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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
(Amendment No. 8)
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
ITT CORPORATION
(Name of Subject Company)
ITT CORPORATION
(Name of Person(s) Filing Statement)
Common Stock, no par value
(including the associated Series A Participating Cumulative
Preferred Stock Purchase Rights)
(Title of Class of Securities)
450912 10 0
(CUSIP Number of Class of Securities)
RICHARD S. WARD, Esq.
Executive Vice President,
General Counsel and Corporate Secretary
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019-5490
(212) 258-1000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
PHILIP A. GELSTON, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
(212) 474-1000
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INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") originally filed on February 12, 1997, by ITT Corporation, a
Nevada corporation (the "Company"), relates to an offer by HLT Corporation, a
Delaware corporation ("HLT") and a wholly owned subsidiary of Hilton Hotels
Corporation, a Delaware corporation ("Hilton"), to purchase 61,145,475 shares of
the common stock, no par value (including the associated Series A Participating
Cumulative Preferred Stock Purchase Rights), of the Company. All capitalized
terms used herein without definition have the respective meanings set forth in
the Schedule 14D-9.
Item 7. Certain Negotiations and Transactions by the Subject Company.
The response to Item 7 is hereby amended by adding the following
after the final paragraph of Item 7:
On April 15, 1997, the Company entered into definitive documentation
with respect to its previously announced agreement in principle to sell its 50%
interest in MSG to Cablevision. The transaction is expected to be completed as
early as June 1, 1997. Cablevision has received a commitment letter from The
Chase Manhattan Bank for funding for the purchase and the closing is not subject
to a financing condition. It is subject only to approval by the National
Basketball Association and the National Hockey League and other customary
closing conditions.
Pursuant to a Partnership Interest Transfer Agreement dated as of
April 15, 1997, among ITT Corporation, ITT Eden Corporation, ITT MSG, Inc.,
Cablevision Systems Corporation, Rainbow Media Holdings, Inc., Rainbow Garden
Corp., Garden L.P. Holding Corp., MSG Eden Corporation and Madison Square
Garden, L.P. (the "Partnership Interest Transfer Agreement"), Cablevision will
pay ITT $500 million in cash at closing. ITT also has a "put" option to require
Cablevision or MSG to purchase half of ITT's continuing interest in MSG for $75
million on the first anniversary of the closing and the other half of this
continuing interest for an additional $75 million on the second anniversary of
the closing (or, if the first option is not exercised, the entire continuing
interest for $150 million).
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In addition, pursuant to an Aircraft Contribution Agreement dated as
of April 15, 1997, among Garden L.P. Holding Corp., MSG Eden Corporation, ITT
MSG, Inc., ITT Flight Operations, Inc. and Madison Square Garden, L.P. (the
"Aircraft Contribution Agreement"), ITT has agreed to contribute to MSG an
ITT-owned aircraft which MSG has used for the Knicks and the Rangers. In
consideration of the aircraft contribution, Cablevision has agreed to add an
additional $19 million to the exercise price of each of ITT's "put" options.
The Partnership Interest Transfer Agreement also includes a "call"
option requiring ITT to sell its remaining stake in MSG on the third anniversary
of the closing at fair market value, but not below a minimum price based on the
"put" prices.
A copy of a press release announcing the signing of the definitive
documentation is filed as Exhibit 48 hereto and is incorporated herein by
reference. The definitive documentation for the transaction includes the
Partnership Interest Transfer Agreement, an Amended and Restated Agreement of
Limited Partnership, a SportsChannel Contribution Agreement and the Aircraft
Contribution Agreement, copies of which are filed as Exhibits 49, 50, 51 and 52
hereto, respectively, and are incorporated herein by reference. The foregoing
description of certain of those agreements is not intended to be complete and is
qualified in its entirety by reference to the provisions of such agreements.
Item 9. Exhibits.
The response to Item 9 is hereby amended by adding the following new
exhibits:
48. Text of Press Release Issued by the Company dated April 16, 1997.
49. Partnership Interest Transfer Agreement dated as of April 15, 1997, among
ITT Corporation, ITT Eden Corporation, ITT MSG, Inc., Cablevision Systems
Corporation, Rainbow Media Holdings, Inc., Rainbow Garden Corp., Garden
L.P. Holding Corp., MSG Eden Corporation and Madison Square Garden, L.P.
2
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50. Amended and Restated Agreement of Limited Partnership of Madison Square
Garden, L.P. dated as of April 15, 1997, among MSG Eden Corporation, ITT
MSG, Inc. and Garden L.P. Holding Corp.
51. SportsChannel Contribution Agreement dated as of April 15, 1997, among
Rainbow Media Holdings, Inc., Garden L.P. Holding Corp., Rainbow Garden
Corp., SportsChannel New York Holding Partnership, SportsChannel
Associates Holding Corporation, MSG Eden Corporation, ITT MSG, Inc., ITT
Eden Corporation and Madison Square Garden, L.P.
52. Aircraft Contribution Agreement dated as of April 15, 1997, among Garden
L.P. Holding Corp., MSG Eden Corporation, ITT MSG, Inc., ITT Flight
Operations, Inc. and Madison Square Garden, L.P.
3
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
ITT CORPORATION
By /s/ RICHARD S. WARD
----------------------------------
Name: Richard S. Ward
Title: Executive Vice President,
General Counsel and
Corporate Secretary
Dated as of April 17, 1997
4
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EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
(48) Text of Press Release issued by the Company
dated April 16, 1997................................
(49) Partnership Interest Transfer Agreement
dated as of April 15, 1997, among ITT
Corporation, ITT Eden Corporation, ITT MSG,
Inc., Cablevision Systems Corporation,
Rainbow Media Holdings, Inc., Rainbow
Garden Corp., Garden L.P. Holding Corp.,
MSG Eden Corporation and Madison Square
Garden, L.P.........................................
(50) Amended and Restated Agreement of Limited
Partnership of Madison Square Garden, L.P.
dated as of April 15, 1997, among MSG Eden
Corporation, ITT MSG, Inc. and Garden L.P.
Holding Corp........................................
(51) SportsChannel Contribution Agreement dated
as of April 15, 1997, among Rainbow Media
Holdings, Inc., Garden L.P. Holding Corp.,
Rainbow Garden Corp., SportsChannel New
York Holding Partnership, SportsChannel
Associates Holding Corporation, MSG Eden
Corporation, ITT MSG, Inc., ITT Eden
Corporation and Madison Square Garden, L.P.
(included as Exhibit B to Exhibit 49
hereto).............................................
(52) Aircraft Contribution Agreement dated as of
April 15, 1997, among Garden L.P. Holding
Corp., MSG Eden Corporation, ITT MSG, Inc.,
ITT Flight Operations, Inc. and Madison
Square Garden, L.P. (included as Exhibit C
to Exhibit 49 hereto)...............................
5
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[Exhibit 48]
[ITT LETTERHEAD]
DATE: April 16, 1997
CONTACT: Jim Gallagher
TELEPHONE: 212-258-1261
FOR IMMEDIATE RELEASE
ITT SIGNS DEFINITIVE AGREEMENTS WITH CABLEVISION
TO SELL ITS 50% STAKE IN MADISON SQUARE GARDEN
NEW YORK, NY, April 16, 1997 - - ITT Corporation (NYSE:ITT) today
announced that it has signed definitive agreements to sell its 50% interest in
the Madison Square Garden (MSG) sports and entertainment properties to
Cablevision Systems Corporation (ASE:CVC). The companies announced an agreement
in principle last month.
The transaction is expected to be completed as early as June 1, 1997.
Cablevision had received a commitment letter from The Chase Manhattan Bank for
funding for the purchase and the closing is not subject to a financing
condition. It is subject only to approvals by the National Basketball
Association and the National Hockey League and other customary closing
conditions.
- - MORE- -
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MSG STAKE SALE - PAGE TWO
Under the definitive agreements, Cablevision will pay ITT $500 million in
cash at closing. ITT also has a "put" option to require Cablevision or MSG to
purchase half of ITT's continuing interest in MSG for $75 million on the first
anniversary of the closing and the other half of this continuing interest for an
additional $75 million on the second anniversary of the closing, or if the first
option is not exercised, the entire interest for $150 million.
The agreement also includes a "call" option requiring ITT to sell its
remaining stake in MSG on the third anniversary of the closing at fair market
value, but not to be below a minimum price based on the put prices.
# # #
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[Exhibit 49]
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PARTNERSHIP INTEREST TRANSFER AGREEMENT
Dated as of April 15, 1997
among
ITT CORPORATION,
ITT EDEN CORPORATION,
ITT MSG INC.,
CABLEVISION SYSTEMS CORPORATION,
RAINBOW MEDIA HOLDINGS, INC.
RAINBOW GARDEN CORP.,
GARDEN L.P. HOLDING CORP.,
MSG EDEN CORPORATION
and
MADISON SQUARE GARDEN, L.P.
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TABLE OF CONTENTS
ARTICLE I
Definitions Page
----------- ----
SECTION 1.01. General................................................. 2
ARTICLE II
Transfers
SECTION 2.01. Initial Transfer........................................ 18
SECTION 2.02. Initial Closing......................................... 19
SECTION 2.03. First Put Option........................................ 19
SECTION 2.04. Second Put Option....................................... 21
SECTION 2.05. Payment of Cash Upon Exercise of
Put Option............................................ 23
SECTION 2.06. Issuance of Shares of Cablevision
Common Stock Upon Exercise of Put Option.............. 24
SECTION 2.07. ITT MSG's Right to Profits.............................. 28
SECTION 2.08. Cablevision's Change of Control
Call Right............................................ 31
SECTION 2.09. Cablevision's Third-Year
Call Right............................................ 33
SECTION 2.10. Accelerated Put Right................................... 34
SECTION 2.11. Adjustment of Purchase Prices .......................... 34
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties
of ITTE and ITT MSG .................................. 35
SECTION 3.02. Representations and Warranties
of Cablevision, RGC and GHC........................... 38
SECTION 3.03. Representations and Warranties
of MSG................................................ 41
SECTION 3.04. No Representations or Warranties as to Business......... 42
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Page
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ARTICLE IV
Registration Rights
SECTION 4.01. Registration Rights...................................... 42
SECTION 4.02. Registration Procedures.................................. 44
ARTICLE V
Indemnification
SECTION 5.01. Indemnification by Cablevision .......................... 51
SECTION 5.02. Indemnification by Rainbow............................... 51
SECTION 5.03. Indemnification by RGC................................... 51
SECTION 5.04. Indemnification by GHC................................... 51
SECTION 5.05. Indemnification by MSG................................... 52
SECTION 5.06. Indemnification by ITTE.................................. 52
SECTION 5.07. Indemnification by ITT MSG............................... 52
SECTION 5.08. Indemnification by ITT................................... 53
SECTION 5.09. Procedures for Indemnification........................... 53
SECTION 5.10. Indemnification Payments................................. 55
SECTION 5.11. Contribution............................................. 55
SECTION 5.12. Survival of Obligations.................................. 56
ARTICLE VI
Covenants
SECTION 6.01. Cooperation; Further Assurances.......................... 56
SECTION 6.02. Antitrust Notification................................... 58
SECTION 6.03. League Approvals......................................... 58
SECTION 6.04. Publicity................................................ 59
SECTION 6.05. Governance of MSG........................................ 60
SECTION 6.06. Existing Agreements; Contribution of
SportsChannel New York ................................ 60
SECTION 6.07. Compliance by Affiliates................................. 62
SECTION 6.08. Other Agreements......................................... 62
SECTION 6.09. Tax Matters.............................................. 63
ARTICLE VII
Closing Conditions
SECTION 7.01. Conditions to Closings................................... 64
SECTION 7.02. Frustration of Closing Conditions........................ 68
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Page
----
ARTICLE VIII
Miscellaneous
SECTION 8.01. Assignment............................................... 69
SECTION 8.02. Successors and Assigns; No Third-party Beneficiaries..... 70
SECTION 8.03. Termination.............................................. 70
SECTION 8.04. Survival of Representations.............................. 72
SECTION 8.05. Expenses................................................. 72
SECTION 8.06. Attorney Fees............................................ 72
SECTION 8.07. Amendments............................................... 72
SECTION 8.08. Notices.................................................. 72
SECTION 8.09. Interpretation; Exhibits
and Schedules................................. 73
SECTION 8.10. Counterparts............................................. 74
SECTION 8.11. Entire Agreement......................................... 74
SECTION 8.12. Brokers' or Finders' Fees................................ 74
SECTION 8.13. Severability............................................. 74
SECTION 8.14. Specific Performance..................................... 74
SECTION 8.15. Consent to Jurisdiction.................................. 75
SECTION 8.16. Governing Law............................................ 76
Exhibit A Form of Bill of Sale and Assignment of Partnership Interest
Exhibit B SportsChannel Contribution Agreement
Exhibit C Aircraft Contribution Agreement
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PARTNERSHIP INTEREST TRANSFER AGREEMENT dated as of
April 15, 1997, among ITT CORPORATION, a Nevada corporation
("ITT"), ITT Eden Corporation, a Delaware corporation
("ITTE"), ITT MSG Inc., a Delaware corporation ("ITT MSG"),
Cablevision Systems Corporation, a Delaware corporation
("Cablevision"), Rainbow Garden Corp., a Delaware corporation
and a subsidiary of Cablevision ("RGC"), Garden L.P. Holding
Corp., a Delaware corporation and a subsidiary of Cablevision
("GHC"), MSG Eden Corporation, a Delaware corporation
("MSGE"), and Madison Square Garden, L.P., a Delaware limited
partnership ("MSG").
