1
EXHIBIT 4.1
================================================================================
_________________________________
SOURCE MEDIA, INC.
as Issuer,
and
U.S. TRUST COMPANY OF TEXAS, N.A.
as Trustee
$100,000,000
12% SENIOR SECURED NOTES DUE 2004, SERIES A
12% SENIOR SECURED NOTES DUE 2004, SERIES B
____________________
INDENTURE
Dated as of October 30, 1997
____________________
================================================================================
2
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05;7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02
(i)
3
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.19
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
_______________________
*This Cross-Reference Table is not part of the Indenture.
N.A. means not applicable.
(ii)
4
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. OTHER DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . 24
SECTION 1.04. RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 2 THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.01. FORM AND DATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.02. EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.03. REGISTRAR AND PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.05. SECURITYHOLDER LISTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.06. TRANSFER AND EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.07. REPLACEMENT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.08. OUTSTANDING SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.09. TREASURY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.10. TEMPORARY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.11. CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.12. DEFAULTED INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.13. CUSIP NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.14. DEPOSIT OF MONEYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.15. RESTRICTIVE LEGENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.17. SPECIAL TRANSFER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.18. PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.19. RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 3 REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.01. NOTICES TO TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.03. NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(iii)
5
SECTION 3.06. SECURITIES REDEEMED IN PART . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.07. OPTIONAL REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.08. MANDATORY REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS . . . . . . . . . . . . . . . . . . 41
ARTICLE 4 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.01. PAYMENT OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.03. SEC REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.04. COMPLIANCE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.05. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.06. STAY, EXTENSION AND USURY LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.08. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES . . . . . . . . 50
SECTION 4.09. LIMITATION ON INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.10. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK . . . . . . . . . . . . . . . . . . . 54
SECTION 4.11. LIMITATION ON AFFILIATE TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.12. LIMITATION ON LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.13. CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.14. CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.15. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES . . . . . . . . . . 59
SECTION 4.16. CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.17. LIMITATION ON SALE/ LEASEBACK TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.18. LIMITATION ON DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES. . . . . . . . . . . . . . . . . 60
SECTION 4.19. FURTHER INSTRUMENTS AND ACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 5 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 5.01. LIMITATIONS ON MERGER, CONSOLIDATION OR SALE OF ASSETS . . . . . . . . . . . . . . . . . 62
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(iv)
6
SECTION 6.02. ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.03. OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.04. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.05. CONTROL BY MAJORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.06. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.07. RIGHTS OF SECURITYHOLDERS TO RECEIVE PAYMENT . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.08. COLLECTION SUIT BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.10. PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.11. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 7 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.01. DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.02. RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.04. TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.05. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.06. REPORTS BY TRUSTEE TO SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.07. COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.08. REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY . . . . . . . . . . . . . . . . . 76
ARTICLE 8 DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.02. CONDITIONS TO DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.03. APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.04. REPAYMENT TO THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.06. REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 9 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 9.01. WITHOUT CONSENT OF SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 9.02. WITH CONSENT OF SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(v)
7
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.01. TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.02. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.03. COMMUNICATION BY SECURITYHOLDERS WITH OTHER SECURITYHOLDERS . . . . . . . . . . . . . . 87
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 87
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.06. RULES BY TRUSTEE AND AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.07. LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.08. NO RECOURSE AGAINST OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.09. DUPLICATE ORIGINALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.10. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.12. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.13. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.14. COUNTERPART ORIGINALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.15. TABLE OF CONTENTS, HEADINGS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
EXHIBIT A - FORM OF INITIAL SECURITY
EXHIBIT B - FORM OF EXCHANGE SECURITY
EXHIBIT C - FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS TO NON-QIB
ACCREDITED INVESTORS
EXHIBIT D - FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO
REGULATION S
(vi)
8
INDENTURE, dated as of October 30, 1997, among Source Media,
Inc., a Delaware corporation (the "Company"), and U.S. Trust Company of Texas,
N.A., a banking corporation organized and existing under the laws of the State
of Texas, in its capacity as trustee (the "Trustee").
The Company has duly authorized the creation of an issue of
12% Senior Secured Notes due 2004, Series A (the "Initial Securities") and 12%
Senior Secured Notes due 2004, Series B (the "Exchange Securities") and, to
provide therefor, the Company has duly authorized the execution and delivery of
this Indenture. All things necessary to make the Securities (as defined), when
duly issued and executed by the Company, and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this Indenture a
valid and binding agreement of the Company, have been done.
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the
Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquisitions" means the September 1997 acquisitions by the
Company of certain of the electronic publishing assets of Brite Voice, Inc. for
approximately $35.6 million and of certain of the assets of Voice News Network,
Inc. for approximately $9.0 million.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Permitted Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or a Restricted Subsidiary of
the Company; (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary of the Company; or (iv) Permitted
Investments of the type and in the amounts described in clause (viii) of the
definition thereof; provided, however, that, in the case of clauses (ii) and
(iii), such Restricted Subsidiary is primarily engaged in a Permitted Business.
"Adjusted Consolidated Net Income" means, for any period,
Consolidated Net Income minus (plus) the net income (loss) of Interactive
Channel, Inc. for such period,
9
plus an amount equal to the corporate overhead allocated to Interactive
Channel, Inc., on an after-tax basis, unless otherwise included in the net
income of Interactive Channel, Inc., for such period (as determined in good
faith by senior management of the Company), plus an amount equal to the
amortization of intangible assets relating to the Acquisition.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date
shall mean the lesser of the amount by which (x) the fair value of the property
of such Subsidiary Guarantor exceeds the total amount of liabilities,
including, without limitation, the probable liability of such Subsidiary
Guarantor with respect to its contingent liabilities (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date),
but excluding liabilities under the Subsidiary Guarantee, of such Subsidiary
Guarantor at such date and (y) the present fair salable value of the assets of
such Subsidiary Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Subsidiary Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities Incurred or assumed
on such date and after giving effect to any collection from any Subsidiary by
such Subsidiary Guarantor in respect of the obligations of such Subsidiary
under the Subsidiary Guarantee), excluding debt in respect of the Subsidiary
Guarantee, as they become absolute and matured.
"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 the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Disposition" means any sale, lease, transfer, issuance
or other disposition (or series of related sales, leases, transfers, issuances
or dispositions that are part of a common plan) of shares of Capital Stock of
(or any other equity interests in) a Restricted Subsidiary (other than
directors' qualifying shares) or of any other property or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Company or any of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction) other than (i) a
disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of
inventory in the ordinary course of business and for which adequate reserves
have been established in accordance with GAAP, (iii) a disposition of obsolete
or worn out equipment or equipment that is no longer useful in the conduct of
the business of the Company and its Restricted Subsidiaries and that is
disposed of in each case in the ordinary course of business, (iv) dispositions
of property for net proceeds which, when taken collectively with the net
proceeds of any other such dispositions under
-2-
10
this clause (iv) that were consummated since the beginning of the calendar year
in which such disposition is consummated, do not exceed $1 million, and (v)
transactions permitted under Section 5.01. Notwithstanding anything to the
contrary contained above, a Restricted Payment made in compliance with Section
4.07 shall not constitute an Asset Disposition except for purposes of
determinations of the Consolidated Coverage Ratio.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the product of the numbers of years (rounded upwards to
the nearest month) from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to Preferred Stock multiplied by the amount of
such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means loans made by banks, trust companies
and other institutions principally engaged in the business of lending money to
businesses to the Company or a Restricted Subsidiary under a credit facility,
loan agreement or similar agreement.
"Bankruptcy Code" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person duly authorized, with respect to any particular matter, to exercise
the power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however
-3-
11
designated) equity of such Person, including any Preferred Stock, but excluding
any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP, and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date such lease may be terminated without
penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"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, (iii) certificates
of deposit, time deposits and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers' acceptances with maturities
not exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $500 million, (iv)
repurchase obligations for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated A-1
or the equivalent thereof by Xxxxx'x or S&P and in each case maturing within
one year after the date of acquisition, (vi) investment funds investing 95% of
their assets in securities of the types described in clauses (i)-(v) above,
(vii) readily marketable direct obligations issued by any state of the United
States of America or any political subdivision thereof having one of the two
highest rating categories obtainable from either Xxxxx'x or S&P and (viii)
Indebtedness or Preferred Stock issued by Persons with a rating of "A" or
higher from S&P or "A2" or higher from Xxxxx'x.
"Change of Control" means (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Company and its Subsidiaries; or (ii)
a majority of the Board of Directors of the Company or of any direct or
indirect holding company thereof shall consist of Persons who are not
Continuing Directors of the Company; or (iii) the acquisition by any Person or
group of related Persons for purposes of Section 13 (d) of the Exchange Act, of
the power, directly or indirectly, to vote or direct the voting of securities
having more than 50% of the ordinary voting power for the election of directors
of the Company or of any direct or indirect holding company thereof.
-4-
12
"Commission" means the U.S. Securities and Exchange Commission
or its successor.
"Common Stock" of any Person means Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Company" means Source Media, Inc., a Delaware corporation,
until a successor replaces it in accordance with Article 5 hereof and
thereafter means the successor.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any noncash
item to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
Securities) and less, to the extent added in calculating Consolidated Net
Income, (x) exchange or translation gains on foreign currencies and (y)
non-cash items (excluding such non-cash items to the extent they represent an
accrual for cash receipts reasonably expected to be received prior to the
Stated Maturity of the Securities), in each case for such period.
Notwithstanding the foregoing, the income tax expense, depreciation expense and
amortization expense of a Subsidiary of the Company shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available
to (ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (1) if the Company or any of its Restricted Subsidiaries has
Incurred any Indebtedness since the beginning of such period and through the
date of determination of the Consolidated Coverage Ratio that remains
outstanding or if the transaction giving rise to the need to calculate
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (A) such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(provided that if such Indebtedness is Incurred under a revolving credit
facility (or similar arrangement or under any predecessor revolving credit or
similar arrangement) only that portion of such Indebtedness that constitutes
the one year projected average balance of such
-5-
13
Indebtedness (as determined in good faith by the Board of Directors of the
Company) shall be deemed outstanding for purposes of this calculation), and (B)
the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period, (2) if since the
beginning of such period any Indebtedness of the Company or any of its
Restricted Subsidiaries has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and the underlying commitment terminated and has not been replaced),
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Indebtedness had been repaid, repurchased,
defeased or otherwise discharged on the first day of such period, (3) if since
the beginning of such period the Company or any of its Restricted Subsidiaries
shall have made any Asset Disposition or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio is an Asset Disposition,
Consolidated Cash Flow for such period shall be reduced by an amount equal to
the Consolidated Cash Flow (if positive) attributable to the assets which are
the subject of such Asset Disposition for such period or increased by an amount
equal to the Consolidated Cash Flow (if negative) attributable thereto for such
period, and Consolidated Interest Expense for such period shall be (i) reduced
by an amount equal to the Consolidated Interest Expense attributable to any
Indebtedness of the Company or any of its Restricted Subsidiaries repaid,
repurchased, defeased or otherwise discharged with respect to the Company and
its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary of the Company is sold, the Consolidated Interest Expense for such
period directly attributable to the Indebtedness of such Restricted Subsidiary
to the extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale) and (ii) increased by
interest income attributable to the assets which are the subject of such Asset
Disposition for such period, (4) if since the beginning of such period the
Company or any of its Restricted Subsidiaries (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary of the Company (or any
Person which becomes a Restricted Subsidiary of the Company as a result
thereof) or an acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder which constitutes all or
substantially all of an operating unit of a business, Consolidated Cash Flow
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period
and (5) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary of the Company or was merged with or into the
Company or any Restricted Subsidiary of the Company since the beginning of such
period) shall have made any Asset Disposition, Investment or acquisition of
assets that would have required an adjustment pursuant to clause (3) or (4)
above if made by the Company or a Restricted Subsidiary of the Company during
such period, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto
-6-
14
as if such Asset Disposition, Investment or acquisition occurred on the first
day of such period. For purposes of this definition, whenever pro forma effect
is to be given to an acquisition of assets, the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated
with any Indebtedness Incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting officer of the Company. If any Indebtedness bears a floating rate
of interest and is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Subsidiaries
determined in accordance with GAAP, plus, to the extent not included in such
interest expense (i) interest expense attributable to Capitalized Lease
Obligations, (ii) amortization of debt discount, (iii) capitalized interest,
(iv) non-cash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) interest actually paid by the Company or any such Restricted
Subsidiary under any Guarantee of Indebtedness or other obligation of any other
Person, (vii) net payments (whether positive or negative) pursuant to Interest
Rate Agreements, (viii) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust and (ix) cash and
Disqualified Stock dividends in respect of all Preferred Stock of Subsidiaries
and Disqualified Stock of the Company held by Persons other than the Company or
a Wholly-Owned Subsidiary and less (a) to the extent included in such interest
expense, the amortization of capitalized debt issuance costs and (b) interest
income. Notwithstanding the foregoing, the Consolidated Interest Expense with
respect to any Restricted Subsidiary of the Company, that was not a
Wholly-Owned Subsidiary, shall be included only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the
consolidated net income (loss) of the Company and its consolidated Subsidiaries
determined in accordance with GAAP; provided, however, that there shall not be
included in such Consolidated Net Income: (i) any net income (loss) of any
Person acquired by the Company or any of its Restricted Subsidiaries in a
pooling of interests transaction for any period prior to the date of such
acquisition, (ii) any net income of any Restricted Subsidiary of the Company if
such Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company (other than restrictions in
effect on the Issue Date with respect
-7-
15
to a Restricted Subsidiary of the Company and other than restrictions that are
created or exist in compliance with Section 4.08, (iii) any gain or loss
realized upon the sale or other disposition of any assets of the Company or its
consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person, (iv) any extraordinary gain or loss, (v) the
cumulative effect of a change in accounting principles, (vi) the net income of
any Person, other than a Restricted Subsidiary, except to the extent of the
lesser of (A) cash dividends or distributions actually paid to the Company or
any of its Restricted Subsidiaries by such Person and (B) the net income of
such Person (but in no event less than zero), and the net loss of such Person
(other than an Unrestricted Subsidiary) shall be included only to the extent of
the aggregate Investment of the Company or any of its Restricted Subsidiaries
in such Person and (vii) any non-cash expenses attributable to grants or
exercises of employee stock options. Notwithstanding the foregoing, for the
purpose of Section 4.07 only, there shall be excluded from Consolidated Net
Income any dividends, repayments of loans or advances or other transfers of
assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary
to the extent such dividends, repayments or transfers increase the amount of
Restricted Payments permitted under such covenant pursuant to clause (a) (3)
(D) thereof.
"Consolidated Net Worth" means, the total of the amounts shown
on the balance sheet of the Company and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending prior to the
taking of any action for the purpose of which the determination is being made
and for which financial statements are available (but in no event ending more
than 135 days prior to the taking of such action), as (i) the par or stated
value of all outstanding Capital Stock of the Company plus (ii) paid in capital
or capital surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Continuing Director" of any Person means, as of the date of
determination, any Person who (i) was a member of the Board of Directors of
such Person on the date of this Indenture or (ii) was nominated for election or
elected to the Board of Directors of such Person with the affirmative vote of a
majority of the Continuing Directors of such Person who were members of such
Board of Directors at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 10.02 or such other address as to
which the Trustee may give notice to the Company.
-8-
16
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and successors.
"Disqualified Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event (other than an
event which would constitute a Change of Control), (i) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the Stated Maturity of the Securities, or (ii) is convertible into or
exchangeable (unless at the sole option of the issuer thereof) for (a) debt
securities or (b) any Capital Stock referred to in (i) above, in each case at
any time prior to the Stated Maturity of the Securities.
"Equity Offering" means an offering for cash by the Company of
its common stock, or options, warrants or rights with respect to its common
stock.
"Escrow Agent" means U.S. Trust Company of New York, and any
successors or assignors thereto.
"Escrow And Disbursement Agreement" means the Escrow And
Disbursement Agreement, dated as of October 30, 1997, among the Trustee, the
Escrow Agent and the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Offer" means the registration by the Company under
the Securities Act pursuant to a registration statement of the offer by the
Company to each Securityholder of the Initial Securities to exchange all the
Initial Securities held by such Securityholder for the Exchange Securities in
an aggregate principal amount equal to the aggregate principal amount of the
Initial Securities held by such Securityholder, all in accordance with the
terms and conditions of the Registration Rights Agreement.
-9-
17
"Exchange Securities" has the meaning set forth in the
preamble to this Indenture.
"Existing Indebtedness" means Indebtedness of the Company or
its Restricted Subsidiaries in existence on the Issue Date, plus interest
accrued thereon, after application of the net proceeds of the sale of the
Securities and Units.
"fair market value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors
of the Company acting reasonably and in good faith and shall be evidenced by a
Board Resolution of the Board of Directors of the Company delivered to the
Trustee.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations based on GAAP
contained in the Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
issued, all Guarantees by such Subsidiary Guarantor of Senior Indebtedness of
the Company and all other Indebtedness of such Subsidiary Guarantor, including
interest and fees thereon, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that the
obligations of such Subsidiary Guarantor in respect of such Indebtedness are
not superior in right of payment to the obligations of such Subsidiary
-10-
18
Guarantor under the Subsidiary Guaranty; provided, however, that Guarantor
Senior Indebtedness shall not include (1) any obligations of such Subsidiary
Guarantor to the Company or any other Subsidiary of the Company, (2) any
liability for Federal, state, local or other taxes owed or owing by such
Subsidiary Guarantor, (3) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities) or (4) any Indebtedness,
Guarantee or obligation of such Subsidiary Guarantor that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of such Subsidiary Guarantor, including any Guarantor Senior
Subordinated Indebtedness and Guarantor Subordinated Obligations of such
Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter incurred) which is subordinate or
junior in right of payment to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee pursuant to a written agreement.
