 41.04. In the event that Tenant defaults in respect of any of the terms, provisions, covenants and conditions of the Lease and Landlord utilizes all or any part of the security represented by the Security Letter but does not terminate this Lease as provided in Article 16 hereof, Landlord may, in. addition to exercising its rights as provided in Section 41.3 hereof, retain the unapplied and unused balance of the principal amount of the Security Letter as security for the faithful performance and observance by Tenant thereafter of the terms, provisions, and conditions of this Lease, and may use, apply, or retain the whole or any part of said balance to the extent required for payment of fixed annual rent, additional rent, or any other sums as to which Tenant is in default or for any sum which Landlord may expend or be required to expend by reason of Tenant's default in respect of any of the terms, covenants, and conditions of this Lease. In the event Landlord applies or retains any portion or all of the security delivered hereunder, Tenant shall forthwith restore the amount so applied or retained so that at all times the amount deposited shall be not less than the security required by this Article 41. 41.05. If Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, the security or any balance thereof to which Tenant is entitled shall be returned or paid over to Tenant after the date fixed as the end of the Lease and after delivery of entire possession of the demised premises to Landlord. In the event of a sale, transfer or leasing of Landlord's interest in the Building whether or not in connection with a sale, transfer or leasing of the Land, Landlord shall have the right to transfer any interest it may have in the Security Letter to the vendee or lessee and Landlord shall thereupon be released by Tenant from all liability for the return of such Security Letter, and Tenant agrees to look solely to the new landlord for the return of said Security Letter; and it is agreed that the provisions hereof shall apply to every transfer or assignment made of the Security Letter to a now landlord. Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the monies deposited herein as security and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. In the event of a sale of the Building, Landlord shall have the right to require Tenant to deliver a replacement Security Letter naming the new landlord as beneficiary and, if Tenant shall fail to timely deliver the same, to draw down the existing Security Letter and retain the proceeds as security hereunder until a replacement Security Letter is delivered. 41.06. Provided that Tenant is not then in default of its obligations under this Lease on the sixth (6th) anniversary of the Commencement Date, the security which Tenant is -59- obligated to maintain hereunder shall be reduced to $175,000.00 for the remainder of the term of this Lease. If Tenant is at such time in default and thereafter cures such default within the grace period, after notice, provided herein, then promptly after Tenant effects such cure the reduction provided herein shall take effect. ARTICLE 42 MISCELLANEOUS 42.01. Irrespective of the place of execution or performance, this Lease shall be governed by and construed in accordance with the laws of the State of Now York. 42.02. This Lease shall be construed without regard to any presumption or other rule requiring construction against the party causing this Lease to be drafted. 42.03. Except as otherwise expressly provided in this Lease, each covenant apartment, obligation or other provision of this Lease on Tenant's part to be performed shall be deemed and construed as a separate and independent covenant of Tenant, not dependent on any other provision of this Lease. 42.04. All terms and words used in this Lease, regardless of the number or gender in which they are used, shall be deemed to include any other number and any other gender as the context may require. 42.05. Time shall be of the essence with respect to the exercise of any option granted under this Lease. 42.06. Except as otherwise provided herein, whenever payment of interest is required by the terms hereof it shall be at the Interest Rate. 42.07. If the demised premises or any additional space to be included within the demised premises shall not be available for occupancy by Tenant on the specific date hereinbefore designated for the commencement of the term of this Lease or for the inclusion of such space for any reason whatsoever, then this Lease shall not be affected thereby but, in such case, said specific date shall be deemed to be postponed until the date when the demised premises or such additional space shall be available for occupancy by Tenant, and Tenant shall not be entitled to possession of the demised premises or such additional space until the same are available for occupancy by Tenant; provided, however, -------- ------- that Tenant shall have no claim against Landlord, and Landlord shall have no liability to Tenant by reason of any such postponement of said specific date, and the parties hereto further agree that any failure to have the demised promises or such additional space available for occupancy by Tenant on said specific date or on the Commencement Date shall in no wise affect the obligations of Tenant hereunder nor shall the same be construed in any wise to extend the term of this Lease and furthermore, this Section 42.7 -60- shall be deemed to be an express provision to the contrary of Section 223a of the Real Property Law of the State of New York and any other law of like import now or hereafter in force. 42.08. In the event that Tenant is in arrears in payment of fixed annual rent or additional rent hereunder, Tenant waives Tenant's right, if any, to designate the items against which any payments made by Tenant are to be credited, and Tenant agrees that Landlord may apply any payments made by Tenant to any items it sees fit, irrespective of and notwithstanding any designation or request by Tenant as to the items against which any such payments shall be credited. 42.09. This Lease shall not be, binding upon Landlord or Tenant unless and until it is signed by both Landlord and Tenant and a signed copy thereof is delivered to both parties. 42.10. Tenant shall not occupy any space in the Building (by assignment, sublease or otherwise) other than the demised promises, except with the prior written consent of Landlord in each instance. 42.11. Intentionally omitted. 42.12 (a) In the event this Lease, is not renewed or extended or a new lease is not entered into between the parties, and if Tenant shall then hold over after the expiration of the term of this Lease, and if Landlord shall then not proceed to remove Tenant from the demised premises in the manner permitted by law (or shall not have given written notice to Tenant that Tenant must vacate the demised promises) irrespective of whether or not Landlord accepts rent from Tenant for a period beyond the Expiration Date, the parties hereby agree that Tenant's occupancy of the demised premises after the expiration of the term shall be under a month-to-month tenancy commencing on the first day after the expiration of the term, which tenancy shall be upon all of the terms set forth in this Lease except Tenant shall pay on the first day of each month of the holdover period as fixed annual rent, an amount equal to the higher of (i) an amount equal to one and one-half times one-twelfth of the sum of: (a) the fixed annual rent and additional rent payable by Tenant during the last year of the term of this lease (i.e., the year immediately prior to the holdover period) or (ii) an amount equal to the then market rental value for the demised premises as shall be established by Landlord giving notice to Tenant of Landlord's good faith estimate of such market rental value. Tenant may dispute such market rental value for the demised promises as estimated by Landlord by giving notice to Landlord within but in no event after ten days after the giving of Landlord's notice to Tenant (as to the giving of which notice to Landlord, time shall be deemed of the essence). Enclosed with such notice, Tenant shall be required to furnish to Landlord a certified opinion of a reputable New York licensed real estate broker having leasing experience in the Borough of Manhattan, for a period of not less than ten (10) years setting forth said broker's good faith opinion of the market rental value of the demised premises. If Tenant and Landlord are unable to resolve any such dispute as to the market rental value, for the demised premises then an independent arbitrator who shall be a real estate broker of similar qualification's and shall be selected from a listing of -61- not loss than three (3) brokers furnished by the Real Estate Board of New York, Inc. to Tenant and Landlord (at the request of either Landlord or Tenant). If Landlord and Tenant are unable to agree upon the se1ection of the individual arbitrator from such listing, then the first arbitrator so listed by the Real Estate Board of New York, Inc. shall be conclusively presumed to have been selected by both Landlord and Tenant and the decision of such arbitrator shall be conclusive and binding upon the parties as to the market rental value for the demised premises. Pending the determination of the market rental value of the demised premises upon the expiration of the term of this lease, Tenant shall pay to Landlord as fixed annual rent an amount computed in accordance with clauses (1) or (ii) of this subsection 42.12(a) (as Landlord shall then elect), and upon determination of the market rental value of the demised promises in accordance with the preceding provisions hereof appropriate adjustments and payments. shall be effected. Further, Landlord shall not be required to perform any work, furnish any materials or make any repairs within the demised promises during the holdover period. It is further stipulated and agreed that if Landlord shall, at any time after the expiration of the original term or after the expiration of any term created thereafter, proceed to remove Tenant from the demised promises as a holdover, the fixed annual rent for the use and occupancy of the demised promises during any holdover period shall be calculated in the same manner as set forth above in this Section 42.12. In addition to the foregoing, Landlord shall be entitled to recover from Tenant any losses or damages arising from such holdover, excluding consequential damages, except to the extent of consequential damages arising out of any new leases executed by Landlord with respect to the demised premises or any portion thereof. (b) Notwithstanding anything to the contrary contained in this lease, the acceptance of any rent paid by Tenant pursuant to subsection 42.12(a) hereof shall not preclude Landlord from commencing and prosecuting a holdover or summary eviction proceeding, and the preceding sentence shall be deemed to be an "agreement expressly providing otherwise" within the meaning of Section 232-c of the Real Property Law of the State of New York. (c) If Tenant shall hold-over or remain in possession of any portion of the demised premises beyond the Expiration Date, Tenant shall be subject not only to summary proceeding and all damages related thereto, but also to any damages arising out of any lost opportunities (and/or new leases) by Landlord to re-let the demised premises (or any part thereof). All damages to Landlord by reason of such holding over by Tenant may be the subject of a separate action and need not be assorted by Landlord in any summary proceedings against Tenant. ARTICLE 43 EXTENSION OF TERM 43.01. Tenant, at Tenant's solo option, shall have the right to extend the term of this Lease for an additional term (hereinafter called the "Extension Term") commencing on the -62- day following the expiration of the initial term of this Lease (hereinafter referred to as the "Commencement Date of the Extension Term"); and expiring on the last day of the month preceding the month in which shall occur the fifth (5th) anniversary of the Commencement Date of the Extension Term, upon Tenant's written notice to Landlord (hereinafter referred to as the "Extension Notice"), given no later than the day occurring twelve (12) months prior to the expiration of the initial term of this Lease, time being of the essence with respect to the giving of the Extension Notice, provided that: (a) Tenant shall not be in default after the expiration of any applicable grace period under this Lease either as of the time of the giving of the Extension Notice or the Commencement Date of the Extension Term, and (b) Tenant or Tenant's affiliates shall, as of the giving of the Extension Notice and as of the Commencement Date of the Extension Term, be in actual occupancy of not less than sixty-seven (67%) percent of the rentable square foot area of the demised premises (including any additional space in the Building hereinafter leased by Tenant). 43.02. The fixed annual rent payable by Tenant to Landlord during the Extension Term shall be ninety-five percent (95%) of the fair market rent for the demised promises as determined by Landlord and set forth in a written notice to Tenant, which determination shall be as of the date occurring six (6) months prior to the expiration of the initial term (such date is hereinafter sometimes called the "Determination Date") and which determination shall be made within a reasonable period of time after the occurrence of the Determination Date. For the purposes of determining the fair market rent for the Extension Term pursuant to this Article 43, the base periods for escalation purposes shall be the same as those set forth in Article 3 hereof. 43.03. (a) (i) In the event that Tenant gives the Extension Notice in accordance with the provisions of Section 43.1 hereof and Tenant disputes the amount of the fair market rent, then Tenant may initiate the arbitration process provided for herein by giving notice to that effect to the Landlord, and Tenant shall specify in such notice the name and address of the person designated to act as an arbitrator on its behalf. Within twenty (20) days after the designation of such arbitrator, Landlord shall give notice to Tenant specifying the name and address of the person designated to act as an arbitrator on its behalf. If Landlord fails to notify Tenant of the appointment of its arbitrator within the time above specified, then the appointment of the second arbitrator shall be made in the same manner as hereinafter provided for the appointment of a third arbitrator in a case where the two arbitrators appointed hereunder and the parties are unable to agree upon such appointment. The two arbitrators so chosen shall meet within ten (10) days after the second arbitrator is appointed and if, within thirty (30) days after the second arbitrator is appointed, the two arbitrators shall not agree, they shall together app9int a third arbitrator. In the event of their being unable to agree upon such appointment within sixty (60) days after the appointment of the second arbitrator, the third arbitrator shall be selected. by the parties themselves if they can agree thereon within a further period of ten (10) days. If, the parties do not so agree, then either party, on behalf of both and on notice to the other may request -63- such appointment by the American Arbitration Association (or organization successor thereto) in accordance with its rules then prevailing or if the American Arbitration Association (or such successor organization) shall fail to appoint said third arbitrator within ten (10) days after such request is made, then either party may apply on notice to the other, to the Supreme Court, Now York County, New York (or any other court having jurisdiction and exercising functions similar to those now exercised by said Court) for the appointment of such third arbitrator. (ii) In determining the fair market rent under this Section 43.3, the arbitrators shall take into account all relevant factors based on the following assumptions, (A) that the standard work letter or work credit, if any, then being offered to office tenants of the Building is being offered to Tenant even though it is not actually offered, (B) that other concessions and allowances then being given by landlords of comparable office buildings to tenants entering into now office leases in New York City are being given to tenant even though same is not actually given, and (C) that brokerage commissions payable in connection with such new leases are being incurred by Landlord even though same are not actually incurred. (b) Each party shall pay the fees and expenses of the one of the two original arbitrators appointed by or for such party, and the fees and expenses of the third arbitrator and all other expenses (not including the attorneys' fees, witness fees and similar expenses of the parties which shall be borne separately by each of the parties) of the arbitration shall be borne by the parties equally. (c) The majority of the arbitrators shall determine the fair market rent of the demised premises and render a written certified report of their determination to both Landlord and Tenant within sixty (60) days of the appointment of the first two arbitrators or sixty (60) days from the appointment of the third arbitrator if such third arbitrator is appointed pursuant to this Article 43. (d) Each of the arbitrators selected as herein provided shall have at least ten (10) years' experience in the leasing and renting (as broker, agent or owner) of office space in first-class office buildings in New York County. (e) Prior to such determination by the arbitrators of the amount of the fair market rent to be paid during the Extension Term, Tenant shall pay the amount determined by Landlord to be ninety-five percent (95%) of the fair market rent for the Extension Term and when the determination has actually been made, an appropriate retroactive adjustment shall be made as of the Commencement Date of the Extension Term. 43.04. Except as provided in Section 43.2 hereof, Tenant's occupancy of the demised premises during the Extension Term shall be on the same terms and conditions as are in effect immediately prior to the expiration of the initial term of this Lease, provided, however, Tenant shall have no further right to extend the term of this Lease pursuant to this Article 43 and -64- Tenant shall not be entitled to any rental abatement provided in Article 1 hereof or any Work Credit provided in Article 46 hereof. 43.05. If Tenant does not timely send the Extension Notice pursuant to provisions of Section 43.1 hereof, this Article 43 shall have no force or effect and shall be deemed deleted from this Lease. Time shall be of the essence with respect to the giving of the Extension Notice. The termination of this Lease during the initial term hereof shall also terminate and render void any option or right on Tenant's part to extend the term of this Lease pursuant to this Article 43 whether or not such option or right shall have theretofore been exercised. 43.06. If this Lease is renewed for the Extension Term, then Landlord or Tenant can request the other party hereto to execute an instrument in form for recording setting forth the exercise of Tenant's right to extend the term of this Lease and the last day of the Extension Term. 43.07. If Tenant exercises its right to extend the term of this Lease for the Extension Term pursuant to this Article, the phrases "the term of this Lease" or "the term hereof" as used in this Lease, shall be construed to include, when practicable, the Extension Term and "Expiration Date" shall mean the last day of the Extension Term and "Expiration Date" shall mean the last day of the Extension Term. ARTICLE 44 RIGHT OF FIRST OFFERING 44.01. For purposes of this Lease, the term "First Offering Space" shall mean a portion of rentable space in the Building consisting of the balance of the sixth (6th) floor not included in the demised premises and the entire fourth (4th) floor. 44.02. Provided Tenant is not in default under the terms and conditions of this Lease after the expiration of any applicable grace period either as of the date of the giving of "Tenant's First Notice"' or the "First Offering Space Inclusion Date" (as such terms are hereinafter defined), if at any time during the term of this Lease the First Offering Space shall become available for leasing to anyone other than the existing tenant thereof or any subsidiary or affiliate thereof (hereinafter called the "Current Tenant") then Landlord, before offering such First Offering Space to anyone other than the Current Tenant, shall offer to Tenant, subject to the provisions of this Article 44, the right to include the entire First Offering Space then offered to Tenant within the demised promises upon all the terms and conditions of this Lease (including the provisions of Articles 3 and 4 hereof with the base year periods specified in Article 3, but excluding Articles 2 and 46 hereof), except that: (i) the fixed annual rent with respect to the First Offering Space shall be at. the rate of ninety-five (95%) percent of the fair market rent (based upon all relevant factors, including without limitation, the fact that the base year periods specified in -65- Article 3 shall not change) for the First Offering Space, which shall be determined by Landlord as of the date (hereinafter called the "First Offering Space Determination Date") occurring 30 days prior to the First Offering Space Inclusion Date (as such term is hereinafter defined) and shall be set forth in a written notice to Tenant, but in no event shall such fixed annual rent applicable to the First Offering Space be less than the product obtained by multiplying (A) the monthly amount of fixed annual rent (determined on a rentable square foot basis) for the last full calendar month prior to the First Offering Space Inclusion Date (as hereinafter defined) computed on an annualized basis without giving effect to, any abatement, credit or offset in effect, by (B) 12, and by (C) the amount of rentable square feet included within the First Offering Space (hereinafter called the "First Offering Space Escalated Rent"); and (ii) Effective as of the First Offering Space Inclusion Date for purposes of calculating the additional rent payable pursuant to Article 3 allocable to the First Offering Space, (y) Tenant's Proportionate Share attributable to the First Offering Space shall be deemed to be the fraction, expressed as a percentage, the numerator of which shall be the number of rentable square feet included within the First Offering Space, and the denominator of which shall be 764,800, and W Tenant's Tax Proportionate Share attributable to the First Offering Space shall be deemed to be the fraction, expressed as a percentage, the numerator of which shall be the number of rentable square feet included within the First Offering Space, and the denominator of which shall be 825,815. 44.03. Such offer shall be made by Landlord to Tenant in a written notice (hereinafter called the "First Offer Notice"') which offer shall specify the fixed annual rent payable with respect to the First offering Space, determined in accordance with the provisions of Section 44.02 hereof. 44.04. Tenant may accept the offer set forth in the First Offer Notice by delivering to Landlord an unconditional acceptance (hereinafter called "'Tenant's First Notice") of such offer within fifteen (15 days after delivery by Landlord of the First Offer Notice to Tenant. Such First Offering Space shall be added to and included in the demised premises on the later to occur (herein called the "'First Offering Space Inclusion Date"') of (i) the day that Tenant exercises its option as aforesaid, or (ii) the date such First Offering Space shall become available for Tenant's possession. Time shall be of the essence with respect to the giving of Tenant's First Notice. 44.05. If Tenant does not accept (or fails to timely accept) an offer made by Landlord pursuant to the provisions of this Article 44 with respect to the First Offering Space, Landlord shall be under no further obligation to Tenant with respect to the first Offering Space or this Article 44. 44.06. In the event that Tenant disputes the amount of the fair market rent specified in the First Offer Notice, then at any time on or before the date occurring thirty (30) -66- days after Tenant has received the First Offer Notice, and provided that Tenant shall have given Tenant's First Notice, Tenant may initiate the arbitration process set forth in Sections 43-03(a), (b), (c) and (d) hereof. 44.07. If Tenant fails to initiate the arbitration process within the aforesaid thirty (30) day period, time being of the essence, then Landlord's determination of the fixed annual rent set forth in the First Offer Notice shall be conclusive. In the event Landlord notifies Tenant that the fixed annual rent for the First Offering Space shall be the first Offering Space Escalated Rent, then the provisions of Section 44.05 hereof shall be inapplicable. 44.08. In the event the Tenant initiates the aforesaid arbitration process and, is of the first Offering Space Inclusion Date, the amount of the fair market rent has not been determined, Tenant shall pay the amount determined by Landlord to be ninety-five (95%) percent of the fair market rent for the First Offering Space, which determination of fair market rent shall be made considering the relevant factors and discount set forth in Section 43.03(a)(ii), and when the determination has actually been made, an appropriate retroactive adjustment shall be made as of the First Offering Space Inclusion Date. 44.09. The provisions of this Article 44 shall be effective only if, on the date on which Tenant accepts possession of the First Offering Space, the Tenant named herein and only such Tenant is in actual occupancy of sixty- seven (67%) percent of the demised premises (including any additional space in the Building hereafter leased by Tenant). 44.10. Tenant agrees to accept the First Offering Space in its condition and state of repair existing as of the First Offering Space Inclusion Date and understands and agrees that Landlord shall not be required to perform any work, supply any materials or incur any expense to prepare such space for Tenant's occupancy. 44.11. The fixed annual rent for the First Offering Space as determined pursuant to this Article 44 shall be subject to periodic increases for any period during the term of this Lease for which such fixed annual rent would otherwise be less (on a per rentable square foot basis) than the fixed annual rent payable pursuant to Section 1.01 hereof (on a per rentable square foot basis) for such period, so that the fixed annual rent payable during such periods with respect to the First Offering Space shall be equal (on a per rentable square foot basis) to the fixed annual rent payable pursuant to Section 1.01 hereof during such periods. ARTICLE 45 LAYOUT AND FINISH. 