WHEREAS ITTE and RGC together own all of the issued and outstanding
shares of capital stock of MSGE;
WHEREAS MSGE is the general partner and owner of a 1% general
partnership interest in MSG;
WHEREAS ITT MSG and GHC each own a 49.5% limited partnership
interest in MSG;
WHEREAS MSGE, ITT MSG and GHC are entering into an amended and
restated agreement of limited partnership, dated the date hereof (the
"Partnership Agreement"), to set forth, among other things, each partner's
rights and obligations with respect to MSG and provide for the operation of the
business of MSG, in each case from and after the Initial Closing (as defined
herein);
WHEREAS ITTE desires to sell or otherwise transfer, and RGC desires
to purchase or cause to be redeemed, all of ITTE's interest in MSGE, ITT MSG
desires to sell or otherwise transfer, and GHC desires to purchase or otherwise
cause to be redeemed, a portion of ITT MSG's interest in MSG and ITT MSG and
Cablevision, RGC and GHC desire to set forth certain rights with respect to the
transfer of ITT MSG's remaining interest in MSG, in each case, upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS certain Affiliates of Cablevision and certain Affiliates of
ITT MSG are entering into contribution agreements dated the date hereof, to set
forth certain
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2
rights and obligations of the parties thereto with respect to a contribution to
MSG of (i) SportsChannel Associates, a New York general partnership, all of the
general partner interests in which are owned by Affiliates of Cablevision and
(ii) an aircraft which is owned by an Affiliate of ITT MSG; and
WHEREAS the parties desire to set forth certain other agreements
relating to their interests in MSG.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. General. (a) As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acceleration Event" shall mean any event resulting in
(a) any indebtedness of Cablevision or MSG in an amount equal to or
greater than $20 million being not paid within any applicable grace period after
final maturity or being accelerated by the holders thereof because of a default
or other similar condition or event;
(b) Cablevision or MSG, pursuant to or within the meaning of Title
11, United States Code, or any similar Federal or state law for the relief of
debtors (a "Bankruptcy Law"),
(i) commencing a voluntary case;
(ii) consenting to the entry of an order for relief against it
in an involuntary case;
(iii) consenting to the appointment of a custodian of it or
for any substantial part of its property; or
(iv) making a general assignment for the benefit of its
creditors;
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3
or taking any comparable action under any foreign laws relating to
insolvency;
(c) a court of competent jurisdiction entering an order or decree
under any Bankruptcy Law that:
(i) is for relief against Cablevision or MSG in an involuntary
case;
(ii) appoints a custodian of Cablevision or MSG or for any
substantial part of its property; or
(iii) orders the winding up or liquidation of Cablevision or
MSG;
or any similar relief is granted under any foreign laws and the
order or decree remains unstayed and in effect for 60 days; or
(d) the dissolution of MSG pursuant to Section 7.1 of the
Partnership Agreement (other than in connection with a change in the
organizational form of MSG to a corporation or other business entity after which
the ITT MSG Interest represents an ownership interest in such corporation or
other business entity).
"Action" shall mean any action, suit, arbitration, inquiry,
investigation or any other proceeding by or before any Governmental Entity,
private arbitral tribunal, the Leagues or any other private regulatory body with
oversight over MSG or the transactions contemplated hereby.
"Acquisition Debt" shall mean the indebtedness incurred by MSG at
the Initial Closing to fund the cost of the redemption by MSG of the Initial
Transferred Interest.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
person specified; provided that after the Initial Closing none of MSG and its
Subsidiaries shall be considered an Affiliate of ITT, ITTE, ITT MSG or any of
their other Affiliates.
"Agent Bank" shall have the meaning set forth in the definition of
Commitment Letter.
"Aircraft" shall have the meaning set forth in the Aircraft
Contribution Agreement.
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4
"Aircraft Contribution Agreement" shall mean the Aircraft
Contribution Agreement, dated as of the date hereof, in the form of Exhibit C
hereto.
"Ancillary Agreements" shall mean the Aircraft Contribution
Agreement, the SportsChannel New York Contribution Agreement and the Sports
League Approval Agreements.
"Applicable Percentage" initially shall mean the Profit Percentage
(as defined in the Partnership Agreement) that ITT Partner (as defined in the
Partnership Agreement) will have immediately following the Initial Closing
giving effect to any transactions under the SportsChannel Contribution Agreement
that occur simultaneously with the Initial Closing, determined in accordance
with the Partnership Agreement, and thereafter shall be adjusted from time to
time to remain equal to such Profit Percentage of ITT Partner.
"Appraiser" shall have the meaning set forth in Section 2.09(a).
"Arena" shall mean all of MSG's right, title and interest in and to
the land, improvements, fixtures (including leaseholds) and all related tangible
property constituting Madison Square Garden (including the arena and any theater
located therein); provided that the Arena shall not include any assets included
in the Knicks, the Rangers or the Network.
"Arm's-length basis" shall mean, as to any transaction, agreement or
other arrangement, being on terms that would be reached by unrelated parties not
under any compulsion to contract.
"Asset Remittance Amount" shall have the meaning set forth in
Section 2.07(b).
"Asset Subject Sale" shall have the meaning set forth in Section
2.07(b).
"Bank Credit Agreement" shall mean the credit agreement (and related
agreements) to be entered into by MSG at or prior to the Initial Closing Date as
contemplated by the Commitment Letter and any refinancing thereof or successor
credit agreement.
"Bid Agreement" shall mean the Agreement dated as of August 15,
1994, between ITT, Cablevision and Rainbow relating to the formation of MSG and
the submission of a
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5
proposal to acquire the business of Madison Square Garden Corporation (the "MSG
Acquisition"), as such agreement has been modified, amended or supplemented to
date.
"Cablevision" shall mean Cablevision Systems Corporation, a Delaware
corporation, and its successors and permitted assigns.
"Cablevision Common Stock" shall mean the Class A Common Stock, par
value $.01 per share, of Cablevision.
"Cablevision Indemnitees" shall mean Cablevision, each Affiliate of
Cablevision, each of their respective directors, officers, employees and agents
and each of the heirs, executors, successors and assigns of any of the
foregoing.
"Cablevision Shares" shall have the meaning set forth in Section
2.06(a).
"Change of Control" shall mean, at the relevant time, (i) any event
resulting in any "person" or "group" (within the meaning of Sections 13(d) and
14(d) of the Exchange Act) becoming the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than
35% of the total voting power of all classes of capital stock of the ultimate
parent, at the relevant time, of ITT MSG then outstanding and entitled to vote
generally in elections of directors ("Voting Stock") and such beneficial
ownership was acquired within a period of two years following a tender offer by
such person (or any of its Affiliates) for shares of Voting Stock of such parent
of ITT MSG or a solicitation of proxies with respect to Voting Stock of such
parent of ITT MSG by such person, if, in either case, such tender offer or
solicitation of proxies was not approved by a majority of the Board of Directors
of such parent of ITT MSG in office at the time such tender offer or proxy
solicitation was commenced, or (ii) a majority of the Board of Directors of the
ultimate parent, at the relevant time, of ITT MSG being constituted of
individuals who were elected pursuant to a solicitation of proxies with respect
to Voting Stock of such parent of ITT MSG, if such solicitation of proxies was
not approved by a majority of the Board of Directors of such parent of ITT MSG
in office at the time such solicitation of proxies was commenced.
"Change of Control Call Closing" shall have the meaning set forth in
Section 2.08(c).
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6
"Change of Control Call Closing Date" shall have the meaning set
forth in Section 2.08(c).
"Change of Control Call Price" shall have the meaning set forth in
Section 2.08(a).
"Change of Control Call Right" shall have the meaning set forth in
Section 2.08(a).
"Closing" shall mean any of the Initial Closing, the First Put Cash
Closing, the Second Put Cash Closing, the First Put Stock Closing, the Second
Put Stock Closing, the Change of Control Call Closing or the Third-Year Call
Closing.
"Closing Date" shall mean any of the Initial Closing Date, the First
Put Cash Closing Date, the Second Put Cash Closing Date, the First Put Stock
Closing Date, the Second Put Stock Closing Date, the Change of Control Call
Closing Date or the Third-Year Call Closing Date.
"Commitment Letter" shall mean the commitment letter dated as of
April 4, 1997, from The Chase Manhattan Bank (the "Agent Bank") committing to
provide funds to MSG.
"Consideration" shall mean, with respect to the Transfer of any
asset, property or interest, the amount of consideration therefor received by
the transferee and any of its Affiliates, including existing indebtedness
assumed by the transferee and any of its Affiliates or to which such Transferred
asset, property or interest is subject and, without duplication, the value to
the transferee or its Affiliates of any rights, options, contracts or other
arrangements received by such transferee and any of its Affiliates in
consideration of such Transfer.
"Contribution Right" shall have the meaning set forth in Section
6.06(a).
"Debt Securities" shall have the meaning set forth in Section
2.08(c).
"DOJ" shall have the meaning set forth in Section 6.02.
"Equity Remittance Amount" shall have the meaning set forth in
Section 2.07(a).
"Equity Subject Sale" shall have the meaning set forth in Section
2.07(a).
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7
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, as to any property, business or
other asset, the price at which a willing seller would sell and a willing buyer
would buy such property, business or other asset having full knowledge of the
facts, and assuming each party acts on an Arm's-length basis with the
expectation of concluding the purchase or sale within a reasonable time but
neither of which is under undue pressure or compulsion to complete the
transaction. Any determination of Fair Market Value shall reflect any
outstanding indebtedness secured by or relating to such property, business or
other asset.
"Fair Market Value of MSG" shall mean the Fair Market Value of MSG
as a whole on the date of determination, based on prevailing general economic,
market and financial conditions and the business, prospects and financial
condition of MSG on such date of determination, as determined in writing by a
Selected Investment Banking Firm.
"First Put Cash Closing" shall have the meaning set forth in Section
2.05(a).
"First Put Cash Closing Date" shall have the meaning set forth in
Section 2.05(a).
"First Put Option" shall have the meaning set forth in Section
2.03(a).
"First Put Purchase Price" shall have the meaning set forth in
Section 2.03(a).
"First Put Stock Closing" shall have the meaning set forth in
Section 2.06(b).
"First Put Stock Closing Date" shall have the meaning set forth in
Section 2.06(b).
"Flight" shall have the meaning set forth in Section 6.08(b).
"Floor Price" shall have the meaning set forth in Section 2.09(a).
"FTC" shall have the meaning set forth in Section 6.02.
"GHC" shall mean Garden L.P. Holding Corp., a Delaware corporation,
which is an indirect Subsidiary of
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8
Cablevision on the date of this Agreement, and its successors and permitted
assigns.
"Governmental Entity" shall have the meaning set forth in Section
3.01(b).
"HSR Act" shall have the meaning set forth in Section 3.01(b).
"indebtedness" of any person shall mean, without duplication, all
indebtedness for borrowed money of such person, including guarantees by such
person of indebtedness for borrowed money of any other person, letter of credit
obligations of such person, capital lease obligations of such person, Swap
Agreement obligations of such person and deferred purchase price obligations of
such person.
"Indemnifiable Losses" shall mean any and all losses, liabilities,
claims, damages, demands, payments, costs or expenses (including attorneys' fees
and any and all out-of-pocket expenses) whatsoever, including all losses,
liabilities, claims, damages, demands, costs or expenses reasonably incurred in
investigating, preparing for or defending against or as a result of any Actions
or potential Actions.
"Indemnifying Party" shall have the meaning as defined in Section
5.09.
"Indemnitee" shall have the meaning as defined in Section 5.09.
"Initial Arena Value" shall have the meaning agreed between the
parties.
"Initial Asset Value" shall mean any of the Initial Knicks Value,
the Initial Rangers Value, the Initial Arena Value and the Initial Network
Value.
"Initial Closing" shall have the meaning set forth in Section 2.02.
"Initial Closing Date" shall have the meaning set forth in Section
2.02.
"Initial Implied Value" shall mean an amount equal to $1,555,000,000
plus indebtedness of MSG as of immediately prior to the Initial Closing (other
than indebtedness under the MSG Acquisition Financing Agreements), which sum
shall be increased at a rate equal to 12% per annum calculated on the basis of
the actual number of days elapsed since the
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9
Initial Closing Date to the date of determination over a year of 365 days.
"Initial Knicks Value" shall have the meaning agreed between the
parties.
"Initial Network Value" shall have the meaning agreed between the
parties.
"Initial Rangers Value" shall have the meaning agreed between the
parties.
"Initial Transferred Interest" shall have the meaning set forth in
Section 2.01.
"Initial Transferred Interest Purchase Price" shall have the meaning
set forth in Section 2.01.
"ITT" shall mean ITT Corporation, a Nevada corporation, and its
successors and permitted assigns.
"ITTE" shall mean ITT Eden Corporation, a Delaware corporation,
which is an indirect subsidiary of ITT on the date of this Agreement, and its
successors and permitted assigns.
"ITT MSG" shall mean ITT MSG Inc., a Delaware corporation, which is
an indirect subsidiary of ITT on the date of this Agreement, and any Permitted
Transferee to which ITT MSG shall assign its rights and obligations hereunder
pursuant to Section 8.01.
"ITT MSG Indemnitees" shall mean ITT MSG, ITT and ITTSC, each of
their respective Affiliates, each of their respective directors, officers,
employees and agents and each of the heirs, executors, successors and assigns of
any of the foregoing.
"ITT MSG Interest" at any time shall mean all MSG Interests owned,
directly or indirectly, at such time by ITT or any of its Affiliates, and any
property received (i) in respect of such MSG Interests by ITT or any of its
Affiliates upon a dissolution of MSG or (ii) in exchange for the ITT MSG
Interest in connection with a change in the organizational form of MSG to a
corporation or other business entity (pursuant to a merger, consolidation, any
other business combination or any other transaction).
"ITTSC" shall mean ITT Sheraton Corporation, a Delaware corporation,
which is a direct subsidiary of ITT on the date of this Agreement, and its
successors.
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10
"Knicks" shall mean the New York Knickerbockers Basketball Club and
all of MSG's assets, property, business and rights relating to the New York
Knickerbockers Basketball Club, including rights to conduct all exhibition,
regular season and playoff basketball games participated in by the New York
Knickerbockers Basketball Club; provided that the Knicks shall not include any
assets included in the Arena, the Rangers or the Network.
"League Rules" shall have the meaning set forth in Section 3.01(b).
"Maximum Offering Size" shall have the meaning set forth in Section
4.01(a).
"MSG" shall mean Madison Square Garden, L.P., a Delaware limited
partnership, and its successors and permitted assigns.
"MSG Acquisition" shall have the meaning set forth in the definition
of Bid Agreement.
"MSG Acquisition Agreements" shall mean (a) the Agreement dated June
28, 1994, between Cablevision and ITT relating to bidding arrangements for
Madison Square Garden Corporation, (b) the Bid Agreement, (c) the Amendment
Agreement dated as of September 12, 1994, to the Bid Agreement, (d) the
Agreement and Plan of Merger (the "Merger Agreement") dated as of August 27,
1994, among Viacom Inc., Paramount Communications Realty Corporation, ITT, RGC
and MSG, (e) Amendment No. 1, dated as of March 10, 1995, to the Merger
Agreement, (f) Amendment No. 2, dated as of March 10, 1995, to the Merger
Agreement, (g) the MSG Acquisition Financing Agreements, (h) the NBA Consent
Agreements and (i) the NHL Consent Agreements.