"Incur" means issue, assume, guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto) (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i), (ii) and (v)) entered into in the
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third business day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit), (iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except trade payables and accrued
expenses Incurred in the ordinary course of business), which purchase price is
due more than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services, (v) all
Capitalized Lease Obligations and all Attributable Indebtedness of such Person,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person, (viii)
the
-11-
19
amount of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or, with respect to any
Restricted Subsidiary of the Company, any Preferred Stock of such Restricted
Subsidiary to the extent such obligation arises on or before the Stated
Maturity of the Securities (but excluding, in each case, accrued dividends)
with the amount of Indebtedness represented by such Disqualified Stock or
Preferred Stock, as the case may be, being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed
repurchase price; provided that, for purposes hereof the "maximum fixed
repurchase price" of any Disqualified Stock or Preferred Stock, as the case may
be, which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Stock or Preferred Stock, as the
case may be, as if such Disqualified Stock or Preferred Stock, as the case may
be, were purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based on the fair
market value of such Disqualified Stock or Preferred Stock, as the case may be,
such fair market value shall be determined in good faith by the Board of
Directors of the Company and (ix) to the extent not otherwise included in this
definition, obligations under Currency Agreements and Interest Rate Agreements.
Unless specifically set forth above, the amount of Indebtedness of any Person
at any date shall be the outstanding principal amount of all unconditional
obligations as described above, as such amount would be reflected on a balance
sheet prepared in accordance with GAAP, and the maximum liability of such
Person, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations described above at such date.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Initial Purchasers" means NatWest Capital Markets Limited and
Prudential Securities, Inc.
"Initial Securities" has the meaning set forth in the preamble
to this Indenture.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Escrow Account" means the account held by the Escrow
Agent for the benefit of the Trustee in accordance with the Escrow and
Disbursement Agreement.
-12-
20
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities which shall be each May 1, and
November 1 of each year, commencing May 1, 1998.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts payable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or similar
arrangement, but excluding any debt or extension of credit represented by a
bank deposit other than a time deposit) or capital contribution to (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person;
provided that any Investment in the interactive television business shall be
made by any Person, directly or indirectly, through Interactive Channel, Inc.,
Interactive Channel Technologies Inc. and any of their Wholly-Owned
Subsidiaries. For purposes of Section 4.07, (i) "Investment" shall include the
portion (proportionate to the Company's equity interest in a Restricted
Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market
value of the net assets of such Restricted Subsidiary of the Company at the
time that such Restricted Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so redesignated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors
and evidenced by a resolution of such Board of Directors certified in an
Officers' Certificate to the Trustee.
"Issue Date" means the date on which the Initial Securities
are originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
-13-
21
"Maturity Date" means November 1, 2004.
"Xxxxx'x" means Xxxxx'x Investors Service, Inc.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets subject to, such Asset
Disposition) therefrom in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all
Federal, state, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition or by applicable, law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other payments
required to be made to any Person owning a beneficial interest in assets
subject to sale or minority interest holders in Subsidiaries or joint ventures
as a result of such Asset Disposition, (iv) the deduction of appropriate
amounts to be provided by the seller as a reserve, in accordance with GAAP,
against any liabilities associated with the assets disposed of in such Asset
Disposition; provided, however, that upon any reduction in such reserves (other
than to the extent resulting from payments of the respective reserved
liabilities), Net Available Cash shall be increased by the amount of such
reduction to reserves, and retained by the Company or any Restricted Subsidiary
of the Company after such Asset Disposition and (v) any portion of the purchase
price from an Asset Disposition placed in escrow (whether as a reserve for
adjustment of the purchase price, for satisfaction of indemnities in respect of
such Asset Disposition or otherwise in connection with such Asset Disposition;
provided, however, that upon the termination of such escrow, Net Available Cash
shall be increased by any portion of funds therein released to the Company or
any Restricted Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
Incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any Restricted Subsidiary (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor, general partner or otherwise) and (ii) no
default with respect to which (including any rights that the holders
-14-
22
thereof may have to take enforcement action against an Unrestricted Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default
under such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S of the Securities Act.
"Note Register" means the register of names and addresses of
the holders of the Securities maintained by the Registrar.
"Obligations" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated
October 30, 1997, pursuant to which the Initial Securities were offered, and
any supplements thereto.
"Officer" means as to any Person the Chairman of the Board,
the Chief Executive Officer, the Chief Operating Officer, the President, the
Chief Financial Officer, or any Vice-President, the Treasurer or the Secretary
of such Person.
"Officers' Certificate" shall mean a certificate signed by two
Officers of the Company, at least one of whom shall be the principal executive,
financial or accounting officer of the Company.
"Offshore Physical Securities" has the meaning provided in
Section 2.01.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee and which complies, if applicable,
with the provisions of Section 10.04 hereof. The counsel may be an employee of
or counsel to the Company or the Trustee.
"Permitted Business" means any business which is the same as
or related, ancillary or complementary to any of the businesses of the Company
and its Restricted Subsidiaries on the date of the Indenture, as reasonably
determined by the Company's Board of Directors; provided, that, an entity which
is not an operating entity and whose primary business is to hold or maintain
intellectual property or licenses shall not qualify as a "Permitted Business."
-15-
23
"Permitted Investments" means an Investment by the Company or
any of its Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the
Company (other than Interactive Channel Technologies, Inc., 997758 Ontario,
Inc., Cableshare (U.S.) Limited, Cableshare International Inc. and 1229501
Ontario, Inc.); provided, however, that (A) the primary business of such
Wholly-Owned Subsidiary is a Permitted Business and (B) in the case of
Investments by the Company or any of its Restricted Subsidiaries in Interactive
Channel, Inc., in an amount not to exceed the amount set forth in clause (b) of
Section 4.07; (ii) another Person if as a result of such Investment such other
Person becomes a Wholly-Owned Subsidiary of the Company or is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Company or a Wholly-Owned Subsidiary of the Company; provided,
however, that in each case such Person's primary business is a Permitted
Business; (iii) Temporary Cash Investments; (iv) receivables owing to the
Company or any of its Restricted Subsidiaries, created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (v) payroll, travel and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses for accounting purposes and that are made in the ordinary course of
business; (vi) loans and advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary in an aggregate amount outstanding at any one time not to exceed
$250,000; (vii) loans or advances to senior management of the Company which
loans or advances are fully secured on the date of such loans or advances by
shares of Common Stock of the Company owned by such senior management in an
aggregate amount outstanding not to exceed $750,000; (viii) stock, obligations
or securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any of its Restricted Subsidiaries or in
satisfaction of judgments or claims; (ix) a Person engaged in a Permitted
Business or a loan or advance to the Company the proceeds of which are used
solely to make an investment in a Person engaged in a Permitted Business or a
Guarantee by the Company of Indebtedness of any Person in which such Investment
has been made; provided, however, that no Permitted Investments may be made
pursuant to this clause (ix) to the extent the amount thereof would, when taken
together with all other Permitted Investments made pursuant to this clause
(ix), exceed $3 million in the aggregate (plus, to the extent not previously
reinvested, any return of capital realized on Permitted Investments made
pursuant to this clause (ix), or any release or other cancellation of any
Guarantee constituting such Permitted Investment); (x) Persons to the extent
such Investment is received by the Company or any Restricted Subsidiary as
consideration for asset dispositions effected in compliance with the covenant
described under Section 4.10; (xi) prepayments and other credits to suppliers
made in the ordinary course of business consistent with the past practices of
the Company and its Restricted Subsidiaries; and (xii) Investments in
connection with pledges, deposits, payments or performance bonds made or given
in the ordinary course of business in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health, safety
or environmental obligations.
-16-
24
"Permitted Liens" means: (i) Liens imposed by law, such as
carriers', warehousemen's and mechanics' Liens, in each case for sums not yet
due from the Company or any Restricted Subsidiary or being contested in good
faith by appropriate proceedings by the Company or any Restricted Subsidiary,
as the case may be, or other Liens arising out of judgments or awards against
the Company or any Restricted Subsidiary with respect to which the Company or
such Restricted Subsidiary, as the case may be, will then be prosecuting an
appeal or other proceedings for review; (ii) Liens for property taxes or other
taxes, assessments or governmental charges of the Company or any Restricted
Subsidiary not yet due or payable or subject to penalties for nonpayment or
which are being contested by the Company or such Restricted Subsidiary, as the
case may be, in good faith by appropriate proceedings; (iii) Liens in favor of
issuers of performance bonds and surety bonds issued pursuant to clause (vii)
under Section 4.09; (iv) survey exceptions, encumbrances, easements or,
reservations of, or rights of others for, licenses, 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 property of the Company or
any Restricted Subsidiary incidental to the ordinary course of conduct of the
business of the Company or such Restricted Subsidiary or as to the ownership of
properties of the Company or any Restricted Subsidiary, which, in either case,
were not incurred in connection with Indebtedness and which do not in the
aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of the Company or
any Restricted Subsidiary; (v) Liens outstanding immediately after the Issue
Date as set forth in a schedule to this Indenture; (vi) Liens on property,
assets or shares of stock of any Restricted Subsidiary at the time such
Restricted Subsidiary became a Subsidiary of the Company; provided, however,
that (A) if any such Lien has been Incurred in anticipation of such
transaction, such property, assets or shares of stock subject to such Lien will
have a fair market value at the date of the acquisition thereof not in excess
of the lesser of (1) the aggregate purchase price paid or owed by the Company
in connection with the acquisition of such Restricted Subsidiary and (2) the
fair market value of all property and assets of such Restricted Subsidiary and
(B) any such Lien will not extend to any other assets owned by the Company or
any Restricted Subsidiary; (vii) Liens on property or assets at the time the
Company or any Restricted Subsidiary acquired such assets, including any
acquisition by means of a merger or consolidation with or into the Company or
such Restricted Subsidiary; provided, however, that (A) if any such Lien is
Incurred in anticipation of such transaction, such property or assets subject
to such Lien will have a fair market value at the date of the acquisition
thereof not in excess of the lesser of (1) the aggregate purchase price paid or
owed by the Company or such Restricted Subsidiary in connection with the
acquisition thereof and of any other property and assets acquired
simultaneously therewith and (2) the fair market value of all such property and
assets acquired by the Company or such Restricted Subsidiary and (B) any such
Lien will not extend to any other property or assets owned by the Company or
any Restricted Subsidiary; (viii) Liens securing Indebtedness or other
obligations of a Restricted Subsidiary owing to the Company or a Wholly-Owned
Subsidiary; (ix) Liens to secure any extension, renewal,
-17-
25
refinancing, replacement or refunding (or successive extensions, renewals,
refinancings, replacements or refundings), in whole or in part, of any
Indebtedness secured by Liens referred to in any of clauses (v), (vi) and
(vii); provided, however, that any such Lien will be limited to all or part of
the same property or assets that secured the original Lien (plus improvements
on such property) and the aggregate principal amount of Indebtedness that is
secured by such Lien will not be increased to an amount greater than the sum of
(A) the outstanding principal amount, or, if greater, the committed amount, of
the Indebtedness described under clauses (v), (vi) and (vii) at the time the
original Lien became a Permitted Lien under this Indenture and (B) an amount
necessary to pay any premiums, fees and other expenses Incurred by the Company
in connection with such refinancing, refunding, extension, renewal or
replacement; (x) Liens on property or assets of the Company securing Interest
Rate Agreements and Currency,Agreements so long as the related Indebtedness is,
and is permitted under Section 4.09, secured by a Lien on the same property
securing the relevant Interest Rate Agreement or Currency Agreement; (xi) Liens
on property or assets of the Company or any Restricted Subsidiary securing
Indebtedness (1) under purchase money obligation or Capital Lease Obligations
permitted under Section 4.09 or (2) under Sale/Leaseback Transactions permitted
under Section 4.17; provided, that (A) the amount of Indebtedness Incurred in
any specific case does not, at the time such Indebtedness is Incurred, exceed
the lesser of the cost or fair market value of the property or asset acquired
or constructed in connection with such purchase money obligation or Capital
Lease Obligation or subject to such Sale/Leaseback Transaction, as the case may
be, (B) such Lien will attach to such property or asset upon acquisition of
such property or asset and or upon commencement of such Sale/Leaseback
Transaction, as the case may be, and (C) no property or asset of the Company or
any Restricted Subsidiary (other than the property or asset acquired or
contracted in connection with such purchase money Obligation or Capital Lease
Obligation or subject to such Sale/Leaseback Transaction, as the case may be)
are subject to any Lien securing such Indebtedness; (xii) Liens granted to the
Trustee on the assets of the Company securing the Company's obligations under
this Indenture; (xiii) Liens granted to the Trustee on the assets of the
Subsidiary Guarantors securing the Subsidiary Guarantors' Obligations under the
Guarantees; and (xv) Liens on the Interest Escrow Account securing the
Company's obligations under this Indenture.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision hereof or any other entity.
"Physical Securities" has the meaning provided in
Section 2.01.
"Preferred Stock" as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary
-18-
26
liquidation or dissolution of such corporation, over shares of Capital Stock of
any other class of such corporation.
"Private Placement Legend" has the meaning provided in
Section 2.15.
"Public Market" exists at any time with respect to the common
stock of the Company if (a) the common stock of the Company is then registered
with the Securities and Exchange Commission pursuant to Section 12(b) or 12(g)
of the Exchange Act and traded either on a national securities exchange or in
the National Association of Securities Dealers Automated Quotation System and
(b) at least 15% of the total issued and outstanding common stock of the
Company, has been distributed prior to such time by means of an effective
registration statement under the Securities Act.
"Qualified Capital Stock" shall mean any Capital Stock which
is not Disqualified Stock.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Record Date" means the record dates specified in the
Securities, whether or not a Legal Holiday.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and refinanced"
shall have a correlative meaning) any Indebtedness existing on the date of this
Indenture or Incurred in compliance with this Indenture (including Indebtedness
of the Company that refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the earlier of (A) the first
anniversary of the Stated Maturity of the Securities and (B) Stated Maturity of
the Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an
Average Life at the time such Refinancing Indebtedness is Incurred that is
equal to or greater than the lesser of (A) the Average Life of the Securities
and (B) the Average Life of the Indebtedness being refinanced and (iii) the
Refinancing Indebtedness is in an aggregate principal amount (or if issued with
original issue discount, an aggregate issue price) that is equal to (or 101%
of, in the case of a refinancing of the Securities in connection with a Change
of Control) or less than the sum of the aggregate principal amount (or if
issued with original issue discount, the accreted value) then outstanding of
the Indebtedness being refinanced.
-19-
27
"Registrar" means U.S. Trust Company of Texas, N.A., as
registrar under this Indenture, or any successor thereto appointed pursuant to
the Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement dated October 30, 1997 among the Company and the Initial Purchasers
for the benefit of themselves and the Securityholders, as the same may be
amended or modified from time to time in accordance with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture 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 Investment" means any Investment other than a
Permitted Investment.
"Restricted Payment" has the meaning provided in
Section 4.07(a).
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of the Company
other than Unrestricted Subsidiary.
"S&P" and "Standard and Poor's" means Standard & Poor's Rating
Group, a division of McGraw Hill Corporation, or any successor organization
thereto.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Subsidiary
leases it from such Person.
"Secured Indebtedness" means any Indebtedness of a Subsidiary
Guarantor secured by a Lien.
"Securities" means the Initial Securities and the Exchange
Securities treated as a single class of securities, as amended or supplemented
from time to time in accordance with the terms hereof, that are issued pursuant
to this Indenture.
-20-
28
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Securityholder" or "Holder" means a registered holder of one
or more Securities.
"Senior Indebtedness" means, whether outstanding on the Issue
Date or thereafter issued, all Indebtedness of the Company, including interest
and fees thereon, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that the obligations
in respect of such Indebtedness are not superior in right of payment to the
Securities; provided, however, that Senior Indebtedness will not include (1)
any obligation of the Company to any Subsidiary, (2) any liability for Federal,
state, foreign, local or other taxes owed or owing by the Company, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including Guarantees thereof or instruments evidencing such
liabilities), or (4) any Indebtedness, Guarantee or obligation of the Company
that is expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of the Company, including any
Subordinated Obligations.
"Senior PIK Preferred Stock" means the 13 1/2% senior
preferred stock of the Company with a liquidation preference of $25 per share.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the Commission.
"Source Media, Inc." has the meaning set forth in the preamble
to this Indenture.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) 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 (i) such Person, (ii)
-21-
29
such Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means the Guarantee of the Securities
by a Subsidiary Guarantor.
"Subsidiary Guarantor" means each Subsidiary of the Company in
existence on the Issue Date and each Subsidiary (other than Unrestricted
Subsidiaries) created or acquired by the Company after the Issue Date.
"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) Investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital surplus and
undivided profits aggregating in excess of $250 million (or the foreign
currency equivalent thereof) and whose long-term debt, or whose parent holding
company's long-term debt, is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act), (iii) repurchase obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) Investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of
which any investment therein is made of "P-1" (or higher) according to Xxxxx'x
or "A-1" (or higher) according to S&P, (v) Investments in securities with
maturities of six months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Xxxxx'x and (vi) Investments in mutual funds
whose investment guidelines restrict such funds' investments to those
satisfying the provisions of clauses (i) through (v) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) and the rules and regulations thereunder as in effect
on the date on which this Indenture is qualified under the TIA, except as
provided in Section 9.03 hereof; provided, however, that, in the event the
Trust Indenture Act of 1939 is amended after such date, "TIA" means, to the
extent required by any such amendment, the Trust Indenture Act of 1939 as so
amended.
-22-
30
"Trustee" means U.S. Trust Company of Texas, N.A., a banking
corporation organized and existing under the laws of the State of Texas, until
a successor replaces it in accordance with Article 7 and thereafter means the
successor serving hereunder.
"Units" means the 800 Units each consisting of (i) 1,000
shares of 13 1/2% of Senior PIK Preferred Stock with a liquidation preference
of $25 per share and (ii) Warrants to purchase 447,000 shares of Common Stock,
representing 3% of the Company's Common Stock on a fully diluted basis.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness
of, or owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that each Subsidiary to be so designated and
each of its Subsidiaries has not at the time of such designation, and does not
thereafter create, Incur, issue, assume, guarantee or otherwise becomes liable
with respect to any Indebtedness other than Non-Recourse Indebtedness and
either (A) the Subsidiary to be so designated has total consolidated assets of
$10,000 or less or (B) if such Subsidiary has consolidated assets greater than
$10,000, then such designation would be permitted under Section 4.07. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary subject to the limitations contained in Section 4.18.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"U.S. Physical Securities" has the meaning provided in
Section 2.01.