45.01. Tenant hereby covenants and agrees that Tenant will, at Tenant's own cost and expense, make and complete the work and installations in and to the demised promises set -67- forth below in a good and workerlike manner to the extent customary and standard with the real estate industry for first class office buildings in midtown Manhattan comparable to the Building. Tenant, at Tenant's expense, shall prepare a final plan or final set of plans and specifications (which said final plan or final set of plans, as the case may be, and specifications are hereinafter called the "final plan") which shall contain complete information and dimensions necessary for the construction and finishing of the demised premises and for the engineering in connection therewith. The final plan shall be submitted by Tenant to Landlord on or before Juno 30, 1993 for Landlord's written approval which written approval shall not be unreasonably withhold or delayed. Tenant shall promptly reimburse Landlord upon demand for any reasonable out-of-pocket costs And expenses incurred by Landlord or independent third parties in connection with Landlord's review of Tenant's final plan. Landlord shall incur no liability, obligations or responsibility to Tenant or any third party by reason of such review. If Landlord shall disapprove the, final plan, Landlord shall set forth its reasons for such disapproval and itemize those portions of the final plan so disapproved. Landlord shall not be doomed unreasonable in withholding its consent to the extent that the, final plan prepared by Tenant pursuant hereto involves the performance, of work or the installation in the demised promises of materials or equipment which do not equal or exceed Building Standard quality. If Tenant in its submission to Landlord of its final plans make specific reference to the following time limitation and the consequences of Landlord's failure to respond, then, Landlord's failure to respond to Tenant's submission within two, (2) weeks after the later of (i) its receipt thereof or (ii) the date that Landlord executes this Lease and delivers copies thereof to Tenant, shall be deemed approval. In accordance with the final plan, Tenant, at Tenant's expense, will make and complete in and to the demised premises (hereinafter Sometimes called the "'Work Area") the work and installations (hereinafter called "Tenant's Work") specified in the final plan. Tenant shall perform Tenant's Work in accordance with such rules and regulations as Landlord may from time to time designed governing the performance. of tenant improvement work in the Building. Tenant agrees that Tenant's Work will be, performed with the, least possible disturbance to other occupants of the, Building and the structural and mechanical parts of the Building and Tenant will, at its own cost and expense leave, all structural and mechanical parts of the Building which shall or may be affected by Tenant's Work in good and workmanlike operating condition. Tenant, in performing Tenant's Work will, at its own cost and expense, promptly comply with all laws, rules and regulations of all public authorities having jurisdiction in the Building with reference, to Tenant's Work. Tenant shall not do or fail to do- any act which shall or may render the Building of which the demised premises are a part, liable to any mechanic's lien or other lien and if any such lien or liens be filed against the Building of which the demised premises are a part, or against Tenant's Work, or any part thereof, Tenant will, at Tenant's own cost and expense, promptly remove, the same of record within thirty (30) days after the filing of such lion or lions; or in -default thereof, Landlord may cause any such lien or liens to be removed of record by payment of bond or otherwise, an Landlord may elect, and Tenant will reimburse Landlord for all costs and expenses incidental to the removal of any such lien or -68- liens incurred by Landlord. Tenant shall indemnify and save harmless Landlord of and from all claims, counsel fees, loss, damage and expenses whatsoever by reason of any lions, charges or payments of any kind whatsoever that may be incurred or become chargeable against Landlord or the Building of which the demised promises are a part, or Tenant's Work or any part thereof, by reason of any work done or to be, done or materials furnished or to bo furnished to or upon the demised premises in connection with Tenant's Work. Tenant hereby covenants and agrees to indemnify and save harmless Landlord of and from all claims, counsel fees, lose, damage and expenses whatsoever by reason of any injury or damage, howsoever caused, to any person or property occurring prior to the completion of Tenant's Work or occurring after such completion, as a result of anything done, or omitted in connection therewith or arising out of any fine, penalty or imposition or out of any other matter or thing connected with any work done or to be done or materials furnished or to be furnished in connection with Tenant's Work. At any and all times during the progress of Tenant's Work, Landlord, at Landlord's sole cost and expense, shall be entitled to have a representative or representatives on the site to inspect Tenant's Work and such representative or representatives shall have free and unrestricted access to any and every part of the demised premises; provided, however, that any such representative shall use reasonable efforts, to the extent reasonably practicable, to minimize any interference with the performance of Tenant's Work. Tenant shall advise Landlord in. writing of Tenant's general contractor and subcontractors who are to do Tenant's Work, and such general contractor and subcontractors shall be subject to Landlord's prior written approval in advance; such contractors shall, to the extent permitted by law, use employees for Tenant's Work who will work harmoniously with other employees on the job. Annexed hereto as Schedule D is a list of general contractors and subcontractors which have been approved by Landlord for the performance of Tenant's Work. Tenant shall at Tenant's sole cost and expense file all necessary architectural plans and obtain all necessary approvals and permits in connection with Tenant's Work being performed by it pursuant to this Article 45. 45.02. The following conditions shall also apply to Tenant's Work: (a) all Tenant's Work shall be of material, manufacture, design, capacity and light colors at least equal to Building Standard; (b) Tenant, at Tenant's expense shall (i) file all required architectural, mechanical and electrical drawings and obtain all necessary permits,-and (ii) furnish and perform all engineering and engineering drawings in connection with Tenant's Work. Tenant shall obtain Landlord's approval of the drawings referred to in (i) and (ii) hereof; (c) Tenant shall use, in connection with the preparation of Tenant's plans and specifications, an architect who shall be licensed in the City and State of New York, and such plans and specifications shall be approved by (and all engineering required to be performed in connection therewith shall be performed by) an engineering -69- firm approved by Landlord, which engineering firm shall likewise be licensed in the City and State of New York; (d) Prior to the commencement of Tenant's Work Tenant shall furnish to Landlord certificates evidencing the existence of (i) workmen's compensation insurance, covering all persons employed for such work, and (ii) reasonable comprehensive general liability and property damage insurance naming Landlord, its designees, and Tenant as insureds with coverage of at least $3,000,000 single limit; (e) Tenant shall complete Tenant's Work on or before December 31, 1993; and (f) Notwithstanding anything to the contrary contained herein, Landlord shall have no liability to Tenant and this Lease shall not be affected if Tenant is unable to obtain a building permit or other necessary approval for the performance of Tenant's Work. 45.03. Tenant shall be responsible for removal of Tenant's refuse and rubbish during the period that Tenant's Work is, in progress in the demised. premises. . 45.04. Landlord shall, at Tenant's written request, cooperate in all reasonable respects with Tenant in the performance by Tenant of Tenant's Work in preparing the demised premises for Tenant's occupancy and Landlord shall instruct its employees and contractors to render such assistance and to cooperate with Tenant's employees, representatives and contractors provided that to the extent that Landlord shall incur any expense in so cooperating or in rendering such assistance, Tenant shall reimburse Landlord for such expense as additional rent hereunder. 45.05. Intentionally omitted. 45.06. Tenant acknowledges and agrees. that, notwithstanding anything in the Lease to the contrary, Landlord have, no responsibility whatsoever for the installation or proper functioning of, or cost of correcting, any portion of Tenant's Work and Tenant shall boar the entire responsibility and liability therefor. ARTICLE 46 TENANT'S WORK CREDIT 46.01. (a) Landlord shall allow Tenant a credit not to exceed the amount of ONE MILLION NINE HUNDRED EIGHTY-SEVEN THOUSAND SIX RUN RED EIGHTY and 00/100 ($1,987,680.00) DOLLARS (hereinafter called the, "'Work Credit"), which credit shall be applied solely against the cost and expense incurred in connection with the performance -70- of Tenant's Work set forth in Article 45 hereof, including so called "soft costs" such as the architectural and engineering fees incurred by Tenant for the preparation of the final plan and decorating and consulting fees provided such soft costs do not exceed in the aggregate fifteen (15%) percent of the Work Credit disbursed hereunder. In the event that the cost and expense, of Tenant's Work shall exceed the amount of the Work Credit, Tenant shall be, entirely responsible for such excess. In the event that the cost and expense, of Tenant's Work shall be less than the mount of the Work Credit, then the amount of the Work Credit shall- be reduced accordingly. The Work Credit shall be payable to Tenant upon written requisition in installments as Tenant's Work progresses, but in no event more frequently than monthly. Prior to the payment -of any such installment, (except in the, case of clause (1) the first such installment) Tenant shall deliver to Landlord a written requisition for disbursement which shall be accompanied by (1) proof of payment of the invoices for the Tenant's Work as, to which Landlord made the previous disbursement, (2) invoices for the Tenant's Work performed since the last disbursement and a certificate signed by Tenant's architect certifying that the Tenant's Work represented by the aforesaid invoices has been satisfactorily completed in accordance with the final plan, (3) partial lien waivers by contractors, subcontractors and all materialmen for all such work if then available and for work covered by the prior disbursement, and (4) with respect to the final disbursement of the Work Credit, all Building Department sign-offs, inspection certificates and any permits required to be issued by any governmental entities having jurisdiction thereover with respect to all of Tenant's Work. Within fifteen (15) business days after final completion of Tenant's work, Tenant shall submit to Landlord (i) a general release or final lion waivers from all contractors and subcontractors performing Tenant's Work acknowledging payment for Tenant's Work and releasing Tenant from all liability or payment for any Tenant's Work, or a payment bond of a surety company licensed to do business in the State of Now York for one and one-half times the full contract price of such Tenant's Work not covered by such general releases or final lien waivers, and (ii) a certificate signed by Tenant's architect certifying that Tenant's Work has been completed in accordance with-tho final plan. (b) At any and all times during the progress of Tenant's Work, representatives of Landlord shall have the right of access to the demised premises and inspection thereof and shall have the right to withhold all or any portion of the Work Credit as shall equal the cost of correcting any portions of Tenant's Work which shall not have been performed in a good and workmanlike manner; provided, however, that Landlord shall incur no liability, obligation or responsibility to Tenant or any third party by reason of such access and inspection except to the extent of Landlord's negligence or willful misconduct. ARTICLE 47 EXISTING LEASE 47.01. Tenant and Landlord are currently parties to a lease dated September 20, 1985 (hereinafter the "Existing Lease") with respect to the portion of the demised premises located on the fifth (5th) floor which shall terminate on the Commencement Date of this Lease; -71- provided, however, that any obligation of Tenant for the payment of rent or additional rent or the performance, of any obligation under such Existing Lease which accrues prior to the Commencement Date of this Lease shall constitute an obligation under this Lease the non-payment or non-performance, for which Landlord shall have all of the remedies provided herein. IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this Lease as of the day and year first above written. ATTEST: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Landlord /s/ By: /s/ - ----------------------- ---------------------------- ATTEST: INTEREP NATIONAL RADIO SALES, INC., Tenant /s/ By: /s/ - ------------------------ ---------------------------- Tenant's Federal Tax Identification Number is 13-Z885151. -72- STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 20th of May, 1993, before me personally came Terry McHugh, to me known who, being by me duly sworn, did depose and say that he resides at 25 Battery Place, Backing Ridge, NJ, that he is the Vice President of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, the corporation described in and which executed the foregoing instrument as Landlord; and that he signed his name thereto by order of the Board of Directors of said corporation. /s/ Florence A. Ires ----------------------------- Notary Public STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 10th day of May, 1993, before me personally came Patrick M. Healy, to me known, being duly sworn by me, did depose and say that he resides at 17 Albert Road, Allendale, NJ 07101, that he is the EVP and CEO of INTEREP NATIONAL RADIO SALES, INC., a New York corporation, the corporation mentioned in, and which executed the foregoing instrument and that he signed his name thereto by order of the Board of Directors of said corporation. /s/ Carrolyn Sarr -------------------------------- Notary Public -73- EX-10.7 15 AGREEMENT EXHIBIT 10.7 AGREEMENT AGREEMENT, dated as of June 29, 1998, between INTEREP NATIONAL RADIO SALES, INC., a New York corporation ("Interep"), and RALPH C. GUILD ("Guild"). W I T N E S S E T H: ------------------- WHEREAS, Interep owns 100 shares (the "Shares") of the Common Stock of Corporate Family Network, Inc. ("CFN"), which is all of the outstanding captial stock of CFN, and Interep wishes to dispose of the Shares and Guild is willing to purchase the Shares; NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth below, the parties agree as follows: 1. PURCHASE AND SALE. On the date hereof, Guild shall purchase all of the Shares from Interep for a purchase price of $200,000. Payment is being made by Guild's delivery to Interep on the date hereof of (a) a check in the amount of $50,000 and (b) a promissory note in the principal amount of $150,000, payable in three annual installments of $50,000 each, and bearing interest at a fluctuating rate equal to the prime rate of BancBoston, N.A. as in effect from time to time, plus 1%. Concurrently, Interep is delivering to Guild of a stock certificate for the Shares, accompanied by a duly executed stock power in blank. 2. REPRESENTATIONS AND WARRANTIES. Interep represents and warrants to Guild that (i) it is the sole owner of all of the Shares and has the unrestricted right to transfer them to Guild and (ii) it shall transfer all of the Shares to Guild free and clear of all claims, liens, security interests, charges, encumbrances and restrictions of any kind, except any imposed under any applicable securities laws. 3. MISCELLANEOUS. This Agreement sets forth the entire understanding of the parties with respect to its subject matter, merges and supersedes all prior understandings, and may not be waived or modified, in whole or in part, except by a writing signed by each of the parties. This Agreement shall be binding on, enforceable against and inure to the benefit of the parties and their respective successors and assigns, and nothing herein is intended to confer any right, remedy or benefit upon any other person. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and fully to be performed in such state, without giving effect to conflicts of law principles. This Agreement may be executed in multiple 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 have executed this Agreement as of the date first set forth above. INTEREP NATIONAL RADIO SALES, INC. /s/ Ralph C. Guild ------------------------------------- RALPH C. GUILD By /s/ William J. McEntee, Jr. ------------------------------------------------------ William J. McEntee, Jr., Vice President EX-10.8 16 PROMISSORY NOTE EXHIBIT 10.8 PROMISSORY NOTE $150,000.00 June 29, 1998 FOR VALUE RECEIVED, RALPH C. GUILD ("Maker") unconditionally promises to pay to the order of INTEREP NATIONAL RADIO SALES, INC. ("Payee") the principal amount of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000), in three equal annual installments of FIFTY THOUSAND DOLLARS ($50,000) each, payable on the anniversary date of this Note in 1999, 2000 and 2001. Maker also promises to pay to Payee interest on the outstanding principal of this Note at a fluctuating rate per annum equal to the prime commercial lending rate announced by BancBoston, N.A., from time to time, plus 1%, computed on the basis of a 360-day year for the actual number of days elapsed. All accrued and unpaid interest on this Note shall be payable in arrears with each payment of principal hereunder. Interest on this Note shall be charged from the date hereof until the date on which this Note is paid in full. If Maker fails to pay in full any installment of principal of, or interest on, this Note or any other amount payable hereunder when due (whether at stated maturity, by acceleration or otherwise), Maker shall thereafter pay interest on the principal amount of this Note at a rate equal to the lower of 12% per annum or the highest rate then permissible under applicable law, unless and until such default is fully cured. Maker shall make all payments of the principal of, and interest on, this Note in immediately available funds and in lawful currency of the United States of America. All payments under this Note shall be made to Payee or any holder without set-off, counterclaim or deduction of any kind, at Payee's address at 100 Park Avenue, New York, New York 10022, Attention: William J. McEntee, Jr., or any other address as Payee may designate in writing to Maker. This Note may be prepaid, in whole or in part, without penalty or premium, at any time at the election of Maker; provided, however, that accrued -------- ------- interest on the amount prepaid is paid to the date of prepayment. Partial principal prepayments shall be applied to the then last maturing installments of the principal of this Note. If an Event of Default (as defined below) occurs and is continuing, Payee may, at its option, by notice in writing to Maker, declare this Note to be, and the principal of this Note shall thereupon be, forthwith due and payable, together with all interest then accrued thereon; provided, however, -------- ------- that if the Event of Default described in clauses (b) or (c) below occurs, this Note shall automatically, without notice, declaration or other further action by Payee, become forthwith due and payable in full as of the date of such Event of Default. An Event of Default shall exist on the occurrence of any of the following: (a) Maker defaults in the payment of any portion of the principal or interest of this Note when due and such default is not cured within 15 days after such date; (b) if there is an entry of a decree or order for relief by a court having jurisdiction in the premises (i) in respect of Maker in any involuntary case under the federal bankruptcy laws or any other applicable federal or state bankruptcy, insolvency or other similar law, as now or hereafter in effect, or (ii) appointing a receiver, liquidator, assignee, trustee, sequestrator (or similar official) of or of any substantial part of the property of Maker, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (c) if there is (i) the commencement by Maker of a voluntary case under the federal bankruptcy laws or any other applicable federal or state bankruptcy, insolvency or other similar law, as now or hereafter in effect, (ii) the consent of Maker to the entry of any order for relief in an involuntary case under any such law, (iii) the consent of Maker to the appointment of, or taking possession by, a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of Maker or of any substantial part of the property of Maker, (iv) the making by Maker of a general assignment for the benefit of creditors or (v) the admission by Maker in writing of its inability generally to pay its debts as they become due. This Note is being executed in connection with the purchase on the date hereof by Maker from Payee of 100 shares of the Common Stock of Corporate Family Network, Inc. (the "Shares") and is being made by Maker as payment of the exercise price of such options. In order to secure the full and timely payment of this Note, Maker pledges, assigns, hypothecates and trans fers the Shares to Payee, and grants to Payee a first lien on, and security interest in, the Shares and in all dividends, distributions and other proceeds thereof, solely as collateral security for the full and timely payment by Maker of the principal of, interest on, and any other obligations for payment under, this Note. Maker agrees to pay, and hold Payee harmless against, any liability for the payment of any costs and expenses, including, without limitation, reasonable attorneys' fees and dis bursements, arising in connection with the enforcement or collection of this Note by Payee or any holder. No provision of this Note shall be construed or shall operate so as to require Maker to pay interest in an amount or at a rate greater than the maximum allowed from time to time under applicable law. Should any payment of interest or other charges by Maker hereunder exceed the maximum rate of interest then permitted under applicable law, the amount of the excess interest shall be waived by Payee and shall be automatically credited against and in reduction of the principal balance of this Note. Maker waives diligence, demand, presentment, protest and all other demands and notices of any kind, consents to any renewals, extensions, and partial payments of this Note or the 2 indebtedness for which it is given without notice to it and agrees that no such renewal, extension or partial payment shall discharge Maker from liability hereon in whole or in part (except to the extent of such partial payments). This Note may not be amended or modified except in a writing signed by Payee and Maker. If any provision of this Note is held to be invalid or unenforceable in any respect, the valid ity, legality and enforceability of the remaining provisions of this Note shall be unaffected thereby. No failure or delay on the part of Payee or any other holder of this Note to exercise any right under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in this Note are cumulative and not exclusive of any remedies provided by law. On receipt of evidence reasonably satisfactory to Maker of the loss, theft, destruction or mutilation of this Note and, in the case of loss, theft or destruction, on receipt of indemnity or security reasonably satisfactory to Maker from Payee or, in the case of mutilation, on surrender of the mutilated Note, Maker shall execute and deliver to Payee a new Note of like tenor in lieu of this Note. This Note shall be governed by and construed in accordance with the laws of the State of New York. Maker irrevocably submits to the personal jurisdiction and venue of any State or Federal court within New York County, State of New York, in connection with any action or pro ceeding instituted to enforce this Note. IN WITNESS WHEREOF, Maker has caused this instrument to be duly executed on its behalf on the date first set forth above. /s/ Ralph C. Guild ------------------------------------------- RALPH C. GUILD 3 EX-10.9 17 COMPENSATION DEFFERAL PLAN EXHIBIT 10.9 INTEREP NATIONAL RADIO SALES, INC. COMPENSATION DEFERRAL PLAN Exhibit 10.9 INTEREP NATIONAL RADIO SALES, INC. COMPENSATION DEFERRAL PLAN 1. Introduction. Interep hereby establishes the Plan, effective January ------------ 1, 1994, for the purpose of providing deferred compensation to a select group of executive employees in recognition of their contributions to Interep. This document constitutes the written instrument under which the Plan is maintained. 2. Definitions. ----------- 2.1 "Account" means the separate account established and maintained by ------- Interep to reflect the interest of each Participant in the Plan. 2.2 "Committee" means the committee appointed by Interep's board of --------- directors. 2.3 "Common Stock" means common stock issued by Interep. ------------ 2.4 "Compensation" means a Participant's salary and/or incentive ------------ compensation from Interep. 2.5 "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended. 2.6 "Interep" means Interep National Radio Sales, Inc., a New York ------- corporation. 2.7 "Participant" means each employee of Interep who is designated as such ----------- by the Committee. 2.8 "Plan" means the Interep National Radio Sales, Inc. Compensation ---- Deferral Plan, as set forth in this instrument and as hereafter amended. 2.9 "Plan Year" means the calendar year. --------- 2.10 "Preferred Stock" means shares of Series B Cumulative Convertible --------------- Preferred Stock issued by Interep. 3. Eligibility To Participate. -------------------------- (a) Determination of Eligibility. The Committee will, from time to ---------------------------- time, designate Interep employees to be Participants. Each such employee must be one of a select group of management and highly compensated employees of Interep. (b) Termination Of Participation. A Participant's participation in ---------------------------- the Plan will terminate upon the Participant's payment to the Participant or his or her beneficiary of all amounts credited to the Participant's Account. A Participant's active Plan participation will cease and no allocations will be made to his or her Account under Section 5 for any period that he or she is a Interep employee but does not satisfy the criteria set forth in Section 3 (a). 4. Vesting. Each Participant will always be 100% vested in his or her ------- Account. 5. Compensation Deferrals. ---------------------- (a) Participant Compensation Deferrals. With respect to the 1994 and ---------------------------------- 1995 Plan Years, each Participant may elect to defer the receipt of Compensation under the terms of deferral election forms prepared by Interep. (b) Deferral Elections. Each Participant must complete a deferral ------------------ election form for each Plan Year for which he or she wishes to defer the receipt of Compensation. To be effective, each such deferral form must satisfy the following rules: . The deferral form must be signed and dated by the Participant. . The deferral form must be received by the Committee before the beginning of the Plan Year for which the Compensation is payable. However, in the case of an employee who becomes a Participant after the beginning of a Plan Year, the deferral form must be received by the Committee both (i) within 30 days of the ---- date on which the employee is notified of his or her eligibility to participate, and (ii) before the date on which the --- Compensation subject to the deferral election would otherwise be paid. . A Participant's election to defer Compensation is irrevocable and cannot be modified or amended by the Participant. 6. Account Values. Each Participant's Account will be credited with an -------------- initial balance of Preferred Stock (valued at $1,000 per share) equal in value to the amount deferred by the Participant, plus 11.2875 shares of Common Stock for each share of Preferred Stock initially credited to the Participant's Account. Upon distribution of an Account, the value of the Account will equal the value of the shares of Common Stock and Preferred Stock credited to the Account as of the distribution date. The value of the shares of Common Stock credited to a Participant's Account will be determined using its fair market value under the terms of The Interep Radio Store Employee Stock Ownership Plan. -2- 7. Distribution of Accounts. ------------------------ (a) Timing And Form Of Distributions. Subject to Section 10, each -------------------------------- Participant will receive distribution(s) of his or her Account an follows: . To the extent that a Participant's Account holds shares of Common Stock, the value of that portion of the Account will be distributed in cash to the Participant upon his or her termination of Interep employment, as set forth in the following schedule: Amount of Timing/Form of Distribution Distribution ------------ ----------- Less than $10,000 Lump sum $10,000 to $24,999 Quarterly payments over one year $25, 000 to $99, 999 Quarterly payments over two years $100,000 to $199,999 Quarterly payments over three years $200,000 to $299,999 Quarterly payments over four years $300,000 or more Quarterly payments over five years . To the extent that a Participant's Account holds shares of Preferred Stock, the value of that portion of the Participant's Account will be distributed in cash to the Participant at the later of (i) his or her termination of Interep employment, or -- (ii) when Interep redeems such Preferred Stock. The Preferred Stock may be redeemed at the option of Interep or the trustee of the trust described in Section 13 on the later to occur of (i) ----- the redemption of all outstanding shares of Series A Preferred Stock issued by Interep, or (ii) November 1, 2003. (b) Beneficiary Designation. Each Participant must designate a ----------------------- beneficiary to receive a distribution of his or her Account if the Participant dies before it is distributed to him or her. A beneficiary designation must be signed, dated and delivered to the Committee to become effective. Each new, valid beneficiary designation will cancel and supercede all prior beneficiary designations. In the absence of a valid or effective beneficiary designation, the Participant's surviving spouse will be his or her beneficiary or, if there is no surviving spouse, the Participant's estate will be his or her beneficiary. If a married Participant designates anyone other than his or -3- her spouse as his or her beneficiary, such designation will be void unless it is signed and dated by the Participant's spouse. 