"MSG Acquisition Financing Agreements" shall mean (a) the Credit
Agreement dated as of January 20, 1995 among MSG, the lenders party thereto and
Chemical Bank, as agent, (b) the Guarantee dated as of March 10, 1995, made by
1863 Corporation, (c) the Credit Party Pledge Agreement dated as of March 10,
1995, made by MSG and 1863 Corporation in favor of Chemical Bank, (d) the NBA
Team Pledge Agreement dated as of March 10, 1995, made by MSG in favor of
Chemical Bank, (e) the NHL Team Pledge Agreement dated as of March 10, 1995,
made by MSG in favor of Chemical Bank, (f) the Credit Party Security Agreement
dated as of March 10, 1995, among MSG, 1863 Corporation and Chemical Bank, (g)
the NBA Team Security Agreement dated March 10, 1995, between MSG and Chemical
Bank, (h) the NHL Team Security Agreement dated March, 10, 1995, between MSG and
Chemical Bank, (i) the
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11
Assignment of Security Interest in United States Copyrights dated March 10,
1995, made by MSG in favor of Chemical Bank, (j) the Assignment of Security
Interest in United States Copyrights (NHL) dated March 10, 1995, made by MSG in
favor of Chemical Bank, (k) the Collateral Assignment of Security Interest in
United States Trademarks dated March 10, 1995, made by MSG in favor of Chemical
Bank, (l) the Assignment of Security Interest in United States Trademarks (NBA)
dated March 10, 1995, made by MSG in favor of Chemical Bank, (m) the Assignment
of Security Interest in United States Trademarks (NHL) dated March 10, 1995,
made by MSG in favor of Chemical Bank, (n) the Letter Agreement dated March 10,
1995, among the NBA, NBA Properties, Inc., the NBA Market Extension Partnership,
Chemical Bank and MSG with respect to the financing, (o) the Letter dated March
10, 1995, from the NBA Market Extension Partnership to Chemical Bank and MSG,
(p) the Partnership Notice dated March 10, 1995, from MSG to the NBA Market
Extension Partnership, (q) the Letter Agreement dated March 10, 1995, among the
NHL, Chemical Bank and MSG, and (r) the Mortgage, Security Agreement, Assignment
of Leases, Rents and Profits, Financing Statement and Fixture Filing dated March
10, 1995, made by MSG in favor of Chemical Bank, as any of such agreements may
have been modified, amended or supplemented to date.
"MSG Implied Value" shall mean in connection with (a) any Transfer
of any direct ownership interest in a Partner, the Partner Percentage, expressed
as a decimal, for such Partner multiplied by the Consideration for the Transfer
of such interest divided by the Percentage Sold, expressed as a decimal,
associated with such Transfer and (b) any Transfer of any MSG Interest, the
Consideration for the Transfer of such interest divided by the Percentage Sold,
expressed as a decimal, associated with such Transfer, and, in the case of each
of the foregoing clauses (a) and (b), (i) if the Initial Closing is accomplished
through a redemption by MSG of the Initial Transferred Interest, plus the
Percentage Sold multiplied by $500 million (reduced by the amount of any
Acquisition Debt that was included in the computation of the Consideration for
the Transfer), (ii) plus the amount of any cash and the Fair Market Value of any
business or other assets distributed (as of the time of such distribution) by
MSG or any of its Affiliates to Cablevision or ITT or any of their respective
Affiliates (other than MSG and its Subsidiaries) from the Initial Closing Date
to the date of the Subject Sale (other than as payment of an Asset Remittance
Amount), (iii) minus the amount of any cash and the Fair Market Value of any
business or other assets that have been contributed to MSG (as of the date of
such contribution) on and from the Initial Closing Date to the date of the
Subject Sale (the Fair Market Value
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12
of SportsChannel New York shall be the value assigned to such contribution in
the SportsChannel Contribution Agreement), (iv) for any transaction or series of
related transactions between (A) Cablevision, Rainbow or any of their respective
Affiliates (other than MSG and its Subsidiaries), on the one hand, and MSG or
any of its Subsidiaries, on the other hand, pursuant to an agreement entered
into between the Initial Closing Date and the date of the Subject Sale and (B)
Cablevision, Rainbow or any of their respective Affiliates (other than MSG and
its Subsidiaries), on the one hand, and SportsChannel New York, on the other
hand, pursuant to an agreement entered into between December 31, 1996 and the
date of the Subject Sale (other than any agreement identified in the SCNY
Disclosure Schedule to the SportsChannel Contribution Agreement) and, in each
case, involving aggregate payments or other Consideration in excess of $1.0
million (an "MSG Affiliate Transaction"), plus the amount by which the benefit
to MSG or SportsChannel New York would have been greater or the costs to MSG or
SportsChannel New York would have been less and minus the amount by which the
benefit to MSG or SportsChannel New York would have been less or the costs to
MSG or SportsChannel New York would have been greater, in each case, if such MSG
Affiliate Transaction were negotiated on an Arm's-length basis between MSG or
such Subsidiary or SportsChannel New York and a third party that is not
Cablevision, Rainbow or an Affiliate of Cablevision or Rainbow. Clause (iv) of
the preceding sentence shall not apply to the contribution of SportsChannel New
York pursuant to the SportsChannel Contribution Agreement.
"MSG Interest" shall mean any direct interest in MSG, including all
partnership interests, all other equity or ownership interests and all other
rights to share in profits, losses and distributions of MSG.
"NBA" shall have the meaning set forth in Section 3.01(b).
"NBA Consent Agreement" shall mean the Agreement and Undertaking
dated March 10, 1995 from MSG, MSGE, Cablevision, Rainbow, RGC, GHC, ITT, ITTE
and ITT MSG in favor of the NBA, NBA Properties Inc., NBA Market Extension
Partnership and Planet Insurance, Ltd.
"Network" shall mean Madison Square Garden Network, a division of
MSG, and all the assets, property, businesses and rights used primarily in the
business of Madison Square Garden Network, as conducted on the date hereof;
provided that the Network shall not include any assets included in the Arena,
the Knicks or the Rangers.
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13
"NHL" shall have the meaning set forth in Section 3.01(b).
"NHL Consent Agreements" shall mean (a) the Rangers Consent
Agreement and (b) the letter dated March 10, 1995 from the NHL to Cablevision,
Rainbow, RGC and GHC regarding the security interest in the Rangers under the
MSG Acquisition Financing Agreements.
"Partner" shall mean any person directly owning an MSG Interest and
any other person, 67% or more of whose Fair Market Value consists, directly or
indirectly, of such person's Partner Interest Fair Market Value. Solely for the
purposes of calculating Fair Market Value as used in this definition,
SportsChannel New York shall be treated as if it had never been contributed to
the Partnership.
"Partner Interest Fair Market Value" of any person shall mean such
person's, direct or indirect, percentage interest in MSG multiplied by the Fair
Market Value of MSG. Solely for the purposes of calculating Fair Market Value as
used in this definition, SportsChannel New York shall be treated as if it had
never been contributed to the Partnership.
"Partner Percentage" shall mean the percentage of the Fair Market
Value of any person that consists of that person's Partner Interest Fair Market
Value. Solely for the purposes of calculating Fair Market Value as used in this
definition, SportsChannel New York shall be treated as if it had never been
contributed to the Partnership.
"Partnership Agreement" shall have the meaning set forth in the
recitals to this Agreement.
"Percentage Sold" shall be determined as of the date of the relevant
Subject Sale and shall mean (a) for any Transfer of an interest in a Partner,
the Fair Market Value of such Partner, multiplied by the Partner Percentage of
such Partner, expressed as a decimal, multiplied by the percentage of the total
equity interest in such Partner represented by the interest so Transferred,
divided by the Fair Market Value of MSG and (b) for any direct Transfer of any
MSG Interest, the percentage of the total MSG Interests represented by the
amount so Transferred.
"Permitted Transferee" shall have the meaning set forth in Section
8.01.
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14
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement, with respect to the terms of the offering of any Cablevision Shares
or equity securities of MSG pursuant to this Agreement covered by such
Registration Statement, as amended or supplemented by any amendments and
supplements to such prospectus and all material incorporated by reference in
such prospectus.
"Put Obligation Breach" shall mean (a) if ITT MSG shall have
exercised the First Put Option, all the conditions to the First Put Cash Closing
or the First Put Stock Closing are satisfied and Cablevision or MSG, as the case
may be, does not consummate such Closing at or prior to the time specified
therefor in Article II or (b) if ITT MSG shall have exercised the Second Put
Option, all the conditions to the Second Put Cash Closing or the Second Put
Stock Closing are satisfied and Cablevision or MSG, as the case may be, does not
consummate such Closing at or prior to the time specified therefor in Article
II.
"Put Obligation Failure" shall mean (a) if ITT MSG shall have
exercised the First Put Option, the failure of the First Put Cash Closing or the
First Put Stock Closing to occur within 45 days following the first anniversary
of the Initial Closing Date or (b) if ITT MSG shall have exercised the Second
Put Option, the failure of the Second Put Cash Closing or the Second Put Stock
Closing to occur within 45 days following the second anniversary of the Initial
Closing Date (in each case, other than due to a breach by ITT MSG or its
Affiliates).
"Put Option" shall have the meaning set forth in Section 2.04(a).
"Put Purchase Price" shall have the meaning set forth in Section
2.04(a).
"Rainbow" shall mean Rainbow Media Holdings, Inc. (formerly, Rainbow
Programming Holdings, Inc.), a Delaware corporation, which is a direct
Subsidiary of Cablevision on the date of this Agreement, and its successors.
"Rangers" shall mean the New York Rangers Hockey Club and all of
MSG's assets, property, and business and rights relating to the New York Rangers
Hockey Club, including rights to conduct all exhibition, regular season
<PAGE>
15
and playoff hockey games participated in by the New York Rangers Hockey Club;
provided that the Rangers shall not include any assets included in the Arena,
the Knicks or the Network.
"Rangers Consent Agreement" shall have the meaning set forth in
Section 6.06(c).
"Registrable Securities" shall have the meaning set forth in Section
4.01(a).
"Registrant" shall have the meaning set forth in Section 4.02(a).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by Cablevision with Section 2.06 (relating to
issuance and registration of Cablevision Shares) or MSG with Article IV
(relating to registration rights of ITT MSG and registration procedures) of this
Agreement, including (i) all SEC and securities exchange registration and filing
fees (including all expenses incident to any filing with the National
Association of Securities Dealers, Inc.), (ii) all fees and expenses of
complying with securities or blue sky laws, (iii) all printing and related
messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of Cablevision Shares or equity securities of MSG on
any securities exchange and (v) the fees and disbursements of counsel and
independent public accountants for Cablevision in the case of a registration of
Purchaser Shares and MSG in the case of a registration of Registrable
Securities.
"Registration Statement" shall mean any registration statement which
covers Cablevision Shares pursuant to the provisions of Section 2.06 or equity
securities of MSG pursuant to Article IV of this Agreement, including the
Prospectus, all amendments and supplements to such registration statement or
such Prospectus, including post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement.
"Remittance Amount" shall have the meaning set forth in Section
2.07(b).
"RGC" shall mean Rainbow Garden Corp., a Delaware corporation, which
is an indirect Subsidiary of Cablevision on the date of this Agreement, and its
successors and permitted assigns.
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16
"SEC" shall mean the Securities and Exchange Commission.
"Second Put Cash Closing" shall have the meaning set forth in
Section 2.05(b).
"Second Put Cash Closing Date" shall have the meaning set forth in
Section 2.05(b).
"Second Put Option" shall have the meaning set forth in Section
2.04(a).
"Second Put Purchase Price" shall have the meaning set forth in
Section 2.04(a).
"Second Put Stock Closing" shall have the meaning set forth in
Section 2.06(c).
"Second Put Stock Closing Date" shall have the meaning set forth in
Section 2.06(c).
"Second Transferred Interest" shall have the meaning set forth in
Section 2.03(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selected Investment Banking Firm" shall mean an investment banking
firm chosen by ITT MSG from a list of three investment banking firms chosen by
Cablevision from the following: Lazard Freres & Co. LLC, Morgan Stanley & Co.
Incorporated, Merrill Lynch & Co., Bear Stearns & Co., Inc., Salomon Brothers
Inc and Goldman, Sachs & Co. or, in each case, their respective successors.
"Shares" shall mean all the issued and outstanding shares of the
capital stock of MSGE beneficially owned by ITTE or any of its Affiliates.
"Shares Purchase Price" shall have the meaning set forth in Section
2.01.
"Significant Asset" shall mean any of the Arena, the Knicks, the
Rangers or the Network.
"SportsChannel Contribution Agreement" shall mean the SportsChannel
Contribution Agreement, dated as of the date hereof, in the form set forth as
Exhibit B hereto.
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"SportsChannel New York" shall mean SportsChannel Associates, a New
York general partnership, and its successors and assigns.
"Sports League Approval Agreements" shall mean all agreements
required to be entered into by Cablevision, ITT or MSG or any of their
respective Subsidiaries and Affiliates in order to obtain the approvals of the
NBA and the NHL and any other sports league to the transactions contemplated
hereby.
"Subject Sale" shall have the meaning set forth in Section 2.07(b).
"Subsidiary" shall mean any corporation, partnership or other entity
of which another entity (i) owns, directly or indirectly, ownership interests
sufficient to elect a majority of the Board of Directors (or persons performing
similar functions) irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g., a
trustee).
"Suspension Notice" shall have the meaning set forth in Section
4.02(a)(xv).
"Swap Agreement" shall mean (a) an agreement (including terms and
conditions incorporated by reference therein) which is a rate swap agreement,
basis swap, forward rate agreement, commodity swap, interest rate option,
foreign exchange agreement, rate cap agreement, rate floor agreement, rate
collar agreement, currency swap agreement, cross-currency rate swap agreement,
currency option, any other similar agreement (including any option to enter into
any of the foregoing); (b) any combination of the foregoing; or (c) a master
agreement for any of the foregoing together with all supplements.
"Third Party Claim" shall have the meaning as defined in Section
5.09.
"Third Party Transfer" shall have the meaning set forth in Section
2.11.
"Third Transferred Interest" shall have the meaning set forth in
Section 2.04(a).
"Third-Year Call Closing" shall have the meaning set forth in
Section 2.09(b).
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"Third-Year Call Closing Date" shall have the meaning set forth in
Section 2.09(b).
"Third-Year Call Price" shall have the meaning set forth in Section
2.09(a).
"Third-Year Call Right" shall have the meaning set forth in Section
2.09(a).
"Transfer" shall mean any direct or indirect sale, lease, transfer,
delegation, exchange, assignment, hypothecation, pledge, encumbrance, creation
of an option or right to purchase or other disposition of any kind (voluntarily,
involuntarily or by operation of law) and a correlative meaning when used as a
verb.
(b) For all purposes of this Agreement:
(i) "including" and "include" shall be deemed to be followed
by ", without limitation,"; and
(ii) "knowledge" of any party means the knowledge, after due
inquiry, of the executive officers of such party.