"Voting Stock" with respect to any Person means all classes of
Capital Stock of such Person then outstanding and normally entitled to vote in
elections of directors of such Person.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, at least 99% of the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary,
and shall include Interactive
-23-
31
Channel Technologies Inc. notwithstanding the ownership by Xxxxxxx X. Xxxxxx of
1,535,821 Class Y Shares of 997758 Ontario Inc., which owns 1,623,409 Class A
Shares and 843,818 Class B Shares of Interactive Channel Technologies Inc.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"actual knowledge" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
"Asset Disposition Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"covenant defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Declaration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02
"Default Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Net Available Cash" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"judgment default provision" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"legal defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.07
"Notice of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Successor Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities and the Subsidiary
Guarantees;
"indenture security holder" means a Securityholder;
-24-
32
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Securities means the Company, the Subsidiary
Guarantors and any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the plural
include the singular; and
(v) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING.
The Initial Securities and the Trustee's certificate of
authentication thereon shall be substantially in the form of Exhibit A hereto.
The Exchange Securities and the Trustee's certificate of authentication thereon
shall be substantially in the form of Exhibit B hereto. The Securities may
have notations, legends or endorsements required by law, stock exchange rule or
Depository rule or usage. The Company and the Trustee shall approve the form
of the Securities and any notation, legend or endorsement on them. Each
Security shall be dated the date of its authentication.
-25-
33
The terms and provisions contained in the forms of the
Securities, annexed hereto as Exhibits A and B, shall constitute, and are
hereby expressly made, a part of this Indenture and, to the extent applicable,
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global notes in
registered form, in substantially the form set forth in Exhibit A (the "Global
Note"), deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Note may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided.
Securities offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of permanent certificated
Securities in registered form in substantially the form set forth in Exhibit A
(the "Offshore Physical Securities"). Securities offered and sold in reliance
on any other exemption from registration under the Securities Act other than as
described in the preceding paragraph shall be issued, and Securities offered
and sold in reliance on Rule 144A may be issued, in the form of permanent
certificated Securities in registered form, in substantially the form set forth
in Exhibit A (the "U.S. Physical Securities"). The Offshore Physical
Securities and the U.S. Physical Securities are sometimes collectively herein
referred to as the "Physical Securities".
SECTION 2.02. EXECUTION AND AUTHENTICATION.
(a) Two Officers of the Company (each of whom shall, in
each case, have been duly authorized by all requisite corporate actions) shall
sign the Securities for the Company by manual or facsimile signature. If an
Officer whose signature is on a Security no longer holds that office at the
time the Security is authenticated, the Security shall nevertheless be valid.
(b) A Security shall not be valid until authenticated by
the manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
(c) The Trustee shall authenticate (i) Initial Securities
for original issue in the aggregate principal amount not to exceed
$100,000,000, and (ii) Exchange Securities from time to time for issue only in
exchange for a like principal amount of Initial Securities, in each case upon
receipt of a written order of the Company signed by two Officers.
-26-
34
(d) The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
(a) The Company shall maintain an office or agency (which
shall be located in the [Borough of Manhattan in the City of New York, State of
New York]) where (i) Securities may be presented for registration of transfer
or for exchange ("Registrar"), (ii) Securities may be presented for payment
("Paying Agent") and (iii) notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
The Company may change any Paying Agent, Registrar or co-registrar without
prior notice to any Securityholder. The Company shall notify the Trustee and
the Trustee shall notify the Securityholders 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 Subsidiary Guarantor may act as Paying Agent,
Registrar or co-registrar. The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which shall incorporate
the provisions of the TIA. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof.
(b) The Company initially appoints the Trustee as
Registrar, Paying Agent and agent for service of notices and demands in
connection with the Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company, the Subsidiary Guarantors or any other obligor on
the Securities shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of the
Securityholders and the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, and interest on the Securities, and
shall notify the Trustee of any Default by the Company, any of the Subsidiary
Guarantors or any other obligor on the Securities in making any such payment.
While any such Default continues, the Trustee may require a Paying Agent to
-27-
35
pay all money held by it to the Trustee. The Company, the Subsidiary
Guarantors or any other obligor on the Securities 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
Guarantor) shall have no further liability for the money delivered to the
Trustee. If the Company, the Subsidiary Guarantors or any other obligor on the
Securities acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Securityholders all money held by it as
Paying Agent.
SECTION 2.05. SECURITYHOLDER 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 Securityholders and shall otherwise comply with TIA Section
312(a). If the Trustee is not the Registrar, the Company, the Subsidiary
Guarantors or any other obligor on the Securities 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
Securityholders, including the aggregate principal amount of the Securities
held by each thereof, and the Company, the Subsidiary Guarantors or any other
obligor on the Securities shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Where Securities are presented to the Registrar or a
co-registrar with a request to register the transfer thereof or exchange them
for an equal principal amount of Securities of other denominations, the
Registrar shall register the transfer or make the exchange if its requirements
for such transactions are met; provided, that any Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar and the Trustee duly executed by the Securityholder thereof or his
attorney duly authorized in writing. To permit registrations of transfer and
exchanges, the Company shall issue and the Trustee shall authenticate
Securities at the Registrar's request.
(b) Neither the Registrar, nor the Company shall be
required (i) to issue, to register the transfer of or to exchange Securities
during a period beginning at the opening of business on a Business Day 15 days
before the day of any selection of Securities for redemption under Section 3.02
hereof and ending at the close of business on the day of selection, (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part or (iii) to register the transfer or exchange of a Security between the
Record Date and the next succeeding Interest Payment Date.
-28-
36
(c) No service charge by the Company shall be made for
any registration of a transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment by the Securityholder of
a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than such transfer tax or similar
governmental charge payable upon exchanges pursuant to Section 2.10, 3.06 or
9.05 hereof).
(d) Any Holder of the Global Note shall, by acceptance of
such Global Note, agree that transfers of beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Global Note shall be required to be reflected in a book entry.
SECTION 2.07. REPLACEMENT SECURITIES.
(a) If any mutilated Security is surrendered to the
Trustee, or the Company and the Trustee receives evidence to its satisfaction
of the destruction, loss or theft of any Security, the Company shall issue and
the Trustee, upon receipt by it of the written order of the Company signed by
two Officers of the Company, shall authenticate a replacement Security if the
Trustee's requirements for replacements of Securities 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 Subsidiary Guarantors, the Trustee, any Agent or any
authenticating agent from any loss which any of them may suffer if a Security
is replaced. The Company and the Trustee may charge a Securityholder for
reasonable out-of-pocket expenses in replacing a Security.
(b) Every replacement Security is an obligation of the
Company and each of the Subsidiary Guarantors.
SECTION 2.08. OUTSTANDING SECURITIES.
(a) The Securities outstanding at any time are all the
Securities authenticated by the Trustee except for those cancelled by the
Company or by the Trustee, those delivered to the Trustee for cancellation and
those described in this Section as not outstanding.
(b) If a Security is replaced pursuant to Section 2.07
hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Security is held by a bona fide purchaser.
-29-
37
(c) If the principal amount of any Security is considered
paid under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
(d) Subject to Section 2.09 hereof, a Security does not
cease to be outstanding because the Company or an Affiliate of the Company or a
Subsidiary Guarantor holds the Security.
SECTION 2.09. TREASURY SECURITIES.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, the Subsidiary Guarantors, or any of their
respective Affiliates shall be considered as though not outstanding, except
that for purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which a
Responsible Officer of the Trustee has actual knowledge are so owned shall be
so disregarded.
SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities
upon written order of the Company signed by two Officers of the Company.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company, the Subsidiary Guarantors
and the Trustee consider appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee, upon receipt of
the written order of the Company signed by two Officers of the Company, shall
authenticate definitive Securities in exchange for temporary Securities. Until
such exchange, temporary Securities shall be entitled to the same rights,
benefits and privileges as definitive Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee (or its Agent) shall cancel all Securities, if not
already cancelled, surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy cancelled Securities (subject to
the record retention requirement of the Exchange Act), and deliver
certification of their destruction to the Company, unless by a written order,
signed by two Officers of the Company, the Company shall direct that cancelled
Securities be returned to it. The Company may not issue new Securities to
replace Securities that it has redeemed or paid or that have been delivered to
the Trustee for cancellation. If the Company acquires any of the Securities,
such acquisition shall not operate as a redemption or
-30-
38
satisfaction of the indebtedness represented by such Securities unless or until
the same are surrendered to the Trustee (or its Agent) for cancellation
pursuant to this Section.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Securityholders on a subsequent special record date, which date shall
be at the earliest practicable date but in all events at least five Business
Days prior to the payment date, in each case at the rate provided in the
Securities and in Section 4.01 hereof. The Company shall, with the consent of
the Trustee, fix or cause to be fixed each such special record date and payment
date. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee, in the name of and at the
expense of the Company) shall mail to Securityholders a notice that states the
special record date, the related payment date and the amount of such interest
to be paid.
SECTION 2.13. CUSIP NUMBER.
The Company in issuing the Securities may use a "CUSIP"
number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Securityholders; provided that no
representation shall be deemed to be made by the Trustee as to the correctness
or accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company shall promptly notify the Trustee of any change in
the CUSIP number.
SECTION 2.14. DEPOSIT OF MONEYS.
Prior to 10:00 a.m. New York City time on each Interest
Payment Date and Maturity Date, the Company shall have deposited with the
Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or Maturity Date, as the
case may be, in a timely manner which permits the Paying Agent to remit payment
to the Securityholders on such Interest Payment Date or Maturity Date, as the
case may be.
SECTION 2.15. RESTRICTIVE LEGENDS.
Each Global Note and Physical Security that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") unless otherwise agreed by the Company and the Securityholder thereof:
-31-
39
THIS NOTE OR ITS PREDECESSORS HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, UNITED STATES PERSONS OR A BENEFICIAL INTEREST HEREIN
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN
RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO SOURCE
MEDIA, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES AT
THE TIME OF TRANSFER OF LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO SOURCE MEDIA, INC. THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (G) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE
-32-
40
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO SOURCE MEDIA, INC.) AND, IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE STATES SECURITIES LAWS AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING RESTRICTIONS;
Each Global Note shall also bear the following legend on the
face thereof:
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 ANY SUCH NOMINEE
OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE &
CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
-33-
41
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.
(a) The Global Note initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as its custodian,
or under the Global Note, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
the Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interest of beneficial owners in the Global Note may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.17. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Global Note if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Global Note and a successor depository is not appointed by
the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request
from the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in the Global Note to beneficial owners
pursuant to paragraph (b) above, the Registrar shall (if one or more Physical
Securities are to be issued) reflect on its books and records the date and a
decrease in the principal amount of the beneficial interest in the Global Note
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Securities of like tenor and
amount.
(d) In connection with the transfer of the entire Global
Note to beneficial owners pursuant to paragraph (b), the Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange
-34-
42
for its beneficial interest in the Global Note, an equal aggregate principal
amount of Physical Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted
Security delivered in exchange for an interest in the Global Note pursuant to
paragraph (b) or (c) above shall, except as otherwise provided by paragraphs
(a)(i)(x) and (c) of Section 2.17, bear the legend regarding transfer
restrictions applicable to the Physical Securities set forth in Section 2.15.
(f) The Holder of the Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Securityholder
is entitled to take under this Indenture or the Securities.
SECTION 2.17. SPECIAL TRANSFER PROVISIONS.
(a) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall apply with
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to any Institutional Accredited Investor which is not a
QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any
Security constituting a Restricted Security, whether or not such
Security bears the Private Placement Legend, if (x) the requested
transfer is after November 1, 1999 or (y) (1) in the case of a
transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S.Persons), the proposed transferee has delivered to
the Registrar a certificate substantially in the form of Exhibit C
hereto or (2) in the case of a transfer to a Non-U.S. Person, the
proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding
a beneficial interest in the Global Note, upon receipt by the
Registrar of (x) the certificate, if any, required by paragraph (i)
above and (y) instructions given in accordance with the Depository's
and the Registrar's procedures, whereupon (a) the Registrar shall
reflect on its books and records the date and (if the transfer does
not involve a transfer of outstanding Physical Securities) a decrease
in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Securities of like tenor
and amount.
-35-
43
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a Security
constituting a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on the form of Security stating, or has otherwise
advised the Company and the Registrar in writing, that the sale has
been effected in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form
of Security stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Security for its own
account or an account with respect to which it exercises sole
investment discretion and that any such account is a QIB within the
meaning of Rule 144A, and it is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member and the
Securities to be transferred consist of Physical Securities which
after transfer are to be evidenced by an interest in the Global Note,
upon receipt by the Registrar of instructions given in accordance with
the Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to the
principal amount of the Physical Securities to be transferred, and the
Trustee shall cancel the Physical Securities so transferred.
(c) Private Placement Legend. Upon the registration of
the transfer, exchange or replacement of Securities not bearing the Private
Placement Legend, the Registrar shall deliver Securities that do not bear the
Private Placement Legend. Upon the registration of the transfer, exchange or
replacement of Securities bearing the Private Placement Legend, the Registrar
shall deliver only Securities that bear the Private Placement Legend unless (i)
the circumstance contemplated by paragraph (a)(i)(x) of this Section 2.17
exists or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
-36-
44
(d) General. By its acceptance of any Security bearing
the Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Registrar shall retain for at least two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
SECTION 2.18. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of
transfer and subject to Section 2.12, the Company, the Trustee, any Paying
Agent, any Registrar and any co-registrar and Agent of the foregoing may deem
and treat the Person in whose name any Security shall be registered upon the
register of Securities kept by the Registrar as the absolute owner of such
Security (whether or not such Security shall be overdue and notwithstanding any
notation of the ownership or other writing thereon made by anyone other than
the Company, any Registrar or any co-registrar) for the purpose of receiving
payments of principal of or interest on such Security and for all other
purposes; and none of the Company, the Trustee, any Paying Agent, any Registrar
or any co-registrar or any Agent of the foregoing shall be affected by any
notice to the contrary.
SECTION 2.19. RECORD DATE.
The record date for purposes of determining the identity of
Securityholders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be the later of (i) 30 days
prior to the first solicitation of such consent or (ii) the date of the most
recent list of Holders furnished to the Trustee, if applicable, pursuant to
Section 2.05 hereto.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
(a) If the Company elects to redeem Securities pursuant
to the optional redemption provisions of Section 3.07 hereof, it shall furnish
to the Trustee, at least 30 days (unless a shorter period is acceptable to the
Trustee) but not more than 60 days before
-37-
45
a redemption date, an Officers' Certificate setting forth (i) the Section of
this Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Securities to be redeemed, (iv)
the redemption price and accrued and unpaid interest and (v) whether it
requests the Trustee to give notice of such redemption.
(b) If the Company is required to make an offer to redeem
Securities pursuant to the provisions of Sections 3.09 or 4.14 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 Section of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Securities to be redeemed, (iv) the
redemption price and accrued and unpaid interest, (v) whether it requests the
Trustee to give notice of such redemption and (vi) further setting forth a
statement to the effect that (a) the Company or one of its Subsidiaries has
effected an Asset Disposition and the conditions set forth in Section 4.10 have
been satisfied or (b) a Change of Control has occurred and the conditions set
forth in Section 4.14 have been satisfied, as applicable.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.
(a) If less than all of the Securities are to be
redeemed, the Trustee shall select the Securities to be redeemed among the
Securityholders on a pro rata basis, by lot or in accordance with any other
method the Trustee considers fair and appropriate (and in such manner as
complies with applicable legal and stock exchange requirements, if any);
provided, however, that if a partial redemption is made with the proceeds of an
Equity Offering, selection of the Securities or portion thereof for redemption
shall be made by the Trustee only on a pro rata basis, unless such method is
otherwise prohibited. In the event of partial redemption by lot, the
particular Securities to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption
date by the Trustee from the outstanding Securities not previously called for
redemption.
(b) The Trustee shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities may be redeemed in part in multiples of $1,000 principal
amount only. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption.
(c) In the event the Company is required to make an offer
to redeem Securities pursuant to Sections 3.09 and 4.10 hereof and the amount
of the Excess Proceeds from the Asset Disposition are not evenly divisible by
$1,000, the Trustee shall promptly refund to the Company any remaining Excess
Proceeds.
-38-
46
SECTION 3.03. NOTICE OF REDEMPTION.
(a) Subject to the provisions of Section 3.09 hereof, at
least 30 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed a notice of redemption by first class mail, postage prepaid to each
Holder whose Securities are to be redeemed at the last address for such Holder
then shown on the registry books.
The notice shall identify the Securities to be redeemed and
shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after
the redemption date upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion shall
be issued;
(iv) the name and address of the Paying Agent;
(v) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(vi) that, unless the Company defaults in making such
redemption payment, interest on Securities called for redemption
ceases to accrue on and after the redemption date;
(vii) the paragraph of the Securities and/or Section of this
Indenture pursuant to which the Securities called for redemption are
being redeemed; and
(viii) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption.
(b) At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense;
provided, however, that the Company shall have delivered to the Trustee at
least 45 days (unless a shorter period is acceptable to the Trustee) prior to
the proposed 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.
-39-
47
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Securities called for redemption become due and payable on the
redemption date at the redemption price plus accrued and unpaid interest, if
any.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
(a) Prior to 10:00 a.m., New York City time, on the
redemption date, the Company shall deposit with the Paying Agent (other than
the Company or any of its Subsidiaries) money sufficient to pay the redemption
price of and accrued interest on all Securities to be redeemed on that date.
The Paying Agent shall promptly return to the Company any money deposited with
the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Securities to be redeemed.
(b) If the Company complies with the provisions of the
preceding paragraph, on and after the redemption date, interest ceases to
accrue on the Securities or the portions of Securities called for redemption
whether or not such Securities are presented for payment, and the only
remaining right of the Holders of such Securities shall be to receive payment
of the redemption price upon surrender to Paying Agent if the Securities are
redeemed. If a Security 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 Security was registered
at the close of business on such record date. If any Security called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, 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 Securities and in Section
4.01 hereof.
SECTION 3.06. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the
Company shall issue and upon the Company's written request, the Trustee shall
authenticate for the Securityholder at the expense of the Company a new
Security equal in principal amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as provided in Section 3.07(b), the Company
may redeem all or any portion of the Securities at any time on or after
November 1, 2001, at a redemption price equal to a percentage of the principal
amount thereof, as set forth in the immediately
-40-
48
succeeding sentence, plus accrued and unpaid interest to the redemption date.