8. Withholding. Interep will withhold from any Plan distribution all ----------- required federal, state, local and other taxes and any other payroll deductions required. Each Participant will agree as a condition of participation in the Plan to pay such amounts, or to have withheld annually from his or her Compensation such amounts, as are necessary to satisfy his or her tax and payroll withholding obligations. 9. Administration. The Plan is administered and interpreted by Interep. -------------- Interep has delegated to the Committee its delegable responsibilities under the Plan. The Committee will maintain, or cause to be maintained, records that show the balance of each Participant's Account, and will provide each Participant with an annual statement that reflects his or her Account balance. The Committee has the full and exclusive discretion to interpret and administer the Plan. All actions, interpretations and decisions of the Committee are conclusive and binding on all persons, and will be given the maximum possible deference allowed by law. 10. Amendment Or Termination. Interep reserves the right, in its sole and ------------------------ unlimited discretion, to amend or terminate the Plan at any time, without prior notice to any Participant. Interep may amend the Plan by action of any of its officers authorized to do so by its board of directors. However, no such amendment or termination will reduce the amounts credited to a Participant's Account prior to such amendment or termination. 11. Claims Procedure. Any person who believes that he or she is entitled ---------------- to any payment under the Plan may submit a claim in writing to the Committee. If the claim is denied (either in full or in part), the claimant will be provided a written notice that explains the specific reasons for the denial and refers to the provisions of the Plan on which the denial is based. The notice will describe any additional information needed to support the claim. The denial notice will be provided to the claimant within 90 days after the claim is received. If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90-day period. 12. Appeal Procedure. If a claim is denied, the claimant (or his or her ---------------- authorized representative) may apply in writing to the Committee for a review of the decision denying the claim. The claimant (or representative) then has the right to review pertinent documents and to submit issues and comments in writing. The Committee will provide written notice of its decision on review within 60 days after it receives a review request. If additional time (up to 60 days) is needed to review the request, the claimant will be given written notice of the reason for the delay. 13. Source Of Payments. Interep intends to establish a trust and to ------------------ contribute shares of Common Stock and Preferred Stock to this trust for the benefit of Participants. Under the terms of the trust instrument, the trust's assets will be available to pay the claims of Interep's creditors in the event of Interep's insolvency. All payments under the Plan will be paid in cash -4- from either the general funds of Interep or from the trust. To the extent that Interep or the trust makes payments under the Plan, the other entity will be absolved of its responsibility for such payments. Any right of any person to receive any payment under the Plan is no greater than the right of any other unsecured creditor of Interep. 14. Inalienability. A Participant's rights to benefits under the Plan are -------------- not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary. 15. Applicable Law. The provisions of the Plan will be construed, -------------- administered and enforced in accordance with ERISA and, to the extent applicable, the laws of the State of New York. 16. Severability. If any provision of the Plan is held invalid or ------------ unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced an if such provision had not been included. 17. No Employment Contract. No Interep employee has any right to be ---------------------- retained in the employ of Interep by virtue of his or her status as a Participant. 18. Status Of Plan As ERISA "Top Hat" Plan. The Plan is intended to be an -------------------------------------- unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management and highly compensated employees and will be administered and construed to effectuate this intent. Accordingly, the Plan is subject to Title I of ERISA, but is exempt from Parts 2, 3 and 4 of Title I (B) of ERISA. Execution - --------- IN WITNESS WHEREOF, Interep National Radio Sales, Inc., by its duly authorized officer, has executed the Plan on the date indicated below. INTEREP NATIONAL RADIO SALES, INC. By/s/ Debra Schwartz ------------------ Dated August 22, 1994 -------------------- -5- EX-10.10 18 TRUST AGREEMENT EXHIBIT 10.10 TRUST AGREEMENT UNDER THE INTEREP NATIONAL RADIO SALES, INC. COMPENSATION DEFERRAL PLAN TRUST AGREEMENT UNDER THE INTEREP NATIONAL RADIO SALES, INC. COMPENSATION DEFERRAL PLAN THIS AGREEMENT is entered into as of the date or dates set forth below, by and between INTEREP NATIONAL RADIO SALES, INC. ("Interep") and RALPH C. GUILD and HENRY LAWSON (the "Trustees"); WHEREAS, Interep has adopted the Interep National Radio Sales, Inc. Compensation Deferral Plan (the "Plan"); WHEREAS, Interep has incurred or expects to incur liability under the terms of the Plan with respect to the individuals participating in the Plan; WHEREAS, Interep wishes to establish a trust (the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of Interep's creditors in the event of Interep's Insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plan; WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded Plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; WHEREAS, it is the intention of Interep to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: Section 1. ESTABLISHMENT OF TRUST (a) Interep hereby deposits with the Trustees in trust $100.00, which shall become the principal of the Trust to be held, administered and disposed of by the Trustees as provided in this Trust Agreement. (b) The Trust shall be irrevocable. (c) The Trust is intended to be a grantor trust, of which Interep is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (d) The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of Interep, and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against Interep. Any assets held by the Trust will be subject to the claims of Interep's general creditors under federal and state law in the event of insolvency, as defined in Section 3(a) herein. (e) Interep, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in Trust with the Trustees to augment the principal to be held, administered and disposed of by the Trustees as provided in this Trust Agreement. Neither the Trustees nor any Plan participant or beneficiary shall have any right to compel such additional deposits. Section 2. PAYMENTS TO PLAN PARTICIPANTS AND THE BENEFICIARIES (a) Interep shall deliver to the Trustees a schedule (the "Payment Schedule") that indicates the amounts payable in respect of each Plan participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to the Trustees for determining the amounts so payable, the form in which such amount is to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. Except as otherwise provided herein, the Trustees shall make payments to the Plan participants and their beneficiaries in accordance with such Payment Schedule. The Trustees shall not be liable for payment of any tax assessed under any existing or future law against the assets of the Trust fund. With respect to any benefit payment which is subject to federal, state or local income tax withholding, as directed in writing by Interep, the Trustees shall distribute assets of the Trust fund to Interep for its submission to the applicable taxing authority. With respect to any federal, state or local income tax on the earnings on the assets of the Trust fund, such tax shall be paid by Interep. (b) The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plan shall he determined by Interep or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. (c) Interep may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plan. Interep shall notify the Trustees of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, 2 Interep shall make the balance of each such payment as it falls due. The Trustees shall notify Interep where principal and earnings are not sufficient. The Trustees shall have no obligation to determine the identity of persons entitled to benefits or their mailing addresses. Section 3. TRUST RESPONSIBILITY REGARD PAYMENTS TO TRUST BENEFICIARY WHEN INTEREP IS INSOLVENT (a) The Trustees shall cease payment of benefits to Plan participants and their beneficiaries if Interep is Insolvent. Interep shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Interep is unable to pay its debts as they become due, or (ii) Interep is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. For purposes of this Section 3 (other than Section 3(b)(1)), the term "Interep" shall include Interep and its affiliates. (b) At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Interep under federal and state law as set forth below. (1) The Board of Directors and the President of Interep shall have the duty to inform the Trustees in writing of Interep's Insolvency. If a person claiming to be a creditor of Interep alleges in writing to the Trustees that Interep has become Insolvent, the Trustees shall determine whether Interep is Insolvent and, pending such determination, the Trustees shall discontinue payment of benefits to Plan participants or their beneficiaries. (2) Unless the Trustees have actual knowledge of Interep's Insolvency, or have received notice from Interep or a person claiming to be a creditor alleging that Interep is Insolvent, the Trustees shall have no duty to inquire whether Interep is Insolvent. The Trustees may in all events rely on such evidence concerning Interep's solvency as may be furnished to the Trustees and that provides the Trustees with a reasonable basis for making a determination concerning Interep's solvency. (3) If at any time the Trustees have determined that Interep is Insolvent, the Trustees shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trust for the benefit of Interep's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of Interep with respect to benefits due under the Plan or otherwise. (4) The Trustees shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustees have determined that Interep is not insolvent (or is no longer Insolvent). 3 (c) Provided that there are sufficient assets, if the Trustees discontinue the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by Interep in lieu of the payments provided for hereunder during any such period of discontinuance. Section 4. PAYMENTS TO INTEREP Except as provided in Sections 1(b) and 3 hereof, after the Trust has become irrevocable, Interep shall have no right or power to direct the Trustees to return to Interep or to divert to others any of the Trust assets before all payment of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plan. Section 5. INVESTMENT AUTHORITY (a) The Trustees may invest in securities (including stock or rights to acquire stock) or obligations issued by Interep. The Trustees shall invest Trust assets as directed by Interep. All other rights associated with assets of the Trust shall be exercised by the Trustees or the person designated by the Trustees, and shall in no event be exercisable by or rest with Plan participants. (b) Interep shall have the right at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by Interep, in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. (c) Notwithstanding any provision herein to the contrary, the Trustees are hereby expressly authorized to invest in any common, collective or pooled fund maintained by any bank or trust company exclusively for the commingling and collective investment of assets of grantor trusts, and the documents establishing or amending these trust funds are hereby incorporated by reference into this Trust Agreement. The Trustees may deposit or invest all or any part of the assets of the Trust fund in savings accounts or certificates of deposit or other deposits which bear a reasonable interest rate in a bank. The Trustees may cause title to property of the Trust to be issued, held or registered in the individual names of the Trustees, or in the name of their nominee(s) or agents, or in such form that title will pass by delivery and may employ such agents, including custodians and counsel, as may be reasonably necessary and to pay them reasonable compensation. 4 Section 6. DISPOSITION OF INCOME During the term of this Trust, all income received by the Trust, net of certain expenses and taxes as designated by Interep, shall be accumulated and reinvested. Section 7. ACCOUNTING BY TRUSTEES The Trustees shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between Interep and the Trustees. Within 60 days following the close of each calendar year and within 60 days after the removal or resignation of one or more of the Trustees, the Trustees shall deliver to Interep a written account of his administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. Section 8. RESPONSIBILITY OF TRUSTEES (a) The Trustees shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the Trustees shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Interep which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by Interep. In the event of a dispute between Interep and a party with respect co the Plan or this Trust, the Trustees may apply to a court of competent jurisdiction to resolve the dispute. (b) If the Trustees undertake or defend any litigation arising in connection with this Trust, Interep agrees to indemnify the Trustees against the Trustees' costs, expenses and liabil ities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If Interep does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustees may obtain payment from the Trust. (c) The Trustees may consult with legal counsel (who may also be counsel for Interep) with respect to any of their duties or obligations hereunder. (d) With the prior consent of Interep, the Trustees may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist them in per forming any of their duties or obligations hereunder. Any expenses incurred therewith shall be considered an expense of the administration of the Trust. 5 (e) The Trustees shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein. (f) Notwithstanding any powers granted to the Trustees pursuant to this Trust Agreement or to applicable law, the Trustees shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. Section 9. COMPENSATION AND EXPENSES OF THE TRUSTEES Interep shall pay all administrative and Trustees' fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust. Section 10. RESIGNATION AND REMOVAL OF THE TRUSTEES (a) A Trustee may resign at any time by written notice to Interep, which shall be effective 60 days after receipt of such notice unless Interep and the Trustee agree otherwise. (b) A Trustee may be removed by Interep on 60 days notice or upon shorter notice accepted by the Trustee. (c) Upon resignation or removal of a Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee(s). The transfer shall be completed within 60 days after receipt of notice of resignation, removal or transfer, unless Interep extends the time limit. (d) If a Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraph (a) or (b) of this Section. If both Trustees resign and no such appointment has been made, a Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of a Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. Section 11. APPOINTMENT OF A SUCCESSOR TRUSTEE If either or both of the Trustees resigns or is removed in accordance with Section 10(a) or (b) hereof, Interep may appoint any third party, such as an individual, a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace either or both Trustees upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee or Trustees, who shall have all of the rights and powers of the former Trustee(s) including ownership rights in the Trust assets. The former Trustee(s) shall execute any instrument necessary or reasonably requested by Interep or the successor Trustee(s) to evidence the transfer. 6 Section 12. AMENDMENT OR TERMINATION (a) This Trust Agreement may be amended by a written instrument executed by the Trustees and Interep. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plan or shall make the Trust revocable after it has become irrevocable in accordance with Section 1(b) hereof. (b) The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plan unless sooner revoked in accordance with Section 1(b) hereof. Upon termination of the Trust any assets remaining in the Trust shall be returned to Interep. (c) Upon written approval of participants or beneficiaries entitled to payment of benefits pursuant to the terms of the Plan, Interep may terminate this Trust prior to the time all benefit payments under the Plan have been made. All assets in the Trust at termination shall be returned to Interep. Section 13. MISCELLANEOUS (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of the state of New York. (d) This Trust Agreement and the Plan are part of and constitute a single, integrated employee benefit plan and trust and shall be construed together. If there is a conflict between the provisions of the Plan and this Trust Agreement, the provisions of this Trust Agreement shall control with respect to all rights, duties, responsibilities, obligations, power and authorities to the Trustees, and the Trustees shall have no duty to inquire into, nor shall they have any obligation or liability with respect to, the provisions of the Plan. (e) All releases and indemnities provided herein shall survive termination of this agreement. Interep shall indemnify and hold the Trustees and Trust fund harmless from and against any loss or liability, including reasonable attorneys' fees, that arises in connection with (i) any acts taken in accordance with written direction (or failure to act, in the absence of such direction) from Interep or any person designated to act on Interep's behalf, or (ii) the Trustees' good faith execution of their duties under this Trust Agreement, except in the event of the Trustees' own gross negligence or willful misconduct. 7 Section 14. EFFECTIVE DATE AND EXECUTION The effective date of this Trust Agreement shall be August 22, 1994.
INTEREP NATIONAL RADIO SALES, RALPH C. GUILD INC. By:/s/ Debra Schwartz /s/ Ralph C. Guild ---------------------------- --------------------------------- Its Vice President Date August 22, 1994 Date August 22, 1994 ---------------------------- ----------------------------- HENRY LAWSON /s/ Henry Lawson --------------------------------- Date August 22, 1994 -----------------------------
8 EX-10.11 19 SERVICES AGREEMENT EXHIBIT 10.11 SERVICES AGREEMENT AGREEMENT, dated as of June 1, 1997, between INTEREP NATIONAL RADIO SALES, INC., a New York corporation ("Interep"), and MEDIA FINANCIAL SERVICES, INC., a Florida corporation ("Media"). W I T N E S S E T H : -------------------- WHEREAS, Interep wishes to retain Media to provide certain financial and accounting services for Interep and its subsidiaries, and Media is willing to provide such services; NOW, THEREFORE, the parties agree as follows: 1. TERM. The term of this Agreement (the "Term") shall commence on the date hereof and, unless earlier terminated by either party pursuant to the provisions of Section 8, shall continue for a period of five years. The parties may renew this Agreement for successive additional five-year periods by, in each case, entering into a written extension of this Agreement prior to the end of the then current period. 2. SERVICES. During the Term of this Agreement, Media shall perform all corporate, accounting and financial functions for Interep, each of its subsidiaries and, as requested by Interep, departments or business segments of Interep, as were formerly provided by Interep's internal finance department, including without limitation, the following: (a) the preparation of monthly, quarterly and annual financial statements and projections and operating reports as required by management; (b) the preparation of annual budgets; (c) the preparation and maintenance of all accounts payable, accounts receivable and fixed asset ledgers and all other customary books and records of account; (d) the preparation and filing of all required federal, state and local tax returns for Interep, each of its subsidiaries and Interep's Employee Stock Ownership Plan (the "ESOP"), although Media may utilize the services of Interep's independent accounting firm or other experts for such purpose; (e) the preparation and filing of any other reports, applications and other documents required by the federal and any applicable state and local governments with respect to Interep, each of its subsidiaries and the ESOP; (f) the maintenance of appropriate internal accounting controls; (g) all accounts payable functions; (h) all billing, accounts receivable and collections functions; (i) all dealings with independent accountants and auditors, including the coordination of all audits; (j) the maintenance of all banking accounts and all relationships between Interep and commercial lenders, investment bankers and other financial institutions in the ordinary course and in connection with any financings; (k) the investment of cash balances; (l) all unwired network accounting and dealings with radio stations and agency clients; (m) such similar, additional services as the parties may agree from time to time. Media shall have no responsibility for any payroll, personnel or benefits functions, all of which shall be performed by Interep. 3. SERVICES OF MCENTEE. During the Term, William J. McEntee, Jr., President of Media, shall be in charge of all services rendered by Media to Interep. Further, as requested by Interep, Media shall cause Mr. McEntee to serve as Vice President and Chief Financial Officer of Interep and in such other offices as Interep and Media shall agree. In such capacity, Mr. McEntee shall participate on behalf of Interep with respect to such corporate mergers, acquisitions, dispositions, mergers and similar transactions as are requested by Interep. 4. FEES. In consideration of the above services to be provided by Media to Interep pursuant to Sections 2 and 3, Interep shall pay annual fees to Media as follows:
Contract Year Annual Fee - ------------- ---------- 1 $2,580,000 2 $2,580,000 3 $2,709,000 4 $2,844,450 5 $2,986,675
Schedule A illustrates how the initial annual fee was calculated. If the Term is extended beyond five years, Media's fees shall be in such amounts as the parties shall agree. All annual fees shall be payable, in advance, in 24 equal semi- monthly installments (initially $107,500 per installment) on the first and 16th days of each month. Media shall render invoices for such monthly fees to Interep at least five days prior to the scheduled payment dates. Media shall be responsible for the payment 2 of any sales, use or similar taxes, if any, that may be payable with respect to the services it provides pursuant to this Agreement. Further, if pursuant to clause (m) of Section 2, Media provides additional services to Interep, or Interep forms or acquires an additional subsidiary, business segment or business, with the result that Media must expand its personnel, office space or facilities, the parties shall in good faith negotiate and agree on an appropriate increase in Media's fee to take the reasonable, additional costs of such expansion into account. If Media finds, initiates or otherwise arranges for financing for Interep, or is able to reduce the charges of any firm which provides or arranges for such financing, Interep shall pay Media a fee for its financing activities, or an incentive for its cost savings, as the case may be, and as the parties shall agree. 5. EXPENSES. The fees contemplated under Section 4 are intended to compensate Media for all expenses that it may incur in the performance of its services under this Agreement. A non-exclusive summary of such expenses, including all auditing and tax preparation fees payable in connection with the annual audit and tax returns of Interep and its subsidiaries (but not the ESOP), is set forth in Schedule A. Accordingly, Media shall not be entitled to seek any further amounts from Interep on account of expenses or otherwise, except as provided in the next sentence. If Media anticipates that it shall be necessary to incur any extraordinary expenses not listed in Schedule A in connection with the performance of its services, it shall obtain Interep's prior written consent therefor, in which case such expenses shall be paid by Interep. Media shall not incur any such expenses without Interep's written consent. It is contemplated that Mr. McEntee shall be required to be in New York, New York, from time to time in order to carry out his duties. Media shall be responsible for all travel and lodging costs incurred for up to 24 trips to New York each year by Mr. McEntee in connection with Interep business. Interep shall pay the cost of any additional such trips. If Mr. McEntee is required to travel to visit Interep client stations or agencies, Interep shall reimburse Media for all related travel and lodging costs. 6. CONFIDENTIALITY. During and after the Term, Media shall, and shall cause its employees and agents to, keep secret and not divulge to any party not employed or retained by Interep any information or documents regarding Interep's business and affairs, whether or not marked as confidential. This obligation shall not apply to any information or document if it is or becomes public knowledge as a result of causes other than the acts or omissions of Media or its employees. 7. NON-COMPETITION. During the Term and for one year following the end of the Term, Media shall not provide any financial, accounting or other services to Katz Media Corporation or any of its subsidiaries, affiliates, successors or assigns. 3 8. TERMINATION. Either party may terminate this Agreement if the other party breaches any provision of this Agreement and such breach is not cured within 30 days after the first party notifies the breaching party of such breach. Further, Interep shall have the right to terminate this Agreement in the event of Mr. McEntee's death, permanent disability or incompetence on not less than 90 days' prior written notice. 9. INDEMNIFICATION. Mr. McEntee and Interep are parties to an Indemnification Agreement, dated as of March 3, 1997. Interep agrees to provide the same indemnification rights to Media as it provides to Mr. McEntee under such Agreement, on and subject to the terms and conditions set forth in such agreement. 10. INDEPENDENT CONTRACTOR. For all purposes, Media shall be an independent contractor, and not an employee, partner or joint venturer, of Interep. Media may employ or retain any person it believes appropriate to assist it in carrying out its obligations under this Agreement, and no such person shall be deemed to be an employee of Interep. Media shall be solely responsible for (i) the compensation and benefits of all of its employees, including workers' compensation benefits, and (ii) withholding and payment of all taxes and contributions which an employer is required to withhold or pay in respect of its employees. 11. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of the parties with respect to its subject matter, merges and supersedes any prior or contemporaneous understandings with respect to its subject matter, and shall not be modified or terminated except by a written instrument executed by both of the parties. Failure of a party to enforce one or more of the provisions of this Agreement or to require at any time performance of any of the obligations hereunder shall not be construed to be a waiver of such provisions by such party nor to in any way affect the validity of this Agreement or such party's right thereafter to enforce any provision of this Agreement, nor to preclude such party from taking any other action at any time which it would legally be entitled to take. 12. COMMUNICATIONS. All notices, consents and other communications given under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered by hand or by Federal Express or a similar overnight courier to, (b) seven days after being deposited in any United States post office enclosed in an airmail postage prepaid registered or cer tified envelope addressed to, or (c) when successfully transmitted by facsimile (with a confirming copy of such communication to be sent as provided in (a) or (b) above) to, the party for whom intended, at the address or facsimile number for such party set forth below, or to such other address or facsimile number as may be furnished by such party by notice in the manner provided herein; provided, -------- however, that any notice of change of address or facsimile number shall be - ------- effective only on receipt.