ARTICLE II
Transfers
SECTION 2.01. Initial Transfer. Upon the terms and subject to the
conditions set forth in this Agreement, (a) ITTE shall sell, transfer and
deliver to RGC, or at RGC's election, to MSGE, and RGC shall purchase, or the
parties, at the election of RGC, shall cause MSGE to redeem from ITTE, the
Shares for an aggregate purchase price of $6.5 million (the "Shares Purchase
Price") and (b) ITT MSG shall sell, transfer and deliver to GHC, or at GHC's
election, to MSG, and GHC shall purchase, or the parties shall, at the election
of GHC, cause MSG to redeem from ITT a portion of the ITT MSG Interest such that
immediately following such purchase or redemption, the ITT MSG Interest
represents the Applicable Percentage of the entire MSG Interest (the ITT MSG
Interest so purchased or redeemed hereunder is referred to as the "Initial
Transferred Interest") for an aggregate purchase price of $493.5 million (the
"Initial Transferred Interest Purchase Price"). The Shares Purchase Price and
the Initial Transferred Interest Purchase Price shall be payable as set forth in
Section 2.02. If RGC elects to effect the purchases of the Shares and the
Initial Transferred Interest as redemptions
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19
by MSGE and MSG, respectively, the parties agree that at the Initial Closing,
MSG shall distribute to MSGE $6.5 million in redemption of one-half of MSGE's
interest in MSG.
SECTION 2.02. Initial Closing. The closing (the "Initial Closing")
of the purchase and sale of the Shares and the Initial Transferred Interest
shall be held at the offices of Sullivan & Cromwell, 125 Broad Street, New York,
New York, at 10:00 a.m. on a date that is no later than five business days after
the date on which the conditions to the Initial Closing set forth in Section
7.01 shall have been satisfied or waived. The date on which the Initial Closing
shall occur is hereinafter referred to as the "Initial Closing Date". At the
Initial Closing, (a)(i) RGC shall deliver, or the parties, at the election of
RGC, shall cause MSGE to deliver, to ITTE, by wire transfer to a bank account
designated by ITTE at least two business days prior to the Initial Closing Date,
immediately available funds in an amount equal to the Shares Purchase Price and
(ii) ITTE shall deliver to RGC or MSGE, as the case may be, certificates
representing the Shares, duly endorsed in blank or accompanied by stock powers
duly endorsed in blank in proper form for transfer, with appropriate transfer
stamps, if any, affixed and (b)(i) GHC shall deliver, or the parties shall, if
GHC shall have elected for MSG to redeem the Initial Transferred Interest, cause
MSG to deliver, to ITT MSG, by wire transfer to a bank account designated by ITT
MSG at least two business days prior to the Initial Closing Date, immediately
available funds in an amount equal to the Initial Transferred Interest Purchase
Price and (ii) ITT MSG shall deliver to GHC or MSG, as the case may be, a Bill
of Sale and Assignment of Partnership Interest in the form of Exhibit A to
effect delivery of title to the Initial Transferred Interest.
SECTION 2.03. First Put Option. (a) Upon the terms and subject to
the conditions set forth in this Agreement, ITT MSG shall have the option (the
"First Put Option") to require Cablevision to purchase 50% of the remaining ITT
MSG Interest, or, at the election of Cablevision, to require Cablevision to
cause MSG to redeem a portion of the ITT MSG Interest so that following such
redemption the ITT MSG Interest is one-half of what it was immediately prior to
such redemption, (the ITT MSG Interest so transferred or redeemed hereunder is
referred to as the "Second Transferred Interest") on the first anniversary of
the Initial Closing Date for a purchase price of $94 million or, if the Aircraft
shall not have been contributed to MSG at the time of payment, $75 million (in
either case, as such amount may be increased pursuant to Section 2.07) (the
"First Put Purchase Price"). If ITT MSG exercises the First
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Put Option, Cablevision shall purchase, or, at the election of Cablevision,
cause MSG to redeem, the Second Transferred Interest pursuant to the terms of
this Agreement. At the election of Cablevision, the First Put Purchase Price may
be paid entirely in cash as set forth in Section 2.05 below, entirely in shares
of Cablevision Common Stock as set forth in Section 2.06 below or in any
combination thereof. In the event that Cablevision shall not be able to
purchase, or cause MSG to redeem, the Second Transferred Interest because of a
failure of any condition to the closing of such purchase or redemption set forth
in Section 7.01(a)(iii), (iv), (v) or (vi) (other than as a result of a breach
by Cablevision or any of its Affiliates), Cablevision shall have the right
during the 45-day period following the first anniversary of the Initial Closing
Date to cause a third party designated by Cablevision to purchase the Second
Transferred Interest for a price payable in cash equal to the First Put Purchase
Price.
(b) Manner of Exercise of First Put Option. If ITT MSG desires to
exercise the First Put Option pursuant to Section 2.03(a), it shall deliver to
Cablevision a written notice of its exercise of the First Put Option at least
100 days prior to the first anniversary of the Initial Closing Date and such
notice shall be revocable by ITT MSG until such date that is 100 days prior to
the first anniversary of the Initial Closing Date. If ITT MSG shall have
delivered and not revoked such notice, no later than 60 days prior to the first
anniversary of the Initial Closing Date, Cablevision shall deliver to ITT MSG a
nonbinding written notice stating whether the First Put Purchase Price will be
paid in cash or by issuing Cablevision Common Stock or a combination thereof. If
ITT MSG fails to deliver a notice stating its exercise of the First Put Option
at least 100 days prior to the first anniversary of the Initial Closing Date,
ITT MSG shall be deemed to have elected not to exercise the First Put Option. If
ITT MSG shall elect to exercise the First Put Option by delivering the written
notice provided for by this Section 2.03(b) and Cablevision shall fail to
deliver a notice specifying its chosen manner of paying the First Put Purchase
Price within 40 days of receipt of ITT MSG's notice, Cablevision shall be deemed
to have elected to have the First Put Purchase Price paid entirely in cash and
Section 2.05(a) shall apply. If Cablevision shall initially indicate its
intention to pay the First Put Purchase Price by delivery of shares of
Cablevision Common Stock, but ultimately pays such price (or causes such price
to be paid) in cash, Cablevision shall reimburse ITT MSG and its Affiliates for
all reasonable, out-of-pocket expenses (including fees and expenses of counsel)
incurred by ITT MSG
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or such Affiliates in preparation for receiving and reselling such shares of
Cablevision Common Stock.
(c) Cablevision Obligation. Cablevision acknowledges and agrees that
the obligation to pay the First Put Purchase Price upon the exercise by ITT MSG
of the First Put Option is and shall remain an obligation of Cablevision,
whether or not Cablevision elects to have MSG pay such First Put Purchase Price,
has the ability to control MSG or elects to designate a third party to purchase
the Second Transferred Interest pursuant to the last sentence of Section
2.03(a). In the event of a Put Obligation Breach with respect to the First Put
Option, without limiting any other remedies available to ITT MSG or any of its
Affiliates, the First Put Purchase Price shall be increased at a rate per annum
equal to twice the interest rate then payable by MSG under the term loan
facility of the Bank Credit Agreement or any successor facility, calculated on
the basis of the actual number of days elapsed since the date on which the Put
Obligation Breach occurred to the date of payment over a year of 365 days.
SECTION 2.04. Second Put Option. (a) In addition to the First Put
Option and upon the terms and subject to the conditions set forth in this
Agreement, ITT MSG shall have the option (the "Second Put Option"; each of the
First Put Option and Second Put Option may be hereinafter referred to as a "Put
Option") to require Cablevision to purchase, or, at the election of Cablevision,
MSG to redeem (i) if ITT MSG has exercised the First Put Option and Cablevision
has purchased, or caused MSG to redeem, the Second Transferred Interest, the
balance of the remaining ITT MSG Interest such that immediately following such
transfer or redemption, ITT MSG does not beneficially own an ITT MSG Interest
(the ITT MSG Interest so transferred or redeemed hereunder is referred to as the
"Third Transferred Interest"), on the second anniversary of the Initial Closing
Date for a purchase price of $94 million or, if the Aircraft shall not have been
contributed to MSG at the time of payment, $75 million or (ii) if ITT MSG has
not exercised the First Put Option, at ITT MSG's election, (A) the Second
Transferred Interest for a purchase price of $94 million or, if the Aircraft
shall not have been contributed to MSG at the time of payment, $75 million or
(B) the Second Transferred Interest and the Third Transferred Interest for a
purchase price of $188 million or, if the Aircraft shall not have been
contributed to MSG at the time of payment, $150 million (as any of such amounts
may be increased pursuant to Section 2.07) (any of such purchase prices, the
"Second Put Purchase Price"; each of the First Put Purchase Price and the Second
Put Purchase
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Price may be hereinafter referred to as a "Put Purchase Price"). If ITT MSG
exercises the Second Put Option, Cablevision shall purchase, or, at the election
of Cablevision, cause MSG to redeem, the Second Transferred Interest or the
Third Transferred Interest or both the Second Transferred Interest and the Third
Transferred Interest, as the case may be, pursuant to the terms of this
Agreement. At the election of Cablevision, the Second Put Purchase Price may be
paid entirely in cash as set forth in Section 2.05 below, entirely in shares of
Cablevision Common Stock as set forth in Section 2.06 below or in any
combination thereof. In the event that Cablevision shall not be able to
purchase, or cause MSG to redeem, the Second Transferred Interest or the Third
Transferred Interest or both, as the case may be, because of a failure of any
condition to the closing of such purchase or redemption set forth in Section
7.01(a)(iii), (iv), (v) or (vi) (other than as a result of a breach by
Cablevision or any of its Affiliates), Cablevision shall have the right during
the 45-day period following the second anniversary of the Initial Closing Date
to cause a third party designated by Cablevision to purchase the Second
Transferred Interest or the Third Transferred Interest or both, as the case may
be, for a price in cash equal to the Second Put Purchase Price.
(b) Manner of Exercise of the Second Put Option. If ITT MSG desires
to exercise the Second Put Option pursuant to Section 2.04(a), it shall deliver
to Cablevision a written notice of its exercise of the Second Put Option at
least 100 days prior to the second anniversary of the Initial Closing Date
specifying, if ITT MSG has not exercised the First Put Option, whether it is
exercising the Second Put Option with respect to only the Second Transferred
Interest or with respect to both the Second Transferred Interest and the Third
Transferred Interest and such notice shall be revocable by ITT MSG until such
date that is 100 days prior to the second anniversary of the Initial Closing
Date. If ITT MSG shall have delivered and not revoked such notice, no later than
60 days prior to the second anniversary of the Initial Closing Date, Cablevision
shall deliver to ITT MSG a non-binding written notice stating whether the Second
Put Purchase Price will be paid in cash or by issuing Cablevision Common Stock
or a combination thereof. If ITT MSG fails to deliver a notice stating its
exercise of the Second Put Option at least 100 days prior to the second
anniversary of the Initial Closing Date, ITT MSG shall be deemed to have elected
not to exercise the Second Put Option. If ITT MSG shall elect to exercise the
Second Put Option by delivering the written notice provided for by this Section
2.04(b) and Cablevision shall fail to deliver a notice specifying its chosen
manner
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of paying the Second Put Purchase Price within 40 days of receipt of ITT MSG's
notice, Cablevision shall be deemed to have elected to have the Second Put
Purchase Price paid entirely in cash and Section 2.05(b) shall apply. If
Cablevision shall initially indicate its intention to pay the Second Put
Purchase Price by delivery of shares of Cablevision Common Stock, but ultimately
pays such price (or causes such price to be paid) in cash, Cablevision shall
reimburse ITT MSG and its Affiliates for all reasonable, out-of-pocket expenses
(including fees and expenses of counsel) incurred by ITT MSG or such Affiliates
in preparation for receiving and reselling such shares of Cablevision Common
Stock.
(c) Cablevision Obligation. Cablevision acknowledges and agrees that
the obligation to pay the Second Put Purchase Price upon the exercise by ITT MSG
of the Second Put Option is and shall remain an obligation of Cablevision,
whether or not Cablevision elects to have MSG pay such Second Put Purchase
Price, has the ability to control MSG or elects to designate a third party to
purchase the Second Transferred Interest or the Third Transferred Interest or
both, as the case may be, pursuant to the last sentence of Section 2.04(a). In
the event of a Put Obligation Breach with respect to the Second Put Option,
without limiting any other remedies that may be available to ITT MSG or any of
its Affiliates, the Second Put Purchase Price shall be increased at a rate per
annum equal to twice the interest rate then payable by MSG under the term loan
facility of the Bank Credit Agreement or any successor facility, calculated on
the basis of the actual number of days elapsed since the date on which the Put
Obligation Breach occurred to the date of payment over a year of 365 days.
SECTION 2.05. Payment of Cash Upon Exercise of Put Option. (a) In
the event ITT MSG exercises the First Put Option and Cablevision elects to have
the First Put Purchase Price paid entirely in cash, the closing of the First Put
Option (the "First Put Cash Closing"), shall be held at the offices of Sullivan
& Cromwell, 125 Broad Street, New York, New York at 10:00 a.m., New York City
time, on the first anniversary of the Initial Closing Date, or, if the
conditions to the First Put Cash Closing set forth in Section 7.01 shall not
have been satisfied or waived by such first anniversary date, as soon as
practicable after such conditions shall have been satisfied or waived. The date
on which the First Put Cash Closing shall occur is hereinafter referred to as
the "First Put Cash Closing Date". At the First Put Cash Closing (i) Cablevision
shall deliver, or cause to be delivered by
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24
MSG, to ITT MSG, by wire transfer to a bank account designated by ITT MSG at
least two business days prior to the First Put Cash Closing Date, immediately
available funds in an amount equal to the First Put Purchase Price and (ii) ITT
MSG shall deliver to Cablevision or MSG, as the case may be, a Bill of Sale and
Assignment of Partnership Interest in the form of Exhibit A to effect delivery
of title to the Second Transferred Interest.
(b) In the event ITT MSG exercises the Second Put Option and
Cablevision elects to have the Second Put Purchase Price paid entirely in cash,
the closing of the Second Put Option (the "Second Put Cash Closing"), shall be
held at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York
at 10:00 a.m., New York City time, on the second anniversary of the Initial
Closing Date, or, if the conditions to the Second Put Cash Closing set forth in
Section 7.01 shall not have been satisfied or waived by such second anniversary
date, as soon as practicable after such conditions shall have been satisfied or
waived. The date on which the Second Put Cash Closing shall occur is hereinafter
referred to as the "Second Put Cash Closing Date". At the Second Put Cash
Closing (i) Cablevision shall deliver, or cause to be delivered by MSG, to ITT
MSG, by wire transfer to a bank account designated by ITT MSG at least two
business days prior to the Second Put Cash Closing Date, immediately available
funds in an amount equal to the Second Put Purchase Price and (ii) ITT MSG shall
deliver to Cablevision or MSG, as the case may be, a Bill of Sale and Assignment
of Partnership Interest in the form of Exhibit A to effect delivery of title to
the Second Transferred Interest, the Third Transferred Interest or both the
Second Transferred Interest and the Third Transferred Interest, as the case may
be.