The redemption price as a percentage of the principal amount shall be as
follows, if the Securities are redeemed during the period commencing on the
dates set forth below, plus in each case, accrued and unpaid interest to the
date of redemption:
Period Redemption Price
------ ----------------
2001 106.00%
2002 103.00%
2003 and thereafter 100.00%
(b) At any time, or from time to time, on or prior to
November 1, 2000, the Company may, at its option, use the net cash proceeds of
one or more Equity Offerings by the Company so long as there is a Public Market
at the time of such redemption at a redemption price equal to 35% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided, however, that after any such redemption the
aggregate principal amount of the Securities outstanding must equal at least
$65 million. In order to effect the foregoing redemption with the proceeds of
any Equity Offering, the Company shall make such redemption not more than 60
days after the consummation of any such Equity Offering.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 3.09 and 4.14, the Company is
not required to make mandatory redemption or sinking fund payments with respect
to the Securities.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
(a) In the event that, pursuant to Section 4.10 hereof,
the Company shall commence an offer to all Securityholders to purchase
Securities (an "Asset Disposition Offer"), it shall follow the procedures
specified below:
(i) The Asset Disposition Offer shall remain open for a
period of 30 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 Securities required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Securities tendered
in response to the Asset Disposition Offer.
-41-
49
(ii) If the Purchase Date is on or after a Record Date and
on or before the related Interest Payment Date, any accrued interest
shall be paid to the Person under whose name a Security is registered
at the close of business on such Record Date, and no additional
interest shall be payable to holders who tender Securities pursuant to
the Asset Disposition Offer.
(iii) Upon the commencement of any Asset Disposition Offer,
the Company shall send or cause to be sent in accordance with Section
3.03, a notice to each Securityholder. The notice shall contain all
instructions and materials necessary to enable such holders to tender
Securities pursuant to the Asset Disposition Offer. The notice, which
shall govern the terms of the Asset Disposition Offer, shall state:
(1) that the Asset Disposition Offer is being made
pursuant to this Section 3.09 and Section 4.10 hereof and the
length of time the Asset Disposition Offer shall remain open;
(2) the Offer Amount, the purchase price and the
Purchase Date;
(3) that any Security not tendered or accepted for
payment shall continue to accrue interest;
(4) that any Security accepted for payment pursuant
to the Asset Disposition Offer shall cease to accrue interest
after the Purchase Date;
(5) that Holders electing to have a Security
purchased pursuant to any Asset Disposition Offer shall be
required to surrender the Security, with the form entitled
"Option of Securityholder to Elect Purchase" on the reverse of
the Security completed, 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;
(6) that Holders shall be entitled to withdraw their
election if the Company, depositary or 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 Security the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have
the Security purchased;
(7) that, if the aggregate principal amount of
Securities surrendered by Holders exceeds the Offer Amount,
the Company shall select the Securities to be purchased on a
pro rata basis (with such adjustments as
-42-
50
may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(8) that Holders whose Securities were purchased
only in part shall be issued new Securities equal in principal
amount to the unpurchased portion of the Securities
surrendered.
(iv) On or before the Purchase Date, the Trustee shall, to
the extent lawful, accept for payment, on a pro rata basis to the
extent necessary, the Offer Amount of Securities or portions thereof
tendered pursuant to the Asset Disposition Offer or, if less than the
Offer Amount has been tendered, all Securities or portions thereof
tendered, and deliver to the Trustee an Officers' Certificate stating
that such Securities or portions thereof were accepted for payment by
the Company in accordance with the terms of this Section 3.09. The
Paying Agent 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 Security tendered by such
Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Security, and at the written request of the
Company the Trustee shall authenticate and mail or deliver such new
Security to such Holder equal in principal amount to any unpurchased
portion of the Security surrendered. Any Security 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
Disposition Offer on the Purchase Date.
(b) Other than as specifically provided in this Section
3.09, any redemption 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 SECURITIES.
(a) The Company shall pay the principal of, premium, if
any, and interest on the Securities on the dates and in the manner provided in
the Securities and in this Indenture. 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, holds as of 10:00 a.m. New York City 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
-43-
51
interest then due. Such Paying Agent shall return to the Company, no later
than five business days following the date of payment, any money (including
accrued interest paid by the Company) that exceeds such amount of principal,
premium, if any, and interest paid on the Securities.
(b) The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate equal to 2% per annum in excess of the then applicable
interest rate on the Securities to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest (without regard to any applicable grace
period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
(a) The Company shall maintain in the Borough of
Manhattan, in the City of New York, an office or agency (which may be an office
of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company shall give prior 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.
(b) The Company may also from time to time designate one
or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, in the City of New York for such purposes.
The Company shall give prior 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.
(c) 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.
SECTION 4.03. SEC REPORTS.
(a) Upon consummation of the Exchange Offer and the
issuance of the Exchange Securities, the Company (at its own expense) shall
file with the Commission and shall furnish to the Trustee and each
Securityholder within 15 days after it files them with
-44-
52
the Commission copies of the quarterly and annual reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) to be
filed pursuant to Section 13 or 15(d) of the Exchange Act (without regard to
whether the Company is subject to the requirements of such Section 13 or 15(d)
of the Exchange Act); provided, that prior to the consummation of the Exchange
Offer and the issuance of the Exchange Securities, the Company (at its own
expense), will mail to the Trustee and the Securityholders in accordance with
paragraph (b) of this Section 4.03 substantially the same information that
would have been required by the foregoing documents within 15 days of when any
such document would otherwise have been required to be filed with the
Commission. Upon qualification of this Indenture under the TIA, the Company
shall also comply with the provisions of TIA Section 314(a).
(b) At the Company's expense, the Company shall cause an
annual report if furnished by it to stockholders generally and each quarterly
or other financial report if furnished by it to stockholders generally to be
filed with the Trustee and mailed to the Securityholders at their addresses
appearing in the register of Securities maintained by the Registrar at the time
of such mailing or furnishing to stockholders.
(c) The Company shall provide to any Securityholder any
information reasonably requested by such Securityholder concerning the Company
(including financial statements) necessary in order to permit such
Securityholder to sell or transfer Securities in compliance with Rule 144A
under the Securities Act.
(d) If the Company instructs the Trustee to distribute
any of the documents described in Section 4.03(a) to the Securityholders, the
Company shall provide the Trustee with a sufficient number of copies of all
such documents.
SECTION 4.04. COMPLIANCE CERTIFICATES.
(a) The Company shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate signed by its
principal executive officer, principal financial officer or principal
accounting officer stating that a review of the activities of the Company and
its Subsidiaries, as the case may be, during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether each 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 each 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
-45-
53
of which he or she may have knowledge and what action each 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 above shall be
accompanied by a written statement of (x) 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 which would lead them to believe that the
Company has violated any provisions of Article 4, 5 or 6 of this Indenture
insofar as they relate to accounting matters 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 and (y) if
any Restricted Subsidiary's financial statements are not prepared on a
consolidated basis with the Company's, such Restricted Subsidiary's or
Guarantor'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 which would
lead them to believe that any of the Restricted Subsidiaries is in Default
under this Indenture or, if any such Default has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Securities
are outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of (i) any Default or Event of Default or (ii) any event of default under
any other mortgage, indenture or instrument to which the Company is a party, an
Officers' Certificate specifying such Default, Event of Default or event of
default and what action the Company is taking or proposes to take with respect
thereto.
(d) The Company shall also comply with TIA
Section 314(a)(4).
SECTION 4.05. TAXES.
The Company will, and will cause its Restricted Subsidiaries
to, pay and discharge when due and pay all taxes, levies, imposts, duties or
other governmental charges ("Taxes") imposed on its income or profits or on any
of its properties except such Taxes which are being contested in good faith in
appropriate proceedings, and for which adequate reserves have been established
with GAAP.
-46-
54
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture (including, but not
limited to, the payment of the principal of or interest on the Securities); and
the Company and each Subsidiary Guarantor (to the extent that they may lawfully
do so) hereby expressly waive all benefit or advantage of any such law, and
covenant that they 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. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries, directly or indirectly, to (i) declare or pay any
dividend or make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or consolidation involving
the Company or any of its Restricted Subsidiaries) except (A) dividends or
distributions payable in its Capital Stock (other than Disqualified Stock) or
in options, warrants or other rights to purchase such Capital Stock, and (B)
dividends or distributions payable to the Company or any of its Restricted
Subsidiaries by any of its Subsidiaries (and if the Subsidiary paying the
dividend or making the distribution is not a Wholly-Owned Subsidiary, to its
other holders of Capital Stock on a pro rata basis), (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of the Company held by
Persons other than a Wholly-Owned Subsidiary of the Company or any Capital
Stock of a Restricted Subsidiary of the Company held by any Affiliate of the
Company, other than a Wholly-Owned Subsidiary (in either case, other than in
exchange for its Capital Stock (other than Disqualified Stock)), (iii)
purchase, repurchase, redeem, defease or otherwise acquire or retire for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Subordinated Obligations (other than the purchase, repurchase or
other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of purchase, repurchase or
acquisition) or (iv) make any Investment (other than a Permitted Investment) in
any Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment as described in
preceding clauses (i) through (iv) being referred to as a "Restricted
Payment"); if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom); or
-47-
55
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) under Section 4.09; or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made subsequent to the Issue
Date would exceed the sum of (A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from the
first day of the fiscal quarter beginning on or after the Issue Date
to the end of the most recent fiscal quarter ending prior to the date
of such Restricted Payment as to which financial results are available
(but in no event ending more than 135 days prior to the date of such
Restricted Payment) (or, in case such Consolidated Net Income shall be
a deficit, minus 100% of such deficit); (B) the aggregate net proceeds
received by the Company from the issue or sale of its Capital Stock
(other than Disqualified Stock) or other capital contributions
subsequent to the Issue Date (other than net proceeds received from an
issuance or sale of such Capital Stock to (x) a Subsidiary of the
Company, (y) an employee stock ownership plan or similar trust of (z)
management employees of the Company or any Subsidiary of the Company);
provided, however, that the value of any non-cash net proceeds shall
be as determined by the Board of Directors in good faith, except that
in the event the value of any non-cash, net proceeds shall be $1
million or more, the value shall be as determined in writing by an
independent investment banking firm of nationally recognized standing;
(C) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than by
a Restricted Subsidiary of the Company) subsequent to the Issue Date
of any Indebtedness of the Company convertible or exchangeable for
Capital Stock of the Company (less the amount of any cash, or other
property, distributed by the Company upon such conversion or
exchange); and (D) the amount equal to the net reduction in
Investments (other than Permitted Investments) made after the Issue
Date by the Company or any of its Restricted Subsidiaries in any
Person resulting from (i) repurchases or redemptions of such
Investments by such Person, proceeds realized upon the sale of such
Investment to an unaffiliated purchaser, repayments of loans or
advances or other transfers of assets by such Person to the Company or
any Restricted Subsidiary of the Company or (ii) the redesignation of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each
case as provided in the definition of "Investment") not to exceed, in
the case of any Unrestricted Subsidiary, the amount of Investments
previously included in the calculation of the amount of Restricted
Payments; provided, however, that no amount shall be included under
this clause (D) to the extent it is already included in Consolidated
Net Income.
(b) Notwithstanding the foregoing, the Company shall not, and
shall not permit any of its Restricted Subsidiaries, to make Investments in
Interactive Channel, Inc. or Interactive Channel Technologies, Inc., if at the
time of such Investment:
-48-
56
(1) a Default shall have occurred and be continuing (or would
result therefrom); or
(2) the aggregate amount of such Investment and all other
Investments in Interactive Channel, Inc. made subsequent to the Issue
Date would exceed the sum of (A) $34.0 million; (B) 50% of the
Adjusted Consolidated Net Income accrued during the period (treated as
one accounting period) from the first day of the fiscal quarter
beginning on or after the Issue Date to the end of the most recent
fiscal quarter ending prior to the date of such Investment as to which
financial results are available (but in no event ending more than 135
days prior to the date of such Restricted Payment) (or, in case such
Adjusted Consolidated Net Income shall be a deficit, minus 100% of
such deficit); and (C) the aggregate net proceeds received by the
Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) or other capital contributions subsequent to the
Issue Date as calculated in accordance with paragraph (a) (3) (B)
above.
(c) The provisions of paragraph (a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary, an employee stock
ownership plan or similar trust or management employees of the Company or any
Subsidiary of the Company); provided, however, that (A) such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale shall be excluded from
clause (3) (B) of paragraph (a); (ii) any purchase or redemption of
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company in compliance with Section 4.09; provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under Section 4.10;
provided, however, that such purchase; or redemption shall be excluded in the
calculation of the amount of Restricted Payments; and (iv) dividends paid
within 60 days after the date of declaration if at such date of declaration
such dividend would have complied with this provision; provided, however, that
such dividend shall be included in the calculation of the amount of Restricted
Payments, provided, however; that in each case, that no Default or Event of
Default shall have occurred or be continuing at the time of such payment or as
a result thereof.
(d) For purposes of determining compliance with the foregoing
covenant, Restricted Payments may be made with cash or non-cash assets,
provided that any Restricted Payment made other than in cash shall be valued at
the fair market value (determined, subject to the additional requirements of
the immediately succeeding proviso,
-49-
57
in good faith by the Board of Directors) of the assets so utilized in making
such Restricted Payment, provided, further that (i) in the case of any
Restricted Payment made with capital stock or indebtedness, such Restricted
Payment shall be deemed to be made in an amount equal to the greater of the
fair market value thereof and the liquidation preference (if any) or principal
amount of the capital stock or indebtedness, as the case may be, so utilized,
and (ii) in the case of any Restricted Payment in an aggregate amount in excess
of $1 million, a written opinion as to the fairness of the valuation thereof
(as determined by the Company) for purposes of determining compliance with
Section 4.07 shall be issued by an independent investment banking firm of
national standing.
(e) Not later than the date of making any Restricted Payment,
the Company shall deliver to the Trustee an Officer's Certificate stating that
such Restricted Payment complies with this Indenture and setting forth in
reasonable detail the basis upon which the required calculations were computed,
which calculations may be based upon the Company's latest available quarterly
financial statements and a copy of any required investment banker's opinion.
SECTION 4.08. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any such Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligation owed to the Company, (ii)
make any loans or advances to the Company or (iii) transfer any of its property
or assets to the Company, except: (a) any encumbrance or restriction pursuant
to an agreement in effect at or entered into on the Issue Date; (b) any
encumbrance or restriction with respect to such a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness issued by such Restricted
Subsidiary on or prior to the date on which such Restricted Subsidiary was
acquired by the Company and outstanding on such date (other than Indebtedness
Incurred in anticipation of, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary of the Company or was acquired by the Company); (c) any encumbrance
or restriction with respect to such a Restricted Subsidiary pursuant to an
agreement evidencing Indebtedness Incurred without violation of this Indenture
or effecting a refinancing of Indebtedness issued pursuant to an agreement
referred to in clauses (a) or (b) or this clause (c) or contained in any
amendment to an agreement referred to in clauses (a) or (b) or this clause (c);
provided, however, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any of such agreement, refinancing agreement
or amendment, taken as a whole, are no less favorable to the holders of the
Securities in any
-50-
58
material respect, as determined in good faith by the Board of Directors of the
Company, than encumbrances and restrictions with respect to such Restricted
Subsidiary contained in agreements in effect at, or entered into on, the Issue
Date; (d) in the case of clause (iii), of this Section 4.08, any encumbrance or
restriction (A) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) by virtue of any transfer of,
agreement to transfer, option, or right with respect to, or Lien on, any
property or assets of the Company or any Restricted Subsidiary not otherwise
prohibited by this Indenture, (C) that is included in a licensing agreement to
the extent such restrictions limit the transfer of the property subject to such
licensing agreement or (D) arising or agreed to in the ordinary course of
business and that does not, individually or in the aggregate, detract from the
value of property or assets of the Company or any of its Subsidiaries in any
manner material to the Company or any such Restricted Subsidiary; (e) in the
case of clause (iii) above, restrictions contained in security agreements,
mortgages or similar documents securing Indebtedness of a Restricted Subsidiary
to the extent such restrictions restrict the transfer of the property subject
to such security agreements; (f) in the case of clause (iii) of this Section
4.08 above, any instrument governing or evidencing Indebtedness of a Person
acquired by the Company or any Restricted Subsidiary of the Company at the time
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 so
acquired; provided, however, that such Indebtedness is not Incurred in
connection with or in contemplation of such acquisition; (g) any restriction
with respect to such a Restricted Subsidiary imposed pursuant to an agreement
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary pending the closing of
such sale or disposition; and (h) encumbrances or restrictions arising or
existing by reason of applicable law.
SECTION 4.09. LIMITATION ON INDEBTEDNESS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness; provided, however, that the
Company and any of its Restricted Subsidiaries may Incur Indebtedness if (i) no
Default or Event of Default shall have occurred and be continuing at the time
of such Incurrence or would occur as a consequence of such Incurrence and (ii)
on the date thereof the Consolidated Coverage Ratio would be greater than
2.0:1.