If to Interep: If to Media: Interep National Radio Sales, Inc. Media Financial Services, Inc. 100 Park Avenue, 5th Floor 2090 Palm Beach Lakes Boulevard, Suite 300
4 New York, New York 10017 West Palm Beach, Florida 33409 Attention: Mr. Ralph C. Guild Attention: Mr. William J. McEntee, Jr. Fax No.: (212) 309-9081 Fax No.: (561) 616-4019
13. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, be binding on and be enforceable by, the parties and their respective permissible successors and assigns. Neither party shall have the right to assign this Agreement, or any rights or obligations hereunder, without the consent of the other, which consent may be withheld for any reason. 14. GOVERNING LAW. This Agreement shall be governed by the laws of the State of New York applicable to agreements made and fully to be performed in such state, without giving effect to conflicts of law principles. 15. ARBITRATION. Any controversy or claim arising out of or relating to this Agreement shall be finally resolved by arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Any such arbitration shall take place in New York, New York, before three arbitrators, one of which shall be appointed by Interep, one by Media and the third by the arbitrators so appointed; provided, however, that the parties may by mutual -------- ------- agreement designate a single arbitrator. The parties further agree that (i) the arbitrators shall be empowered to include arbitration costs and attorney fees in the award to the prevailing party in such proceedings and (ii) the award in such proceedings shall be final and binding on the parties. Judgment on the arbitrators' award may be entered in any court having the requisite jurisdiction. Each party irrevocably submits to the jurisdiction and venue of the arbitration described above and to the jurisdiction and venue of the federal and state courts sitting in New York County, New York, for the enforcement of any judgment on the arbitrators' award, and waives any objection it may have with respect to the jurisdiction of such arbitrations or courts or the inconvenience of such forums or venues. 16. CONSTRUCTION; COUNTERPARTS. The headings contained in this Agreement are for convenience only and shall in no way restrict or otherwise affect the construction of the provisions hereof. References in this Agreement to Sections and Schedules are to the sections and schedules of this Agreement. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. INTEREP NATIONAL RADIO SALES, INC. By /s/ Ralph C. Guild ----------------------------------------------- Ralph C. Guild Chairman of the Board 5 MEDIA FINANCIAL SERVICES, INC. By /s/ William J. McEntee, Jr. ----------------------------------------------- William J. McEntee, Jr. President 6 EX-10.12 20 AMENDMENT TO SERVICES AGREEMENT EXHIBIT 10.12 AMENDMENT TO SERVICES AGREEMENT AMENDMENT, dated as of July 1, 1997, to the Agreement, dated as of June 1, 1997 (the "Agreement'"), between INTEREP NATIONAL RADIO SALES, INC., a New York corporation ("Interep"), and MEDIA FINANCIAL SERVICES, INC., a Florida corporation ("Media"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Interep and Media wish to amend the Agreement as set forth below; NOW, THEREFORE, in consideration of the premises and of the mutual agreements set forth herein, the parties agree as follows: 1. Inasmuch as Interep has determined to employ William J. McEntee, Jr. directly as its Vice President and Chief Financial Officer at an annual salary of $120,000, the table set forth in Section 4 of the Agreement is amended to deduct such amount from the fees payable to Media and to read as follows:
Contract Year Annual Fee - ------------- ---------- 1 $2,460,000 2 $2,460,000 3 $2,589,000 4 $2,724,450 5 $2,866,675
2. Except as provided above, the Agreement shall continue unchanged and in full force and effect. This Amendment shall be given effect as of June 1, 1997. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above. INTEREP NATIONAL RADIO SALES, INC. MEDIA FINANCIAL SERVICES, INC. By /s/ Ralph C. Guild By /s/ William J. McEntee, Jr. -------------------------------------- ------------------------------ Ralph C. Guild William J. McEntee, Jr. Chairman of the Board President EX-10.13 21 FOURTH AMENDED & RESTATED EMPLOYMENT AGREEMENT EXHIBIT 10.13 FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT Fourth Amended and Restated Employment Agreement, dated as of June 1, 1995, between INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), and RALPH C. GUILD ("Guild"). W I T N E S S E T H: ------------------- WHEREAS, the Company and Guild are parties to an Employment Agreement, dated as of August 1, 1986, as amended and restated as of August 1, 1987, January 1, 1989 and January 1, 1991 (as so amended and restated, the "Original Agreement"); and WHEREAS, the Company and Guild wish to amend and restate the Original Agreement in order to extend the term of the Original Agreement and to make certain other changes; NOW, THEREFORE, in consideration of the mutual agreements set forth below, the parties agree that the Original Agreement is amended and restated as follows: 1. EMPLOYMENT. (a) TERM. Subject to the terms and conditions of this Agreement, the Company employs Guild, and Guild agrees to serve, as Chairman of the Board and Chief Executive Officer of the Company for a term commencing on the date hereof and ending May 31, 2000, unless extended as provided in the following sentence (the "Term"). On June 1, 1998 and each following June 1 during the Term, the Term shall automatically be extended for one additional year, unless the Company or Guild notified the other on or before the immediately preceding May 1 that the Term is not to be so extended. For example, (i) if no such notice is given on May 1, 1998, the Term would automatically be extended by one year and would end on May 31, 2001 or (ii) if such notice is given by the Company on May 1, 1998, the Term would end on May 31, 2000 and the Consulting Period (as defined in Section 1(c)) would begin on the following day. (b) DUTIES. Guild shall report directly to the Board of Directors of the Company. The Company shall use its best efforts to cause Guild to be elected a director of the Company at all times during the Term. Guild shall perform his duties to the best of his ability and shall devote a reasonable portion of his time, energies and skills to such duties, subject to the understanding that he has various investments and participates in other business ventures and activities which may, from time to time, require his attention, but which shall not interfere with the performance of his duties to the Company. It is further understood that such other investments, ventures and activities may include radio stations that may compete in the same markets as radio stations which are clients of the Company. Guild may perform his duties at the offices of the Company or at such other locations as he reasonably deems appropriate. (c) CONSULTING. If the Company gives Guild notice pursuant to Section 1(a) that the Term of this Agreement is not to be extended, the Company shall retain Guild as a consultant for a period of two years beginning on the day after the last day of the Term (the "Consulting Period"). During the Consulting Period, Guild shall provide the Company with such advice, assistance and services regarding any aspect of the Company's business and affairs as the Company and Guild shall from time to time agree. During the Consulting Period, the Company shall pay Guild annual consulting fees in an amount equal to Guild's base salary under Section 2(a) in effect at the end of the Term, the Company shall provide him with the health, hospitalization and welfare benefits referred to in Section 3 and the provisions of Section 4 (other than those respecting vacations) shall apply. The Company shall pay such consulting fees to Guild in equal semi-monthly installments or, if Guild requests the Company in writing at any time, the Company shall pay to Guild an amount equal to the total consulting fees payable during the Consulting Period (or then remaining balance thereof) discounted at the discount rate (as defined in Section 7(b)) to present value as of the date of such request. Any such accelerated payment shall not relieve Guild of his obligation to perform the consulting services contemplated by this Section 1(c). 2. COMPENSATION. (a) BASE SALARY. During the Term, the Company shall pay Guild a base salary of not less than $925,000 per year ("base salary"), payable in equal semi-monthly installments; provided, however, that the Company and Guild -------- ------- may from time to time agree on different payment schedules, which may involve the payment of portions of such annual salary (not to exceed $175,000 at any one time) in advance to assist Guild, for example, in making life insurance premium payments. The foregoing shall not preclude Guild from receiving salary increases or awards of bonuses, incentive or other types of additional compensation (in addition to the bonus compensation described in Section 2(b)) which the Company in its sole discretion may wish to pay. (b) INCENTIVE BONUS. In addition to his base salary, Guild shall be entitled to receive a minimum incentive bonus ("incentive bonus") in respect of each year during the Term, based on the Company's performance and calculated as follows. If the Company achieves 1995 EBITDA in excess of its 1994 EBITDA, Guild shall be entitled to a bonus in respect of fiscal 1995 equal to a percentage of his 1995 base salary, which percentage shall be equal to two times the percentage increase of 1995 EBITDA over 1994 EBITDA. Thereafter, for each fiscal year of the Company for which EBITDA exceeds EBITDA for the prior year, Guild shall similarly be entitled to an incentive bonus equal to a percentage of his base salary for such year, which percentage shall be equal to two times the percentage increase of EBITDA for such year over the higher of (i) EBITDA for the prior year and (ii) the highest EBITDA for any prior year back to 1994. All incentive bonus amounts payable hereunder shall be paid within 30 days following the Company's determination thereof, which shall be not later than 30 days following the delivery to the Company of audited financials for the year in respect of which the determination is made. "EBITDA" means the Company's operating income, plus depreciation, amortization and other non-cash items, including non-cash rent and compensation expense, plus payments made pursuant to this Section -2- 2(b), as derived based on the Company's audited financials for the fiscal year in respect of which it is determined. 3. BENEFIT PLANS. Guild shall be entitled to participate in all employee fringe benefit plans and policies that the Company may make available to, or have in effect for, its senior executives from time to time, including, without limitation, health, hospitalization and welfare benefits, pension, profit-sharing and similar plans, stock option, incentive compensation, savings, investment, retirement and supplemental benefit plans, in each case subject to the eligibility and other provisions of any such plan or policy. Nothing in this Section 3 shall require the Company to institute or make available to Guild any particular benefit plan or policy. 4. EXPENSES; VACATIONS; FACILITIES. Guild shall be entitled to incur on behalf of the Company reasonable and necessary expenses in connection with the performance of his duties and in accordance with the customary practice of the Company. The Company shall reimburse Guild for any such expenses paid by him. Whenever Guild is required to travel in connection with his duties, he may arrange for his wife to accompany him and for the Company to reimburse him for the related cost. During each 12-month period during the Term, Guild shall be entitled to paid vacation in accordance with his status and the policies of the Company regarding paid vacation time for its senior executives. The Company shall provide Guild with all reasonable facilities necessary for the performance of his duties hereunder and suitable to his position. 5. TEMPORARY DISABILITY. If, during the Term, Guild becomes disabled, through illness or otherwise, from performing his duties hereunder, he shall be entitled to a leave of absence for up to six consecutive months. The Company shall continue to pay Guild's compensation during any such leave of absence. If such disability continues beyond such period, it shall be deemed to be a permanent disability subject to the provisions of Sections 6(b) and 7(a). 6. RIGHTS OF TERMINATION. (a) TERMINATION FOR CAUSE BY THE COMPANY. The Company shall have the right to terminate Guild's employment forthwith for cause, limited to (i) an action by Guild involving willful malfeasance or gross negligence or (ii) Guild's incapacity to perform the duties called for under this Agreement by reason of the abuse of alcohol or drugs. (b) PERMANENT DISABILITY; DEATH. If Guild is disabled through illness or other wise from performing his duties hereunder for a period in excess of six consecutive months, so that such disability is deemed to be a permanent disability under Section 5, the Company shall have the option, exercisable on written notice to Guild and only so long as such disability continues, to terminate his employment under this Agreement. Any such termination shall be effective as of the end of the month in which such written notice is given to Guild. If Guild dies, the Term shall end on the date of his death. -3- (c) TERMINATION FOR CAUSE BY GUILD. Guild shall have the right, exercisable within six months after the occurrence of any of the following events, to terminate his employment under this Agreement on delivery of 30 days' written notice thereof to the Company: (i) if the Company violates this Agreement in any material respect, and such violation is not cured within 15 days of Guild's written notice thereof to the Company; (ii) if Guild is not re-elected or re-appointed to the offices of Chairman of the Board and Chief Executive Officer, other than by his own choice, by reason of his permanent disability, or is removed from such offices, other than for reasons justifying termination by the Company under Section 6(a); (iii) if Guild ceases to be a member of the Board of Directors of the Company, other than by his own choice, by reason of his permanent disability or for reasons justifying termination under Section 6(a); or (iv) in the event of a change of control of the Board of Directors of the Company as a result of (A) a contest for the control of the Company, (B) the consolidation of the Company with, or merger of the Company into, any other corporation, (C) the acquisition of the Company, of a controlling interest in the Company or of all or substantially all of the assets of the Company by another person, or (D) the cessation of the corporate existence of the Company or failure to continue such existence in full force and effect as a result of any circumstances. 7. EFFECTS OF TERMINATION. (a) TERMINATION FOR PERMANENT DISABILITY. If Guild's employment terminates under Section 6(b) on account of Guild's permanent disability, the Company shall continue to pay (or cause to be paid) to Guild, for the remainder of the Term (the "Remainder Term"), in equal semi-monthly installments, 75% of his then current salary, less the aggregate amount of all income disability benefits which he may receive or to which he may be entitled for such period by reason of (i) any group health insurance plan which is intended to function as a salary replacement plan, (ii) any applicable compulsory state disability law, (iii) the Federal Social Security Act, (iv) any applicable workmen's compensation law or similar law and (v) any disability plan to which the Company or any of its affiliates has contributed or for which it has made payroll deductions, other than those which reimburse for actual medical expenses. (b) PAYMENT ON TERMINATION BY REASON OF DEATH OR BY GUILD FOR CAUSE. If Guild dies during the Term or the Remainder Term, or if Guild elects to terminate his employment hereunder pursuant to Section 6(c), (i) the Company shall continue to pay (or cause to be paid) to Guild or his designated beneficiary (or, if no beneficiary has been designated, his estate), for the Remainder Term, in equal semi-monthly installments, the base salary that would have been payable to Guild during the Remainder Term pursuant to Section 2(a) had Guild's employment not been -4- terminated, and (ii) after the Remainder Term, if Guild elected to terminate his employment hereunder pursuant to Section 6(c), the Company shall also pay during the Consulting Period the consulting fees that would have been payable during the Consulting Period as if the Company had elected not to extend the Term pursuant to Section 1(a). If, however, Guild or his designated beneficiary or estate so requests the Company in writing at any time after Guild's election to terminate his employment pursuant to Section 6(c) or Guild's death, the Company shall pay to him or his designated beneficiary (or, if no beneficiary has been designated, his estate), an amount equal to the total base salary and, if applicable, consulting fees, otherwise owing pursuant to the preceding sentence, discounted at the Discount Rate (as defined below) to its present value as of the date of such request (the "Notice Date"). The Company shall pay such amount in a lump sum not later than 30 days after the Notice Date. "Discount Rate" means the yield to maturity, as determined on the Notice Date, on U.S. Treasury obligations having an original maturity comparable to the Remainder Term plus, if applicable, the Consulting Period. Guild may waive his right to receive all or part of any payment otherwise owing pursuant to this Section 7(b) by written notice to the Company and may also elect to receive a portion of any payments owing to him pursuant to this Section 7(b) on the installment basis referred to in the first sentence of this Section 7(b) and a portion on the lump sum basis referred to in the second sentence hereof. (c) GENERAL. Except as otherwise set forth herein, Guild's right to receive the base salary provided for in Section 2(a) shall cease on the effective date of any termination of his employment under Section 6, nor shall he have any right to any incentive bonus in respect of the year in which termination occurs, unless it occurs as of December 31 of such year. Termination of Guild's employment under any provision of this Agreement shall not affect the right of Guild or his designated beneficiary or estate to receive benefits accrued to him through the date of such termination under this Agreement or any employee benefit plan of the Company in which he is then participating; provided, however, that the rights of Guild or his designated -------- ------- beneficiary or estate under any such plan and any termination of his participation thereunder shall be governed by the terms of such plans as then in effect. All payments and rights under Sections 7 (a) and 7(b) shall be in lieu of any other amounts Guild (or his estate) might be entitled to receive under this Agreement for any breach hereof by the Company. Payments under Sections 7(a) or 7(b) shall not affect Guild's right to receive any severance payments or other benefits to which he is entitled in accordance with the Company's policy. At Guild's request at any time prior to the termination of his employment hereunder, the Company shall provide him with such reasonable security as Guild shall reasonably request to secure payment of all amounts payable to him after such termination, such as a bank letter of credit, bond or security interest in a portion of the Company's assets. 8. CONFIDENTIALITY. All information possessed by Guild relative to the activities of the Company which is of a secret or confidential nature, including business plans, sales or marketing data, financial data, developments and administrative procedures, is the property of the Company. Guild shall not, during the Term and any Remainder Term, disclose any such information to others not in the employ of the Company or its subsidiaries or use it for his benefit or that of any third party. Nothing herein shall prevent Guild, subsequent to the termination of his employment -5- hereunder, from using and availing himself of his general skill, knowledge and experience, including that pertaining to or derived from the non-confidential aspects of the business of the Company. 9. NON-COMPETITION. During the Term, any Remainder Term with respect to which he is receiving payment hereunder and any Consulting Period, Guild shall not, anywhere in the United States of America, without the consent of the Board of Directors of the Company: (a) engage in any national radio sales representation business on behalf of any party other than the Company and its subsidiaries; (b) solicit business from or represent any client of the Company or any of its subsidiaries in connection with national radio sales representation; or (c) offer employment to or hire any employee of the Company or any of its subsidiaries. 10. NOTICES. Any notice given by either party to the other shall be in writing and delivered by personal delivery or registered or certified mail, return receipt requested, addressed to Guild at his address of record with the Company, or to the Company at is principal office, as the case may be, or, in either case, at such other place as Guild or the Company may from time to time designate in writing. The date of personal delivery or the date of mailing any such notice shall be deemed to be the date of delivery thereof. 11. PRIOR AGREEMENTS; AMENDMENTS. This Agreement constitutes the entire agreement between the Company and Guild with regard to its subject matter and merges and supersedes any employment understandings or agreements which may have been previously made between the Company and Guild (other than the Supplemental Income Agreement, dated as of December 31, 1986 and amended as of June 18, 1993, and the Amendment and Extension of Option, dated January 1, 1991 and amended as of June 18, 1993), including, without limitation, the Original Agreement. This Agreement may not be changed, waived, discharged or terminated orally, but only by an instrument in writing, signed by the party against which enforcement of such change, waiver, discharge or termination is sought. 12. PARTIES IN INTEREST. Neither this Agreement nor any rights or obligations hereunder may be assigned by one party without the consent of the other, except that this Agreement (a) shall be binding on and inure to the benefit of any successor of the Company whether by merger, consolidation, sale of assets or otherwise, and references to the Company shall be deemed to include any such successor, and (b) to the extent provided herein, shall be binding on and inure to the benefit of the estate, heirs, designated beneficiaries or personal representatives, if any, of Guild, and references to Guild shall be deemed to include such estate, heirs, designated beneficiaries or personal representatives. Any designation by Guild of a beneficiary to receive payments hereunder in the event of Guild's death or permanent disability, and any change in such designation, shall be made by written notice from Guild to the Company. -6- 13. SEVERABILITY. If any provision of this Agreement is held invalid, illegal or unenforceable by a court or tribunal of competent jurisdiction, the remainder of this Agreement shall not be affected thereby, and such provision shall be carried out as nearly as possible according to its original terms and intent to eliminate such invalidity or unenforceability. In this regard, the parties agree that the provisions of Section 9, including, without limitation, the scope of the territorial and time restrictions, are reasonable and necessary to protect and preserve the Company's legitimate interests. If the provisions of Section 9 are held by a court of competent jurisdiction to be in any respect unreasonable, then such court may reduce the territory or time to which it pertains or otherwise modify such provisions to the extent necessary to render such provisions reasonable and enforceable. 14. MISCELLANEOUS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Headings used in this Agreement are for convenience only and shall not be used in the interpretation of this Agreement. References to Sections are to the sections of this Agreement. 15. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Florida applicable to agreements made and fully to be performed therein by residents thereof. 16. ARBITRATION. Any dispute arising out of or relating to any provision of this Agreement or to the parties' performance of any of their respective obligations hereunder shall be resolved before a single arbitrator chosen in accordance with the Rules of the American Arbitration Association as at the time in effect Florida. The arbitration shall take place in a major city in Florida designated by Guild and otherwise in accordance with such Rules. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. INTEREP NATIONAL RADIO SALES, INC. By /s/ Leslie D. Goldberg ---------------------------------- Leslie D. Goldberg, President /s/ Ralph C. Guild ---------------------------------- RALPH C. GUILD -7- EX-10.14 22 EMPLOYMENT AGREEMENT EXHIBIT 10.14 EMPLOYMENT AGREEMENT -------------------- This Employment Agreement, dated as of January 1, 1991, between INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), and MARC G. GUILD ("Guild"), W I T N E S S E T H: - - - - - - - - - - WHEREAS, Guild has been employed by the Company in various executive capacities for a number of years; WHEREAS, the Company desires to secure Guild's services and Guild desires to perform such services for the Company, on the terms and conditions hereinafter set forth; NOW, THEREFORE, the parties hereto, in consideration of their mutual interests, agree as follows: 1. Employment. The Company will employ Guild as President - ---------- Marketing Division of the Company for a term commencing on the date hereof and ending on January 1, 1997. On each anniversary of the date hereof commencing on January 1, 1995, the term of this Agreement shall be automatically extended for successive one-year periods, unless the Company notifies Guild by December 1 in the calendar year preceding such anniversary that the term shall not be so extended. Guild shall report directly to Leslie Goldberg, President of the Company, and shall have the right to be consulted by Goldberg concerning major decisions affecting the Company, including, without limitation, decisions to acquire or dispose of significant assets, merge with any other corporation or change the nature of the business of the Company, it being understood that any such decision is subject to approval by the Board of Directors of the Company. For the duration of his employment under this Agreement, the Company will use its best efforts to cause Guild to be elected a Director of the Company. Guild agrees to perform the duties called for hereunder to the best of his ability and to devote substantially all his time, energies and skills to such duties during the term of his employment. 2. Base Salary. In consideration of the services and duties to be ----------- rendered and performed by Guild hereunder, the Company shall pay to Guild a base salary consisting of the sum of the Base Amount and the Incentive Amount, as hereinafter defined. The "Base Amount" shall be the amount of $225,000 per annum and shall be payable in equal semi-monthly installments for the duration of his employment under this Agreement and for such additional periods as are hereinafter provided for. The "Incentive Amount" shall be the amount of $75,000 per annum and shall be payable by the Company only if the Company and/or Guild achieve certain financial and/or other goals in each such year, which goals shall be agreed upon by the Company and Guild for each year prior to the beginning of such year. The Incentive Amount of such base salary shall be payable in quarterly installments in accordance with the Company's then-existing incentive plan. In establishing such salary, it is not intended to preclude Guild from salary increases or awards of bonuses, incentive or other types of additional compensation which the Company in its sole discretion shall agree to pay. Moreover, it is contemplated that in addition to such salary and other possible compensation, Guild shall be eligible for and shall (except as otherwise agreed) participate in all employment benefit programs now or hereafter provided for by the Company for its senior executives in accordance with the provisions thereof, including any stock option, incentive compensation, savings and investment, retirement, supplemental benefit plans and programs. -2- 3. Expenses; Vacations; etc. During the term of employment of Guild ------------------------ hereunder, Guild shall be entitled to incur on behalf of the Company reasonable and necessary expenses in connection with his duties in accordance with customary practice and shall be entitled to reimbursement of any such expenses incurred and paid by him directly. Whenever Guild is required to travel in connection with his duties, he shall be entitled to arrange for his wife to accompany him and for the Company to reimburse him for the cost of such arrangements. During each 12-month period of the term of employment of Guild hereunder, Guild shall be entitled to a vacation with pay in accordance with his status and the general policy of the Company with respect to vacations for its executive personnel. During the term of employment of Guild hereunder, the Company shall provide Guild with all reasonable facilities necessary for the performance of his duties hereunder and suitable to his position, including an appropriate office and staff. 4. Temporary Disability. If, during the term of employment of Guild -------------------- hereunder, Guild should become disabled, through illness or otherwise, from performing his duties hereunder, he shall be entitled to a leave of absence from his employment for up to but not exceeding six consecutive months. His compensation shall continue during any such leave of absence. If such disability continues beyond the foregoing specified period, it shall be deemed a permanent disability and subject to the provisions of Sections 5(b) and 6(a). 