SECTION 2.06. Issuance of Shares of Cablevision Common Stock Upon
Exercise of Put Option. (a) In the event ITT MSG exercises a Put Option pursuant
to Section 2.03(a) or 2.04(a) and Cablevision elects to pay the Put Purchase
Price associated therewith in whole or in part in shares of Cablevision Common
Stock pursuant to Section 2.03(b) or 2.04(b), then Cablevision shall have the
right in compliance with this Section 2.06 to pay such Put Purchase Price by
delivery to ITT MSG of a number of validly issued, fully paid and nonassessable
shares of Cablevision Common Stock that shall result in cash proceeds to ITT MSG
from the underwritten public offering contemplated by this Section 2.06, net of
all discounts and commissions and all other expenses, at least equal to the
portion of such Put Purchase Price that Cablevision has elected to pay in shares
of Cablevision Common Stock (the "Cablevision Shares").
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25
Notwithstanding anything to the contrary contained in this Agreement,
Cablevision shall only have the right to deliver Cablevision Shares at a Closing
if the closing of an underwritten public offering of such Cablevision Shares as
contemplated by this Section 2.06 and Section 4.02 occurs simultaneously with
such Closing. The resale by ITT MSG in an underwritten public offering of all
Cablevision Shares delivered hereunder shall be (i) registered under the
Securities Act on a Registration Statement declared effective by the SEC at
least three business days prior to the First Put Stock Closing Date or the
Second Put Stock Closing Date (each, as defined below), as the case may be, in
accordance with this Section 2.06 and Section 4.02 and (ii) consummated by
delivery of the Cablevision Shares, on behalf of ITT MSG, to the underwriters,
and payment in cash therefor by the underwriters, on such First Put Stock
Closing Date or Second Put Stock Closing Date, as the case may be, pursuant to
an underwriting agreement meeting the requirements of this Section 2.06.
(b) In the event ITT MSG exercises the First Put Option and
Cablevision elects to pay the First Put Purchase Price by the delivery of
Cablevision Shares, the closing of the First Put Option (the "First Put Stock
Closing") shall be held at the offices of Sullivan & Cromwell, 125 Broad Street,
New York, New York at 10:00 a.m., New York City time, on the first anniversary
of the Initial Closing Date, or, if the conditions to the First Put Stock
Closing set forth in Section 7.01 shall not have been satisfied or waived by
such date, as soon as practicable after such conditions shall have been
satisfied or waived; provided, however, that if the First Put Stock Closing
shall not have occurred by a date that is three business days after the first
anniversary of the Initial Closing Date due to a failure of the conditions set
forth in Section 7.01(b)(vii) or (viii) to be satisfied by such date,
Cablevision shall pay the First Put Purchase Price in cash on the fifth business
day following the first anniversary of the Initial Closing Date. The date on
which the First Put Stock Closing shall occur is hereinafter referred to as the
"First Put Stock Closing Date". At the First Put Stock Closing, (i) ITT MSG
shall deliver to Cablevision a Bill of Sale and Assignment of Partnership
Interest in the form of Exhibit A to effect delivery of title to the Second
Transferred Interest and (ii) Cablevision shall deliver to ITT MSG (A)(1) duly
authorized and executed stock certificates representing the number of
Cablevision Shares determined pursuant to Section 2.06(a) for immediate delivery
to the managing underwriter or underwriters of the underwritten public offering
required by this Section 2.06 for the accounts of the underwriters and (2) cash,
by wire transfer
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26
to a bank account designated by ITT MSG at least two business days prior to the
First Put Stock Closing Date of immediately available funds in an amount equal
to the portion of the First Put Purchase Price that Cablevision elects to have
paid in cash or (B) if required by the proviso to the first sentence of this
subsection, cash by wire transfer to a bank account designated by ITT MSG of
immediately available funds in an amount equal to the First Put Purchase Price.
(c) In the event ITT MSG exercises the Second Put Option and
Cablevision elects to pay the Second Put Purchase Price by the delivery of
Cablevision Shares, the closing of the Second Put Option (the "Second Put Stock
Closing") shall be held at the offices of Sullivan & Cromwell, 125 Broad Street,
New York, New York at 10:00 a.m., New York City time, on the second anniversary
of the Initial Closing Date, or, if the conditions to the Second Put Stock
Closing set forth in Section 7.01 shall not have been satisfied or waived by
such date, as soon as practicable after such conditions shall have been
satisfied or waived; provided, however, that if the Second Put Stock Closing
shall not have occurred by a date that is three business days after the second
anniversary of the Initial Closing Date due to a failure of the conditions set
forth in Section 7.01(b)(vii) or (viii) to be satisfied by such date,
Cablevision shall pay the Second Put Purchase Price in cash on the fifth
business day following the second anniversary of the Initial Closing Date. The
date on which the Second Put Stock Closing shall occur is hereinafter referred
to as the "Second Put Stock Closing Date". At the Second Put Stock Closing, (i)
ITT MSG shall deliver to Cablevision a Bill of Sale and Assignment of
Partnership Interest in the Form of Exhibit A to effect delivery of title to the
Second Transferred Interest or the Third Transferred Interest or both the Second
Transferred Interest and the Third Transferred Interest, as the case may be, and
(ii) Cablevision shall deliver to ITT MSG (A)(1) duly authorized and executed
stock certificates representing the number of Cablevision Shares determined
pursuant to Section 2.06(a) for immediate delivery to the managing underwriter
or underwriters of the underwritten public offering required by this Section
2.06 for the accounts of the underwriters and (2) cash, by wire transfer to a
bank account specified by ITT MSG at least two business days prior to the Second
Put Stock Closing Date of immediately available funds in an amount equal to the
portion of the First Put Purchase Price that Cablevision elects to have paid in
cash or (B) if required by the proviso to the first sentence of this subsection,
cash by wire transfer to a bank account designated by ITT MSG at least two
business days
<PAGE>
27
prior to the fifth business day following the second anniversary of the Initial
Closing Date of immediately available funds in an amount equal to the Second Put
Purchase Price.
(d) In connection with the delivery of Cablevision Shares upon the
exercise of any Put Option, if (x) the aggregate of the amount of cash paid by
Cablevision or MSG, as the case may be, toward the Put Purchase of a Put Option
and the net cash proceeds to ITT MSG of the resale of Cablevision Shares
delivered pursuant to this Section 2.06, as certified in writing by the managing
underwriter or underwriters for such resale, less all out-of-pocket expenses
actually incurred by ITT MSG or any of its Affiliates in connection with such
resale (which shall include all legal and accounting fees), and not paid
directly by Cablevision pursuant to Section 2.06(f) is less than (y) the Put
Purchase Price due from Cablevision upon the exercise of such Put Option,
Cablevision shall deliver such difference to ITT MSG in cash on the first
business day following the First Put Stock Closing Date or the Second Put Stock
Closing Date, as the case may be, by wire transfer of immediately available
funds to a bank account designated by ITT MSG.
(e) In connection with any underwritten public offering of
Cablevision Shares pursuant to this Section 2.06, Cablevision shall have the
right to select the managing underwriter or underwriters therefor; provided that
such managing underwriter or underwriters are reasonably acceptable to ITT MSG.
Cablevision and ITT MSG agree to execute an underwriting agreement with such
managing underwriter or underwriters containing customary terms and provisions
(including provisions as to indemnification) and such other terms as such
managing underwriter or underwriters shall reasonably request to effectuate the
underwritten public offering of Cablevision Shares as contemplated by this
Agreement. Any such underwriting agreement shall be reasonably satisfactory in
form and substance to ITT MSG and Cablevision. Subject to its obligations
contained in Section 4.02, Cablevision shall prepare and file promptly following
the delivery of its notice pursuant to Section 2.03(b) or 2.04(b), and use all
reasonable efforts to cause to be declared effective, a Registration Statement
on any appropriate form under the Securities Act which shall cover a resale
pursuant to an underwritten public offering of all Cablevision Shares to be
issued to ITT MSG pursuant to this Section 2.06. Cablevision agrees that it and
the underwriters may not use any Registration Statement covering a resale of
Cablevision Shares unless ITT MSG shall have consented to such use
<PAGE>
28
(which consent shall not be unreasonably withheld) and shall be reasonably
satisfied with the content and form of such Registration Statement. Cablevision
may require ITT MSG to furnish Cablevision with such information regarding ITT
MSG and pertinent to the disclosure requirements relating to the registration
and the distribution of Cablevision Shares as Cablevision may from time to time
reasonably request in writing.
(f) Cablevision will pay all Registration Expenses in connection
with all registrations of Cablevision Shares pursuant to this Section 2.06 and
all expenses otherwise incurred by it or its Affiliates relating to the sale or
disposition of Cablevision Shares issued to ITT MSG pursuant to this Section
2.06 and, subject to reimbursement under Section 2.06(d), ITT MSG shall only be
responsible for its own expenses (other than Registration Expenses and
underwriting commissions and discounts, which shall be paid by Cablevision).
SECTION 2.07. ITT MSG's Right to Profits. (a) In the event
Cablevision, RGC, GHC or any of their respective Affiliates (other than MSG and
its Subsidiaries) consummate any Transfer, or enters into one or more signed
written agreements or signed written agreements in principle (whether or not
binding) to Transfer, in one or a series of related transactions, to one or more
third parties who are not Affiliates of Cablevision, RGC, GHC or MSG, or files
with the SEC a registration statement relating to a secondary public offering of
(i) any MSG Interest or (ii) any direct ownership interest in any Partner or
there is a public announcement relating to any such Transfer (or such agreement
or such agreement in principle related thereto) by any party thereto, at any
time during the one-year period beginning on the Initial Closing Date (an
"Equity Subject Sale"), and such Equity Subject Sale indicates an MSG Implied
Value that is greater than the Initial Implied Value (determined as of the date
of such Subject Sale), Cablevision shall remit to ITT MSG an amount equal to
0.385 multiplied by the amount by which (x) the Percentage Sold, expressed as a
decimal, multiplied by the MSG Implied Value exceeds (y) the Percentage Sold,
expressed as a decimal, multiplied by the Initial Implied Value (the "Equity
Remittance Amount").
(b) In the event MSG or any of its Subsidiaries consummates any
Transfer, or enters into one or more signed written agreements or signed written
agreements in principle (whether or not binding) to Transfer, in one or a series
of related transactions, to one or more third parties who are not Affiliates of
Cablevision, RGC, GHC or MSG, or files
<PAGE>
29
with the SEC a registration statement relating to a secondary public offering
of, a majority or greater direct interest in, or all or substantially all of the
assets of, any Significant Asset, or there is a public announcement relating to
any such Transfer (or such agreement or such agreement in principle related
thereto) by any party thereto, at any time during the one-year period beginning
on the Initial Closing Date (an "Asset Subject Sale" and, together with an
Equity Subject Sale, a "Subject Sale"), if the aggregate Consideration received
by MSG and its Subsidiaries and Cablevision, Rainbow, RGC or GHC and their
respective Affiliates for the interest or assets Transferred exceeds the Initial
Asset Value for the Significant Asset subject to such Subject Sale multiplied by
a fraction, the numerator of which is the Fair Market Value of the interests or
assets of the Significant Asset so Transferred and the denominator of which is
the Fair Market Value of the Significant Asset, MSG shall remit to ITT MSG an
amount equal to 0.385 multiplied by such excess (the "Asset Remittance Amount"
and, together with the Equity Remittance Amount, the "Remittance Amount"). In
the event that MSG has Transferred assets of, or interests in, a Significant
Asset to Cablevision, Rainbow, RGC, GHC or any of their respective Affiliates
and Cablevision, Rainbow, RGC, GHC or any of their respective Affiliates takes
any action with respect to such interests or assets during the one-year period
described above that would be an Asset Subject Sale if such action were taken by
MSG, then the provisions of this clause (b) shall apply to such subsequent
resale and the Remittance Amount payable as a result thereof, if any, shall be
payable by Cablevision.
(c) The Remittance Amount payable in connection with any Subject
Sale shall be paid in cash within five business days following the consummation
of the Subject Sale by wire transfer of immediately available funds to a bank
account designated by ITT MSG; provided that if the Subject Sale is a Transfer
by MSG of assets or interests in assets and the payment by MSG of the Remittance
Amount is expressly not permitted by the terms of the Bank Credit Agreement, the
Remittance Amount will bear interest at a rate per annum equal to the interest
rate then payable under the term loan facility of the Bank Credit Agreement and
the Remittance Amount and the amount of such interest will be added to the Put
Purchase Price for the next Put Option to be exercised by ITT MSG, the Floor
Price in respect of such Third-Year Call Price, the Change of Control Call
Price, the Third-Year Call Price or the price payable by MSG pursuant to the
right of first refusal set forth in Section 6.5 of the Partnership Agreement, as
applicable; provided that ITT MSG's right to receive the Remittance Amount and
such interest from MSG
<PAGE>
30
shall remain until the Remittance Amount and such interest is paid by MSG or
pursuant to the foregoing. Any adjustment to the Third-Year Call Price or the
price payable on a right of first refusal under the Partnership Agreement shall
take account of any value reflected in such price prior to such adjustment as a
result of the retention of the Remittance Amount by MSG including, if
applicable, the reduction in interest expense of MSG as a result of the
application of the proceeds to reduce MSG borrowings.
(d) Cablevision shall deliver in writing to ITT MSG its three
choices of firms to act as the Selected Investment Banking Firm prior to or
within two business days following the earlier to occur of such Subject Sale or
the first public announcement of such Subject Sale by a party thereto. If
Cablevision fails to so deliver such choices to ITT MSG, ITT MSG shall be
entitled to select the Selected Investment Banking Firm from the list of firms
set forth in the definition thereof. The Remittance Amount (and all component
parts thereof) shall be determined by the Selected Investment Banking Firm and
the results of and methodologies used in such determination shall be in writing
and delivered to Cablevision and ITT MSG. Each of Cablevision, RGC, GHC and ITT
MSG agrees to, and to cause its Affiliates to, cooperate with the Selected
Investment Banking Firm in its determination of MSG Implied Value and the
Remittance Amount and provide reasonable access to information requested by the
Selected Investment Banking Firm. ITT MSG and Cablevision shall each pay
one-half of the fees and expenses of the Selected Investment Banking Firm
(including fees and expenses of counsel) related to its services pursuant to
this Section 2.07. The Remittance Amount shall be payable promptly after the
determination thereof and shall bear interest from the date of consummation of
the Subject Sale at a rate per annum equal to the interest rate then payable by
MSG under the term loan facility of the Bank Credit Agreement or any successor
facility, calculated on the basis of the actual number of days elapsed since the
consummation of the Subject Sale over a year of 365 days.