(b) Notwithstanding the foregoing paragraph (a), the Company
and its Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness of the Company or any Restricted Subsidiary
under Bank Indebtedness and under standby letters of credit or
reimbursement obligations with respect thereto issued in the ordinary
course of business and consistent with industry
-51-
59
practice; provided, however, that the aggregate principal amount of
any Indebtedness Incurred pursuant to this clause (i) shall not exceed
$10 million at any time outstanding;
(ii) Indebtedness represented by Capitalized 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 or
equipment used in a Permitted Business or Incurred to refinance any
such purchase price or cost of construction or improvement, in each
case Incurred no later than 365 days after the date of such
acquisition or the date of completion of such construction or
improvement; provided, however, that the principal amount of any
Indebtedness Incurred pursuant to this clause (ii), together with
Indebtedness Incurred in connection with Sale/Leaseback Transactions
in accordance with Section 4.17, shall not exceed $5 million at any
time outstanding;
(iii) Indebtedness of the Company owing to and held by any
Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly-Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly-
Owned Subsidiary ceasing to be a Wholly-Owned Subsidiary or any
subsequent transfer of any such Indebtedness (except to the Company or
any Wholly-Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof;
(iv) Indebtedness represented by (w) the Securities, (x) the
Guarantees, (y) Existing Indebtedness and (z) any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this
clause (iv) or Incurred pursuant to paragraph (a);
(v) (A) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness Incurred in
anticipation of, or to provide all or any portion of the funds or
credit support utilized to consummate the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Subsidiary or was otherwise acquired by the Company);
provided, however, that at the time such Restricted Subsidiary is
acquired by the Company, the Company would have been able to Incur $
1.00 of additional Indebtedness pursuant to paragraph (a) above after
giving effect to the Incurrence of such Indebtedness pursuant to this
clause (v) and (B) Refinancing Indebtedness Incurred by a Restricted
Subsidiary in respect of Indebtedness Incurred by such Restricted
Subsidiary pursuant to this clause (v);
-52-
60
(vi) Indebtedness (A) in respect of performance bonds,
bankers' acceptances and surety or appeal bonds provided by the
Company or any of its Restricted Subsidiaries to their customers in
the ordinary course of their business, (B) in respect of performance
bonds or similar obligations of the Company or any of its Restricted
Subsidiaries for or in connection with pledges, deposits or payments
made or given in the ordinary course of business in connection with or
to secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations, (C)
arising from Guarantees to suppliers, lessors, licensees, contractors,
franchises or customers of obligations (other than Indebtedness)
Incurred in the ordinary course of business and (D) under Currency
Agreements and Interest Rate Agreements; provided, however, that in
the case of Currency Agreements and Interest Rate Agreements, such
Currency Agreements and Interest Rate Agreements are entered into for
bona fide hedging purposes of the Company or its Restricted
Subsidiaries (as determined in good faith by the Board of Directors of
the Company) and correspond in terms of notional amount, duration,
currencies and interest rates as applicable, to Indebtedness of the
Company, or its Restricted Subsidiaries Incurred without violation of
this Indenture or to business transactions of the Company or its
Restricted Subsidiaries on customary terms entered into in the
ordinary course of business;
(vii) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations,
or from Guarantees or letters of credit, surety bonds or performance
bonds securing any obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in each case Incurred in
connection with the disposition of any business assets or Restricted
Subsidiary of the Company (other than Guarantees of Indebtedness or
other obligations Incurred by any Person acquiring all or any portion
of such business assets or Restricted Subsidiary of the Company for
the purpose of financing such acquisition) in a principal amount not
to exceed the gross proceeds actually received by the Company or any
of its Restricted Subsidiaries in connection with such disposition;
provided, however, that the principal amount of any Indebtedness
Incurred pursuant to this clause (vii) when taken together with all
Indebtedness Incurred pursuant to this clause (vii) and then
outstanding, shall not exceed $1 million;
(viii) Indebtedness consisting of (A) Guarantees by the Company
or a Subsidiary Guarantor of Indebtedness Incurred by a Wholly-Owned
Subsidiary without violation of this Indenture (so long as the Company
or such Subsidiary Guarantor, as the case may be, could have Incurred
such Indebtedness directly without violation of this Indenture) and
(B) Guarantees by a Restricted Subsidiary of Senior Indebtedness
Incurred by the Company without violation of this Indenture
-53-
61
(so long as such Restricted Subsidiary could have Incurred such
Indebtedness directly without violation of this Indenture);
(ix) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument issued
by the Company or its Restricted Subsidiaries drawn against
insufficient funds in the ordinary course of business in an amount not
to exceed $250,000 at any time, provided that such Indebtedness is
extinguished within two business days of its incurrence; and
(x) Indebtedness (other than Indebtedness described in
clauses (i)-(ix)) in a principal amount which, when taken together
with the principal amount of all other Indebtedness Incurred pursuant
to this clause (x) and then outstanding, will not exceed $4 million
(it being understood that any Indebtedness Incurred under this clause
(x) shall cease to be deemed Incurred or outstanding for purposes of
this clause (x) (but shall be deemed to be Incurred for purposes of
paragraph (a)) from and after the first date on which the Company or
its Restricted Subsidiaries could have Incurred such Indebtedness
under the foregoing paragraph (a) without reliance upon this clause
(x)).
(c) Neither the Company nor any Restricted Subsidiary shall
Incur any Indebtedness under paragraph (b) above if the proceeds thereof are
used, directly or indirectly, to refinance any Subordinated Obligations of the
Company unless such Indebtedness shall be subordinated to the Securities to at
least the same extent as such Subordinated Obligations. No Restricted
Subsidiary shall Incur any Indebtedness under paragraph (b) above if the
proceeds thereof are used, directly or indirectly, to refinance any Guarantor
Subordinated Obligation of such Subsidiary Guarantor unless such Indebtedness
shall be subordinated to the obligations of such Subsidiary Guarantor under the
Subsidiary Guaranty to at least the same extent as such Guarantor Subordinated
Obligation.
(d) The Company will not permit any Unrestricted Subsidiary
to Incur any Indebtedness other than Non- Recourse Debt.
SECTION 4.10. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any Asset Disposition unless (i) the Company
or such Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value (as determined in good
faith by senior management of the Company or, if the fair market value of such
assets exceeds $500,000, by the Company's Board of Directors) (including as to
the value of all non-cash consideration), of the shares and assets subject to
such Asset Disposition, (ii) at least 80% of the consideration thereof received
by the Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents and
-54-
62
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be): (A) first, to the extent the Company or any Restricted
Subsidiary elects (or is required by the terms of any Senior Indebtedness), (x)
to prepay, repay or purchase Senior Indebtedness or (y) to the investment in or
acquisition of Additional Assets within 180 days from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (B) second,
within 180 days from the receipt of such Net Available Cash, to the extent of
the balance of such Net Available Cash after application in accordance with
clause (A), to make an offer to purchase Securities at 100% of their principal
amount plus accrued and unpaid interest, if any, thereon; (C) third, within 180
days after the later of the application of Net Available Cash in accordance
with clauses (A) and (B) and the date that is one year from the receipt of such
Net Available Cash, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A) and (B), to prepay, repay or
repurchase Indebtedness (other than Preferred Stock) of a Wholly-Owned
Subsidiary (in each case other than Indebtedness owned to the Company); and (D)
fourth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B) and (C), to (w) the investment
in or acquisition of Additional Assets, (x) the making of Temporary Cash
Investments, (y) the prepayment, repayment or purchase of Indebtedness of the
Company (other than Indebtedness owing to any Subsidiary of the Company) or
Indebtedness of any Subsidiary (other than Indebtedness owed to the Company, or
any of its Subsidiaries) or (z) any other purpose otherwise permitted under
this Indenture, in each case within the later of 45 days after the application
of Net Available Cash in accordance with clauses (A), (B) and (C) or the date
that is one year from the receipt of such Net Available Cash; provided,
however, that, in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A), (B), (C) or (D) above, the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal
to the principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions the Company and its Restricted Subsidiaries shall not be
required to apply any Net Available Cash in accordance herewith except to the
extent that the aggregate Net Available Cash from all Asset Dispositions which
are not applied in accordance with this covenant at any time exceed $5 million.
The Company shall not be required to make an offer for Securities pursuant to
this covenant if the Net Available Cash available therefor (after application
of the proceeds as provided in clause (A)) is less than $5 million for any
particular Asset Disposition (which lesser amounts shall be carried forward for
purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be
deemed to be cash: (x) the assumption by the transferee of Senior Indebtedness
of the Company or Senior Indebtedness of any Restricted Subsidiary and the
release of the Company or such Restricted Subsidiary from all liability on such
Senior Indebtedness in connection with such
-55-
63
Asset Disposition (in which case the Company shall, without further action, be
deemed to have applied such assumed Indebtedness in accordance with clause (A)
of the preceding paragraph) and (y) securities received by the Company or any
Restricted Subsidiary of the Company from the transferee that are promptly (and
in any event within 60 days) converted by the Company or such Restricted
Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to clause (a)(iii)(B), the Company will be
required to purchase Securities tendered pursuant to an offer by the Company
for the Securities at a purchase price of 101% of their principal amount plus
accrued and unpaid interest, if any, to the purchase date in accordance with
the procedures (including prorating in the event of oversubscription) set forth
in this Indenture. If the aggregate purchase price of the Securities tendered
pursuant to the offer is less than the Net Available Cash allotted to the
purchase of the Securities, the Company will apply the remaining Net Available
Cash in accordance with clauses (a) (iii) (C) or (D) above.
(c) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this Indenture by virtue thereof.
SECTION 4.11. LIMITATION ON AFFILIATE TRANSACTIONS.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or conduct any
transaction or series of related transactions (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with or for
the benefit of any Affiliate of the Company, other than a Wholly-Owned
Subsidiary (an "Affiliate Transaction") unless: (i) the terms of such
Affiliate Transaction are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the time
of such transaction in arm's length dealings with a Person who is not such an
Affiliate; (ii) in the event such Affiliate Transaction involves an aggregate
amount in excess of $1 million, the terms of such transaction have been
approved by a majority of the members of the Board of Directors of the Company
and by a majority of the disinterested members of such Board, if any (and such
majority or majorities, as the case may be, determines that such Affiliate
Transaction satisfies the criteria in (i) above); and (iii) in the event such
Affiliate Transaction involves an aggregate amount in excess of $2 million, the
Company has received a written opinion from an independent investment banking
firm of nationally
-56-
64
recognized standing that such Affiliate Transaction is fair to the Company or
such Restricted Subsidiary, as the case may be, from a financial point of view.
(b) The foregoing paragraph (a) shall not apply to (i) any
Restricted Payment permitted to be made pursuant to Section 4.07, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, or any
stock options and stock ownership plans for the benefit of employees, officers
and directors, consultants and advisors approved by the Board of Directors of
the Company, (iii) loans or advances to employees in the ordinary course of
business of the Company or any of its Restricted Subsidiaries in aggregate
amount outstanding not to exceed $250,000 at any time, (iv) loans or advances
to senior management of the Company which loans and advances are fully secured
on the date of such loans or advances by shares of Common Stock of the Company
owned by such senior management, in an aggregate amount outstanding not to
exceed $750,000, (v) indemnification agreements with, and the payment of fees
and indemnities to, directors, officers and employees of the Company and its
Restricted Subsidiaries, in each case in the ordinary course of business, (vi)
transactions pursuant to agreements in existence on the Issue Date which are
(x) described in the Offering Memorandum or (y) otherwise, in the aggregate,
immaterial to the Company and its Restricted Subsidiaries taken as a whole,
(vii) any employment, non- competition or confidentiality agreements entered
into by the Company or any of its Restricted Subsidiaries with its employees in
the ordinary course of business and (viii) the issuance of Capital Stock of the
Company (other than Disqualified Stock).
SECTION 4.12. LIMITATION ON LIENS.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Liens, except for Permitted Liens.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence, and the corporate, partnership or other existence of each
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Subsidiary and 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 Subsidiary, if the Board of Directors of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the
-57-
65
Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Securityholders.
SECTION 4.14. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control each
Securityholder will have the right to require the Company to repurchase all or
any part of such Securityholder's Securities at a purchase price in cash equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (the "Change of Control Payment") (subject to the
right of Securityholders of record on the relevant record date to receive
interest due on the relevant Interest Payment Date).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Securityholder with a copy to the Trustee
or, at the Company's option, by the Trustee (at the Company's expense) stating:
(i) that a Change of Control has occurred and that such
Securityholder has the right to require the Company to purchase such
Securityholder's Securities at a purchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Securityholders
of record on a record date to receive interest on the relevant
Interest Payment Date);
(ii) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed) (the
"Change of Control Payment Date"); and
(iii) the procedures determined by the Company, consistent
with this Indenture, that a Securityholder must follow in order to
have its Securities purchased.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Company will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in this Indenture by virtue thereof.
(c) Securityholders electing to have a Security repurchased
will be required to surrender the Security, with the form entitled "Option of
Securityholder to Elect Purchase" on the reverse of the Security completed, to
the Company at the address
-58-
66
specified in the notice at least 10 Business Days prior to the repurchase date.
Securityholders will be entitled to withdraw their election if the Trustee or
the Company receives not later than three Business Days prior to the repurchase
date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Securityholder, the principal amount of the Security which was
delivered for repurchase by the Securityholder and a statement that such
Securityholder is withdrawing his election to have such Security purchased.
(d) On the Change of Control Payment Date, the Company
will, to the extent lawful, (i) accept for payment all Securities or portions
thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit
with the Trustee an amount equal to the Change of Control Payment in respect of
all Securities or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Securities so accepted together with an Officers'
Certificate stating the aggregate principal amount of Securities or portions
thereof being purchased by the Company. The Trustee will promptly mail to each
Securityholder so tendered the Change of Control Payment for such Securities,
and the Trustee will promptly authenticate and mail (or cause to be transferred
by book entry) to each Securityholder a new Security equal in principal amount
to any unpurchased portion of the Securities surrendered, if any; provided that
each such new Security will be in a principal amount of $1,000 or an integral
multiple thereof. Unless the Company defaults in the payment for any
Securities properly tendered pursuant to the Change of Control Offer, any
Securities accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date.
(e) The Company will to the extent applicable comply with
any tender offer rules under the Exchange Act which may then be applicable,
including Rule 14e-1, in connection with any offer required to be made by the
Company to repurchase the Securities as a result of a Change of Control. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions of this Indenture relative to the Company's obligation to
make an offer to repurchase the Securities as a result of a Change of Control,
the Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under such provisions of
the Indenture by virtue thereof.
SECTION 4.15. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES.
The Company will not permit any of its Restricted Subsidiaries
to issue any Capital Stock to any Person (other than to the Company or a
Wholly-Owned Subsidiary of the Company) or permit any Person (other than the
Company or a Wholly-Owned Subsidiary of the Company) to own any Capital Stock
of a Restricted Subsidiary of the Company, if in either case as a result
thereof such Restricted Subsidiary would no longer
-59-
67
be a Restricted Subsidiary of the Company; provided, however, that this
provision shall not prohibit (x) the Company or any of its Restricted
Subsidiaries from selling or otherwise disposing of all of the Capital Stock of
any,Restricted Subsidiary or (y) the designation, of a Restricted Subsidiary as
an Unrestricted Subsidiary in compliance with this Indenture.
SECTION 4.16. CONDUCT OF BUSINESS.
The Company will not permit IT Network, Inc. to directly or
indirectly engage in any business other than the provision of voice information
services, including the services described in this Offering Memorandum. The
Company will conduct all of its interactive television business through
Interactive Channel, Inc., Interactive Channel Technologies, Inc. and any of
their Wholly-Owned Subsidiaries.
SECTION 4.17. LIMITATION ON SALE/LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, Guarantee or otherwise
become liable with respect to any Sale/Leaseback Transaction with respect to
any property or assets unless (i) the Company or such Restricted Subsidiary, as
the case may be, would be entitled to pursuant to this Indenture Incur
Indebtedness secured by a Permitted Lien on such property or assets in an
amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction, (ii) the Net Cash Proceeds from such Sale/Leaseback
Transaction are at least equal to the fair market value of the property or
assets subject to such Sale/Leaseback Transaction (such fair market value
determined, in the event such property or assets have a fair market value in
excess of $500,000, no more than 30 days prior to the effective date of such
Sale/ Leaseback Transaction, by the Board of Directors of the Company as
evidenced by a resolution of such Board of Directors), (iii) the Net Cash
Proceeds of such Sale/Leaseback Transaction are applied in accordance with the
provisions described under Section 4.10 and (iv) the Indebtedness Incurred in
connection with such Sale/Leaseback Transaction, together with Indebtedness
Incurred in accordance with (ii) of paragraph (b) of Section 4.09, does not
exceed $5 million at any time outstanding.
SECTION 4.18. LIMITATION ON DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES.
(a) The Company may designate any Subsidiary of the Company
(other than a Subsidiary of the Company which owns Capital Stock of a
Restricted Subsidiary) as an "Unrestricted Subsidiary" under the Indenture (a
"Designation") only if:
(i) no Default shall have occurred and be continuing at the
time of or, after giving effect to such Designation; and
-60-
68
(ii) the Company would be permitted under this Indenture to
make an Investment at the time of Designation (assuming the
effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the sum of (i) fair market value of the Capital
Stock of such Subsidiary owned by the Company and the Restricted
Subsidiaries on such date and (ii) the aggregate amount of other
Investments of the Company and the Restricted Subsidiaries in such
Subsidiary on such date; and
(iii) the Company would be permitted to Incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant
to Section 4.09 at the time of Designation (assuming the effectiveness
of such Designation).
(b) In the event of any such Designation, the Company shall
be deemed to have made an Investment constituting a Restricted Payment pursuant
to the covenant described under Section 4.07 for all purposes of this Indenture
in the Designation Amount. The Company shall not, and shall not permit any
Restricted Subsidiary to, at any time (x) provide direct or indirect credit
support for or a Guarantee of any Indebtedness of any Unrestricted Subsidiary
(including of any undertaking, agreement or instrument evidencing such
Indebtedness), (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the
occurrence of a default with respect to any Indebtedness of any Unrestricted
Subsidiary (including any right to take enforcement action against such
Unrestricted Subsidiary), except, in the case of clause (x) or (y), to the
extent permitted under Section 4.07.
The Company may revoke any Designation of a Subsidiary
as an Unrestricted Subsidiary (a "Revocation"), whereupon such
Subsidiary shall then constitute a Restricted Subsidiary, if:
(i) no Default shall have occurred and be continuing at the
time of and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if
incurred at such time, have been permitted to be incurred for all
purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
-61-
69
SECTION 4.19. FURTHER INSTRUMENTS AND ACTS.
The Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any covenants, conditions or agreements on the
part of the Company, except as otherwise set forth herein, but the Trustee may
require of the Company full information and advice as to the performance of the
covenants, conditions and agreements contained herein, and upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
ARTICLE 5
SUCCESSORS
SECTION 5.01. LIMITATIONS ON MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate with or merge with or into,
or convey, transfer or lease all or substantially all of its assets to any
Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership, trust or
limited liability company organized and existing under the laws of the
United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall
expressly assume, by supplemental indenture, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations
of the Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the
Successor Company or any Subsidiary of the Successor Company as a
result of such transaction as having been incurred by the Successor
Company or such Restricted Subsidiary at the time of such
transaction), no Default or Event of Default shall have occurred and
be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company (A) would have a Consolidated Net Worth equal to
or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction and (B) would be able to Incur at least an
additional $1.00 of Indebtedness pursuant to paragraph (a) of Section
4.09;
-62-
70
(iv) there has been delivered to the Trustee an Opinion of
Counsel to the effect that holders of the Securities will not
recognize income, gain or loss for U.S. Federal income tax purposes as
a result of such consolidation, merger, conveyance, transfer or lease
and will be subject to U.S. Federal income tax on the same amount and
in the same manner and at the same times as would have been the case
if such consolidation, merger, conveyance, transfer or lease had not
occurred; and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
The Successor Company will succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture,
but, in the case of a lease of all or substantially all its assets, the Company
will not be released from the obligation to pay the principal of and interest
on the Securities.