5. Rights of Termination. --------------------- (a) Termination for Cause by the Company. The Company shall have the ------------------------------------ right to terminate this Agreement and Guild's employment hereunder forthwith for cause limited -3- to (i) action by Guild involving willful malfeasance or gross negligence or (ii) Guild's incapacity to perform the duties called for under this Agreement by reason of the abuse of alcohol or drugs. (b) Permanent Disability; Death. In the event that Guild shall be --------------------------- disabled through illness or otherwise from performing his duties hereunder for a period in excess of the period provided for in Section 4 so that such disability is deemed a permanent disability thereunder, the Company shall have the option, upon giving to Guild written notice thereof and exercisable only so long as such disability shall continue, to terminate his employment under this Agreement at the end of the month after the date when such written notice is given to Guild. If Guild shall die during the term his employment under this Agreement, his term of employment hereunder shall be deemed terminated on the date of his death. (c) Termination for Cause by Guild. Guild shall have the further ------------------------------ right to terminate his employment with the Company under this Agreement as follows: (i) if the Company violates this Agreement in any material respect, (ii) if Guild shall fail to be re-elected or reappointed to (other than by his own choice) or shall be removed from (other than by reasons justifying termination by the Company under Section 5(a) above) the office of President-Marketing Division, (iii) if Guild shall cease to be a Director of the Company (other than by his own choice or by reason of removal or reasons justifying termination under Section 5(a) above), (iv) in the event of a change of control of the Board of Directors of the Company as a result of (w) a contest for the control of the Company, (x) the consolidation of the Company with, or merger of the Company into, any other corporation, (y) the acquisition of the Company, of a controlling interest in the Company or all or substantially all of the assets of the Company by another corporation, or (z) the cessation of the corporate existence of the Company or failure to continue such existence in full force and effect as a result of any circumstances, or -4- (v) in the event that the Company notifies Guild in accordance with the provisions of Section 1 that the term of this Agreement will not be extended, then Guild shall have the right, exercisable within six months of such event or default, to terminate his employment under this Agreement upon delivery of 30 days' written notice thereof to the Company. 6. Effects of Termination. ---------------------- (a) Payments Upon Termination Upon Permanent Disability. In the event --------------------------------------------------- Guild's employment hereunder is terminated by the Company under Section 5(b) upon Guild's permanent disability, Guild shall be entitled to receive, and the Company shall continue to pay (or cause to be paid) to Guild, 75% of his then- current salary (less the aggregate amount of all income disability benefits which for such period he may receive or to which he may be entitled by reason of (i) any group health insurance plan which is intended to function as a salary replacement plan, (ii) any applicable compulsory state disability law, (iii) the Federal Social Security Act, (iv) any applicable workmen's compensation law or similar law and (v) any plan towards which the Company or any parent, subsidiary or affiliate of the Company has contributed or for which it has made payroll deductions, such as group accident or health policies, other than those which reimburse for actual medical expenses) for the duration of the original term of his employment under this Agreement (as the same may have been extended prior to such termination) (the "Remainder Term"); provided, however that (i) the ----------------- Incentive Amount shall be calculated for the year in which such employment terminates based on whether the Company and/or Guild have met the agreed-upon goals as of the last day of the calendar month ending closest to such termination, (ii) the Incentive Amount shall be prorated for the -5- portion of the year ending on the date of such termination, (iii) the prorated portion of such Incentive Amount shall be paid in a lump sum within thirty days of such termination, and (iv) the Incentive Amount shall be paid with respect to the Remainder Term notwithstanding whether the agreed-upon goals were met. (b) Payment Upon Termination By Reason of Death. In the event that ------------------------------------------- Guild's employment hereunder is terminated pursuant to Section 5(b) upon his death, or that Guild dies during the Remainder Term, Guild or his designated beneficiary (or, in the event of his death if no beneficiary shall have been designated hereunder, his estate) shall be entitled to receive as a death benefit, and the Company shall pay, an amount equal to the present value at the time of his death, discounted at the Discount Rate, of the entire amount of the salary which would have been payable to Guild during the Remainder Term. Such death benefit shall be payable on the earlier of the first anniversary of Guild's death or the last day of the Remainder Term (which period may not be terminated or shortened by waiver of the Company executed after such death), as the case may be; provided, however that if such beneficiary (or estate, if -------- ------- applicable), gives written notice to the Company within one month after the date of death, such death benefit shall not be paid in a lump sum but shall instead be payable in the amounts and at the times set forth in Section 2 hereof for the duration of the Remainder Term; and provided, further that the Incentive Amount -------- ------- shall be calculated and paid as set forth in Section 6(a). As used herein, the "Discount Rate" shall mean the yield to maturity, as determined on the date of termination on U.S. Treasury obligations having an original maturity comparable to the Remainder Term. All amounts payable in a lump sum hereunder shall be paid within one month after the date of termination or of death during the Remainder Term, as the case may be. Amounts payable under any -6- applicable plans or arrangements of the Company shall be payable in accordance therewith and amounts which may not be calculated as of such date shall be paid as soon as practicable thereafter. (c) Payment Upon Termination for Cause. In the event Guild terminates ---------------------------------- his employment hereunder for cause under Section 5(c), Guild shall be entitled to receive, and the Company shall continue pay (or cause to be paid) to Guild, his then-current salary for the Remainder Term; provided, that the Incentive -------- Amount shall be calculated and paid as set forth in Section 6(a). (d) In General. Guild's right to receive the base salary provided for ---------- in Section 2 shall cease upon the effective date of any termination of his employment under Section 5(a) of this Agreement. Termination of Guild's employment under any provision of this Agreement shall not in any event affect the right of Guild or his designated beneficiary hereunder (or, if no beneficiary shall be designated hereunder, his estate) to receive benefits accrued to him through the date of such termination under this Agreement or any employee benefit plans of the Company in which he is then participating as contemplated under Section 2, provided, that the rights of Guild or his -------- designated beneficiary or estate under any such plans and any termination of his participation thereunder shall be governed by the terms of such plans as then in effect. All payments and rights under Section 6 (a) and (c) shall be in lieu of any other amounts Guild might be entitled to receive under this Agreement for any breach hereof. Payments under Section 6(a) or (c) shall not affect Guild's right to receive any severance payments or other benefits to which he is entitled in accordance with the Company's policy. -7- 7. Secrecy Agreement. All information obtain or possessed by Guild ----------------- relative to the activities of the Company and its subsidiaries and affiliates which secret or confidential nature, including business plans, financial data, trademarks, developments or administrative procedures, is the property of the Company and its subsidiaries or affiliates, as the case may be, and Guild shall not, during the term of his employment under this Agreement or during any Remainder Term as to which he is receiving payment hereunder, use any such information for the benefit of others than the Company and its subsidiaries and affiliates, or disclose it to others. Nothing herein shall prevent Guild, subsequent to the termination of his employment hereunder, from using and availing himself of his general skill, knowledge and experience, including that pertaining to or derived from the nonsecret and nonconfidential aspects of the business of the Company and its subsidiaries and affiliates. 8. Non-Competition. During the period of Guild's employment --------------- hereunder and during any Remainder Term as to which he is receiving payment hereunder, Guild will not, without the consent of the Board of Directors of the Company, engage in the national radio sales representation business, offer employment to or hire any employee of the Company or any of its subsidiaries or solicit business from or represent any client of the Company or any of its subsidiaries in connection with national radio sales representation. 9. Notices. Any notices which the Company is required or may desire ------- to give to Guild shall be given by personal delivery or registered or certified mail, return receipt requested, addressed to Guild at his address of record with the Company, or at such other place as Guild may from time to time designate in writing. Any notice which Guild is required or may desire to give to the Company hereunder shall be given by personal delivery or by registered or -8- certified mail, return receipt requested, addressed to the Company at its principal office, or at such other office as the Company may from time to time designate in writing. The date of personal delivery or the date of mailing any such notice shall be deemed to be the date of delivery thereof. 10. Prior Agreements; Amendments. This Agreement supersedes any ---------------------------- employment understandings or agreements which may have been previously made between the Company and Guild and this Agreement represents all the terms and conditions and the entire agreement between the Company and Guild with respect to such employment. This Agreement may not be changed, waived, discharged or terminated orally, but only by an instrument in writing, signed by the party against which enforcement of such change, waiver, discharge or termination is sought. 11. Parties in Interest. Neither this Agreement nor any rights or ------------------- obligations hereunder may be assigned by one party without the consent of the other, except that this Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company whether by merger, consolidation, sale of assets or otherwise and reference herein to the Company shall be deemed to include any such successor or successors, and except that this Agreement shall, to the extent provided herein, be binding upon and inure to the benefit of the estate, heirs, designated beneficiaries or personal representatives, if any, of Guild and references herein to Guild shall be deemed to include such estate, heirs, designated beneficiaries or personal representatives. Any designation by Guild of a beneficiary to receive payments hereunder in the event of Guild's death or permanent disability, and any change in such designation, shall be made by written notice from Guild to the Company. -9- 12. Severability. If any provision of this Agreement is, for any ------------ reason, held invalid, illegal or unenforceable in any respect, its invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall thereafter be construed and enforced as if such invalid, illegal or unenforceable provision had not been included herein. 13. Governing Law. This Agreement shall be governed by and construed ------------- and enforced in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. INTEREP NATIONAL RADIO SALES, INC. By: /s/ Ralph C. Guild ------------------- Chairman of the Board /s/ Marc G. Guild ------------------ Marc G. Guild -10- EX-10.15 23 AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.15 AMENDMENT TO EMPLOYMENT AGREEMENT AMENDMENT, dated as of June 29, 1998, to Employment Agreement, dated as of January 1, 1991 (the "Agreement"), between INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), and MARC G. GUILD ("Guild"). W I T N E S S E T H: ------------------- WHEREAS, the Company and Guild are parties to the Agreement and wish to document an amendment of the Agreement which was effective as of January 1, 1997, as set forth below; NOW, THEREFORE, in consideration of the premises and of the mutual agreements set forth herein, the parties agree as follows: 1. SECTION 2 (BASE SALARY). Section 2 of the Agreement is amended by (i) deleting "$225,000" on line 6 and inserting in lieu thereof "$320,000" and (ii) deleting "$75,000" on line 10 and inserting in lieu thereof "$80,000". 2. FULL FORCE AND EFFECT. Except as amended by this Amendment, the Agreement shall continue unchanged and in full force and effect. The amendment set forth in Section 1 above shall be deemed to have been effective as of January 1, 1997. 3. COUNTERPARTS. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of the date first set forth above. INTEREP NATIONAL RADIO SALES, INC. By /s/ Ralph C. Guild /s/ Marc G. Guild --------------------------------- ------------------------ Ralph C. Guild MARC G. GUILD Chairman of the Board EX-10.16 24 NON-QUALIFIED STOCK OPTION EXHIBIT 10.16 INTEREP NATIONAL RADIO SALES, INC. ---------------------------------- NON-QUALIFIED STOCK OPTION -------------------------- For valuable consideration, receipt of which is hereby acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), hereby grants to Ralph C. Guild, who resides at 142 South County Road, Palm Beach, Florida 33480 (the "Optionee"), a non-qualified stock option ("Option"), subject to the terms and conditions hereof, to purchase from the Company an aggregate of 10,000 shares of the Common Stock of the Company, par value $.04 per share (the "Common Stock"), at the price of $32.62 per share (the "Option Price"), such option to be exercisable as set forth below on or before the date (the "Termination Date") which is the later of (i) August 1, 1991 or (ii) the date which is 210 days after the day the notice referred to in the next sentence is delivered to Optionee or his Beneficiary (as defined below). The Company shall give Optionee written notice of his rights under this Option on or about February 1, 1991. Subject to the provisions of this Option, this Option may be exercised by written notice (the "Notice") to the Company stating the number of shares of Common Stock with respect to which it is being exercised. The Notice shall be accompanied by the Optionee's payment in full of the Option Price for each of the shares to be purchased by the Optionee, such payment to be made by (a) certified or bank cashier's check payable to the order of the Company or (b) any other means acceptable to the Company. This Option is issued pursuant to the Amendment and Termination Agreement, dated as of December 31, 1988 (the "Agreement") between the Company and the Optionee, and upon execution hereof supersedes in all respects the rights granted to Optionee, and the obligations of the Company, under the Agreement with respect to the shares of Common Stock subject hereto. As soon as practicable after receipt of the Notice and payment, and subject to the next paragraph, the Company shall, without transfer or issue tax or other incidental expense to the Optionee, deliver to the Optionee a certificate or certificates for the shares of Common Stock so purchased. Such delivery shall be made (a) at the offices of the Company at 100 Park Avenue, New York, New York 10017, (b) at such other place as may be mutually acceptable to the Company and the Optionee, or (c) at the election of the Company, by certified mail addressed to the Optionee at (i) the Optionee's address shown in the records of the Company or (ii) the address specified for the Optionee in the first paragraph above. The Company shall have the right to withhold an appropriate number of shares of Common Stock (based on the fair market value thereof on the date of exercise) for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding tax obligations. The Company may postpone the time of delivery of certificate(s) for shares of Common Stock for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any applicable laws or regulations relating to the authorization, issuance or sale of securities. The issuance of the shares of Common Stock subject hereto and issuable upon the exercise of this Option and the transfer or resale of such shares shall be subject to such restrictions as are, in the opinion of the Company's counsel, required to comply with the Securities Act of 1933, as amended, and the rules and regulations thereunder, and the certificate(s) representing such shares shall, if it is deemed advisable by the Company's counsel, bear a legend to such effect. If, upon tender of delivery thereof, the Optionee fails to accept delivery of and pay or have paid for all or any part of the number of shares of Common Stock specified in the Notice, the Optionee's right to exercise this Option with respect to such undelivered or unpaid shares will be terminated by the Company. During the Optionee's lifetime, this Option shall be exercisable only by the Optionee (except as otherwise provided below), and neither this Option nor any right hereunder shall be assignable or transferable otherwise than by will or the laws of descent and distribution (as provided below), or be subject to attachment, execution or other similar process. In the event of any attempt by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, this Option shall terminate and become null and void. In the event of the Optionee's death prior to the Termination Date, this Option may be exercised after the date of the Optionee's death by the Optionee's estate or beneficiaries, but in no event may this Option be exercised later than the Termination Date. All rights with respect to this Option, including the right to exercise it, shall pass in the following order: (a) to such person(s) as the Optionee may designate in a writing duly delivered to the Company (in the form available from the Company for such purpose), or in the absence of such a designation, then (b) to the Optionee's estate (the Option to be exercised by the legal representative). If any of the events set forth below shall occur between the date hereof and the date of any issuance of Common Stock pursuant to this Option (the "Issue Date"), the number of shares issuable pursuant to this Option (the "Issue Number") shall be adjusted in respect of each such event as set forth in this paragraph: (i) In the event that the Company, at any time or from time to time prior to the Issue Date, issues any shares of Common Stock in subdivision of outstanding shares of Common Stock, by recapitalization, reclassification, stock split or stock dividend, or in case of any combination of outstanding shares of Common Stock by reverse stock split, recapitalization, reclassification or otherwise, the Issue Number shall be adjusted to equal -2- that number of shares of Common Stock (including fractional shares, if any) that Optionee would have owned immediately after such event had he, immediately prior to such event, owned that number of shares of Common Stock that he otherwise would have been entitled to receive pursuant to this Option. The provisions of this paragraph shall not be construed to effect any adjustment in the event of the issuance of any shares of Common Stock or other securities of the Company in return for consideration acceptable to the Board of Directors, except as provided in subparagraph (ii), below. (ii) In case of any capital reorganization of the Company, sale of substantially all of the assets of the Company or any reclassification of the shares of Common Stock of the Company other than into shares of Common Stock of the Company, or in case of any consolidation or merger of the Company into or with another corporation, provision shall be made so that Optionee shall have the right thereafter to receive his proportionate share of the securities or property (including any contingent or deferred payments) issued or issuable with respect to the number of shares of Common Stock which Optionee has the right to receive under this Option, to the end that the provisions of this Option shall thereafter be applicable, as nearly as reasonably may be, in relation to securities or other property distributed in respect of the Common Stock. Neither the Optionee nor any person or persons entitled to exercise the Optionee's rights under this Option in accordance herewith shall have any rights to dividends or any other rights of a stockholder with respect to any shares of Common Stock subject to this Option, except to the extent that a certificate for such shares shall have been issued upon the exercise of this Option as provided herein. Any notices which the Company is required or may desire to give to Optionee or his Beneficiary shall be given by personal delivery or by registered or certified mail, return receipt requested, addressed to Optionee at his address of record with the Company, or at such other place as Optionee or his Beneficiary may from time to time designate in writing. Any notice which Optionee or his Beneficiary is required or may desire to give to the Company hereunder shall be given by personal delivery or by registered or certified mail, return receipt requested, addressed to the Company at its principal office, or at such other office as the Company may from time to time designate in writing. The date of personal delivery or five days after the date of mailing of any such notice shall be deemed to be the date of delivery thereof. For purposes of this Option, Optionee's "Beneficiary" shall be any person designated by Optionee in accordance with this paragraph who will succeed to the benefits of Optionee under this Option upon Optionee's death or other events specified by Optionee, or, in the event of Optionee's death or incapacity without such a beneficiary having been designated, Optionee's executor, guardian, other personal or legal representative, heirs or estate. No Beneficiary shall have any rights under this Option unless and until Optionee shall have died or there shall have occurred some other event giving rise to the rights of such Beneficiary under the preceding sentence or, if applicable, the terms of the instrument executed by Optionee designating such Beneficiary, and all -3- references in this Option to such Beneficiary and his or its rights hereunder shall be deemed qualified by this sentence. Neither this Option nor any rights or obligations hereunder may be assigned by one party without the consent of the other, except that this Option shall be binding upon and inure to the benefit of any successor or successors of the Company whether by merger, consolidation, sale of assets or otherwise and reference herein to the Company shall be deemed to include any such successor or successors, and this Option shall be binding upon and inure to the benefit of Optionee and, subject to the happening of the events giving rise to its rights hereunder, Optionee's Beneficiary, if any. Any designation by Optionee of a Beneficiary, and any change in such designation, shall be made by written notice from Optionee to the Company. Except as here under provided, no rights under this Option shall be subject in any manner to participation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do any of the foregoing shall be void and no such benefit shall be in any manner liable for or subject to debts, contracts, liabilities, or engagements or torts of Optionee or his Beneficiary. This Option and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Internal Revenue Code of 1986, as amended from time to time, or the securities laws of the United States of America, shall be governed by and construed in accordance with the laws of the State of New York. -4- This Option shall be wholly void and of no effect after the Termination Date. IN WITNESS WHEREOF, INTEREP NATIONAL RADIO SALES, INC. has caused this Option to be executed by its officers, thereunto duly authorized, as of the 31st day of December, 1988. INTEREP NATIONAL RADIO SALES, INC. By:/s/ Les Goldberg ------------------------------------ Name: Les Goldberg Title: President / COO ATTEST: /s/ John Rykala - --------------------------------- John Rykala Assistant Secretary AGREED TO AND ACKNOWLEDGED as of the 31st day of December, 1988, by: /s/ Ralph C. Guild - --------------------------------- Optionee -5- EX-10.17 25 AMENDMENT & EXTENSION OF OPTION EXHIBIT 10.17 AMENDMENT AND EXTENSION OF OPTION This Amendment, dated as of January 1, 1991, between INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), and RALPH C. GUILD (the "Optionee"), W I T N E S S E T H: ------------------- WHEREAS, the Company granted the Optionee a nonqualified stock option on December 31, 1988 to purchase 10,000 shares of the Common Stock of the Company, par value $.04 per share, for a price of $32.62 per share, expiring on August 31, 1991 (the "Original Option"); and WHEREAS, the Company and the Optionee are entering an Amended and Restated Employment Agreement (the "Agreement"), dated as of January 1, 1991 pursuant to which the Company will secure the services of Optionee for the term stated therein; WHEREAS, in order to induce the Optionee to enter into the Agreement, the Company has agreed with Optionee to extend the term of the Original Option to December 31; NOW THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: The Original Option is hereby amended as follows: (i) In the first sentence of the first paragraph of the Original Option, all of the words after "as set forth below on or before" are hereby deleted and replaced with "December 31, 1993 (the "Termination Date")." (ii) In the second sentence of the first paragraph of the Original Option, the words "on or about February 1, 1991" are hereby deleted and replaced with the words "on a date which is not earlier than twelve months prior to, and not later than 6 months prior to, the Termination Date." Except as expressly amended hereby, the Original Option continues and remains in full force and effect as originally executed. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. INTEREP NATIONAL RADIO SALES, INC. By: /s/ Les Goldberg -------------------------------- ATTEST: By: /s/ John Rykala ----------------------------- John Rykala Assistant Secretary OPTIONEE: /s/ Ralph C. Guild ------------------------------------ Ralph C. Guild -2- EX-10.18 26 NON-QUALIFIED STOCK OPTION EXHIBIT 10.18 INTEREP NATIONAL RADIO SALES, INC. ---------------------------------- NON-QUALIFIED STOCK OPTION -------------------------- For valuable consideration, receipt of which is hereby acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), hereby grants to Ralph C. Guild, who resides at 142 South County Road, Palm Beach, Florida 33480 (the "Optionee"), a non-qualified stock option ("Option"), subject to the terms and conditions hereof, to purchase from the Company an aggregate of 10,000 shares of the Common Stock of the Company, par value $.04 per share (the "Common Stock"), at the price of $57.9082 per share (the "Option Price"), such option to be exercisable as set forth below on or before the day (the "Termination Date") preceding the tenth anniversary of the date hereof. The Company shall give Optionee written notice of his rights under this Option on a date no earlier than twelve months prior to, and no later than 6 months prior to, the Termination Date. Subject to the provisions of this Option, this Option may be exercised by written notice (the "Notice") to the Company stating the number of shares of Common Stock with respect to which it is being exercised. The Notice shall be accompanied by the Optionee's payment in full of the Option Price for each of the shares to be purchased by the Optionee, such payment to be made by (a) certified or bank cashier's check payable to the order of the Company or (b) any other means acceptable to the Company. As soon as practicable after receipt of the Notice and payment, and subject to the next paragraph, the Company shall, without transfer or issue tax or other incidental expense to the Optionee, deliver to the Optionee a certificate or certificates for the shares of Common Stock so purchased. Such delivery shall be made (a) at the offices of the Company at 100 Park Avenue, New York, New York 10017, (b) at such other place as may be mutually acceptable to the Company and the Optionee, or (c) at the election of the Company, by certified mail addressed to the Optionee at (i) the Optionee's address shown in the records of the Company or (ii) the address specified for the Optionee in the first paragraph above. The Company shall have the right to withhold an appropriate number of shares of Common Stock (based on the fair market value thereof on the date of exercise) for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding tax obligations. The Company may postpone the time of delivery of certificate(s) for shares of Common Stock for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any applicable laws or regulations relating to the authorization, issuance or sale of securities. The issuance of the shares of Common Stock subject hereto and issuable upon the exercise of this Option and the transfer or resale of such shares shall be subject to such restrictions as are, in the opinion of the Company's counsel, required to comply with the Securities Act of 1933, as amended, and the rules and regulations thereunder, and the certificate(s) representing such shares shall, if it is deemed advisable by the Company's counsel, bear a legend to such effect. If, upon tender of delivery thereof, the Optionee fails to accept delivery of and pay or have paid for all or any part of the number of shares of Common Stock specified in the Notice, the Optionee's right to exercise this Option with respect to such undelivered or unpaid shares will be terminated by the Company. During the Optionee's lifetime, this Option shall be exercisable only by the Optionee (except as otherwise provided below), and neither this Option nor any right hereunder shall be assignable or transferable otherwise than by will or the laws of descent and distribution (as provided below), or be subject to attachment, execution or other similar process. In the event of any attempt by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, this Option shall terminate and become null and void. In the event of the Optionee's death prior to the Termination Date, this Option may be exercised after the date of the Optionee's death by the Optionee's estate or beneficiaries, but in no event may this Option be exercised later than the Termination Date. All rights with respect to this Option, including the right to exercise it, shall pass in the following order: (a) to such person(s) as the Optionee may designate in a writing duly delivered to the Company (in the form available from the Company for such purpose), or in the absence of such a designation, then (b) to the Optionee's estate (the Option to be exercised by the legal representative). In the event of any change in the number of shares of outstanding Common Stock by reason of a stock split, stock dividend, combination or reclassification of shares, recapi- -2- talization, merger or consolidation, or any other event changing the number of shares of Common Stock outstanding without receipt of consideration by the Company, the number of shares of Common Stock covered by this Option and the Option Price thereof shall automatically be adjusted proportionately. In the event of any other change affecting the Common Stock or any distribution (other than normal cash dividends) to holders of Common Stock, such adjustments as may be deemed equitable by the Board of Directors, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board of Directors may authorize the assumption of this Option or the substitution of a new stock option for this Option, whether or not in a transaction to which Section 424(a) of the Internal Rvenue Code applies. The judgment of the Board of Directors with respect to any matter refereed to in this paragraph shall be conclusive and binding upon the Optionee and any parties validly claiming through the Optionee. Neither the Optionee nor any person or persons entitled to exercise the Optionee's rights under this Option in accordance herewith shall have any rights to dividends or any other rights of a stockholder with respect to any shares of Common Stock subject to this Option, except to the extent that a certificate for such shares shall have been issued upon the exercise of this Option as provided herein. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at its offices at 100 Park Avenue, New York, New York 10017, c/o the Company's Secretary, and shall become effective when received by the Secretary. All notices to the Optionee or other person or persons then entitled to exercise any rights with respect to this Option shall be addressed to the Optionee or such other person or persons at the Optionee's address specified in the first paragraph above. Anyone to whom a notice may be given under this Option may designate a new address by notice to that effect. This Option and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Internal Revenue Code of 1986, as amended from time to time, or the securities laws of the United States of America, shall be governed by and construed in accordance with the laws of the State of New York. -3- This Option shall be wholly void and of no effect after the Termination Date. IN WITNESS WHEREOF, INTEREP NATIONAL RADIO SALES, INC. has caused this Option to be executed by its officers, thereunto duly authorized, as of the 1st day of January, 1991. INTEREP NATIONAL RADIO SALES, INC. By: /s/ Les Goldberg --------------------------------- Name: Title: ATTEST: /s/ John Rykala ----------------------------- John Rykala Assistant Secretary AGREED TO AND ACKNOWLEDGED as of this 1st day of January, 1991, by: /s/ Ralph C. Guild ----------------------------- Optionee -4- EX-10.19 27 NON-QUALIFIED STOCK OPTION EXHIBIT 10.19 INTEREP NATIONAL RADIO SALES, INC. NON-QUALIFIED STOCK OPTION For valuable consideration, the receipt and sufficiency of which is acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), grants to Ralph C. Guild, residing at 10 South Lake Trail, Palm Beach, Florida 33480 ("Optionee"), a non-qualified stock option (the "Option") to purchase from the Company an aggregate of 10,000 shares of the Company's Common Stock, par value $.04 per share (the "Common Stock"), at an exercise price equal to the fair market value per share of the Common Stock on the date hereof, which shall be determined based on the independent appraisal thereof to be conducted for the Company's Employee Stock Ownership Plan as of December 31, 1995 (the "Option Price"). This Option shall be exercisable at any time on and after the six-month anniversary of the date hereof until the close of business on the tenth anniversary of the date hereof (the "Termination Date"), and may be exercised in whole or in part from time to time. The Company shall give Optionee written notice of the pending expiration of this Option on a date no earlier than twelve months prior to, and no later than 6 months prior to, the Termination Date. Subject to the provisions of this Option, this Option may be exercised by written notice to the Company stating the number of shares of Common Stock with respect to which it is being exercised. Such notice shall be accompanied by Optionee's full payment of the Option Price for the shares to be purchased by certified or bank cashier's check payable to the order of the Company or by any other means acceptable to the Company. As soon as practicable after receipt of such notice and payment, and subject to the next paragraph, the Company shall, without transfer or issue tax or other expense to Optionee, deliver to Optionee a certificate for the shares purchased. Such delivery shall be made at the offices of the Company, at such other place as may be mutually acceptable to the Company and Optionee or, at the election of the Company, by certified mail addressed to Optionee at Optionee's address set forth above or, if different, Optionee's address shown in the records of the Company. The Company shall have the right to withhold an appropriate number of shares of Common Stock (based on the fair market value thereof on the date of exercise) for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding tax obligations. The Company may postpone the time of delivery of certificates for shares of Common Stock for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any applicable laws or regulations relating to the authorization, issuance or sale of securities. The issuance of the shares of Common Stock subject hereto and issuable on the exercise of this Option and the transfer or resale of such shares shall be subject to such restrictions as are, in the opinion of the Company's counsel, required to comply with the Securities Act of 1933 and the rules and regulations thereunder, and the certificates representing such shares shall, if it is deemed advisable by counsel, bear a legend to such effect. On exercise of this Option, Optionee shall, if so requested by the Company, deliver to the Company a written representation that he is acquiring the shares of Common Stock to be purchased solely for his own account for investment and not with a view to, or for resale in connection with, any distribution thereof. During Optionee's lifetime, this Option shall be exercisable only by Optionee (except as otherwise provided below), and neither this Option nor any right hereunder shall be assignable or transferable otherwise than by will or the laws of descent and distribution (as provided below), or be subject to attachment, execution or other similar process. If Optionee attempts to alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, this Option shall terminate and become null and void. Notwithstanding the foregoing, Optionee shall have the right to transfer this Option during his lifetime to a trust for the benefit of his spouse and/or his descendants. In the event of Optionee's death prior to the Termination Date, this Option may be exercised after the date of Optionee's death by Optionee's estate or beneficiaries, or by the trustee or trustees of a trust for the benefit of his spouse and/or his descendants, but in no event may this Option be exercised later than the Termination Date. All rights with respect to this Option (to the extent held by Optionee at death and not by such a trust), including the right to exercise it, shall pass in the following order: (a) to such persons as Optionee may designate in a writing duly delivered to the Company (in the form available from the Company for such purpose), or in the absence of such a designation, (b) to Optionee's estate (this Option to be exercised by the legal representative). References to "Optionee" shall be deemed to include Optionee's estate, executor, beneficiaries or the trustee or trustees of any trust for the benefit of his spouse and/or his descendants, as appropriate. The right of the Company to terminate (whether by dismissal, discharge, retirement or otherwise) Optionee's employment with it at any time at will, or as otherwise provided by an agreement between the Company and Optionee, is specifically reserved. The termination of Optionee's employment with the Company, for any reason, shall, however, have no effect on this Option, which shall continue in full force and effect in accordance with its terms. In the event of any change in the number of shares of outstanding Common Stock by reason of a stock split, reverse stock split, stock dividend, combination or reclassification of shares, recapitalization or any other event changing the number of shares of Common Stock outstanding without receipt of consideration by the Company, the number of shares of Common Stock covered by this Option and the Option Price thereof shall automatically be adjusted to equal that number of shares of Common Stock (including fractional shares, if any) that Optionee would have owned immediately after such event had he, immediately prior to such event, owned that number of shares of Common Stock that he otherwise would have been entitled to receive pursuant to this Option. In the event of any capital reorganization of the Company, sale of substantially all of the assets of the Company or any reclassification of the shares of Common Stock of the Company other than into shares of Common Stock of the Company, or in case of any consolidation or merger -2- of the Company into or with another corporation, provision shall be made so that Optionee shall have the right thereafter to receive his proportionate share of the securities or property (including any contingent or deferred payments) issued or issuable with respect to the number of shares of Common Stock which Optionee has the right to receive under this Option, to the end that the provisions of this Option shall thereafter be applicable, as nearly as reasonably may be, in relation to securities or other property distributed in respect of the Common Stock. This Option shall be binding on and inure to the benefit of any successor of the Company, whether by merger, consoli dation, sale of assets or otherwise, and reference herein to the Company shall be deemed to include any such successor. If there is any other change affecting the Common Stock or any distribution (other than normal cash dividends) to holders of Common Stock, such adjustments as may be deemed equitable by the Board of Directors, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. Neither Optionee nor any person entitled to exercise Optionee's rights under this Option shall have any right to receive dividends or any other rights of a stockholder with respect to any shares of Common Stock subject to this Option, unless and until a certificate for such shares shall have been issued on the exercise of this Option. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at its offices at 100 Park Avenue, New York, New York 10017, c/o the Company's Secretary, and shall become effective when received by the Secretary. All notices to Optionee or other persons then entitled to exercise any rights with respect to this Option shall be addressed to Optionee or such other persons at Optionee's address specified above. Anyone to whom a notice may be given under this Option may designate a new address by written notice to that effect. This Option and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Internal Revenue Code of 1986, as amended from time to time, or the securities laws of the United States of America, shall be governed by and construed in accordance with the laws of the Sate of New York. This Option shall be void and of no effect after the Termination Date. IN WITNESS WHEREOF, the Company has caused this Option to be executed by its officers, thereunto duly authorized, as of December 31, 1995. INTEREP NATIONAL RADIO SALES, INC. By /s/ Debra Schwartz -------------------------------- Name:_______________________ Title:_____________________ ATTEST: /s/ John Rykala -------------------------- John Rykala, Secretary -3- EX-10.20 28 NON-QUALIFIED STOCK OPTION EXHIBIT 10.20 INTEREP NATIONAL RADIO SALES, INC. ---------------------------------- NON-QUALIFIED STOCK OPTION -------------------------- For valuable consideration, receipt of which is hereby acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), hereby grants to Marc G. Guild, who resides at 45 Ellison Avenue, Bronxville, New York 10708 (the "Optionee"), a non-qualified stock option ("Option"), subject to the terms and conditions hereof, to purchase from the Company an aggregate of 5,000 shares of the Common Stock of the Company, par value $.04 per share (the "Common Stock"), at the price of $57.9082 per share (the "Option Price"), such option to be exercisable as set forth below on or before the day (the "Termination Date") preceding the tenth anniversary of the date hereof. The Company shall give the Optionee written notice of his rights under this Option on a date no earlier than twelve months prior to, and no later than 6 months prior to, the Termination Date. Subject to the provisions of this Option, this Option may be exercised by written notice (the "Notice") to the Company stating the number of shares of Common Stock with respect to which it is being exercised. The Notice shall be accompanied by the Optionee's payment in full of the Option Price for each of the shares to be purchased by the Optionee, such payment to be made by (a) certified or bank cashier's check payable to the order of the Company or (b) any other means acceptable to the Company. As soon as practicable after receipt of the Notice and payment, and subject to the next paragraph, the Company shall, without transfer or issue tax or other incidental expense to the Optionee, deliver to the Optionee a certificate or certificates for the shares of Common Stock so purchased. Such delivery shall be made (a) at the offices of the Company at 100 Park Avenue, New York, New York 10017, (b) at such other place as may be mutually acceptable to the Company and the Optionee, or (c) at the election of the Company, by certified mail addressed to the Optionee at (i) the Optionee's address shown in the records of the Company or (ii) the address specified for the Optionee in the first paragraph above. The Company shall have the right to withhold an appropriate number of shares of Common Stock (based on the fair market value thereof on the date of exercise) for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding tax obligations. The Company may postpone the time of delivery of certificate(s) for shares of Common Stock for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any applicable laws or regulations relating to the authorization, issuance or sale of securities. The issuance of the shares of Common Stock subject hereto and issuable upon the exercise of this Option and the transfer or resale of such shares shall be subject to such 1 restrictions as are, in the opinion of the Company's counsel, required to comply with the Securities Act of 1933, as amended, and the rules and regulations thereunder, and the certificate(s) representing such shares shall, if it is deemed advisable by the Company's counsel, bear a legend to such effect. If, upon tender of delivery thereof, the Optionee fails to accept delivery of and pay or have paid for all or any part of the number of shares of Common Stock specified in the Notice, the Optionee's right to exercise this Option with respect to such undelivered or unpaid shares will be terminated by the Company. During the Optionee's lifetime, this Option shall be exercisable only by the Optionee (except as otherwise provided below), and neither this Option nor any right hereunder shall be assignable or transferable otherwise than by will or the laws of descent and distribution (as provided below), or be subject to attachment, execution or other similar process. In the event of any attempt by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, this Option shall terminate and become null and void. In the event of the Optionee's death prior to the Termination Date, this Option may be exercised after the date of the Optionee's death by the Optionee's estate or beneficiaries, but in no event may this Option be exercised later than the Termination Date. All rights with respect to this Option, including the right to exercise it, shall pass in the following order: (a) to such person(s) as the Optionee may designate in a writing duly delivered to the Company (in the form available from the Company for such purpose), or in the absence of such a designation, then (b) to the Optionee's estate (the Option to be exercised by the legal representative). In the event of any change in the number of shares of outstanding Common Stock by reason of a stock split, stock dividend, combination or reclassification of shares, recapitalization, merger or consolidation, or any other event changing the number of shares of Common Stock outstanding without receipt of consideration by the Company, the number of shares of Common Stock covered by this Option and the Option Price thereof shall automatically be adjusted proportionately. In the event of any other change affecting the Common Stock or any distribution (other than normal cash dividends) to holders of Common Stock, such adjustments as may be deemed equitable by the Board of Directors, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board of Directors may authorize the assumption of this Option or the substitution of a new stock option for this Option, whether or not in a transaction to which Section 424(a) of the Internal Rvenue Code applies. The judgment of the Board of Directors with respect to any matter refereed to in this paragraph shall be conclusive and binding upon the Optionee and any parties validly claiming through the Optionee. -2- Neither the Optionee nor any person or persons entitled to exercise the Optionee's rights under this Option in accordance herewith shall have any rights to dividends or any other rights of a stockholder with respect to any shares of Common Stock subject to this Option, except to the extent that a certificate for such shares shall have been issued upon the exercise of this Option as provided herein. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at its offices at 100 Park Avenue, New York, New York 10017, c/o the Company's Secretary, and shall become effective when received by the Secretary. All notices to the Optionee or other person or persons then entitled to exercise any rights with respect to this Option shall be addressed to the Optionee or such other person or persons at the Optionee's address specified in the first paragraph above. Anyone to whom a notice may be given under this Option may designate a new address by notice to that effect. This Option and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Internal Revenue Code of 1986, as amended from time to time, or the securities laws of the United States of America, shall be governed by and construed in accordance with the laws of the State of New York. -3- This Option shall be wholly void and of no effect after the Termination Date. IN WITNESS WHEREOF, INTEREP NATIONAL RADIO SALES, INC. has caused this Option to be executed by its officers, thereunto duly authorized, as of the 1st day of January, 1991. INTEREP NATIONAL RADIO SALES, INC. By: /s/ Les Goldberg ------------------------------- Name: Title: ATTEST: /s/ John Rykala - ------------------------- John Rykala Assistant Secretary AGREED TO AND ACKNOWLEDGED as of this 1st day of January, 1991, by: /s/ Marc Guild - ------------------------- Optionee -4- EX-10.21 29 NON-QUALIFIED STOCK OPTION EXHIBIT 10.21 INTEREP NATIONAL RADIO SALES, INC. NON-QUALIFIED STOCK OPTION For valuable consideration, the receipt and sufficiency of which is acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), grants to RALPH C. GUILD, with a residence address of 10 South Lake Trail, Palm Beach, Florida 33480 ("Optionee"), a non-qualified stock option (the "Option") to purchase from the Company an aggregate of 30,000 shares of the Company's Common Stock, par value $.04 per share (the "Common Stock"), at an exercise price equal to the fair market value per share of the Common Stock on the date hereof, which shall be determined based on the independent appraisal thereof to be conducted for the Company's Employee Stock Ownership Plan as of December 31, 1997 (the "Option Price"). This Option shall be exercisable at any time on and after the six-month anniversary of the date hereof until the close of business on the tenth anniversary of the date hereof (the "Termination Date"), and may be exercised in whole or in part from time to time. The Company shall give Optionee written notice of the pending expiration of this Option on a date no earlier than twelve months prior to, and no later than 6 months prior to, the Termination Date. Subject to the provisions of this Option, this Option may be exercised by written notice to the Company stating the number of shares of Common Stock with respect to which it is being exercised. Such notice shall be accompanied by Optionee's full payment of the Option Price for the shares to be purchased by certified or bank cashier's check payable to the order of the Company or by any other means acceptable to the Company. As soon as practicable after receipt of such notice and payment, and subject to the next paragraph, the Company shall, without transfer or issue tax or other expense to Optionee, deliver to Optionee a certificate for the shares purchased. Such delivery shall be made at the offices of the Company, at such other place as may be mutually acceptable to the Company and Optionee or, at the election of the Company, by certified mail addressed to Optionee at Optionee's address set forth above or, if different, Optionee's address shown in the records of the Company. The Company shall have the right to withhold an appropriate number of shares of Common Stock (based on the fair market value thereof on the date of exercise) for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding tax obligations. The Company may postpone the time of delivery of certificates for shares of Common Stock for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any applicable laws or regulations relating to the authorization, issuance or sale of securities. The issuance of the shares of Common Stock subject hereto and issuable on the exercise of this Option and the transfer or resale of such shares shall be subject to such restrictions as are, in the opinion of the Company's counsel, required to comply with the Securities Act of 1933 and the rules and regulations thereunder, and the certificates representing such shares shall, if it is deemed advisable by counsel, bear a legend to such effect. On exercise of this Option, Optionee shall, if so requested by the Company, deliver to the Company a written representation that he is acquiring the shares of Common Stock to be purchased solely for his own account for investment and not with a view to, or for resale in connection with, any distribution thereof. During Optionee's lifetime, this Option shall be exercisable only by Optionee (except as otherwise provided below), and neither this Option nor any right hereunder shall be assignable or transferable otherwise than by will or the laws of descent and distribution (as provided below), or be subject to attachment, execution or other similar process. If Optionee attempts to alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, this Option shall terminate and become null and void. Notwithstanding the foregoing, Optionee shall have the right to transfer this Option during his lifetime to a trust for the benefit of his spouse and/or his descendants. In the event of Optionee's death prior to the Termination Date, this Option may be exercised after the date of Optionee's death by Optionee's estate or beneficiaries, or by the trustee or trustees of a trust for the benefit of his spouse and/or his descendants, but in no event may this Option be exercised later than the Termination Date. All rights with respect to this Option (to the extent held by Optionee at death and not by such a trust), including the right to exercise it, shall pass in the following order: (a) to such persons as Optionee may designate in a writing duly delivered to the Company (in the form available from the Company for such purpose), or in the absence of such a designation, (b) to Optionee's estate (this Option to be exercised by the legal representative). References to "Optionee" shall be deemed to include Optionee's estate, executor, beneficiaries or the trustee or trustees of any trust for the benefit of his spouse and/or his descendants, as appropriate. The right of the Company to terminate (whether by dismissal, discharge, retirement or otherwise) Optionee's employment with it at any time at will, or as otherwise provided by an agreement between the Company and Optionee, is specifically reserved. The termination of Optionee's employment with the Company, for any reason, shall, however, have no effect on this Option, which shall continue in full force and effect in accordance with its terms. In the event of any change in the number of shares of outstanding Common Stock by reason of a stock split, reverse stock split, stock dividend, combination or reclassification of shares, recapitalization or any other event changing the number of shares of Common Stock outstanding without receipt of consideration by the Company, the number of shares of Common Stock covered by this Option and the Option Price thereof shall automatically be adjusted to equal that number of shares of Common Stock (including fractional shares, if any) that Optionee would have owned immediately after such event had he, immediately prior to such event, owned that number of shares of Common Stock that he otherwise would have been entitled to receive pursuant to this Option. In the event of any capital reorganization of the Company, sale of substantially all of the assets of the Company or any reclassification of the shares of Common Stock of the Company other than into shares of Common Stock of the Company, or in case of any consolidation or merger of the Company into or with another corporation, provision shall be made so that Optionee shall 2 have the right thereafter to receive his proportionate share of the securities or property (including any contingent or deferred payments) issued or issuable with respect to the number of shares of Common Stock which Optionee has the right to receive under this Option, to the end that the provisions of this Option shall thereafter be applicable, as nearly as reasonably may be, in relation to securities or other property distributed in respect of the Common Stock. This Option shall be binding on and inure to the benefit of any successor of the Company, whether by merger, consoli dation, sale of assets or otherwise, and reference herein to the Company shall be deemed to include any such successor. If there is any other change affecting the Common Stock or any distribution (other than normal cash dividends) to holders of Common Stock, such adjustments as may be deemed equitable by the Board of Directors, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. Neither Optionee nor any person entitled to exercise Optionee's rights under this Option shall have any right to receive dividends or any other rights of a stockholder with respect to any shares of Common Stock subject to this Option, unless and until a certificate for such shares shall have been issued on the exercise of this Option. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at its offices at 100 Park Avenue, New York, New York 10017, c/o the Company's Secretary, and shall become effective when received by the Secretary. All notices to Optionee or other persons then entitled to exercise any rights with respect to this Option shall be addressed to Optionee or such other persons at Optionee's address specified above. Anyone to whom a notice may be given under this Option may designate a new address by written notice to that effect. This Option and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Internal Revenue Code of 1986, as amended from time to time, or the securities laws of the United States of America, shall be governed by and construed in accordance with the laws of the Sate of New York. This Option shall be void and of no effect after the Termination Date. IN WITNESS WHEREOF, the Company has caused this Option to be executed by its officers, thereunto duly authorized, as of June 29, 1997. INTEREP NATIONAL RADIO SALES, INC. By /s/ Marc G. Guild -------------------------------- Marc G. Guild President, Marketing Division ATTEST: /s/ Paul Parzuchowski - -------------------------------- Paul Parzuchowski, Secretary 3 EX-10.22 30 NON-QUALIFIED STOCK OPTION EXHIBIT 10.22 INTEREP NATIONAL RADIO SALES, INC. NON-QUALIFIED STOCK OPTION For valuable consideration, the receipt and sufficiency of which is acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), grants to MARC G. GUILD, with a business address of 100 Park Avenue, New York, New York 10017 ("Optionee"), a non-qualified stock option (the "Option") to purchase from the Company an aggregate of 5,000 shares of the Company's Common Stock, par value $.04 per share (the "Common Stock"), at an exercise price equal to the fair market value per share of the Common Stock on the date hereof, which shall be determined based on the independent appraisal thereof to be conducted for the Company's Employee Stock Ownership Plan as of December 31, 1997 (the "Option Price"). This Option shall be exercisable at any time on and after the six-month anniversary of the date hereof until the close of business on the tenth anniversary of the date hereof (the "Termination Date"), and may be exercised in whole or in part from time to time. The Company shall give Optionee written notice of the pending expiration of this Option on a date no earlier than twelve months prior to, and no later than 6 months prior to, the Termination Date. Subject to the provisions of this Option, this Option may be exercised by written notice to the Company stating the number of shares of Common Stock with respect to which it is being exercised. Such notice shall be accompanied by Optionee's full payment of the Option Price for the shares to be purchased by certified or bank cashier's check payable to the order of the Company or by any other means acceptable to the Company. As soon as practicable after receipt of such notice and payment, and subject to the next paragraph, the Company shall, without transfer or issue tax or other expense to Optionee, deliver to Optionee a certificate for the shares purchased. Such delivery shall be made at the offices of the Company, at such other place as may be mutually acceptable to the Company and Optionee or, at the election of the Company, by certified mail addressed to Optionee at Optionee's address set forth above or, if different, Optionee's address shown in the records of the Company. The Company shall have the right to withhold an appropriate number of shares of Common Stock (based on the fair market value thereof on the date of exercise) for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding tax obligations. The Company may postpone the time of delivery of certificates for shares of Common Stock for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any applicable laws or regulations relating to the authorization, issuance or sale of securities. The issuance of the shares of Common Stock subject hereto and issuable on the exercise of this Option and the transfer or resale of such shares shall be subject to such restrictions as are, in the opinion of the Company's counsel, required to comply with the Securities Act of 1933 and the rules and regulations thereunder, and the certificates representing such shares shall, if it is deemed advisable by counsel, bear a legend to such effect. On exercise of this Option, Optionee shall, if so requested by the Company, deliver to the Company a written representation that he is acquiring the shares of Common Stock to be purchased solely for his own account for investment and not with a view to, or for resale in connection with, any distribution thereof. During Optionee's lifetime, this Option shall be exercisable only by Optionee (except as otherwise provided below), and neither this Option nor any right hereunder shall be assignable or transferable otherwise than by will or the laws of descent and distribution (as provided below), or be subject to attachment, execution or other similar process. If Optionee attempts to alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, this Option shall terminate and become null and void. Notwithstanding the foregoing, Optionee shall have the right to transfer this Option during his lifetime to a trust for the benefit of his spouse and/or his descendants. In the event of Optionee's death prior to the Termination Date, this Option may be exercised after the date of Optionee's death by Optionee's estate or beneficiaries, or by the trustee or trustees of a trust for the benefit of his spouse and/or his descendants, but in no event may this Option be exercised later than the Termination Date. All rights with respect to this Option (to the extent held by Optionee at death and not by such a trust), including the right to exercise it, shall pass in the following order: (a) to such persons as Optionee may designate in a writing duly delivered to the Company (in the form available from the Company for such purpose), or in the absence of such a designation, (b) to Optionee's estate (this Option to be exercised by the legal representative). References to "Optionee" shall be deemed to include Optionee's estate, executor, beneficiaries or the trustee or trustees of any trust for the benefit of his spouse and/or his descendants, as appropriate. The right of the Company to terminate (whether by dismissal, discharge, retirement or otherwise) Optionee's employment with it at any time at will, or as otherwise provided by an agreement between the Company and Optionee, is specifically reserved. The termination of Optionee's employment with the Company, for any reason, shall, however, have no effect on this Option, which shall continue in full force and effect in accordance with its terms. In the event of any change in the number of shares of outstanding Common Stock by reason of a stock split, reverse stock split, stock dividend, combination or reclassification of shares, recapitalization or any other event changing the number of shares of Common Stock outstanding without receipt of consideration by the Company, the number of shares of Common Stock covered by this Option and the Option Price thereof shall automatically be adjusted to equal that number of shares of Common Stock (including fractional shares, if any) that Optionee would have owned immediately after such event had he, immediately prior to such event, owned that number of shares of Common Stock that he otherwise would have been entitled to receive pursuant to this Option. In the event of any capital reorganization of the Company, sale of substantially all of the assets of the Company or any reclassification of the shares of Common Stock of the Company other than into shares of Common Stock of the Company, or in case of any consolidation or merger of the Company into or with another corporation, provision shall be made so that Optionee shall 2 have the right thereafter to receive his proportionate share of the securities or property (including any contingent or deferred payments) issued or issuable with respect to the number of shares of Common Stock which Optionee has the right to receive under this Option, to the end that the provisions of this Option shall thereafter be applicable, as nearly as reasonably may be, in relation to securities or other property distributed in respect of the Common Stock. This Option shall be binding on and inure to the benefit of any successor of the Company, whether by merger, consoli dation, sale of assets or otherwise, and reference herein to the Company shall be deemed to include any such successor. If there is any other change affecting the Common Stock or any distribution (other than normal cash dividends) to holders of Common Stock, such adjustments as may be deemed equitable by the Board of Directors, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. Neither Optionee nor any person entitled to exercise Optionee's rights under this Option shall have any right to receive dividends or any other rights of a stockholder with respect to any shares of Common Stock subject to this Option, unless and until a certificate for such shares shall have been issued on the exercise of this Option. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at its offices at 100 Park Avenue, New York, New York 10017, c/o the Company's Secretary, and shall become effective when received by the Secretary. All notices to Optionee or other persons then entitled to exercise any rights with respect to this Option shall be addressed to Optionee or such other persons at Optionee's address specified above. Anyone to whom a notice may be given under this Option may designate a new address by written notice to that effect. This Option and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Internal Revenue Code of 1986, as amended from time to time, or the securities laws of the United States of America, shall be governed by and construed in accordance with the laws of the Sate of New York. This Option shall be void and of no effect after the Termination Date. IN WITNESS WHEREOF, the Company has caused this Option to be executed by its officers, thereunto duly authorized, as of June 29, 1997. INTEREP NATIONAL RADIO SALES, INC. By /s/ Ralph C. Guild -------------------------------------- Ralph C. Guild Chairman of the Board ATTEST: /s/ Paul Parzuchowski - --------------------------------- Paul Parzuchowski, Secretary 3 EX-10.23 31 NON-QUALIFIED STOCK OPTION EXHIBIT 10.23 INTEREP NATIONAL RADIO SALES, INC. NON-QUALIFIED STOCK OPTION For valuable consideration, the receipt and sufficiency of which is acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), grants to WILLIAM J. MCENTEE, JR., with a business address of 2090 Palm Beach Lakes Boulevard, Suite 300, West Palm Beach, Florida 33409 ("Optionee"), a non-qualified stock option (the "Option") to purchase from the Company an aggregate of 5,000 shares of the Company's Common Stock, par value $.04 per share (the "Common Stock"), at an exercise price equal to the fair market value per share of the Common Stock on the date hereof, which shall be determined based on the independent appraisal thereof to be conducted for the Company's Employee Stock Ownership Plan as of December 31, 1997 (the "Option Price"). This Option shall be exercisable at any time on and after the six- month anniversary of the date hereof until the close of business on the tenth anniversary of the date hereof (the "Termination Date"), and may be exercised in whole or in part from time to time. The Company shall give Optionee written notice of the pending expiration of this Option on a date no earlier than twelve months prior to, and no later than 6 months prior to, the Termination Date. Subject to the provisions of this Option, this Option may be exercised by written notice to the Company stating the number of shares of Common Stock with respect to which it is being exercised. Such notice shall be accompanied by Optionee's full payment of the Option Price for the shares to be purchased by certified or bank cashier's check payable to the order of the Company or by any other means acceptable to the Company. As soon as practicable after receipt of such notice and payment, and subject to the next paragraph, the Company shall, without transfer or issue tax or other expense to Optionee, deliver to Optionee a certificate for the shares purchased. Such delivery shall be made at the offices of the Company, at such other place as may be mutually acceptable to the Company and Optionee or, at the election of the Company, by certified mail addressed to Optionee at Optionee's address set forth above or, if different, Optionee's address shown in the records of the Company. The Company shall have the right to withhold an appropriate number of shares of Common Stock (based on the fair market value thereof on the date of exercise) for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding tax obligations. The Company may postpone the time of delivery of certificates for shares of Common Stock for such additional time as the Company shall deem necessary or desirable to enable it to comply with the requirements of any applicable laws or regulations relating to the authorization, issuance or sale of securities. The issuance of the shares of Common Stock subject hereto and issuable on the exercise of this Option and the transfer or resale of such shares shall be subject to such restrictions as are, in the opinion of the Company's counsel, required to comply with the Securities Act of 1933 and the rules and regulations thereunder, and the certificates representing such shares shall, if it is deemed advisable by counsel, bear a legend to such effect. On exercise of this Option, Optionee shall, if so requested by the Company, deliver to the Company a written representation that he is acquiring the shares of Common Stock to be purchased solely for his own account for investment and not with a view to, or for resale in connection with, any distribution thereof. During Optionee's lifetime, this Option shall be exercisable only by Optionee (except as otherwise provided below), and neither this Option nor any right hereunder shall be assignable or transferable otherwise than by will or the laws of descent and distribution (as provided below), or be subject to attachment, execution or other similar process. If Optionee attempts to alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, this Option shall terminate and become null and void. Notwithstanding the foregoing, Optionee shall have the right to transfer this Option during his lifetime to a trust for the benefit of his spouse and/or his descendants. In the event of Optionee's death prior to the Termination Date, this Option may be exercised after the date of Optionee's death by Optionee's estate or beneficiaries, or by the trustee or trustees of a trust for the benefit of his spouse and/or his descendants, but in no event may this Option be exercised later than the Termination Date. All rights with respect to this Option (to the extent held by Optionee at death and not by such a trust), including the right to exercise it, shall pass in the following order: (a) to such persons as Optionee may designate in a writing duly delivered to the Company (in the form available from the Company for such purpose), or in the absence of such a designation, (b) to Optionee's estate (this Option to be exercised by the legal representative). References to "Optionee" shall be deemed to include Optionee's estate, executor, beneficiaries or the trustee or trustees of any trust for the benefit of his spouse and/or his descendants, as appropriate. The right of the Company to terminate (whether by dismissal, discharge, retirement or otherwise) Optionee's employment with it at any time at will, or as otherwise provided by an agreement between the Company and Optionee, is specifically reserved. The termination of Optionee's employment with the Company, for any reason, shall, however, have no effect on this Option, which shall continue in full force and effect in accordance with its terms. In the event of any change in the number of shares of outstanding Common Stock by reason of a stock split, reverse stock split, stock dividend, combination or reclassification of shares, recapitalization or any other event changing the number of shares of Common Stock outstanding without receipt of consideration by the Company, the number of shares of Common Stock covered by this Option and the Option Price thereof shall automatically be adjusted to equal that number of shares of Common Stock (including fractional shares, if any) that Optionee would have owned immediately after such event had he, immediately prior to such event, owned that number of shares of Common Stock that he otherwise would have been entitled to receive pursuant to this Option. In the event of any capital reorganization of the Company, sale of substantially all of the assets of the Company or any reclassification of the shares of Common Stock of the Company other than into shares of Common Stock of the Company, or in case of any consolidation or merger 2 of the Company into or with another corporation, provision shall be made so that Optionee shall have the right thereafter to receive his proportionate share of the securities or property (including any contingent or deferred payments) issued or issuable with respect to the number of shares of Common Stock which Optionee has the right to receive under this Option, to the end that the provisions of this Option shall thereafter be applicable, as nearly as reasonably may be, in relation to securities or other property distributed in respect of the Common Stock. This Option shall be binding on and inure to the benefit of any successor of the Company, whether by merger, consoli dation, sale of assets or otherwise, and reference herein to the Company shall be deemed to include any such successor. If there is any other change affecting the Common Stock or any distribution (other than normal cash dividends) to holders of Common Stock, such adjustments as may be deemed equitable by the Board of Directors, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. Neither Optionee nor any person entitled to exercise Optionee's rights under this Option shall have any right to receive dividends or any other rights of a stockholder with respect to any shares of Common Stock subject to this Option, unless and until a certificate for such shares shall have been issued on the exercise of this Option. Each notice relating to this Option shall be in writing and delivered in person or by certified mail to the proper address. All notices to the Company shall be addressed to it at its offices at 100 Park Avenue, New York, New York 10017, c/o the Company's Secretary, and shall become effective when received by the Secretary. All notices to Optionee or other persons then entitled to exercise any rights with respect to this Option shall be addressed to Optionee or such other persons at Optionee's address specified above. Anyone to whom a notice may be given under this Option may designate a new address by written notice to that effect. This Option and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Internal Revenue Code of 1986, as amended from time to time, or the securities laws of the United States of America, shall be governed by and construed in accordance with the laws of the Sate of New York. This Option shall be void and of no effect after the Termination Date. IN WITNESS WHEREOF, the Company has caused this Option to be executed by its officers, thereunto duly authorized, as of June 29, 1997. INTEREP NATIONAL RADIO SALES, INC. By /s/ Ralph C. Guild ---------------------------------------------- Ralph C. Guild Chairman of the Board ATTEST: /s/ Paul Parzuchowski ------------------------------------------------------- Paul Parzuchowski, Secretary 3 EX-10.24 32 DEFERRED COMPENSATION AGREEMENT EXHIBIT 10.24 DEFERRED COMPENSATION AGREEMENT AGREEMENT, dated as of September 30, 1997, between INTEREP NATIONAL RADIO SALES, INC., a corporation with offices at 100 Park Avenue, New York, New York 10017 (the "Company") and STEWART YAGUDA, residing at 208 Midland Avenue, Montclair, New Jersey 07042 ("Executive"). W I T N E S S E T H: ------------------- WHEREAS, Executive has rendered many years of valuable service to the Company, and the Company wishes to have the benefit of his continued service, loyalty and counsel; and WHEREAS, Executive is willing to continue in the employ of the Company if the Company agrees to pay certain benefits to him or his beneficiaries in accordance with the provisions of this Agreement; NOW, THEREFORE, in consideration of Executive's services performed in the past and to be performed in the future for the Company, and of the mutual agreements set forth below, the parties agree as follows: 1. RETIREMENT BENEFIT. (a) The Company will establish a bookkeeping account (the "Account") in the name of Executive and will credit $27,750.00 to the Account (the "Allocation") on or before September 24, 1997 and on April 1 in 1998 and each succeeding year (the "Allocation Dates") until the earlier of (i) the date of termination of Executive's employment with the Company and (ii) April 1, 2010. The Company will maintain the Account until it is paid out in full pursuant to Paragraphs 2(b) or (c) or terminated pursuant to Paragraph 2(a). During this time period, the Executive will not be taxed on the deferred compensation or on the growth. (b) Earnings and losses will be credited to the Account quarterly on the last day of September, December, March and June of each year during which the Account is maintained (each such date is referred to as a "Valuation Date"), determined as though the Account were invested in such mutual funds as Executive and the Company agree in writing (the "Reference Funds") and in such percentages among such funds as is specified in writing by Executive from time to time. (i) On the first Valuation Date (September 30, 1997), earnings and losses will be calculated on the initial Allocation. On subsequent Valuation Dates, earnings and losses will be calculated on the Account balance determined as of the preceding Valuation Date, together, in the case of each June 30 Valuation Date, with the amount of any annual Allocation credited during the preceding quarter. (ii) Any change in percentage allocations among the Reference Funds may be made by Executive, to be effective as of the next following Valuation Date, so long as a change in election form is received by the Company's Chief Financial Officer at least five days prior to such Valuation Date. Any such change will apply to the total balance of the Account determined at such Valuation Date and to all subsequent Allocations and valuations of the Account until a further change in election is made in such manner. No more than one change may be made during each calendar year. 2. PAYMENT ON TERMINATION OF EMPLOYMENT. (a) No benefits will be payable under this Agreement if Executive's employment with the Company is terminated for "cause", that is, Executive's gross neglect of his duties, willful failure to perform his duties, dishonesty, fraud or other gross misconduct, or conviction of a felony. If Executive's employment with the Company is terminated for cause, the Company will terminate the Account and Executive will have no further right, claim or interest in the Account. (b) For purposes of this Agreement, the term "Allocation Period" means the period beginning on the date of this Agreement and ending on the 30th day following the earlier of the dates referred to in clauses (i) and (ii) of Section 1(a). If Executive's employment with the Company terminates before the end of the Allocation Period for any reason other than cause, the Company will pay Executive or his beneficiary, in the event of his death, an amount equal to the value of the Account determined as of the Valuation Date next following the date of termination of Executive's employment. Such payment will be made within 30 days after such date of termination, in a single, lump sum cash payment. (c) If the termination of Executive's employment occurs on or after April 1, 2010, the Company will pay Executive the value of the Account in ten annual installments. For this purpose, the Account will be valued as of the Valuation Date next following the date of termination of Executive's employment and on the anniversary date of such Valuation Date in each of the following nine years. The first installment will be in an amount equal to 1/10th of the value of the Account as of such first Valuation Date, the second installment will be in an amount equal to 1/9th of the value of the Account as of the second such Valuation Date, the third installment will be in an amount equal to 1/8th of the value of the Account as of the third such Valuation Date and so on until the remaining balance of the Account is paid in the 10th installment. All payments will be made within 30 days after the Valuation Date in question. The Company will continue to credit earnings quarterly on the declining balance of the Account in the manner set forth in Paragraph 1. 3. BENEFICIARY DESIGNATION. The amount payable on the death of Executive pursuant to Paragraph 2(b) will be paid to the parties designated in writing by Executive as his beneficiaries in a form acceptable to the Company and furnished to its Chief Financial Officer. Executive will have the right to change such designation from time to time in the same manner. If Executive fails to make such a designation prior to his death, the payment will be made to his wife, or if he leaves no wife surviving him, to the duly appointed, executor, administrator or other personal representative of his estate. -2- 4. NON-COMPETITION. In consideration of the Company's obligations under this Agreement, Executive agrees that he will not participate, directly or indirectly, in the ownership, management, operation or control of, or be a director or employee of, or a consultant to, any person or entity that is in competition with the Company in the New York City metropolitan area in the business of repping stations and networks or developing radio business that would be in direct competition with the Company, for a period of two years after the date of the termination of Executive's employment with the Company. At the time of such termination, Executive will, on the Company's request, execute a supplementary agreement to the same effect. If Executive breaches any of his obligations under this Paragraph 4, he will be deemed to have forfeited all of his rights under this Agreement and the Company will no longer be obligated to make any payments to Executive hereunder. 5. ASSIGNABILITY. No transfer, assignment, pledge, collateralization, attach ment, execution or levy of any kind, voluntary or involuntary, of any of the benefits under this Agreement by Executive will be valid or recognized by the Company. 6. CONSTRUCTION. All questions of interpretation, construction or application arising under this Agreement will be decided by the Board of Directors of the Company, whose decision will be final and conclusive on all parties. 7. NO SECURITY. The Company's obligations under this Agreement constitute merely the unsecured promise of the Company to make the payments provided for herein. No property of the Company will, by reason of this Agreement, be held in trust for Executive, any designated beneficiary or any other party, and neither Executive nor any designated beneficiary or other party will have, by reason of this Agreement, any rights, title or interest of any kind in or to any property of the Company. 8. NO EMPLOYMENT RIGHTS. This Agreement creates no right in Executive to continue in the Company's employ for any specific length of time, nor does it create any rights in favor of Executive or obligations on the part of the Company not set forth in this Agreement. 9. MISCELLANEOUS. This Agreement may not be modified or amended except by a writing signed by the Company and Executive. This Agreement will be binding on Executive and his heirs, personal representatives and assigns and on the Company and its successors and assigns. This Agreement will be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. INTEREP NATIONAL RADIO SALES, INC. By /s/ William J. McEntee, Jr. /s/ Stewart Yaguda --------------------------- ------------------ WILLIAM J. McENTEE, JR. STEWART YAGUDA CHIEF FINANCIAL OFFICER -3- EX-10.25 33 SUPPLEMENTAL INCOME AGREEMENT EXHIBIT 10.25 11/24/86 Exhibit A --------- SUPPLEMENTAL INCOME AGREEMENT ----------------------------- THIS AGREEMENT is entered into this 31st day of December, 1986, between ----- -------- INTEREP NATIONAL RADIO SALES, INC., a corporation having its principal place of business at 100 Park Avenue, New York, New York 10017 (herein called "Company") and RALPH GUILD (herein called "Employee"). WITNESSETH: WHEREAS, Employee has been employed by the Company since April 1, 1957 and by reason thereof has acquired experience and knowledge of considerable value to the Company; and WHEREAS, in order to induce the Employee to remain employed by the company, the Company and the Employee desire to enter into an Agreement whereby the Company will make certain payments to the Employee after his retirement or to the Employee's designated beneficiary upon the Employee's death prior to retirement. NOW THEREFORE, it is mutually agreed as follows: SECTION 1. Retirement Payments Commencement Date. If the Employee remains ------------------------------------- in the continuous employ of the Company until attainment of age 62, the Company will pay the Employee a Monthly Benefit commencing on the 1st of any month coinciding with or next following attainment of his sixty-second birthday but no later than his sixty-fifth birthday as set forth in Section 2 below. SECTION 2. Computation of the Monthly Benefit. The total benefit payable ---------------------------------- shall be equivalent to the present value of an annual benefit of $104,583 -------- commencing on the first of the month coinciding with or next following the Employee's sixty-fifth birthday and payable for 15 years certain. The computation of the present value shall be made using the Pension Benefit Guarantee Corporation Prospective Actuarial and Mortality Tables (Publication 509) in effect as of the first of the month three months prior to the effective date benefit payments are to begin. The resulting present value will be paid out in monthly installments over a period of 180 months. SECTION 3. Pre-Retirement Survivor Benefit. In the event the Employee ------------------------------- should die prior to commencement of benefit payments the Company shall pay the Monthly Benefit that would have been paid at 65 had he lived, as set forth in Section 2, to whomever the Employee has designated in writing or, if no such designation has been made, the Employee's spouse, if living, otherwise to the Employee's estate. Said payments shall commence on the first day of the month following Employee' s death. Said beneficiary may appoint by notice in writing to the Company any remaining payments to any person or to said beneficiary's estate; failing such appointment, the remaining payments shall be made to the beneficiary's estate. -2- SECTION 4. Post-Retirement Benefit. In the event the Employee dies after ----------------------- Monthly Benefit payments commence but before receiving the total number of Monthly payments, the Company shall continue the payments until the balance of the Monthly Benefit set forth in Section 2 had been paid to whomever the Employee has designated in writing or, if no such designation has been made, to the Employee' s spouse, if 1iving, otherwise to the Employee's estate. SECTION 5. Disability Benefit. If Employee ceases employment by reason of ------------------ Total and Permanent Disability prior to age 62 then, for the purposes of this Agreement, Employee shall be deemed continuously employed until the earliest of the attainment of age 62, death or the date on which such Disability ceases. Total and Permanent Disability shall mean the incapacity of the Employee, either mental or physical, to perform the usual duties of his employment with the Company, such incapacity to be deemed to exist when so declared by the Company in its judgment and discretion, supported by the written opinion of at least one physician approved by the Company. SECTION 6. Agreement Unfunded. It is the intention of the parties hereto ------------------ the Company's obligations to pay retirement or survivor benefits hereunder shall be an unsecured promise, and that any right to enforce such obligation shall be solely as a general creditor of the Company. If the Company shall acquire an insurance policy or any other asset in connection with the liabilities assumed by it hereunder, it is expressly agreed that neither Employee nor any beneficiary of Employee shall have any right with respect to or claim against such policy except -3- as expressly provided by the terms of such policy. Such policy shall not be deemed to be held under any trust for the benefit of Employee or his beneficiaries or to be held in any way collateral security for the fulfilling of the obligations of the Company under this Agreement, except as may be expressly provided by the terms of such policy and shall be, and remain, a general, unpledged, un-restricted asset of the company. Notwithstanding the foregoing, the Company may contribute assets, including but not limited to insurance policies, to a trust designed to provide the Employee with psychological comfort and reassurance (but not providing the Employee with any interest in said trust other than as a general unsecured creditor of the Company) that the benefits provided in this Agreement will be paid to the Employee. SECTION 7. Merger or Consolidation. In the event the Company merges or ----------------------- consolidates with any other company, or agrees that substantially all its business activities be taken over by any other company, the succeeding or continuing company shall be required to assume all obligations and liabilities herein set forth. SECTION 8. Suicide. No benefits will be paid if the Employee's death is ------- from suicide within two years of the date of this contract. SECTION 9. Employment Contract to Govern. This Agreement is subject to ----------------------------- the terms of any employment contract heretofore or hereafter entered into between the Company and the Employee. If the terms of such other employment contract conflict with the provisions of this Agreement, the terms of such other employment contract shall govern. Nothing in this -4- Agreement shall confer upon the Employee the right to continue in the employ of the Company or affect any right the Company may have to terminate the Employee's employment. It is the express intent of the parties hereto that this Agreement not be deemed an employment contract between the Employee and the Company. SECTION 10. Late Retirement. If, with the consent of the Board of --------------- Directors, the Employee remains in the employ of the Company beyond age 65, he may, at his option, receive benefits beginning at age 65 or delay receipt until actual retirement and receive an increase in benefit as mutually agreed upon by the Employee and the Company. SECTION 1. Termination for Cause. The Company retains the right at all --------------------- times to dismiss the Employee for cause such as dishonesty. In the event of termination for cause by the Company of the Employee, the Employee's vested interest in the plan will be forfeited and he will have no rights whatsoever under the contract. If, following termination for any reason, it is discovered that the Employee has committed any act of dishonesty while employed by the Company, then all rights which the Employee or his spouse or beneficiaries may have had under this Agreement shall be forfeited and any liability of the Company to make payments hereunder shall be terminated. SECTION 12. Employee Information Required. Payment of benefits is ----------------------------- conditioned upon the Employee furnishing to the Company all information which the Company may deem necessary or desirable to assist in the administration of this Agreement and upon the employee -5- submitting to medical examinations and/or questionnaires and to supply all such information referred to above accurately and truthfully and to execute such documents as may be required by the Company or their designated agents. SECTION 13. Whole Agreement; Amendment. This Agreement constitutes the -------------------------- whole Supplemental Income Agreement between the Company and the Employee and may not be modified, amended or terminated except by a written instrument signed by the Company and the Employee. The Employee and the Company may amend this Agreement by a document in writing, without the consent of the Employee's spouse or Beneficiary, notwithstanding that any such amendment may have the effect of diminishing or eliminating benefits payable to such spouse or Beneficiary under the several provisions of this Agreement. A. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. B. If any provision of this Agreement is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed and enforced as if such provision had not been included herein. C. The captions contained herein are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge or describe the scope or intent of this -6- Agreement nor in any way shall affect the Agreement or the construction of any provision thereof. SECTION 14. Governing Law. This Agreement shall be governed by, construed ------------- and enforced in accordance with the laws of the State of New York (without regard to principles of conflict of laws). IN WITNESS WHEREOF, Company and Employee have hereunto executed this Agreement the day and year above written. INTEREP NATIONAL RADIO SALES, INC. Attest: /s/ Patricia H. Baker By: /s/ Les Goldberg ------------------------- ------------------------------------ (Seal) Witness: /s/ Patricia H. Baker /s/ Ralph Guild ---------------------- ------------------------ RALPH GUILD -7- EX-10.26 34 AGREEMENT BETWEEN THE COMPANY & RALPH C. GUILD EXHIBIT 10.26 June 18, 1993 AGREEMENT BETWEEN INTEREP NATIONAL RADIO SALES, INC. AND RALPH GUILD WHEREAS, Interep National Radio Sales, Inc. ("The Company") and Ralph Guild ("Guild") are parties to the following agreements: 1) The Supplemental Income Agreement dated as of December 31, 1986 2) The Third Amended and Restated Employment Agreement dated as of January 1, 1991 ("The Employment Agreement") 3) The Amendment and Extension of Option dated as of January 1, 1991 ("The Extended Option") WHEREAS, the Employment Agreement calls for the continued employment of Guild through January 1, 1997; and, WHEREAS, the Company and Guild both desire that Guild remain active in his position as Chairman of the Company. Now, therefore, the Company and Guild in consideration of their mutual interests agree as follows: 1) The total benefit payable under the Supplemental Income Agreement is hereby reduced from a 15 year benefit beginning at age 65 to a 12 year benefit beginning January 1, 1997. 2) The Extended Option is hereby further extended to January 1, 1997. Accepted and Agreed To: INTEREP NATIONAL RADIO SALES, INC. Ralph C. Guild /s/ Les Goldberg /s/ Ralph C. Guild - ---------------------------- -------------------------- By: Les Goldberg, Director /s/ Marc Guild - ---------------------------- By: Marc Guild, Director EX-12.1 35 CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1 Interep National Radio Sales, Inc. Calculation of Earnings to Fixed Charges (Thousands of dollars)
Years Ended December 31, 1993 1994 1995 1996 1997 Earnings: Operating income (loss) $ 1,760 $ 3,213 $ 3,777 $ 1,794 $(3,563) Fixed charges 1,456 1,359 1,401 1,455 1,511 --------------------------------------------------------------- Earnings as adjusted $ 3,216 $ 4,572 $ 5,178 $ 3,249 $(2,052) Fixed Charges: Interest on debt $ 3,191 $ 3,379 $ 3,494 $ 4,049 $ 3,888 Amortization of debt issuance costs 94 94 55 73 89 Imputed interest portion of rent 1,362 1,265 1,346 1,382 1,422 ---------------------------------------------------------------- Total fixed charges $ 4,647 $ 4,738 $ 4,895 $ 5,504 $ 5,399 Deficiency of earnings to fixed charges $ 1,431 $ 166 $ - $ 2,255 $ 7,451 ================================================================ Ratio of earnings to fixed charges 1.06 =======
Proforma (1) Three Months Ended Year Ended Three Months March 31, December 31, Ended March 31, 1997 1998 1997 1998 Earnings: Operating income (loss) $(1,818) $(3,250) $(3,563) $(3,250) Fixed charges 386 404 1,822 469 ------------------------------------------------------------ Earnings as adjusted $(1,432) $(2,846) $(1,741) $(2,781) Fixed Charges: Interest on debt $ 842 $ 1,017 $10,000 $ 2,500 Amortization of debt issuance costs 34 35 400 100 Imputed interest portion of rent 352 369 1,422 369 ------------------------------------------------------------- Total fixed charges $ 1,228 $ 1,421 $11,822 $ 2,969 Deficiency of earnings to fixed charges $ 2,660 $ 4,267 $13,563 $ 5,750 ==============================================================
(1) Refer to the unaudited pro forma consolidated financial data for further detail. EX-21.1 36 SUBSIDIARIES OF REGISTRANT EXHIBIT 21.1 SUBSIDIARIES OF INTEREP NATIONAL RADIO SALES, INC. Corporations - ------------ McGavren Guild, Inc. ("MG") D&R Radio, Inc. CBS Radio Sales, Inc. ABC Radio Sales (a division of Interep National Radio Sales, Inc.) Allied Radio Partners, Inc. MG Spanish Media, Inc. McGavren Guild Radio Sales, Inc. LLC's - 95% Interep, 5% MG - -------------------------- Caballero Spanish Media L.L.C. Clear Channel Radio LLC All of the subsidiaries were organized in the State of New York. EX-23.1 37 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report (and to all references to our Firm) included in or made a part of this registration statement. ARTHUR ANDERSEN LLP New York, New York August 3, 1998 EX-25.1 38 FORM T-1 STATEMENT OF ELIGIBILITY EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) X - (Name of Trustee) SUMMIT BANK (I.R.S. Employer Identification No.) 22-0834947 (Address of Principal Executive Offices) 210 Main Street Hackensack, NJ 07601 (Name of Obligor) Interep National Radio Sales, Inc. (State of Incorporation) New York (I.R.S. Employer Identification No.) 13-1865151 (Address of Principal Executive Offices) 100 Park Avenue New York, NY 10017 (Title of Indenture Securities) 10 % Subordinated Debt Securities due 2008 1. GENERAL INFORMATION Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject: Name Address - ---- ------- Federal Reserve Bank (2nd District) New York, NY Federal Deposit Insurance Corporation Washington, D.C. New Jersey Department of Banking Trenton, NJ (b) Whether it is authorized to exercise corporate trust powers. Yes 2. AFFILIATIONS WITH OBLIGOR If the obligor is an affiliate of the trustee, describe each such affiliation. None (See Note on page 6) 3. VOTING SECURITIES OF THE TRUSTEE Furnish the following information as to each class of voting securities of the trustee: As of _____________________ Col. A Col. B ------ ------ Summit Bank Common Stock 34,021,623 shares Summit Bank, Preferred Stock 120,000 shares 4. TRUSTEESHIPS UNDER OTHER INDENTURES If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, furnish the following information: Not applicable - see answer to item 13 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR UNDERWRITERS If the trustee or any of the directors or executive officers of the trustee is a director, officer, partner, employee, appointee, or representative of the obligor or of any underwriter for the obligor, identify each such person having any such connection and state the nature of each such connection. Not applicable - see answer to item 13 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS Furnish the following information as to the voting securities of the trustee owned beneficially by the obligor and each director, partner, and executive officer of the obligor: Not applicable - see answer to item 13 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS Furnish the following information as to the voting securities of the trustee owned beneficially by each underwriter for the obligor and each director, partner, and executive officer of each such underwriter: 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE Furnish the following information as to securities of the obligor owned beneficially or held as collateral security for obligations in default by the Trustee: Not applicable - see answer to item 13 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE If the trustee owned beneficially or holding as collateral security for obligations in default any securities or an underwriter for the obligor, furnish the following information as to each class of securities of such underwriter any of which are owned or held by the trustee: Not applicable - see answer to item 13 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR If the trustee owns beneficially or holds as collateral security for oblications in default voting securities of a person who, to the knowledge of the trustee (1) owns 10 percent or -2- more of the voting stock of the obligor or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the following information as to the voting securities of such person: Not applicable - see answer to item 13 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR If the trustee owns beneficially or holds as collateral security for obligations in default any securities of a person who, to the knowledge of the trustee, owns 50 percent or more of the voting securities of the obligor, furnish the following information as to each class of securities of such person any of which are owned or held by the trustee: Not applicable - see answer to item 13 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE (a) State whether there is or has been a default with respect to the securities under this indenture. Explain the nature of any such default. None (b) If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, or is trustee for more than one outstanding series of securities under the indenture, state whether there has been a default under any such indenture or series, identify the indenture or series affected, and explain the nature of any such default. 13. DEFAULTS BY THE OBLIGOR (a) State whether there is or has been a default with respect to the securities under this indenture. Explain the nature of any such default. None (b) If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, or is trustee for more than one outstanding series of securities under the indenture, state whether there has been a default under any such indenture or series, identify the indenture or series affected, and explain the nature of any such default. -3- NOTE The Trustee disclaims responsibility for the accuracy or completeness of information contained in this Statement of Eligibility and Qualification not known to the trustee and not obtained by it through reasonable investigation and as to which information it has obtained from the obligor and has had to rely or will obtain from the principal underwriters and will have to rely. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, Summit Bank, a corporation organized and existing under the laws of the State of New Jersey, has duly caused this Statement of Eligibility and Qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Hackensack and State of New Jersey on the 29th day of June, 1998. SUMMIT BANK By:/s/ Jennifer J. Houle ------------------------ Jennifer J. Houle Assistant Vice President -4- CONSENT OF TRUSTEE Summit Bank, as trustee (the "Trustee") under an indenture to be entered into between itself and Interep National Radio Sales, Inc. hereby consents to Section 321(b) of the Trust Indenture Act of 1939, as amended, to the furnishing by Federal, State, Territorial or District Authorities to the Securities and Exchange Commission of all reports, records or other information relating thereto. SUMMIT BANK By: /s/ Jennifer J. Houle --------------------- Jennifer J. Houle Assistant Vice President Dated: June 29, 1998 -5- Board of Governors of the Federal Reserve System OMB Number: 7100-0036 Federal Deposit Insurance Corporation OMB Number: 3064-0052 Office of the Comptroller of the Currency OMB Number: 1557-0081 Expires March 31, 2000 Federal Financial Institutions Examination Council - -------------------------------------------------------------------------------- Please refer to page 1, Table of Contents, for the required disclosure of estimated burden - -------------------------------------------------------------------------------- Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices -- FFIEC 031 Report at the close of business December 31, 1997 (971231) --------- (RCRI 9999) This report is required by law: 12 U.S.C. (S)324 (State This report form is to be filed by banks with branches and member banks); 12 U.S.C. (S)1817 (State nonmember banks); consolidated subsidiaries in U.S. territories and possessions, and 12 U.S.C. (S)161 (National banks). Edge or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries, or International Banking Facilities. - ------------------------------------------------------------------------------------------------------------------------------ NOTE: The Reports of Condition and Income must be signed by The Reports of Condition and Income are to be prepared in an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions. attested to by not less than two directors (trustees) for State nonmember banks and three directors for State member We, the undersigned directors (trustees), attest to the and National banks. correctness of the Report of Condition (including the supporting schedules) for this report date and declare that it has been I, William J. Healy, Assistant Treasurer examined by us and to the best of our knowledge and belief has ------------------------------------------------------- been prepared in conformance with the instructions issued by the Name and Title of Officer Authorized to Sign Report appropriate Federal regulatory authority and is true and correct. of the named bank do hereby declare that the Reports of condition and income (including the supporting schedules) on this report date have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and /s/ belief. ------------------------------------------------------------------ Director (Trustee) /s/ William J. Healy /s/ - ------------------------------------------------------------ ------------------------------------------------------------------ Signature of Officer Authorized to Sign Report Director (Trustee) /s/ - ------------------------------------------------------------ ------------------------------------------------------------------ Date of Signature Director (Trustee) - ------------------------------------------------------------------------------------------------------------------------------ (b) in hard-copy (paper) form and arrange for another party to Submission of Reports convert the paper report to automated form. That party (if other than EDS) must transmit the bank's computer data file to EDS. Each bank must prepare its Reports of Condition and Income either: To fulfill the signature and attestation requirement for the Reports of Condition and Income for this report date, attach this (a) in automated form and then file the computer data file signature page to the hard-copy record of the completed report directly with the banking agencies' collection agent, that the bank places in its files Electronic Data Systems Corporation (EDS), by modern or on computer diskette; or - ------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number 00550 --------- (RCRI 9050) SUMMIT BANK 301 CARNEGIE CENTER 4TH FLOOR PRINCETON NJ 8543 2066 B341220000 023412200000 00550 Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency Affix the address label in this space Summit Bank NJ - -------------------------------------------------------------------------------- Legal Title of Bank FDIC Certificate Number 550 ----- Consolidated Report of Income for the period January 1, 1997 - December 31, 1997 All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars. Schedule RI - Income Statement
480 -------------------------------- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------- 1. Interest income: a. Interest and fee income on loans: (1) In domestic offices: -------------------- (a) Loans secured by real estate......................................... RIAD 653,773 1.a.(1)(a) 4011 -------------------- (b) Loans to depository institutions..................................... RIAD 4,276 1.a.(1)(b) 4019 -------------------- (c) Loans to finance agricultural production and other loans to farmers.. RIAD 22 1.a.(1)(c) 4024 -------------------- (d) Commercial and industrial loans...................................... RIAD 340,201 1.a.(1)(d) 4012 -------------------- (e) Acceptances of other banks........................................... RIAD 0 1.a.(1)(e) 4026 -------------------- (f) Loans to individuals for household, family, and other personal expenditures: -------------------- (1) Credit cards and related plans.................................. RIAD 13,621 1.a.(1)(f)(1) 4054 -------------------- (2) Other........................................................... RIAD 60,083 1.a.(1)(f)(2) 4055 -------------------- (g) Loans to foreign governments and official institutions............... RIAD 0 1.a.(1)(g) 4056 -------------------- (h) Obligations (other than securities and leases) of states and political subdivisions in the U.S.: -------------------- (1) Taxable obligations............................................ RIAD 99 1.a.(1)(h)(1) 4503 -------------------- (2) Tax-exempt obligations......................................... RIAD 7,599 1.a.(1)(h)(2) 4504 -------------------- (i) All other loans in domestic offices.................................. RIAD 12,012 1.a.(1)(i) 4058 -------------------- (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs............ RIAD 0 1.a.(2) 4059 -------------------- b. Income from lease financing receivables: -------------------- (1) Taxable leases............................................................ RIAD 36,976 1.b.(1) 4505 -------------------- (2) Tax-exempt leases......................................................... RIAD 0 1.b.(2) 4307 -------------------- c. Interest income on balances due from depository institutions/1/: -------------------- (1) In domestic offices...................................................... RIAD 557 1.c.(1) 4105 -------------------- (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs............ RIAD 0 1.c.(2) 4106 d. Interest and dividend income on securities: -------------------- (1) U.S. Treasury securities and U.S. Government agency obligations.......... RIAD 287,674 1.d.(1) 4027 -------------------- (2) Securities issued by states and political subdivisions in the U.S.: -------------------- (a) Taxable securities.................................................. RIAD 0 1.d.(2)(a) 4506 -------------------- (b) Tax-exempt securities............................................... RIAD 11,434 1.d.(2)(b) 4507 -------------------- (3) Other domestic debt securities.......................................... RIAD 72,826 1.d.(3) 3657 - -------------------------------------------------------------------------------------------------------------------------------
/1/ Includes interest income on time certificates of deposit not held for trading.
480 ----------------------- Dollar Amounts in Thousands Bil Mil Thou - ---------------------------------------------------------------------------------------------------------- (4) Foreign debt securities................................................. RIAD 1,390 1.d.(4) 3658 -------------------- (5) Equity securities (including investments in mutual funds)............... RIAD 6,986 1.d.(5) 3659 -------------------- e. Interest income from trading assets........................................... RIAD 745 1.e. 4069 -------------------- f. Interest income on federal funds sold and securities purchased under RIAD 7,892 1.f. agreements to resell.......................................................... 4020 -------------------- g. Total interest income (sum of items 1.a through 1.f).......................... RIAD 1,518,166 1.g. 4107 -------------------- 2. Interest expense: a. Interest on deposits: (1) Interest on deposits in domestic offices: -------------------- (a) Transaction accounts (NOW accounts, ATS accounts, and RIAD 34,791 2.a.(1)(a) telephone and preauthorized transfer accounts)..................... 4508 -------------------- (b) Nontransaction accounts: -------------------- (1) Money market deposit accounts (MMDAs).......................... RIAD 114,440 2.a.(1)(b)(1) 4509 -------------------- (2) Other savings deposits......................................... RIAD 43,429 2.a.(1)(b)(2) 4511 -------------------- (3) Time deposits of $100,000 or more.............................. RIAD 61,242 2.a.(1)(b)(3) A517 -------------------- (4) Time deposits of less than $100,000............................ RIAD 212,039 2.a.(1)(b)(4) A518 -------------------- (2) Interest on deposits in foreign offices, Edge and Agreement RIAD 0 2.a.(2) subsidiaries, and IBFs.................................................. 4172 -------------------- b. Expense of federal funds purchased and securities sold under RIAD 107,871 2.b. agreements to repurchase..................................................... 4180 -------------------- c. Interest on demand notes issued to the U.S. Treasury, trading RIAD 39,158 2.c. liabilities, and other borrowed money........................................ 4185 -------------------- d. Not applicable -------------------- e. Interest on subordinated notes and debentures................................. RIAD 11,303 2.e. 4200 -------------------- f. Total interest expense (sum of items 2.a through 2.e)......................... RIAD 624,273 2.f. 4073 --------------------------------------- 3. Net interest income (item 1.g minus 2.f).......................................... RIAD 893,893 3. 4074 --------------------------------------- 4. Provisions: --------------------------------------- a. Provision for loan and lease losses........................................... RIAD 49,904 4.a. 4230 --------------------------------------- b. Provision for allocated transfer risk......................................... RIAD 0 4.b. 4243 --------------------------------------- 5. Noninterest income: -------------------- a. Income from fiduciary activities.............................................. RIAD 43,689 5.a. 4070 -------------------- b. Service charges on deposit accounts in domestic offices....................... RIAD 97,340 5.b. 4080 -------------------- c. Trading revenue (must equal Schedule RI, sum of Memorandum items RIAD 405 5.c. 8.a through 8.d)............................................................. A220 -------------------- d.-e. Not applicable -------------------- f. Other noninterest income: -------------------- (1) Other fee income......................................................... RIAD 47,072 5.f.(1) 5407 -------------------- (2) All other noninterest income/*/.......................................... RIAD 42,089 5.f.(2) 5408 --------------------------------------- g. Total noninterest income (sum of items 5.a through 5.f)....................... RIAD 230,595 5.g. 4079 --------------------------------------- 6. a. Realized gains (losses) on held-to-maturity securities........................ RIAD 5 6.a. 3529 --------------------------------------- b. Realized gains (losses) on available-for-sale securities...................... RIAD 526 6.b. 3196 --------------------------------------- 7. Noninterest expense: -------------------- a. Salaries and employee benefits................................................ RIAD 245,988 7.a. 4135 -------------------- b. Expenses of premises and fixed assets (net of rental income) RIAD 83,724 7.b. (excluding salaries and employee benefits and mortgage interest).............. 4217 -------------------- c. Other noninterest expense/*/.................................................. RIAD 320,550 7.c. 4092 -------------------- d. Total noninterest expense (sum of items 7.a. through 7.c.).................... RIAD 650,262 7.d. 4093 ---------------------
- -------------------- /*/ Describe on Schedule RI-E - Explanations
480 ----------------------- Dollar Amounts in Thousands Bil Mil Thou - ---------------------------------------------------------------------------------------------------------- ----------------------------------------- 8. Income (loss) before income taxes and extraordinary items and other RIAD 424,853 8. adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b and 7.d).... 4301 ----------------------------------------- 9. Applicable income taxes (on item 8)......................................... RIAD 149,030 9. 4302 ----------------------------------------- 10. Income (loss) before extraordinary items and other adjustments RIAD 275,823 10. (item 8 minus 9)........................................................... 4300 ----------------------------------------- 11. Extraordinary items and other adjustments, net of income taxes/*/.......... RIAD 0 11. 4320 ----------------------------------------- 12. Net income (loss) (sum of items 10 and 11)................................. RIAD 275,823 12. 4340 -----------------------------------------
- -------------------- /*/ Describe on Schedule RI-E - Explanations Summit Bank NJ - ---------------------------------------------------------------------- Legal Title of Bank FDIC Certificate Number 550 --- Schedule RI - Continued
-------------------------------------- 481 -------------------------------------- Memoranda Year-to-date - --------------------------------------------------------------------------------------------------------------------------- Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------------- 1. Interest expense incurred to carry tax-exempt securities, loans, and RIAD 0 M.1. leases acquired after August 7, 1986, that is not deductible 4513 for federal income tax purposes................................................ ----------------------------------- 2. Income from the sale and servicing of mutual funds and annuities in RIAD 28,911 M.2. domestic offices (included in Schedule RI, item 8)............................. 8431 ----------------------------------- 3.-4. Not applicable............................................................... Number ----------------------------------- 5. Number of full-time equivalent employees at end of current period (round RIAD 5238 M.4. to nearest whole number)....................................................... 4150 ----------------------------------- 6. Not applicable ----------------------------------- 7. If the reporting bank has restated its balance sheet as a result of RIAD CC YY MM DD M.7. applying push down accounting this calendar year, report the date of 9106 the bank's acquisition/1/...................................................... 00000000 ----------------------------------- 8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) (sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): ----------------------------------- a. Interest rate exposures.................................................... RIAD (2,017) M.8.a. 8757 ----------------------------------- b. Foreign exchange exposures.................................................. RIAD 2,422 M.8.b. 8758 ----------------------------------- c. Equity security and index exposures......................................... RIAD 0 M.8.c. 8759 ----------------------------------- d. Commodity and other exposures............................................... RIAD 0 M.8.d. 8760 ----------------------------------- 9. Impact on income of off-balance sheet derivatives held for purposes other than trading: ----------------------------------- a. Net increase (decrease) to interest income.................................. RIAD (815) M.9.a. 8761 ----------------------------------- b. Net (increase) decrease to interest expense................................. RIAD (947) M.9.b. 8762 ----------------------------------- c. Other (noninterest) allocations............................................. RIAD 0 M.9.c. 8763 ----------------------------------- 10. Credit losses on off-balance sheet derivatives (see instructions)............. RIAD 0 M.10. A251 ----------------------------------- 11. Does the reporting bank have a Subchapter Selection in effect for RIAD YES NO M.11. federal income tax purposes for the current tax year?......................... A530 [ ] [ ] ----------------------------------- ----------------------------------- Bil Mil Thou ----------------------------------- 12. Deferred portion of total applicable income taxes included in Schedule RIAD 0 M.12. RI, items 9 and 11 (to be reported with the December Report of Income)........ 4772 -----------------------------------
- ----------------------- /1/ For example, a bank acquired on June 1, 1997, would not report 19970601. EX-27.1 39 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF OPERATIONS AND CONSOLIDATED BALANCE SHEETS OF INTEREP NATIONAL RADIO SALES, INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR YEAR 3-MOS DEC-31-1997 DEC-31-1996 DEC-31-1998 JAN-01-1997 JAN-01-1996 JAN-01-1998 DEC-31-1997 DEC-31-1996 MAR-31-1998 1,419 2,653 4,441 0 0 0 43,544 39,114 49,752 1,220 982 1,220 0 0 0 83,119 64,597 92,196 19,384 17,678 19,275 15,049 13,462 15,392 141,212 94,185 145,141 49,921 44,378 41,062 44,425 34,235 42,884 6,924 5,334 7,389 0 0 0 4,536 4,675 4,536 (28,087) (18,420) (33,112) 141,212 94,185 145,141 87,096 72,858 15,898 87,096 72,858 15,898 0 0 0 90,659 71,064 19,148 0 0 0 0 0 0 3,779 3,911 1,005 (7,342) (2,117) (4,255) 412 400 49 (7,754) (2,517) (4,304) 0 0 0 0 0 0 0 0 0 (7,754) (2,517) (4,304) 0 0 0 0 0 0
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