(e) This Section 2.07 shall not apply to any Transfer to an
unaffiliated third-party lender that is any bona fide assignment, hypothecation,
pledge, encumbrance or bona fide sale-leaseback transaction, in each case,
whereby operating control of the asset Transferred remains with the Transferee
and which is a financing transaction for the benefit of the Transferee or its
Affiliates and which does not have the primary purpose of avoiding or reducing
any payments that would otherwise be payable to ITT MSG pursuant to this Section
2.07.
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31
SECTION 2.08. Cablevision's Change of Control Call Right. (a)
General. Upon the terms and subject to the conditions set forth in this
Agreement, Cablevision shall have the right at any time after the Initial
Closing Date, upon a Change of Control, to require that ITT MSG sell to
Cablevision, or, at Cablevision's election, to require MSG to redeem, all (but
not less than all) the balance of the remaining ITT MSG Interest upon the terms
set forth in this Section 2.08 (the "Change of Control Call Right"). If at the
time of such Change of Control, ITT MSG shall have previously exercised a Put
Option by delivering and not revoking the notice required by Section 2.03(b) or
Section 2.04(b), then the ITT MSG Interest subject to such Put Option shall be
Transferred to Cablevision or MSG, as the case may be, pursuant to such Put
Option and not pursuant to this Section 2.08. If at the time of such Change of
Control, (i) ITT MSG shall have exercised and not revoked a Put Option with
respect to only the Second Transferred Interest, then Cablevision shall have the
right to purchase, or cause MSG to redeem, the balance of the remaining ITT MSG
Interest for an aggregate purchase price of $94 million or, if the Aircraft
shall not have been contributed to MSG, $75 million, payable as set forth in
Section 2.08(c) below, or (ii) ITT MSG shall not have exercised a Put Option,
then Cablevision shall have the right to purchase, or cause MSG to redeem, the
balance of the remaining ITT MSG Interest for an aggregate purchase price of
$188 million or, if the Aircraft shall not have been contributed to MSG, $150
million, payable as set forth in Section 2.08(c) below. Either of such purchase
prices may be hereinafter referred to as a "Change of Control Call Price".
(b) Manner of Exercise of Change of Control Call Right. Within 10
days following a Change of Control, ITT MSG shall deliver to Cablevision a
written notice stating:
(i) that a Change of Control has occurred and that Cablevision has
the right to purchase, or cause MSG to redeem, the balance of the
remaining ITT MSG Interest upon the terms of this Section 2.08; and
(ii) the circumstances and relevant facts regarding such Change of
Control (including the identity of the person acquiring control in the
Change of Control transaction).
If Cablevision desires to exercise its Change of Control Call Right pursuant to
this Section 2.08, it shall deliver to ITT MSG, within 60 days following receipt
of notice from ITT MSG, a notice stating that it intends to purchase, or
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32
cause MSG to redeem, as the case may be, the balance of the remaining ITT MSG
Interest pursuant to this Section 2.08 and the method of payment of the Change
of Control Call Price and, in the event Cablevision elects to pay the Change of
Control Call Price in Debt Securities, its three selections of investment
banking firms to act as the Selected Investment Banking Firm. If Cablevision
shall fail to deliver such notice within 60 days following receipt of ITT MSG's
notice of a Change of Control, Cablevision shall be deemed to have elected not
to exercise its Change of Control Call Right pursuant to this Section 2.08.
Within 10 business days following receipt of Cablevision's notice ITT MSG shall
select the Selected Investment Banking Firm from the list of three investment
banking firms furnished by Cablevision.
(c) Payment of Change of Control Call Price. If Cablevision elects
to exercise its Change of Control Call Right pursuant to this Section 2.08, it
shall have the right to pay the Change of Control Call Price associated
therewith (i) in cash or (ii) by delivery to ITT MSG of notes or debentures
having a maturity of 30 years or less of one of Cablevision, RGC or GHC having a
Fair Market Value as determined by a Selected Investment Banking Firm equal to
such Change of Control Call Price ("Debt Securities"). The Debt Securities shall
contain terms specified by Cablevision, RGC or GHC, as the case may be, and
shall be issued pursuant to an agreement between Cablevision, RGC or GHC on the
one hand and ITT MSG on the other that shall contain appropriate representations
and warranties relating to due organization and good standing, due authorization
execution and delivery, validity and binding effect, enforceability, consents,
conflicts, liens, transferability, violations or defaults and any other
reasonably appropriate matters considering the circumstances. ITT MSG shall pay
a percentage of the fees and expenses of the Selected Investment Banking Firm
(including fees and expenses of counsel) related to the services provided by it
pursuant to this Section 2.08 equal to its Profit Percentage (as defined in the
Partnership Agreement) at such time and Cablevision, RGC or GHC shall pay the
balance of such fees and expenses. The closing of such purchase (or redemption)
and sale (the "Change of Control Call Closing") shall be held at the offices of
Sullivan & Cromwell, 125 Broad Street, New York, New York as soon as is
reasonably practicable following the satisfaction or waiver of all the
conditions to the Change of Control Call Closing set forth in Section 7.01 (the
date of such closing, the "Change of Control Call Closing Date"). At such
closing (x) Cablevision shall deliver to ITT MSG, (i) if Cablevision shall elect
to have the Change of Control Call Price paid in cash, by wire transfer to a
bank account
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33
designated by ITT MSG, immediately available funds in an amount equal to such
Change of Control Call Price or (ii) if Cablevision shall elect to have the
Change of Control Call Price paid in Debt Securities, Cablevision shall, or
shall cause RGC or GHC, as the case may be, to deliver the Debt Securities duly
executed and notarized and registered in the name of ITT MSG or its designee and
(y) ITT MSG shall deliver to Cablevision a Bill of Sale and Assignment of
Partnership Interest in the form of Exhibit A to effect delivery of title to the
ITT MSG Interest transferred pursuant to this Section 2.08.
SECTION 2.09. Cablevision's Third-Year Call Right. (a) Upon the
terms and subject to the conditions set forth in this Agreement, Cablevision
shall have the right to require ITT MSG to sell to Cablevision, or, at the
election of Cablevision, cause MSG to redeem on the third anniversary of the
Initial Closing Date the balance of the remaining ITT MSG Interest upon the
terms set forth in this Section 2.09 (the "Third-Year Call Right") and for a
purchase price equal to the percentage of the total existing MSG Interest
represented by such balance of the remaining ITT MSG Interest multiplied by the
Fair Market Value of MSG (the "Third-Year Call Price") as determined by an
investment banking firm selected by Cablevision from a list of three investment
banking firms selected by ITT MSG from the list of six investment banking firms
(or their successors) set forth in the definition of Selected Investment Banking
Firm (the "Appraiser"); provided that if at the time of Cablevision's delivery
of the notice required by Section 2.09(b) for the exercise of the Third-Year
Call Right (i) ITT MSG shall have previously exercised the First Put Option,
then the Third-Year Call Price shall not be less than $94 million or, if the
Aircraft shall not have been contributed to MSG, $75 million and (ii) ITT MSG
shall not have previously exercised a Put Option, then the Third-Year Call Price
shall not be less than $188 million or, if the Aircraft shall not have been
contributed to MSG, $150 million (each of such minimum prices, a "Floor Price").
The Appraiser shall determine the Third-Year Call Price in accordance with this
Agreement and shall present the methodology used in and results of such
determination in writing to Cablevision and ITT MSG. All fees and expenses of
the Appraiser (including fees and expenses of counsel) related to the services
provided by it pursuant to this Section 2.09 shall be paid by Cablevision.
(b) Manner of Exercise of Third-Year Call Right. If Cablevision
desires to exercise the Third-Year Call Right pursuant to Section 2.09(a), it
shall deliver to ITT MSG a written notice of its intention to exercise the
Third-Year
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34
Call Right at least 60 days prior to the third anniversary of the Initial
Closing Date. If Cablevision fails to deliver a notice stating its intention to
exercise the Third-Year Call Right at least 60 days prior to the third
anniversary of the Initial Closing Date, Cablevision shall be deemed to have
elected not to exercise the Third-Year Call Right. Within 10 business days
following receipt of Cablevision's notice ITT MSG shall deliver a notice setting
forth its three selections of investment banking firms to act as Appraiser from
the list of six investment banking firms (or their successors) set forth in the
definition of Selected Investment Banking Firm. The closing of the purchase and
sale contemplated by this Section 2.09 (the "Third-Year Call Closing") shall
occur as soon as is reasonably practicable following delivery to Cablevision and
ITT MSG of the Appraiser's written determination and the satisfaction or waiver
of all the conditions to the Third-Year Call Closing set forth in Section 7.01
(the date of such closing, the "Third-Year Call Closing Date"). At such closing
(i) Cablevision shall deliver to ITT MSG, by wire transfer to a bank account
designated by ITT MSG, immediately available funds in an amount equal to the
Third-Year Call Price and (ii) ITT MSG shall deliver to Cablevision a Bill of
Sale and Assignment of Partnership Interest in the form of Exhibit A to effect
delivery of title to the ITT MSG Interest transferred pursuant to this Section
2.09.
SECTION 2.10. Accelerated Put Right. In the event any Acceleration
Event shall occur, ITT MSG immediately shall have the right during the
continuance of such Acceleration Event to exercise the First Put Option and the
Second Put Option by delivery of written notice thereof to Cablevision and, upon
such exercise in accordance with this Section 2.10, the First Put Purchase Price
and the Second Put Purchase Price immediately shall become due and payable
entirely in cash; provided that if the relevant Acceleration Event arises under
clause (d) of the definition of Acceleration Event, ITT MSG must exercise its
rights under this Section 2.10 within 10 days following its receipt of the
statement on liquidation pursuant to Section 7.3 of the Partnership Agreement
and the First Put Purchase Price and the Second Put Purchase Price shall become
due and payable 10 days from receipt by Cablevision of ITT MSG's notice of its
exercise of its acceleration rights pursuant to the following sentence.
SECTION 2.11 Adjustment of Purchase Prices. In the event ITT MSG
shall Transfer (other than pursuant to Article II of this Agreement) any ITT MSG
Interest to any third party that is not a Permitted Transferee, including
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35
pursuant to a registered public offering (a "Third Party Transfer"), (a) upon
the exercise of a Put Option, the purchase price payable by Cablevision or MSG,
as the case may be, for the Second Transferred Interest and the Third
Transferred Interest, respectively, each shall be reduced by one-half of the
amount of the proceeds to ITT MSG from such Third Party Transfer and (b) each of
the Change of Control Call Price payable upon the exercise of the Change of
Control Call Right and the Floor Price in respect of a Third-Year Call Price
payable upon the exercise of the Third-Year Call Right shall be reduced by the
amount of such proceeds. Cablevision and ITT MSG agree that this provision is
intended to equitably adjust amounts to be paid to ITT MSG by Cablevision or its
Affiliates for ITT MSG Interests pursuant to this Agreement to account for any
Third Party Transfers.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of ITTE and ITT MSG.
Each of ITTE and ITT MSG hereby represents and warrants to Cablevision, RGC and
GHC as follows:
(a) Authority. Each of ITTE and ITT MSG is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of ITTE and ITT MSG has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
All corporate acts and other proceedings required to be taken by ITTE or ITT MSG
to authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and properly
taken. This Agreement has been duly executed and delivered by ITTE and ITT MSG
and constitutes a legal, valid and binding obligation of ITTE and ITT MSG,
enforceable against ITTE and ITT MSG in accordance with its terms.
(b) No Conflicts; Consents. The execution and delivery of this
Agreement by ITTE and ITT MSG do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof shall not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation, or result in the creation of any lien, claim,
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36
encumbrance, security interest, option, charge or restriction of any kind upon
any of the properties or assets of ITTE or ITT MSG or any of their respective
Subsidiaries under, any provision of (i) the certificate of incorporation or
by-laws of ITTE or ITT MSG or the comparable governing instruments of any such
Subsidiary, (ii) (assuming the consents required under clause (ii) of the next
sentence are obtained) any material note, bond, mortgage, indenture, deed of
trust, license, lease, contract, commitment, agreement or arrangement to which
ITTE, ITT MSG or any such Subsidiary is a party or by which any of their
respective properties or assets are bound, or (iii) (assuming the consents
required under clauses (i), (ii) and (iii) of the next sentence are obtained)
any judgment, order or decree, or statute, law, ordinance, rule or regulation
applicable to ITTE, ITT MSG or any such Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii) above,
any such items that, individually or in the aggregate, would not have a material
adverse effect on the ability of ITTE, ITT MSG, MSG or MSGE to consummate the
transactions contemplated hereby. No consent, approval, license, permit, order
or authorization of, or registration, declaration or filing with, any Federal,
state, local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity") or other
nongovernmental third party is required to be obtained or made by or with
respect to ITTE or ITT MSG or any of their respective Subsidiaries or their
respective Affiliates in connection with the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated hereby,
other than (i) compliance with and filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), if applicable, (ii) filings, approvals
or agreements required by the National Basketball Association (the "NBA") and
the National Hockey League (the "NHL") in accordance with applicable rules,
regulations or agreements of the NBA and the NHL (collectively, the "League
Rules"), (iii) compliance with and filings under the Securities Act and the
Exchange Act, (iv) those that may be required solely by reason of Cablevision's
and its Affiliates, (as opposed to any other third party's) participation in the
transactions contemplated hereby and (v) any consents, approvals, licenses,
permits, orders or authorizations, that, if not obtained or made, would not,
individually or in the aggregate, have a material adverse effect on the ability
of ITTE, ITT MSG, MSG or MSGE to consummate or cause to be consummated the
transactions contemplated hereby.