Notwithstanding clauses (ii) and (iii) of Section 5.01, any
Restricted Subsidiary of the Company may consolidate with, merge into or
transfer all or part of its properties and assets to the Company.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
(a) An "Event of Default" occurs if:
(i) there is a default in any payment of interest on any
Security when due, continued for 30 days;
(ii) there is a default in the payment of principal of any
Security when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise;
(iii) there is a failure by the Company to comply with its
obligations under Section 5.01 hereof;
-63-
71
(iv) there is failure by the Company to comply for 30 days
after notice with any of its obligations under Sections [4.01, 4.03,
4.04, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16,
4.17, 4.18 or 5.01] hereof (in each case, other than a failure to
purchase Securities which shall constitute an Event of Default under
clause (ii) above);
(v) there is a failure by the Company or any Subsidiary
Guarantor to comply for 60 days after notice with its other agreements
contained in this Indenture;
(vi) Indebtedness of the Company or any Restricted
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default
and the total amount of such Indebtedness unpaid or accelerated
exceeds $3 million and such default shall not have been cured or such
acceleration rescinded after a 10-day period;
(vii) any judgment or decree for the payment of money in
excess of $3 million (to the extent not covered by insurance) is
rendered against the Company or a Significant Subsidiary and such
judgment or decree shall remain undischarged or unstayed for a period
of 60 days after such judgment becomes final and non- appealable
(the"judgment default provision");
(viii) any Subsidiary Guarantee by a Significant Subsidiary
ceases to be in full force and effect (except as contemplated by the
terms of this Indenture) or any Subsidiary Guarantor that is a
Significant Subsidiary denies or disaffirms its obligations under this
Indenture or its Subsidiary Guarantee and such Default continues for
10 days;
(ix) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors,
-64-
72
(E) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, or
(F) takes any corporate action to authorize or effect
any of the foregoing; or
(x) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case,
(B) appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of
the property of the Company or any of its Significant
Subsidiaries, or
(C) orders the liquidation of the Company or any of
its Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(b) The term "Bankruptcy Law" means Title 11, U.S. Code
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
(c) A Default under clause (iv) or (v) of Section 6.01(a)
hereof is not an Event of Default until the Trustee or the holders of 25% in
principal amount of the outstanding Securities notifies the Company or such
Subsidiary Guarantor, as the case may be, of the Default and the Company or
such Subsidiary Guarantor, as the case may be, does not cure such Default
within the time specified in such clause (iv) or (v) after receipt of the
notice. The written notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default
specified in clause (viii) or (ix) of Section 6.01(a) with respect to the
Company or any Subsidiary Guarantor) occurs and is continuing, the Trustee or
the Holders of not less than 25% in aggregate principal amount of the then
outstanding Securities by notice to the Company, may declare (a "Declaration")
the unpaid principal of, and any accrued and unpaid interest on, all the
Securities to be due and payable (the "Default Amount"). Upon any such
Declaration the Default Amount shall be due and payable immediately. If an
Event of Default specified in
-65-
73
clause (ix) or (x) of Section 6.01(a) occurs with respect to the Company or any
of the Subsidiary Guarantors, the Default Amount shall ipso facto become and be
immediately due and payable without any Declaration or other act on the part of
the Trustee or any Securityholder. The Holders of a majority in aggregate
principal amount of the then outstanding Securities by written notice to the
Trustee and to the Company may rescind any Declaration if the rescission would
not conflict with any judgment or decree and if all Events of Default then
continuing (other than any Events of Default with respect to the nonpayment of
principal of or interest on any Security which has become due solely as a
result of such Declaration) have been cured, and may waive any Default other
than a Default with respect to a covenant or provision that cannot be modified
or amended without the consent of each Securityholder pursuant to Section 9.02
hereof.
SECTION 6.03. OTHER REMEDIES.
(a) If an Event of Default occurs and is continuing, the
Trustee and the Securityholders may pursue any available remedy to collect the
payment of principal, premium, if any, or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
(b) The Trustee may maintain a proceeding even if it does
not possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder 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.
Securityholders of not less than a majority in aggregate
principal amount of the then outstanding Securities by notice to the Trustee
may, on behalf of all the Securityholders, waive an existing Default or Event
of Default and its consequences, except a continuing Default or Event of
Default in the payment of the principal, premium, if any, or interest on any
Security (other than principal, premium (if any) or interest which has become
due solely as a result of a Declaration) or a Default or Event of Default that
cannot be modified or amended without the consent of the Holder of each
outstanding Security affected. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
-66-
74
SECTION 6.05. CONTROL BY MAJORITY.
Securityholders of a majority in principal amount of the
Securities then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that the Trustee
determines may be unduly prejudicial to the rights of other Securityholders or
that may involve the Trustee in personal liability. The Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction.
SECTION 6.06. LIMITATION ON SUITS.
(a) A Securityholder may pursue a remedy with respect to
this Indenture or the Securities only if:
(i) the Securityholder has previously given to the Trustee
written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in principal amount of the
then outstanding Securities make a written request to the Trustee to
pursue the remedy;
(iii) such Securityholder or Securityholders offer, and, if
requested, provide, to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee, in the reasonable opinion of such Trustee, a direction
inconsistent with the request.
(b) A Securityholder may not use this Indenture to
prejudice the rights of another Securityholder or to obtain a preference or
priority over another Securityholder.
SECTION 6.07. RIGHTS OF SECURITYHOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Securityholder to receive payment of principal, premium, if any,
interest on the Security, on or after the respective due dates expressed in the
Security, or to bring suit for the
-67-
75
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Securityholder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a)(i) or (ii)
or an acceleration pursuant to Section 6.02 occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Company or any Subsidiary Guarantor or any other
obligor on the Securities for the whole amount of principal, premium, if any,
and accrued interest remaining unpaid on the Securities and interest on overdue
principal, premium, if any, and, to the extent lawful, interest on overdue
installments of interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including any advances made by the
Trustee and the reasonable compensation, expenses and disbursements 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 Securityholders allowed in any judicial proceedings relative to the
Company or any Subsidiary Guarantor (or any other obligor on the Securities),
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 Securityholder 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 Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07 hereof out of the
estate in any such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Securityholders 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 Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Securityholder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
-68-
76
SECTION 6.10. PRIORITIES.
(a) If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
(i) First: to the Trustee, its agents and attorneys for
amounts due under Section 7.07, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
(ii) Second: if the Securityholders are forced to proceed
against the Company directly without the Trustee, to the
Securityholders for their collection costs;
(iii) Third: to the Securityholders for amounts due and
unpaid on the Securities for principal, premium, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, premium, if
any, and interest, respectively; and
(iv) Fourth: to the Company or, to the extent the Trustee
collects any amount pursuant to a Security Document from any
Subsidiary Guarantor, to such Subsidiary Guarantor, or to such party
as a court of competent jurisdiction shall direct.
(b) The Trustee may fix a record date and payment date for
any payment to Securityholders. At least 15 calendar days before such record
date, the Company shall mail to each Holder and the Trustee a notice that
states the record date, the payment date and the amount to be paid.
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
Securityholder pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Securities.
-69-
77
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 their exercise as a
prudent person would exercise or use under the circumstances and in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform only those duties as
are specifically set forth in this Indenture and the duties of the
Trustee shall be determined solely by the express provisions of this
Indenture, 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 any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture, but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the same to determine whether or not they conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein
contained, 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 7.01;
(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.
-70-
78
(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 7.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(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. Assets held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of Section 7.01 and to the provisions of the
TIA.
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
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with 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 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 which it believes to be authorized or within its
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.
-71-
79
(f) The permissive rights of the Trustee to do certain
things enumerated in this Indenture shall not be construed as a duty and the
Trustee shall not be answerable for other than its negligence or wilful default
with respect to such permissive rights.
(g) Except for an Event of Default under 6.01(a)(i) or (ii)
hereof, the Trustee shall not be deemed to have notice of any Default or Event
of Default unless specifically notified in writing of such event by the Company
or the Securityholders of not less than 25% in aggregate principal amount of
Securities outstanding.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company, any
Subsidiary Guarantor or any Affiliate of the Company or any Subsidiary
Guarantor with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Securities
or the Subsidiary Guarantees, it shall not be accountable for the Company's use
of the proceeds from the Securities or any money paid to the Company or upon
the Company's direction under any provision 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 Securities or the Subsidiary
Guarantees or any other document in connection with the sale of the Securities
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 each Securityholder a
notice of the Default or Event of Default within 60 days after it occurs.
Except in the case of a Default or Event of Default in any payment of principal
or interest on any Security, the Trustee may withhold the notice if a committee
of its officers in good faith determines that withholding the notice is in the
interest of the Securityholders. In addition, the Company is required to
deliver to the Trustee, within 90 days after each fiscal year of the Company, a
certificate indicating whether the signers thereof know of any Default or Event
of Default that occurred during the previous year. The Company shall also
deliver to the Trustee, within 30 days after the occurrence thereof, written
notice of any events which would constitute a Default or Event of Default.
-72-
80
SECTION 7.06. REPORTS BY TRUSTEE TO SECURITYHOLDERS.
(a) Within 60 days after each May 15 beginning with the May
15 following the date of this Indenture, and for so long as the Securities
remain outstanding, the Trustee shall mail to the Securityholders a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted).
The Trustee also shall comply with TIA Section 313(b)(2) and (c).
(b) A copy of each report at the time of its mailing to the
Securityholders shall be filed with the Commission and each stock exchange, if
any, on which the Securities are listed, in accordance with and to the extent
required by TIA Section 313(d). The Company shall promptly notify the Trustee
if and when the Securities are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
(a) The Company and the each of the Subsidiary Guarantors,
jointly and severally, shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder,
including extraordinary services such as default administration. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company and each of the Subsidiary Guarantors, jointly and
severally, shall reimburse the Trustee 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.
(b) The Company and each of the Subsidiary Guarantors,
jointly and severally, 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, any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except as
set forth below in subparagraph (d). The Trustee shall notify the Company and
each of the Subsidiary Guarantors promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company or any Subsidiary
Guarantor shall not relieve the Company or any of the Subsidiary Guarantors of
their Obligations hereunder. The Trustee may have separate counsel and the
Company and each of the Subsidiary Guarantors, jointly and severally, shall pay
the reasonable fees and expenses of such counsel. Neither the Company nor any
Subsidiary Guarantor need pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
-73-
81
(c) The obligations of the Company and each of the
Subsidiary Guarantors under this Section 7.07 shall survive the resignation or
removal of the Trustee and the satisfaction and discharge or termination of
this Indenture.
(d) Notwithstanding subparagraphs (a) or (b) above, neither
the Company nor any Subsidiary Guarantor need reimburse any expense or
indemnify against any loss or liability incurred by the Trustee through its own
negligence, bad faith or willful misconduct.
(e) To secure the Company's and each of the Subsidiary
Guarantor's payment obligations in this Section, the Trustee shall have a Lien
prior to the Securities on all money or property held or collected by the
Trustee, except that held in trust to pay principal, premium, if any, and
interest on particular Securities. Such Lien shall survive the resignation or
removal of the Trustee and the satisfaction and discharge of this Indenture.
(f) When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(viii) or (ix) hereof
occurs, the expenses and the compensation for such services (including the fees
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
(a) A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
(b) The Trustee may resign at any time and be discharged
from the trust hereby created by so notifying the Company. The Securityholders
of a majority in principal amount of the then outstanding Securities may remove
the Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10 hereof;
(ii) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(iii) a Custodian, receiver or other public officer takes
charge of the Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
-74-
82
(c) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall notify each
Securityholder of such event and 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 Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
(d) 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 each Securityholder. 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 and each of the Subsidiary
Guarantor's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
(e) If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the retiring Trustee,
the Company, any of the Subsidiary Guarantors or the Securityholders of at
least 10% in principal amount of the then outstanding Securities may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(f) If the Trustee after written request by any
Securityholder who has been a Securityholder for at least six months fails to
comply with Section 7.10, such Securityholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
-75-
83
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
(a) There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the laws of the
United States of America or any State or Territory thereof or the District of
Columbia authorized under such laws to exercise corporate trustee power, shall
be subject to supervision or examination by Federal, State, Territorial, or
District of Columbia authority and shall have (or be a part of a holding
company with) a combined capital and surplus of at least $100 million as set
forth in its most recent published annual report of condition.
(b) This Indenture shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee
shall comply with TIA Section 310(b). The provisions of TIA Section 310
shall also apply to the Company and each of the Subsidiary Guarantors, as
obligor of the Securities.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein. The provisions of TIA Section 311 shall apply to the
Company and each of the Subsidiary Guarantors as obligor on the Securities.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE.
(a) When (i) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section 2.07
hereof) canceled or for cancellation or (ii) all outstanding Securities have
become due and payable and the Company irrevocably deposits with the Trustee
funds sufficient to pay at maturity all outstanding Securities, including
interest thereon (other than Securities replaced pursuant to Section 2.07
hereof), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Sections
8.01(e) and 8.06 hereof, cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel
reasonably acceptable to the Trustee and at the cost and expense of the
Company.
-76-
84
(b) Subject to Sections 8.01(e), 8.02 and 8.06 hereof, the
Company at any time may terminate (i) all its obligations under the Securities
and this Indenture ("legal defeasance option") or (ii) all obligations under
[Sections 3.09, 4.04(a), (b) and (c), 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13,
4.14, 4.15, 4.16, 4.17, 4.18 or 5.01(iii) and the operation of Sections
6.01(a)(iv), 6.01(a)(v) and 6.01(a)(vi) as well as (6.01(a)(ix) and 6.01(a)(x)
hereof but only with respect to Significant Subsidiaries) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
(c) If the Company exercises its legal defeasance option,
payment of the Securities may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, payment of
the Securities may not be accelerated because of an Event of Default specified
in Section 6.01(a)(iv), 6.01(a)(vi), 6.01(a)(vii), 6.01(a)(viii) or 6.01(a)(ix)
(but only with respect to Significant Subsidiaries which is a Guarantor) or
6.01(a)(ix) hereof (but only with respect to Significant Subsidiaries which is
a Guarantor), or because of the failure of the Company or the Subsidiary
Guarantors to comply with Sections 5.01(iii) or 5.01(iv).
(d) Upon satisfaction of the conditions set forth herein
and Section 8.02 and upon request of the Company, the Trustee shall acknowledge
in writing the discharge of those obligations that the Company terminates.
(e) Notwithstanding clauses (a) and (b) above, the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08,
8.01(d), 8.04, 8.05 and 8.06 hereof shall survive until the Securities have
been paid in full. Thereafter, the Company's obligations in Sections 7.07,
8.04 and 8.05 hereof shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE.
(a) The Company may exercise its legal defeasance option or
its covenant defeasance option only if:
(i) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations in amounts (including
interest, but without consideration of any reinvestment of such
interest) and maturities sufficient, but in the case of the legal
defeasance option only, not more than such amounts (as certified by a
nationally recognized firm of independent public accountants), to pay
and discharge at their Stated Maturity (or such earlier redemption
date as the Company shall have specified to the Trustee) the principal
of, premium, if any, interest on all outstanding Securities to
maturity or redemption, as the case may be, and to pay all of the sums
payable by it hereunder; provided, that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such
U.S.
-77-
85
Government Obligations to the payment of said principal, premium, if
any, and interest with respect to the Securities;
(ii) in the case of the legal defeasance option only, 123
days pass after the deposit is made and during the 123 day period no
Default or Event of Default specified in Section 6.01(viii) or (ix)
hereof with respect to the Company or any Subsidiary Guarantor occurs
which is continuing at the end of the period;
(iii) no Default or Event of Default has occurred and is
continuing on the date of such deposit and after giving effect
thereto;
(iv) the deposit does not constitute a default under any
other agreement binding on the Company;
(v) the Company delivers to the Trustee an Opinion of
Counsel to the effect that the trust resulting from the deposit does
not constitute, or is qualified as, a regulated investment company
under the Investment Company Act of 1940, as amended;
(vi) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) 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 Securityholders will not recognize
income, gain or loss for U.S. Federal income tax purposes as a result
of such defeasance and will be subject to U.S. Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred;
(vii) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Securityholders 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; and
(viii) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities
as contemplated by this Article 8 have been complied with.
-78-
86
(b) In order to have money available on a payment date to
pay principal, premium, if any, or interest on the Securities, the U.S.
Government Obligations deposited pursuant to preceding clause (a) shall be
payable as to principal or interest at least one Business Day before such
payment date in such amounts as shall provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.
(c) Before or after a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption of Securities at a
future date in accordance with Article 3 hereof.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article 8. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal,
premium, if any, and interest on the Securities.
SECTION 8.04. REPAYMENT TO THE COMPANY.
(a) The Trustee and the Paying Agent shall promptly pay to
the Company upon written request any excess money or securities held by them at
any time; provided, however, that the Trustee shall not pay any such excess to
the Company unless the amount remaining on deposit with the Trustee, after
giving effect to such transfer are sufficient to pay principal, premium, if
any, and interest on the outstanding Securities, which amount shall be
certified to the Trustee by independent public accountants.
(b) The Trustee and the Paying Agent shall pay to the
Company upon written request any money held by them for the payment of
principal, premium, if any, or interest that remains unclaimed for two years
after the date upon which such payment shall have become due; provided,
however, that the Company shall have either caused notice of such payment to be
mailed to each Securityholder entitled thereto no less than 30 days prior to
such repayment or within such period shall have published such notice in a
financial newspaper of widespread circulation published in the City of New
York. After payment to the Company, Securityholders entitled to the money must
look to the Company and the Subsidiary Guarantors for payment as general
creditors unless an applicable abandoned property law designates another
Person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS.
The Company and the Subsidiary Guarantors, jointly and
severally, shall pay and shall indemnify the Trustee against any tax, fee or
other charge imposed on or assessed
-79-
87
against deposited U.S. Government Obligations or the principal and interest
received on such U.S. Government Obligations.
SECTION 8.06. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with this Article 8 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and each of the Subsidiary Guarantor's Obligations
under this Indenture and the Securities and the Subsidiary Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article 8 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with this Article
8; provided, however, that if the Company or any Subsidiary Guarantor has made
any payment of principal of, premium, if any, or interest on any Securities
because of the reinstatement of its Obligations, the Company or any of the
Subsidiary Guarantors, as the case may be, shall be subrogated to the rights of
the Securityholders to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF SECURITYHOLDERS.