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37
(c) The Shares and the ITT MSG Interest. ITTE owns the Shares and
ITT MSG owns the ITT MSG Interest, in each case, free and clear of any pledges,
liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind, other than those imposed by virtue of the League
Rules. Assuming RGC has the requisite power and authority to be the lawful owner
of the Shares and GHC and Cablevision have the requisite power and authority to
own the ITT MSG Interest, MSGE has the requisite power and authority to redeem
the Shares, and MSG has the requisite power and authority to redeem the ITT MSG
Interest, upon delivery to RGC or MSGE, as the case may be, of certificates
representing the Shares, duly endorsed by ITTE for transfer, and the delivery to
Cablevision, GHC or MSG, as the case may be, of a Bill of Sale and Assignment of
Partnership Interest in the form of Exhibit A representing the Initial
Transferred Interest, the Second Transferred Interest, the Third Transferred
Interest or the ITT MSG Interest to be transferred at the Change of Control Call
Closing or the Third-Year Call Closing, as the case may be, and upon ITTE's
receipt in accordance with this Agreement of the Shares Purchase Price and ITT
MSG's receipt in accordance with this Agreement of the Initial Transferred
Interest Purchase Price, the First Put Purchase Price, the Second Put Purchase
Price, the Change of Control Call Price or the Third-Year Call Price, as the
case may be, good and valid title to the Shares and the Initial Transferred
Interest, the Second Transferred Interest, the Third Transferred Interest or the
ITT MSG Interest to be transferred at the Change of Control Call Closing on the
Third-Year Call Closing, as the case may be, will pass to RGC, GHC, MSGE,
Cablevision or MSG, as the case may be, free and clear of any pledges, liens,
claims, encumbrances, security interests, options, charges and restrictions of
any kind, other than those arising from acts of or agreements relating to
Cablevision, RGC, GHC, MSGE, MSG or their respective Affiliates, other than
those imposed by virtue of the League Rules. Other than this Agreement, the
Partnership Agreement, the Bid Agreement, the NBA Consent Agreement, the NHL
Consent Agreements, the League Rules and the MSG Acquisition Financing
Agreements, the Shares and the ITT MSG Interest are not subject to any voting
trust agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Shares or the ITT MSG Interest.
(d) Registration Statements. The information supplied by ITT MSG in
writing specifically for inclusion in any Registration Statement, will not, at
the time such Registration Statement becomes effective, at the relevant
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38
Closing Date or at the closing of any sale registered on such Registration
Statement, as such Registration Statement is then amended or supplemented,
contain any untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any such Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations thereunder.
(e) Actions and Proceedings, etc. Except as described in filings on
Schedule 14D-9 by ITT with the SEC, there are no (i) outstanding judgments,
orders, injunctions or decrees of any Governmental Entity or arbitration
tribunal against ITTE or ITT MSG or any of their respective Affiliates or (ii)
investigations or Actions which are pending or, to the knowledge of ITTE or ITT
MSG, threatened against ITTE or ITT MSG or any of their respective Affiliates,
which, in each case, could have a material adverse effect on the ability of
ITTE, ITT MSG, MSG or MSGE to consummate the transactions contemplated hereby.
SECTION 3.02. Representations and Warranties of Cablevision, RGC and
GHC. Cablevision, RGC and GHC hereby represent and warrant to ITTE and ITT MSG
as follows:
(a) Authority. Each of Cablevision, RGC and GHC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each of Cablevision, RGC and GHC has all requisite corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. All corporate
acts and other proceedings required to be taken by Cablevision, RGC or GHC to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and properly
taken. This Agreement has been duly executed and delivered by Cablevision, RGC
and GHC and constitutes a legal, valid and binding obligation of Cablevision,
RGC and GHC, enforceable against Cablevision, RGC and GHC in accordance with its
terms.
(b) No Conflicts; Consents. The execution and delivery of this
Agreement by Cablevision, RGC and GHC do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof shall not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or
<PAGE>
39
acceleration of any obligation, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
any of the properties or assets of Cablevision, RGC or GHC or any of their
respective Subsidiaries under, any provision of (i) the Amended and Restated
Certificate of Incorporation or By-laws of Cablevision or the comparable
governing instruments of RGC or GHC or any such Subsidiary, (ii) (assuming the
consents required under clauses (ii), (iv) and (vi) of the next sentence are
obtained) any material note, bond, mortgage, indenture, deed of trust, license,
lease, contract, commitment, agreement or arrangement to which Cablevision, RGC
or GHC or any such Subsidiary is a party or by which any of their respective
properties or assets are bound, or (iii) (assuming the consents required under
clauses (i), (ii) and (iii) of the next sentence are obtained) any judgment,
order or decree, or statute, law, ordinance, rule or regulation applicable to
Cablevision, RGC or GHC or any such Subsidiary or their respective properties or
assets, other than, in the case of clauses (ii) and (iii) above, any such items
that, individually or in the aggregate, would not have a material adverse effect
on the ability of Cablevision, RGC or GHC to consummate or cause to be
consummated the transactions contemplated hereby. No consent, approval, license,
permit, order or authorization of, or registration, declaration or filing with,
any Governmental Entity or other nongovernmental third party is required to be
obtained or made by or with respect to Cablevision, RGC, GHC, MSG or any of
their respective Subsidiaries or their respective Affiliates in connection with
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby, other than (i) compliance with and filings
under the HSR Act, if applicable, (ii) filings, approvals or agreements required
by the NBA or the NHL in accordance with League Rules, (iii) compliance with and
filings under the Securities Act and the Exchange Act, (iv) approval of the
issuance of shares of Cablevision Common Stock at the First Put Stock Closing or
the Second Put Stock Closing by the shareholders of Cablevision, (v) those that
may be required solely by reason of ITTE's or ITT MSG's (as opposed to any other
third party's) participation in the transactions contemplated hereby, (vi)
approvals of the indemnities set forth in Sections 5.02, 5.03 and 5.04 by the
lenders under Rainbow's senior credit facility and (vii) any consents,
approvals, licenses, permits, orders or authorizations, that, if not obtained or
made, would not, individually or in the aggregate, have a material adverse
effect on the ability of Cablevision, RGC or GHC to consummate or cause to be
consummated the transactions contemplated hereby.
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40
(c) Purchase Intent. The Shares and the ITT MSG Interest to be
acquired by Cablevision, RGC, MSGE, GHC or MSG from time to time pursuant to
this Agreement are being acquired for investment only and not with a view to any
public distribution thereof, and none of them or their respective Affiliates
shall offer to sell or otherwise dispose of all or any portion of the Shares or
the ITT MSG Interest so acquired by it in violation of any of the registration
requirements of the Securities Act.
(d) Cablevision Shares. All Cablevision Shares which may be issued
pursuant to this Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to any preemptive rights.
(e) Registration Statements. The information included or
incorporated by reference in any Registration Statement covering Cablevision
Shares (other than the information supplied by ITT MSG in writing specifically
for inclusion in such Registration Statement), will not, at the time such
Registration Statement becomes effective, at the relevant Closing Date or at the
closing of any sale registered on such Registration Statement, as such
Registration Statement is then amended or supplemented, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any such
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations thereunder.
(f) Actions and Proceedings, etc. There are no (i) outstanding
judgments, orders, injunctions or decrees of any Governmental Entity or
arbitration tribunal against Cablevision, RGC or GHC or any of their respective
Affiliates or (ii) investigations or Actions which are pending or, to the
knowledge of Cablevision, RGC or GHC, threatened against Cablevision, RGC, GHC
or any of their respective Affiliates, which, in each case, could have a
material adverse effect on the ability of Cablevision, RGC, GHC, MSGE or MSG to
consummate or cause to be consummated the transactions contemplated hereby.
(g) Solvency. Each of Cablevision, RGC, GHC and MSGE on the date
hereof is not, and after giving effect to the transactions contemplated to occur
at each Closing will not be, insolvent or unable to meet its debts as they come
due.
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41
SECTION 3.03. Representations and Warranties of MSG. MSG represents
and warrants to ITT MSG as of any Closing Date other than the Initial Closing
Date (except for Section 3.03(e), which shall be as of the Initial Closing Date
and any other Closing Date) as follows:
(a) Authority. MSG is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware. MSG has
all requisite partnership power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. All partnership acts and other proceedings required to be
taken by MSG to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and properly taken. This Agreement has been duly executed and delivered by
MSG and constitutes a legal, valid and binding obligation of MSG, enforceable
against MSG in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement by
MSG do not, and the consummation of the transactions contemplated hereby and
compliance with the terms hereof shall not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation, or result in the creation of any lien, claim, encumbrance,
security interest, option, charge or restriction of any kind upon any of the
properties or assets of MSG or any Subsidiary of MSG under, any provision of (A)
the Partnership Agreement or the charter and by-laws or comparable governing
instruments of any Subsidiary of MSG, (B) any material note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to MSG or any Subsidiary of MSG is a party or by which any of their
respective properties or assets are bound, or (C) any judgment, order, or
decree, or statute, law, ordinance, rule or regulation applicable to MSG or any
Subsidiary of MSG or their respective properties or assets, other than, in the
case of clauses (B) and (C) above, any such items that, individually or in the
aggregate, would not have a material adverse effect on the ability of MSG to
consummate the transactions contemplated hereby.
(c) Registration Statements. The information included or
incorporated by reference in any Registration Statement relating to equity
securities of MSG (other than the information supplied by ITT MSG in writing
specifically for inclusion in such Registration Statement), will not, at the
time such Registration Statement becomes effective or at
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42
the closing of any sale registered on such Registration Statement, as such
Registration Statement is then amended or supplemented, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any such
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations thereunder.
(d) Actions and Proceedings, etc. There are no (i) outstanding
judgments, orders, injunctions or decrees of any Governmental Entity or
arbitration tribunal against MSG or any of its Affiliates or (ii) investigations
or Actions which are pending or, to the knowledge of MSG, threatened against MSG
or any of its Affiliates, which, in each case, could have a material adverse
effect on the ability of MSG to consummate the transactions contemplated hereby.
(e) Solvency. After giving effect to the transactions contemplated
to occur at each Closing in which MSG is redeeming an ITT MSG Interest, MSG will
not be insolvent or unable to meet its debts as they come due.
SECTION 3.04. No Representations or Warranties as to Business. Each
of the parties hereto understands and agrees that, except as expressly set forth
in this Article III, no party hereto is, in this Agreement or any document
contemplated by this Agreement expressly or impliedly, making any representation
or warranty whatsoever as to the business, assets, condition (financial or
otherwise), results of operations, financial statements, assets, properties,
contracts and agreements of MSG.
ARTICLE IV
Registration Rights
SECTION 4.01. Registration Rights. (a) If MSG shall at any time
after the date hereof, and for so long as ITT MSG or any of its Affiliates
beneficially owns any MSG Interest, propose to file a Registration Statement
under the Securities Act with respect to an underwritten public offering by MSG
or Cablevision or any Affiliate of Cablevision of any partnership interests in
or equity securities of MSG, on each such occasion MSG shall promptly furnish
ITT MSG with prior written notice thereof. After receipt of such notice by ITT
MSG, at the written request of ITT MSG given within 10 days after the receipt of
such
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43
notice to register any of ITT MSG's partnership interest in or equity securities
of MSG (the "Registrable Securities"), MSG shall include in such Registration
Statement such Registrable Securities for which registration shall have been
requested in an amount so as to permit the sale or other disposition by ITT MSG
as part of such underwritten public offering of all such Registrable Securities
as are requested by ITT MSG to be included; provided, however, that if the
managing underwriter of such offering shall advise MSG in writing that, in its
opinion, the number of securities requested and otherwise proposed to be
included in such offering exceeds the number which can be sold without adversely
affecting the marketability of the offering (the "Maximum Offering Size"), MSG
shall include in such registration to the extent of the number which MSG is so
advised can be sold in such offering, (i) for the five-year period commencing on
the Initial Closing Date, first, the securities MSG proposes to sell for its own
account in such registration, second, all Registrable Securities requested to be
included in such registration by ITT MSG pursuant to this Section 4.01, and
third, all other securities proposed to be included in such Registration
Statement by Cablevision or any other holders and (ii) after such five-year
period, first, the securities MSG proposes to sell for its own account in such
registration and second, all Registrable Securities requested to be included in
such registration by ITT MSG pursuant to this Section 4.01 and all other
securities proposed to be included in such Registration Statement by Cablevision
or any other holders pro rata based on the number of securities requested to be
included by each. In connection with any registration in which ITT MSG includes
Registrable Securities pursuant to this Section 4.01, ITT MSG shall execute a
normal and customary underwriting agreement in form and substance reasonably
satisfactory to ITT MSG. Nothing in this Section 4.01 shall create any liability
(other than pursuant to Section 4.01(b)) on the part of MSG to ITT MSG if MSG in
its sole discretion should decide not to file a Registration Statement proposed
to be filed pursuant to this Section 4.01 or to withdraw such Registration
Statement subsequent to its filing.
(b) Expenses. The parties hereto acknowledge and agree that, as
between MSG and ITT MSG, all Registration Expenses incurred by MSG and ITT MSG
hereto in complying with the provisions of this Section 4.01 shall be borne by
MSG and ITT MSG in proportion to the amount of securities sold by such person in
any offering in relation to the total amount of securities included in such
offering; provided that each of MSG and ITT MSG shall be responsible for
underwriting commissions and discounts and transfer taxes
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44
with respect to the securities included in any Registration Statement pursuant
to this Section 4.01 by such person and shall be responsible for all other fees
and expenses directly incurred by such person.