(a) Notwithstanding Section 9.02 of this Indenture, the
Company, the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture or the Securities without the consent of any Securityholder:
(i) to cure any ambiguity, omission, defect or
inconsistency;
(ii) to comply with Article 5 hereof;
(iii) to provide for uncertificated Securities in addition to
or in place of certificated Securities (provided that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code);
(iv) to add further Guarantees with respect to the
Securities; to secure the Securities with additional collateral;
-80-
88
(v) to add to the covenants of the Company for the benefit
of the Securityholders or to surrender any right or power conferred
upon the Company;
(vi) to comply with requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the
TIA;
(vii) to make any change that would provide additional rights
or benefits to the Holders of the Securities, as evidenced by an
Opinion of Counsel delivered to the Trustee or that does not adversely
affect the rights of any Securityholder in any respect; or
(viii) to evidence or provide for a replacement Trustee under
Section 7.08 hereof;
provided, that the Company has delivered to the Trustee an Opinion of Counsel
stating that any such amendment or supplement complies with the provisions of
this Section 9.01.
(b) Upon the request of the Company and the Subsidiary
Guarantors accompanied by Board Resolutions of their respective Boards of
Directors authorizing the execution of any such supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 and
Section 9.06 hereof, the Trustee shall join with the Company and the Subsidiary
Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into such supplemental indenture which affects
its own rights, duties or immunities under this Indenture or otherwise.
(c) After an amendment or supplement under this Section
9.01 becomes effective, the Company shall mail to all Securityholders a notice
briefly describing such amendment or supplement. The failure to give such
notice to all Securityholders, or any defect therein, shall not impair or
affect the validity of an amendment or supplement under this Section.
SECTION 9.02. WITH CONSENT OF SECURITYHOLDERS.
(a) Except as provided below in this Section 9.02, the
Company and the Trustee may amend or supplement this Indenture or the
Securities with the written consent of the Securityholders of not less than a
majority in aggregate principal amount of the Securities then outstanding
(including consents obtained in connection with a purchase of, or tender offer
or exchange offer for the Securities) and subject to Section 6.04 and 6.07 any
existing Default or Event of Default and its consequences (other than a Default
or Event of Default in the payment of principal premium, if any, or interest,
if any, on the
-81-
89
Securities except a payment default resulting from an acceleration of the
Securities that has been rescinded) or compliance with any provision of this
Indenture or the Securities may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Securities (including
consents obtained in connection with a purchase of, or tender offer or exchange
offer for the Securities). [Furthermore, subject to Sections 6.04 and 6.07
hereof, the Holders of a majority in aggregate principal amount of the
Securities then outstanding (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for the Securities) may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Securities.] However, without the consent of each
Securityholder affected, an amendment, supplement or waiver under this Section
9.02 may not (with respect to any Securities held by a non-consenting Holder):
(i) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver;
(ii) reduce the stated rate of or extend the stated time for
payment of any interest on any Security;
(iii) reduce the principal of or extend the Stated Maturity
of any Security or alter the redemption provisions (including without
limitation Sections 3.07, 3.09, 4.11 and 4.14 hereof) with respect
thereto;
(iv) reduce the premium payable upon the redemption or
repurchase of any Security or change the time at which any Security
may be redeemed in accordance with Section 3.07;
(v) make any Security payable in money other than that
stated in the Security;
(vi) make any change in Section 6.04 or 6.07 hereof or in
this Section 9.02(a);
(vii) waive a Default or Event of Default in the payment of
principal of premium, if any, or interest, if any, on, or redemption
payment with respect to, any or Security (except a rescission of
acceleration of the Securities by the Holders of at least a majority
in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
(viii) impair the right of any holder to receive payment of
principal of and interest on such holder's Securities on or after the
due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such holder's Securities;
-82-
90
(ix) make any change in the amendment provisions which
require each consent or in the waiver provisions or requiring any
Guaranty hereof or in the provisions of any such Guaranty;
(x) release Collateral from the lien of the Escrow
Agreement, except in accordance with terms thereof, or amend terms
thereof relating to release; or
(xi) release any Subsidiary Guarantor from its Subsidiary
Guaranty, except as provided herein.
(b) Upon the request of the Company and the Subsidiary
Guarantors accompanied by Board Resolutions of their respective Boards of
Directors authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Securityholders as aforesaid, and upon receipt by the Trustee of
the documents described in Section 7.02 and Section 9.06 hereof, the Trustee
shall join with the Company and the Subsidiary Guarantors in the execution of
such supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise,
in which case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental indenture.
(c) It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
(d) After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to all Securityholders 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 amendment, supplement or
waiver.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
(a) Until an amendment, supplement or waiver becomes
effective, a consent to it by a Securityholder is a continuing consent by the
Securityholder and every subsequent Securityholder or portion of a Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security.
-83-
91
However, any such Securityholder or subsequent Securityholder may revoke the
consent as to its Security 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 when approved by the
requisite Holders and executed by the Trustee (or, if otherwise provided in
such waiver, amendment or supplement, in accordance with its terms) and
thereafter binds every Securityholder, unless it makes a change described in
any of clauses (i) through (xi) of Section 9.02, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same indebtedness as the consenting Holder's
Security.
(b) The Company may fix a record date for determining which
Securityholders must consent to such amendment, supplement or waiver. If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of Securityholders furnished to the Trustee prior to such
solicitation pursuant to Section 2.05 hereof, or (ii) such other date as the
Company shall designate. If a record date is fixed, then notwithstanding the
last sentence of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies), and only those
persons, shall be entitled to consent to such amendment or waiver or revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No consent shall be valid or effective for more than
890 days after such record date except to the extent that the requisite number
of consents to the amendment, supplement or waiver have been obtained within
such 90-day period or as set forth in the preceding paragraph of this Section
9.04.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES.
(a) Securities authenticated and delivered after the
execution of any supplemental indenture may bear a notation in form approved by
the Trustee as to any matter provided for in such amendment, supplement or
waiver on any Security thereafter authenticated. The Company in exchange for
all Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment, supplement or waiver.
(b) Failure to make the appropriate notation or issue a new
Security 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 amendment, waiver or supplemental
indenture authorized pursuant to this Article 9 if the amendment, waiver or
supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but
need not, sign it. In signing or refusing to sign such
-84-
92
amendment, waiver or supplemental indenture, the Trustee shall be entitled to
receive and, subject to Section 7.01, shall be fully protected in relying upon,
in addition to the documents required by Section 7.02, an Officers' Certificate
and an Opinion of Counsel as conclusive evidence that such amendment, waiver or
supplemental indenture is authorized or permitted by this Indenture, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control. Until such time as
this Indenture becomes qualified under the TIA, the Company, the Subsidiary
Guarantors and the Trustee shall be deemed subject to and governed by the TIA
as if the Indenture were so qualified on the date hereof.
SECTION 10.02. NOTICES.
(a) Any notice or communication by the Company, any
Subsidiary Guarantor or the Trustee to the other is duly given if in writing
and delivered in person or mailed by first class mail (registered or certified,
return receipt requested), confirmed facsimile transmission or overnight air
courier guaranteeing next day delivery, to the other's address:
If to the Company or any of the Subsidiary Guarantors:
Source Media, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Chief Financial Officer
If to the Trustee:
U.S. Trust Company of Texas, N.A.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
-85-
93
Attention: Corporate Trust
(b) The Company or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.
(c) All notices and communications (other than those sent
to Securityholders) 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 by facsimile transmission; and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next day
delivery.
(d) Any notice or communication to a Securityholder shall
be mailed by first class mail, postage prepaid, 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 Section 313(c), to the extent required
by the TIA. Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders.
(e) If a notice or communication is mailed to any Person in
the manner provided above within the time prescribed, it is duly given, whether
or not the addressee receives it.
(f) If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and each Agent at the same
time.
SECTION 10.03. COMMUNICATION BY SECURITYHOLDERS WITH OTHER SECURITYHOLDERS.
Securityholders may communicate pursuant to TIA Section
312(b) with other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Subsidiary Guarantors, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company and/or any of
the Subsidiary Guarantors to the Trustee to take any action under this
Indenture, the Company and/or any of the Subsidiary Guarantors, as the case may
be, shall furnish to the Trustee:
(i) an Officer's Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 10.05 hereof)
-86-
94
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 (except with regard to an
authentication order pursuant to Section 2.02(c) hereof, which shall
require a certificate of two Officers); and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 10.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 10.05. 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 Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e), shall comply with the definition of the term "Officers'
Certificate" and shall include:
(i) a statement that the person making such certificate or
opinion has read such covenant or condition;
(ii) 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;
(iii) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(iv) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been satisfied.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
-87-
95
SECTION 10.07. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York City, or at a place of payment are authorized
or obligated by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
SECTION 10.08. NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, agent,
manager, stockholder or partner of the Company or its predecessors shall have
any liability for any Obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of, or by reason of such
Obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. This waiver and release are part of
the consideration for issuance of the Securities.
SECTION 10.09. DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
SECTION 10.10. GOVERNING LAW.
This Indenture and the Securities shall be governed by, and
construed in accordance with, the laws of the State of New York 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.
SECTION 10.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Subsidiary Guarantors, the Company or
their respective Subsidiaries. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
SECTION 10.12. SUCCESSORS.
All agreements of the Company and the Subsidiary Guarantors in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successor.
-88-
96
SECTION 10.13. SEVERABILITY.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 10.14. COUNTERPART ORIGINALS.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be an original, but all of them together
represent the same agreement.
SECTION 10.15. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
-89-
97
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
SIGNATURES
SOURCE MEDIA, INC.
By /s/ XXXXXXX X. XXXX
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Financial Officer
U.S. TRUST COMPANY OF TEXAS,
as Trustee
By /s/ XXXX XXXXXX
-------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
-90-
98
EXHIBIT A
THIS NOTE OR ITS PREDECESSORS HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, UNITED STATES PERSONS OR A BENEFICIAL INTEREST HEREIN
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN
RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO SOURCE
MEDIA, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES AT
THE TIME OF
99
EXHIBIT A
Page 2
TRANSFER OF LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO
SOURCE MEDIA, INC. THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (G) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO SOURCE
MEDIA, INC.) AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATES
SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902
OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS;
Each Global Note shall also bear the following legend on the
face thereof:
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 ANY SUCH NOMINEE
OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE &
CO. OR TO A SUCCESSOR THEREOF
100
EXHIBIT A
Page 3
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS 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.
101
EXHIBIT A
Page 4
CUSIP No:
(Front of Security)
No. 1 $___________
SOURCE MEDIA, INC.
12% Senior Notes due 2004, Series A
SOURCE MEDIA, INC., a Delaware corporation promises to pay to Cede & Co., as
nominee of the Depository Trust Company, or its registered assigns, the
principal sum of $100,000,000 on November 1, 2004.
Interest Payment Dates: May 1 and November 1, commencing May 1, 1998.
Record Dates: April 15 and October 15 (whether or not a Business Day).
Additional provisions of this Security are set forth on the other side of this
Security.
Dated:
SOURCE MEDIA, INC.
By:
------------------------
By:
------------------------
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities referred
to in the within-mentioned Indenture
U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee
By:
-------------------------------
Authorized Signatory
Dated:
-------------------
102
EXHIBIT A
Page 5
(Reverse of Security)
12% SENIOR NOTE DUE 2004, Series A
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. Source Media, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security
at the rate and in the manner specified below. The Company shall pay, in cash,
interest on the principal amount of this Security at the rate per annum of 12%.
The Company will pay interest semiannually in arrears on May 1 and November 1
of each year (each an "Interest Payment Date"), commencing May 1, 1998, or if
any such day is not a Business Day on the next succeeding Business Day.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Interest shall accrue from the most recent Interest Payment
Date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of the Securities. To the extent lawful, the
Company shall pay interest on overdue principal at the rate of 2% per annum in
excess of the then applicable interest rate on the Securities; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful. The rate of interest
payable on this Security shall be subject to the assessment of additional
interest (the "Additional Interest") as follows:
(i) if the Exchange Offer Registration Statement (as defined
below) or Shelf Registration Statement (as defined below) is not filed within
45 days following the Issue Date (the "Filing Date"), Additional Interest shall
accrue on the Securities over and above the stated interest at a rate of 0.50%
per annum for the first 30 days commencing on the 16th day after the Filing
Date, such Additional Interest rate increasing by an additional 0.50% per annum
at the beginning of each subsequent 30-day period;
(ii) if the Exchange Offer Registration Statement or Shelf
Registration Statement is not declared effective within 75 days following the
Filing Date, Additional Interest shall accrue on the Securities over and above
the stated interest at a rate of 0.50% per annum for the first 30 days
commencing on the 76th day after the Filing Date, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each subsequent
30-day period; or
(iii) if (A) the Company and the Subsidiary Guarantors have
not exchanged all Securities validly tendered in accordance with the terms of
the Exchange Offer on or prior to 135 days after the Filing Date or (B) the
Exchange Offer Registration Statement ceases to be effective at any time prior
to the time that the Exchange Offer is consummated or (C) if applicable, the
Shelf Registration Statement has been declared effective and such
103
EXHIBIT A
Page 6
Shelf Registration Statement ceases to be effective at any time prior to the
second anniversary of the Issue Date (unless all the Securities have been sold
thereunder), then Additional Interest shall accrue on the Securities over and
above the stated interest at a rate of 0.50% per annum for the first 30 days
commencing on (x) the 36th day after the Filing Date with respect to the
Securities validly tendered and not exchanged by the Company, in the case of
(A) above, or (y) the day the Exchange Offer Registration Statement ceases to
be effective or usable for its intended purpose in the case of (B) above, or
(z) the day such Shelf Registration Statement ceases to be effective in the
case of (C) above, such Additional Interest rate increasing by an additional
0.50% per annum at the beginning of each subsequent 30-day period; provided,
however, that the Additional Interest rate on the Securities under clauses (i),
(ii) and (iii) above may not exceed in the aggregate 2.0% per annum; and
provided further, that (1) upon the filing of the Exchange Offer Registration
Statement or Shelf Registration Statement (in the case of clause (i) above),
(2) upon the effectiveness of the Exchange Offer Registration Statement or
Shelf Registration Statement (in the case of (ii) above), or (3) upon the
exchange of Exchange Securities for all Securities tendered (in the case of
clause (iii)(A) above), or upon the effectiveness of the Exchange Offer
Registration Statement which had ceased to remain effective (in the case of
clause (iii)(B) above), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause (iii)(C)
above), Additional Interest on the Securities as a result of such clause (or
the relevant subclause thereof), as the case may be, shall cease to accrue.
"Exchange Offer" shall mean the exchange offer by the Company
of Initial Securities for Exchange Securities pursuant to Section 2(a) of the
Registration Rights Agreement.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Offering Memorandum or prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Record Date" shall have the meaning provided on the front of
this Security.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company and the Subsidiary Guarantors pursuant to
the provisions of the Registration Rights Agreement which covers all of the
Initial Securities on an appropriate form under Rule 415 under the Securities
Act, or any similar rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Offering Memorandum
contained therein, all exhibits thereto and all material incorporated by
reference therein.
104
EXHIBIT A
Page 7
2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the Record Date immediately
preceding the Interest Payment Date, even if such Securities are cancelled
after such Record Date and on or before such Interest Payment Date.
Securityholders must surrender Securities to a Paying Agent to collect
principal payments. The Company shall pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal, premium, if any, and interest by its check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Securityholder at the Securityholder's
registered address.
3. Paying Agent and Registrar. Initially, the Trustee will
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Securityholder. The
Company or any Guarantor of the Company may act in any such capacity, except
that none of the Company, its Subsidiaries or their Affiliates shall act (i) as
Paying Agent in connection with any redemption, offer to purchase, discharge or
defeasance, as otherwise specified in the Indenture, and (ii) as Paying Agent
or Registrar if a Default or Event of Default has occurred and is continuing.
4. Indenture. The Company issued the Securities under an
Indenture, dated as of October 30, 1997 (the "Indenture"), between the Company
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the TIA as in
effect on the date the Indenture is qualified. The Securities are subject to
all such terms, and Securityholders are referred to the Indenture and the TIA
for a statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Securities. The Securities are
senior Obligations of the Company limited to $100,000,000 in aggregate
principal amount.
5.(a) Optional Redemption. Except as indicated in the next
succeeding paragraph, the Securities are not redeemable at the Company's option
prior to November 1, 2001. Thereafter, the Securities will be redeemable, at
the option of the Company, in whole or in part, at the redemption prices
(expressed as percentages of the principal amount of the Securities) set forth
below, plus accrued interest to the redemption date:
PERIOD REDEMPTION PRICE
------ ----------------
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 106%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 103%
2003 and thereafter 100.000%
105
EXHIBIT A
Page 8
(b) Optional Redemption Upon Equity Offerings. At any time,
or from time to time, on or prior to November 1, 2000, the Company may, at its
option, use the Net Cash Proceeds of one or more Equity Offerings by the
Company so long as there is a Public Market at the time of such redemption, at
a redemption price equal to 35% of the principal amount thereof, plus accrued
and unpaid interest thereon, if any, to the date of redemption; provided,
however, that after any such redemption, the aggregate principal amount of the
Securities outstanding must equal at least $65 million. In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Company
shall make such redemption not more than 60 days after the consummation of any
such Equity Offering.
6. Mandatory Redemption. The Securities are not subject to
mandatory redemption or sinking fund payments.
7. Repurchase at Option of Securityholder. (a) If there is a
Change of Control, each Holder of Securities will have the right to require the
Company to repurchase all or any part of such Holder's Securities at a
repurchase price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date). Within 30 days following any Change of
Control, the Company will mail a notice to each Securityholder stating (i) that
a Change of Control has occurred and that such Securityholder has the right to
require the Company to repurchase all or any part of such Securityholder's
Securities at a repurchase price in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date); (ii) the
circumstances and relevant facts regarding such Change of Control (including
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (iii) the
repurchase date (which will be no earlier then 30 days nor later than 60 days
from the date such notice is mailed); and (iv) the procedures, determined by
the Company consistent with the Indenture, that a Securityholder must follow in
order to have its Securities repurchased. Securityholders that are subject to
an offer to repurchase may elect to have such Securities repurchased by
completing the form entitled "Option of Securityholder to Elect Purchase"
appearing below.
(b) If the Company or a Subsidiary consummates any Asset
Disposition, and when the aggregate amount of Net Available Cash from such an
Asset Disposition exceeds $3 million, the Company shall be required to offer to
purchase the maximum principal amount of Securities, that is in an integral
multiple of $1,000, that may be purchased out of the Net Available Cash at 100%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date fixed for the closing of such offer in accordance with the procedures
set forth in the Indenture. If the aggregate principal amount of Securities
106
EXHIBIT A
Page 9
surrendered by Holders thereof exceeds the amount of Net Available Cash, the
Securities to be redeemed shall be selected on a pro rata basis.
Securityholders that are the subject of an offer to purchase will receive an
Asset Disposition Offer from the Company prior to any related purchase date and
may elect to have such Securities purchased by completing the form entitled
"Option of Securityholder to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be
mailed at least 30 (unless a shorter period is acceptable to the Trustee) but
not more than 60 days before the redemption date to each Holder whose
Securities are to be redeemed at its registered address. Securities may be
redeemed in part but only in whole multiples of $1,000, unless all of the
Securities held by a Securityholder are to be redeemed. On and after the
redemption date, interest ceases to accrue on Securities or portions of them
called for redemption.
9. Registration Rights. Pursuant to the Registration Rights
Agreement, and subject to certain terms and conditions stated therein, the
Company will be obligated to consummate an Exchange Offer pursuant to which the
Holders of the Initial Securities shall have the right to exchange this
Security for Exchange Securities, which have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respect to the Initial Security.
10. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Securityholder among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not exchange
or register the transfer of any Security or portion of a Security selected for
redemption. Also, it need not exchange or register the transfer of any
Securities during a period beginning at the opening of business on a Business
Day 15 days before the day of any selection of Securities to be redeemed and
ending at the close of business on the day of selection or during the period
between a Record Date and the corresponding Interest Payment Date.
11. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Security, the Trustee, any
Agent and the Company may deem and treat the Person in whose name this Security
is registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Security and for all other
purposes whatsoever, whether or not this Security is overdue, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the contrary.
The registered Securityholder shall be treated as its owner for all purposes.
107
EXHIBIT A
Page 10
12. Amendments and Waivers. Subject to certain exceptions
provided in the Indenture, the Indenture or the Securities may be amended with
the consent of the Holders of a majority in principal amount of the then
outstanding Securities, and any existing Default or Event of Default (except a
payment default) may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities. Without the consent of
any Securityholder the Indenture or the Securities may be amended to, among
other things, cure any ambiguity, defect or inconsistency, to comply with the
requirements of the Commission in order to effect or maintain qualification of
the Indenture under the TIA or to make any change that does not adversely
affect the rights of any Securityholder.
13. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Securities may declare the unpaid principal of, and any
accrued and unpaid interest on, all the Securities to be due and payable
immediately; provided, that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company or any
Subsidiary Guarantor, all outstanding Securities shall become due and payable
immediately without further action or notice. Securityholders may not enforce
the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Securities may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment
of principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
14. Trustee Dealings with the Company. The Trustee under the
Indenture, in its individual or any other capacity may make loans to, accept
deposits from, and perform services for the Company, the Subsidiary Guarantors
or any Affiliate of the Company or the Subsidiary Guarantors, and may otherwise
deal with the Company, the Subsidiary Guarantors and their respective
Affiliates as if it were not Trustee.
15. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a
number of important qualifications and exceptions provided for in the
Indenture. The Company must annually report to the Trustee on compliance with
such limitations.
108
EXHIBIT A
Page 11
16. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
17. Subsidiary Guarantee. Each Subsidiary Guarantor has
jointly and severally irrevocably and unconditionally guaranteed the payment of
principal, premium, if any, and interest (including interest on overdue
principal and overdue interest, if lawful) on the Securities; provided,
however, each Subsidiary Guarantor that makes a payment or distribution under a
Subsidiary Guarantee shall be entitled to a contribution from each other
Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor.
18. Defeasance. Subject to certain conditions provided for
in the Indenture, the Company at any time may terminate some or all of its
obligations under the Securities and the Indenture if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Securities to redemption or maturity, as
the case may be.
19. Governing Law. The Laws of the State of New York shall
govern this Security and the Indenture, without regard to principles of
conflict of laws.
20. Abbreviations. Customary abbreviations may be used in
the name of a Securityholder 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).
21. 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 Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to
Securityholders. No representation is made as to the accuracy of such numbers
either as printed on the Securities 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 Securityholder upon written
request and without charge a copy of the Indenture. Request may be made to:
Source Media, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
109
EXHIBIT A
Page 12
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
110
EXHIBIT A
Page 13
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date:
--------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the
face of this Security)
Signature Guarantee:
------------------------------
(Signatures must be guaranteed
by an "eligible guarantor
institution" meeting the
requirements of the Registrar,
which requirements will
include membership or
participation in the
Securities Transfer Agents
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.)
111
EXHIBIT A
Page 14
In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by
the Commission of the effectiveness of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") covering resales of
this Security (which effectiveness shall not have been suspended or terminated
at the date of the transfer) and (ii) June 25, 1999, the undersigned confirms
that it has not utilized any general solicitation or general advertising in
connection with the transfer and that this Security is being transferred:
Check One
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under
the Securities Act; or
(3) ___ to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) that has furnished to the Trustee a
signed letter containing certain representations and
agreements (the form of which letter can be obtained
from the Trustee); or
(4) ___ outside the United States to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act; or
(5) ___ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act; or
(6) ___ pursuant to an effective registration statement under
the Securities Act; or
(7) ___ pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any Person other
than the registered Securityholder thereof; provided that if box (3), (4), (5)
or (7) is checked, the Company or the Trustee may require, prior to registering
any such transfer of the Securities, in its sole discretion, such legal
opinions, certifications (including an investment letter in the case of box (3)
or (4)) and other information as the Trustee or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act. If none
112
EXHIBIT A
Page 15
of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Securityholder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: Signed:
-------------------------- --------------------------------------
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:
------------------------------------------------
------------------------------
(Signatures must be guaranteed
by an "eligible guarantor
institution" meeting the
requirements of the Registrar,
which requirements will include
membership or participation in
the Securities Transfer Agents
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.)
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying
113
EXHIBIT A
Page 16
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
----------------------- -------------------------------------
NOTICE: To be executed by an
executive officer
114
EXHIBIT A
Page 17
OPTION OF SECURITYHOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture check the appropriate box:
[ ] Section 4.10 [ ] Section 4.14
If you want to have only part of the Security purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$
----------------------
Date:
-----------------
Your Signature:
------------------------
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:
----------------------------------------
(Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Registrar, which
requirements will include membership or
participation in the Securities Transfer
Agents 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.)
115
EXHIBIT B
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH
NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH
SUCCESSOR 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, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN THE INDENTURE.
116
EXHIBIT B
Page 2
CUSIP No:
(Front of Security)
No. 1 $
-----------
SOURCE MEDIA, INC.
12% Senior Note dues 2004, Series B
SOURCE MEDIA, INC., a Delaware corporation, promises to pay to Cede & Co., as
nominee of the Depository Trust Company, or its registered assigns, the
principal sum of $100,000,000 on November 1, 2004.
Interest Payment Dates: May 1 and November 1, commencing May 1, 1998.
Record Dates: April 15 and October 15 (whether or not a Business Day).
Additional provisions of this Security are set forth on the other side of this
Security.
Dated:
SOURCE MEDIA, INC.
By:
------------------------
Name:
Title:
By:
------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities referred
to in the within-mentioned Indenture
U.S. Trust Company of Texas, N.A., as Trustee
By:
-------------------------------
Authorized Signatory
Date:
-----------------------
117
EXHIBIT B
Page 3
(Reverse of Security)
12% SENIOR NOTES DUE 2004, SERIES B
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. Source Media, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security
at the rate and in the manner specified below. The Company shall pay, in cash,
interest on the principal amount of this Security at the rate per annum of 12%.
The Company will pay interest semiannually in arrears on May 1 and November 1
of each year (each an "Interest Payment Date"), commencing May 1, 1998, or if
any such day is not a Business Day on the next succeeding Business Day.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Interest shall accrue from the most recent Interest Payment
Date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of the Securities. To the extent lawful, the
Company shall pay interest on overdue principal at the rate of 2% per annum in
excess of the then applicable interest rate on the Securities; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are registered
Securityholders at the close of business on the Record Date immediately
preceding the Interest Payment Date, even if such Securities are cancelled
after such Record Date and on or before such Interest Payment Date.
Securityholders must surrender Securities to a Paying Agent to collect
principal payments. The Company shall pay principal premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Securityholder at the Securityholder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Securityholder. The
Company, or any Subsidiary Guarantor of the Company may act in any such
capacity, except that none of the Company, its Subsidiaries or their Affiliates
shall act (i) as Paying Agent in connection with any redemption, offer to
purchase, discharge or defeasance, as otherwise specified in the
118
EXHIBIT B
Page 4
Indenture, and (ii) as Paying Agent or Registrar if a Default or Event of
Default has occurred and is continuing.
4. Indenture. The Company issued the Securities under an
Indenture, dated as of October 30, 1997 (the "Indenture"), between the Company
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the TIA as in
effect on the date the Indenture is qualified. The Securities are subject to
all such terms, and Securityholders are referred to the Indenture and the TIA
for a statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Securities. The Securities are
senior Obligations of the Company limited to $100,000,000 in aggregate
principal amount.
5. (a) Optional Redemption. Except as indicated in the next
succeeding paragraph, the Securities are not redeemable at the Company's option
prior to November 1, 2001. Thereafter, the Securities will be redeemable, at
the option of the Company, in whole or in part, at the redemption prices
(expressed as percentages of the principal amount of the Securities) set forth
below, plus accrued interest to the redemption date:
PERIOD REDEMPTION PRICE
------ ----------------
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 106%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 103%
2003 and thereafter 100.000%
(b) Optional Redemption Upon Equity Offerings. At any time,
or from time to time, on or prior to November 1, 2000, the Company may, at its
option, use the Net Cash Proceeds of one or more Equity Offerings by the
Company so long as there is a Public Market at the time of such redemption, at
a redemption price equal to 35% of the principal amount thereof, plus accrued
and unpaid interest thereon, if any, to the date of redemption; provided,
however, that after any such redemption, the aggregate principal amount of the
Securities outstanding must equal at least $65 million. In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Company
shall make such redemption not more than 60 days after the consummation of any
such Equity Offering.
6. Mandatory Redemption. The Securities are not subject to
mandatory redemption or sinking fund payments.
119
EXHIBIT B
Page 5
7. Repurchase at Option of Securityholder. (a) If there is a
Change of Control, each Holder of Securities will have the right to require the
Company to repurchase all or any part of such Holder's Securities at a
repurchase price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date). Within 45 days following any Change of
Control, the Company will mail a notice to each Securityholder stating (i) that
a Change of Control has occurred and that such Securityholder has the right to
require the Company to repurchase all or any part of such Securityholder's
Securities at a repurchase price in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date); (ii) the
circumstances and relevant facts regarding such Change of Control (including
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control; (iii) the
repurchase date (which will be no earlier then 30 days nor later than 30 days
from the date such notice is mailed); and (iv) the procedures, determined by
the Company consistent with the Indenture, that a Securityholder must follow in
order to have its Securities repurchased. Securityholders that are subject to
an offer to repurchase may elect to have such Securities repurchased by
completing the form entitled "Option of Securityholder to Elect Purchase"
appearing below.
(b) If the Company or a Subsidiary consummates any Asset
Disposition, and when the aggregate amount of Net Available Cash from such an
Asset Disposition exceeds $3 million, the Company shall be required to offer to
purchase the maximum principal amount of Securities, that is in an integral
multiple of $1,000, that may be purchased out of the Net Available Cash, at an
offer price in cash in an amount equal to 100% of the outstanding principal
amount thereof, plus accrued and unpaid interest, if any, to the date fixed for
the closing of such offer in accordance with the procedures set forth in the
Indenture. If the aggregate principal amount of Securities surrendered by
Holders thereof exceeds the amount of Net Available Cash, the Securities to be
redeemed shall be selected on a pro rata basis. Securityholders that are the
subject of an offer to purchase will receive an Asset Disposition Offer from
the Company prior to any related purchase date and may elect to have such
Securities purchased by completing the form entitled "Option of Securityholder
to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be
mailed at least 30 days (unless a shorter period is acceptable to the Trustee)
but not more than 60 days before the redemption date to each Holder whose
Securities are to be redeemed at its registered address. Securities may be
redeemed in part but only in whole multiples of $1,000, unless all of the
Securities held by a Securityholder are to be redeemed. On and after the
120
EXHIBIT B
Page 6
redemption date, interest ceases to accrue on Securities or portions of them
called for redemption.
9. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Securityholder among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not exchange
or register the transfer of any Security or portion of a Security selected for
redemption. Also, it need not exchange or register the transfer of any
Securities during a period beginning on the opening of business on a Business
Day 15 days before the day of any selection of Securities to be redeemed and
ending on the close of business on the day of selection or during the period
between a Record Date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Security, the Trustee, any
Agent and the Company may deem and treat the Person in whose name this Security
is registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Security and for all other
purposes whatsoever, whether or not this Security is overdue, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the contrary.
The registered Securityholder shall be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions
provided in the Indenture, the Indenture or the Securities may be amended with
the consent of the Holders of a majority in principal amount of the then
outstanding Securities, and any existing default or Event of Default (except a
payment default) may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities. Without the consent of
any Securityholder the Indenture or the Securities may be amended to, among
other things, cure any ambiguity, defect or inconsistency, to comply with the
requirements of the Commission in order to effect or maintain qualification of
the Indenture under the TIA Securityholders or to make any change that does not
adversely affect the rights of any Securityholder.
12. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Securities may declare the unpaid principal of, and any
accrued and unpaid interest on, all the Securities to be due and payable
immediately; provided, that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company or any
Subsidiary Guarantor, all outstanding Securities shall become due and payable
immediately without further action or notice. Securityholders may not enforce
121
EXHIBIT B
Page 7
the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Securities may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment
of principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
13. Trustee Dealings with the Company. The Trustee under the
Indenture, in its individual or any other capacity may make loans to, accept
deposits from, and perform services for the Company, the Subsidiary Guarantor
or any Affiliate of the Company or the Subsidiary Guarantor, and may otherwise
deal with the Company, the Subsidiary Guarantor and their respective Affiliates
as if it were not Trustee.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a
number of important qualifications and exceptions provided for in the
Indenture. The Company must annually report to the Trustee on compliance with
such limitations.
15. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
16. Subsidiary Guarantee. Each Subsidiary Guarantor has
jointly and severally irrevocably and unconditionally guaranteed the payment of
principal, premium, if any, and interest (including interest on overdue
principal and overdue interest, if lawful) on the Securities; provided,
however, each Subsidiary Guarantor that makes a payment or distribution under a
Subsidiary Guarantee shall be entitled to a contribution from each other
Subsidiary Guarantor in a pro rata amount based on the Adjusted Net Assets of
each Subsidiary Guarantor.
17. Defeasance. Subject to certain conditions provided for
in the Indenture, the Company at any time may terminate some or all of its
obligations under the Securities and the Indenture if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Securities to redemption or maturity, as
the case may be.
122
EXHIBIT B
Page 8
18. Governing Law. The Laws of the State of New York shall
govern this Security and the Indenture, without regard to principles of
conflict of laws.
19. Abbreviations. Customary abbreviations may be used in
the name of a Securityholder 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).
20. 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 Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to
Securityholders. No representation is made as to the accuracy of such numbers
either as printed on the Securities 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 Securityholder upon written
request and without charge a copy of the Indenture. Request may be made to:
Source Media, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
123
EXHIBIT B
Page 9
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
124
EXHIBIT B
Page 10
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date:
--------------
Your Signature:
--------------------------------
(Sign exactly as your name appears
on the face of this Security)
Signature Guarantee:
-------------------------------
(Signatures must be guaranteed
by an "eligible guarantor
institution" meeting the
requirements of the Registrar,
which requirements will include
membership or participation in
the Securities Transfer Agents
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.)
125
EXHIBIT B
Page 11
OPTION OF SECURITYHOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture check the appropriate box:
[ ] Section 4.10 [ ] Section 4.14
If you want to have only part of the Security purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$
----------------------
Date:
-----------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the
face of this Security)
Signature Guarantee:
-------------------------------
(Signatures must be guaranteed
by an "eligible guarantor
institution" meeting the
requirements of the Registrar,
which requirements will include
membership or participation in
the Securities Transfer Agents
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.)
126
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
U.S. Trust Company of Texas, N.A.
------------------------------------------
------------------------------------------
Attention: Corporate Trust Administration
Re: Source Media, Inc.
12% Senior Notes due 2004
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Secured
Notes due 2004 (the "Securities") of Source Media, Inc. (the "Company"), we
confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated October 30, 1997 relating to the Securities and
such other information as we deem necessary in order to make our investment
decision. We acknowledge that we have read and agreed to the matters stated on
pages (ii) and (iii) of the Offering Memorandum and in the section entitled
"Transfer Restrictions" of the Offering Memorandum including the restrictions
on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the
Securities is subject to certain restrictions and conditions set forth in the
Indenture relating to the Securities (as described in the Offering Memorandum)
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Securities
have not been registered under the Securities Act, and that the Securities 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 or
127
EXHIBIT C
Page 2
otherwise transfer any Securities prior to the date which is two years after
the original issuance of the Securities, we will do so only (i) to the Company
or any of its subsidiaries, (ii) inside the United States in accordance with
Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act), (iii) inside the United States
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 the Trustee (as defined in the Indenture relating to the
Securities), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Securities, (iv) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (v) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act (if available), or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing any of the Securities from us a notice
advising such purchaser that resales of the Securities are restricted as stated
herein.
4. We are not acquiring the Securities for or on behalf of,
and will not transfer the Securities to, any pension or welfare plan (as
defined in Section 3 of the Employee Retirement Income Security Act of 1974),
except as permitted in the section entitled "Transfer Restrictions" of the
Offering Memorandum.
5. We understand that, on any proposed resale of any
Securities, we will be required to furnish to the Trustee and the Company such
certification, legal opinions and other information as the Trustee and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. 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
Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our
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
128
EXHIBIT C
Page 3
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
---------------------------------------
Name:
129
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
,
--------------- ----
U.S. Trust Company of Texas, N.A.
------------------------------------------
------------------------------------------
Attention: Corporate Trust Administration
Re: Source Media, Inc.
(the "Company") __% Senior Unsecured
Notes due 2004 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $_____________
aggregate principal amount of the Securities, we confirm that such sale has
been effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a Person in
the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre- arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
130
EXHIBIT D
Page 2
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
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. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------------
Authorized Signature