SECTION 4.02. Registration Procedures. (a) For purposes of this
Section 4.02, "Registrant" shall mean, with respect to a registration of
Cablevision Shares pursuant to Section 2.06, Cablevision and, with respect to a
registration of Registrable Securities pursuant to Section 4.01, MSG. In
connection with any registration pursuant to Section 2.06 or Section 4.01:
(i) Registrant shall furnish to ITT MSG, sufficiently prior to the
filing thereof with the SEC to allow ITT MSG to review and comment on,
copies of the Registration Statement and each amendment thereof and each
supplement, if any, to the Prospectus included therein and Registrant
shall use all reasonable efforts to reflect in each such document, when so
filed with the SEC, such comments as ITT MSG reasonably may propose;
(ii) Registrant shall advise ITT MSG and, if requested by ITT MSG,
confirm such advice in writing (which advice pursuant to paragraphs (B)
through (E) hereof shall be accompanied by an instruction to suspend the
use of the Prospectus until the requisite changes have been made):
(A) when the Registration Statement and any amendment thereto
has been filed with the SEC and when the Registration Statement or
any posteffective amendment thereto has become effective;
(B) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus included therein or for
additional information;
(C) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any actions or proceedings for that purpose;
(D) of the receipt by Registrant of any notification with
respect to the suspension of the qualification or exemption from
qualification of the Cablevision Shares or Registrable Securities,
as the case may be, for sale in any jurisdiction
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or the initiation or threatening of any action or proceeding for
such purpose; and
(E) of the happening of any event that requires the making of
any changes in the Registration Statement or the Prospectus so that,
as of such date, the statements therein are not misleading and do
not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(iii) Upon the occurrence of any event contemplated by paragraphs
(B) through (E) of Section 4.02(a)(ii) during the period for which
Registrant is required to maintain an effective Registration Statement and
subject to paragraph (xv) of this Section 4.02(a), Registrant shall
promptly prepare a post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to purchasers of the Cablevision
Shares or Registrable Securities, as the case may be, the Prospectus will
not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(iv) Registrant shall comply with all applicable rules and
regulations of the SEC and will make generally available to its security
holders as soon as practicable but in any event not later than 18 months
after the effective date of the Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Securities
Act;
(v) Registrant shall enter into such customary agreements and take
all such other customary action, if any, as ITT MSG or the managing
underwriter or underwriters shall reasonably request in order to
facilitate the disposition of Cablevision Shares or Registrable
Securities, as the case may be, pursuant to any Registration Statement;
(vi) Registrant shall (A) make reasonably available upon reasonable
notice and during reasonable business hours for inspection by
representatives of, and counsel for, ITT MSG and any underwriter
participating in any disposition of Cablevision Shares or Registrable
Securities, as the case may be, pursuant to a Registration Statement, all
relevant financial and
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other records, pertinent corporate documents and properties of Registrant
and each Subsidiary of Registrant and (B) cause each of Registrant's (and
each of Registrant's Subsidiary's) officers, directors, employees,
accountants and auditors to supply all relevant information reasonably
requested by such representative, counsel or any such underwriter in
connection with any such Registration Statement, in each case, as shall be
reasonably necessary, in the judgment of counsel for ITT MSG or such
underwriters, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that each such
representative or counsel shall be acceptable to Registrant in its
judgment reasonably exercised and each such person inspecting or being
supplied with records, documents or information pursuant to this clause
(vi) shall agree (and, in the case of representatives other than counsel,
in writing) to maintain in confidence and not disclose to any other person
any such records, documents or information that is not then publicly
available, until such time as (A) such information becomes a matter of
public record (whether by virtue of its inclusion in such Registration
Statement or otherwise), (B) such person shall be required to disclose
such information pursuant to a subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter (subject
to the requirements of such order, and only after such person shall have
given Registrant prompt prior written notice of such requirement) or (C)
such information is required to be set forth in such Registration
Statement or the Prospectus included therein in order that such
Registration Statement or Prospectus does not contain an untrue statement
of a material fact or omit to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing;
(vii) Registrant shall cause (A) its counsel to deliver an opinion
relating to the Registration Statement and the Cablevision Shares or the
Registrable Securities, as the case may be, in customary form addressed to
the managing underwriter or underwriters and, if customary, ITT MSG and
dated the effective date of such Registration Statement (it being agreed
that the matters to be covered by such opinion shall include the due
organization and good standing of Registrant and its material
Subsidiaries; the qualification of Registrant and its material
Subsidiaries to transact business as foreign organizations; the due
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authorization, execution and delivery of the underwriting agreement and
any other relevant agreements; the status of the Cablevision Shares or the
Registrable Securities, as the case may be, as duly authorized and
executed, validly issued, fully paid and nonassessable; the absence of
material legal or governmental proceedings involving Registrant; the
governmental approvals required to be obtained in connection with the
Registration Statement and the offering and sale of the Cablevision Shares
or the Registrable Securities, as the case may be; the compliance as to
form in all material respects of such Registration Statement with the
requirements of the Securities Act; and, as of the date of the opinion and
of the Registration Statement or most recent post-effective amendment
thereto, as the case may be, the absence from such Registration Statement
and the Prospectus included therein, as then amended or supplemented, of
an untrue statement of a material fact or the omission to state therein a
material fact necessary to make the statements therein not misleading
other than with respect to information supplied by parties other than
Registrant and Affiliates of Registrant (in the case of such documents, in
light of the circumstances existing at the time such documents were filed
with the SEC under the Exchange Act)); (B) its officers to execute and
deliver all customary documents and certificates requested by the managing
underwriter or underwriters and, in the case of a registration of
Cablevision Shares, ITT MSG and (C) its independent public accountants to
provide a comfort letter in customary form addressed to ITT MSG and the
managing underwriters, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards
No. 72;
(viii) Registrant shall furnish to ITT MSG such number of copies of
such Registration Statement and of each amendment and post-effective
amendment thereto (in each case including all exhibits), the Prospectus
and any Prospectus supplement, as applicable, and such other documents as
ITT MSG may reasonably request in order to facilitate the disposition of
the Cablevision Shares or the Registrable Securities, as the case may be,
by ITT MSG (Registrant hereby consents to the use of the Prospectus or any
amendment or supplement thereto in connection with such disposition);
(ix) Registrant shall furnish to ITT MSG at least one manually
signed copy of any Registration Statement
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48
(including exhibits, financial statements and schedules) and all
amendments thereto;
(x) Registrant shall use all reasonable efforts to register or
qualify the Cablevision Shares or Registrable Securities, as the case may
be, covered by such Registration Statement under such state securities or
blue sky laws of such jurisdictions as ITT MSG shall reasonably request in
writing by the time the Registration Statement is declared effective, and
do any and all other acts and things which may be reasonably necessary or
advisable to enable ITT MSG to consummate the disposition in such
jurisdictions of such Cablevision Shares or Registrable Securities, as the
case may be, except that Registrant shall not for any such purpose be
required to (A) qualify generally to do business as a foreign corporation
or as a broker-dealer in any jurisdiction where it would not otherwise be
required to qualify but for this Section 4.02, (B) consent to general
service of process in any such jurisdiction or (C) subject itself to
taxation in any such jurisdiction;
(xi) In the case of a registration of Cablevision Shares pursuant to
Section 2.06, Cablevision shall cause all such Cablevision Shares to be
listed on any securities exchange on which the Cablevision Common Stock is
then listed, or approved for trading through the Nasdaq Stock Market or
any other inter-dealer quotation system through which the Cablevision
Common Stock is then traded, provide a transfer agent and registrar for
such Cablevision Shares covered by such Registration Statement no later
than the effective date of such Registration Statement and, if securities
of the same class as the Cablevision Shares are then certificated, provide
certificates for Cablevision Shares covered by a Registration Statement
without any restrictive legends;
(xii) In the case of a registration of Registrable Securities
pursuant to Section 4.01, MSG shall cause all Registrable Securities
registered on a Registration Statement to be listed on any securities
exchange on which partnership interests or equity securities of MSG are
then listed, or approved for trading through the Nasdaq Stock Market or
any other inter-dealer quotation system through which such interests or
securities are then traded, provide a transfer agent and registrar for
such Registrable Securities covered by such Registration Statement no
later than the effective date of such Registration Statement and provide
certificates
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49
for Registrable Securities covered by a Registration Statement without any
restrictive legends;
(xiii) Without limiting any of the foregoing, Registrant shall
permit ITT MSG and its counsel to be involved in the preparation of any
Registration Statement being prepared pursuant to this Agreement, shall
permit ITT MSG and its counsel to review and comment on any filing
(including of the Registration Statement) required to be made by
Registrant hereunder or correspondence with the SEC and to deliver to ITT
MSG all material correspondence from the SEC promptly following receipt
thereof by Registrant;
(xiv) Each party hereto agrees not to engage in any actions which
could reasonably be expected to cause the Registrant to be in violation of
any Federal or state securities law or regulation in complying with this
Article IV;
(xv) ITT MSG agrees that, upon receipt of any (i) notice from
Registrant of the happening of any event of the kind described in
paragraphs (B) through (E) of Section 4.02(a)(ii) or (ii) notice from
Registrant that Registrant is in possession of material information that
has not been disclosed to the public and would be required to be disclosed
in the Registration Statement and Registrant reasonably deems it to be
advisable not to disclose such information in a Registration Statement (in
each case, such notice being hereinafter referred to as a "Suspension
Notice"), ITT MSG shall (A) forthwith discontinue disposition of the
Cablevision Shares or Registrable Securities, as the case may be, pursuant
to any Registration Statement and (B) shall not be entitled to the
benefits provided under Article V hereof with respect to liabilities
arising from the subject matter of the notice received by ITT MSG pursuant
to the foregoing clause (i) or (ii) in connection with any sales made by
it in contravention of this paragraph, in each case, until ITT MSG's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4.02(a)(iii) or a notice that any order suspending
the effectiveness of the Registration Statement has been withdrawn, or,
until further notice from Registrant that disposition of Cablevision
Shares or Registrable Securities may resume, provided that such further
notice will be given within 90 days of the Suspension Notice in the case
of (ii) above, and provided further in the case of clause (ii) above that
any Suspension Notice must be based upon a good faith
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50
determination of the Board of Directors of Registrant that such Suspension
Notice is necessary; and, if so directed by Registrant, ITT MSG will
deliver to Registrant (at the expense of Registrant) all copies in its
possession, other than permanent file copies then in ITT MSG's possession,
of the Prospectus covering such Cablevision Shares or Registrable
Securities current at the time of receipt of such notice; and
(xvi) ITT MSG will furnish to Registrant such information regarding
ITT MSG and its Affiliates as Registrant may from time to time reasonably
request in writing, but only to the extent that such information is
required in order to comply with the Securities Act or any relevant state
securities or Blue Sky law or obligation. ITT MSG agrees to notify
Registrant as promptly as practicable of any inaccuracy or change in
information previously furnished by ITT MSG to Registrant or of the
happening of any event, in either case as a result of which any Prospectus
relating to such registration contains an untrue statement of a material
fact regarding ITT MSG or omits to state any material fact regarding ITT
MSG required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and to furnish to Registrant promptly any additional
information required to correct and update any previously furnished
information or required such that such prospectus shall not contain, with
respect to ITT MSG, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. In connection with a registration of
Registrable Securities, ITT MSG shall cause its counsel to deliver an
opinion in customary form to the managing underwriters or underwriters
dated the effective date of such Registration Statement with respect to
matters customarily covered by an opinion of counsel to a selling
shareholder. ITT MSG agrees to provide reasonable cooperation to the
Registrant in connection with a registration of Cablevision Shares or
Registrable Securities.
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51
ARTICLE V
Indemnification
SECTION 5.01. Indemnification by Cablevision. Cablevision agrees to
indemnify, defend and hold harmless the ITT MSG Indemnitees from and against,
and pay or reimburse the ITT MSG Indemnitees for, any and all Indemnifiable
Losses arising out of, by reason of or otherwise related to (i) any untrue or
alleged untrue statement of material fact contained or incorporated in a
Registration Statement covering Cablevision Common Stock, any Prospectus or
preliminary Prospectus relating to Cablevision Common Stock, or any amendment or
supplement to any of the foregoing, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a Registration Statement, Prospectus or a
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading, except, in the case of the foregoing clauses (i) or (ii),
insofar as the same arise out of or are based upon, any such untrue statement or
omission made in reliance on and in conformity with information with respect to
ITT MSG and its Affiliates furnished in writing to Cablevision by ITT MSG
expressly for use therein or (iii) any breach by Cablevision of its obligations
under this Agreement, the Partnership Agreement or any Ancillary Agreement.
SECTION 5.02. Indemnification by Rainbow. Rainbow agrees to
indemnify, defend and hold harmless the ITT MSG Indemnitees from and against,
and pay or reimburse the ITT MSG Indemnitees for, any and all Indemnifiable
Losses arising out of, by reason of or otherwise related to any obligation of
ITT or any of its Affiliates contemplated to be discharged and released pursuant
to Section 6.06(c).
SECTION 5.03. Indemnification by RGC. RGC agrees to indemnify,
defend and hold harmless the ITT MSG Indemnitees from and against, and pay or
reimburse the ITT MSG Indemnitees for, any and all Indemnifiable Losses arising
out of, by reason of or otherwise related to (i) any obligation of ITT or any of
its Affiliates contemplated to be discharged and released pursuant to Section
6.06(c) or (ii) any breach by RGC, GHC or MSG of their respective obligations
under this Agreement, the Partnership Agreement or any Ancillary Agreement.
SECTION 5.04. Indemnification by GHC. GHC agrees to indemnify,
defend and hold harmless the ITT MSG Indemnitees from and against, and pay or
reimburse the ITT
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52
MSG Indemnitees for, any and all Indemnifiable Losses arising out of, by reason
of or otherwise related to (i) any obligation of ITT or any of its Affiliates
contemplated to be discharged and released pursuant to Section 6.06(c) or (ii)
any breach by GHC or RGC of their respective obligations under this Agreement,
the Partnership Agreement or any Ancillary Agreement.
SECTION 5.05. Indemnification by MSG. MSG agrees to indemnify,
defend and hold harmless the ITT MSG Indemnitees from and against, and pay or
reimburse the ITT MSG Indemnitees for, any and all Indemnifiable Losses arising
out of, by reason of or otherwise related to (i) any untrue or alleged untrue
statement of material fact contained or incorporated in a Registration Statement
covering securities of MSG, any Prospectus or preliminary Prospectus relating to
securities of MSG, or any amendment or supplement to any of the foregoing, (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
Registration Statement, Prospectus or a preliminary Prospectus, in light of the
circumstances under which they were made) not misleading, except, in the case of
the foregoing clauses (i) or (ii), insofar as the same arise out of or are based
upon, any such untrue statement or omission made in reliance on and in
conformity with information with respect to ITT MSG or its Affiliates furnished
in writing to MSG by ITT MSG expressly for use therein or (iii) any breach by
MSG of its obligations under this Agreement, the Partnership Agreement or any
Ancillary Agreement.
SECTION 5.06. Indemnification by ITTE. ITTE agrees to indemnify,
defend and hold harmless the Cablevision Indemnitees from and against, and pay
or reimburse the Cablevision Indemnitees for, any and all Indemnifiable Losses
arising out of, by reason of or otherwise related to any breach by ITTE of its
obligations under this Agreement, the Partnership Agreement or any Ancillary
Agreement.
SECTION 5.07. Indemnification by ITT MSG. ITT MSG agrees to
indemnify, defend and hold harmless the Cablevision Indemnitees from and
against, and pay or reimburse the Cablevision Indemnitees for, any and all
Indemnifiable Losses arising out of, by reason of or otherwise related to (i)
any untrue or alleged untrue statement of material fact contained in a
Registration Statement covering Cablevision Shares or Registrable Securities, as
the case may be, any Prospectus or preliminary Prospectus relating to such
Cablevision Shares or Registrable
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53
Securities, or any amendment or supplement to any of the foregoing, (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
Prospectus or a preliminary Prospectus, in light of the circumstances under
which they were made) not misleading, but only, in the case of the foregoing
clauses (i) and (ii), to the extent that any such untrue statement or omission
is made in reliance on and in conformity with information with respect to ITT
MSG furnished in writing to the Registrant by ITT MSG and its Affiliates
specifically for inclusion therein or (iii) any breach by ITT MSG of its
obligations under this Agreement, the Partnership Agreement or any Ancillary
Agreement.
SECTION 5.08. Indemnification by ITT. ITT agrees to indemnify,
defend and hold harmless the Cablevision Indemnitees from and against, and pay
or reimburse the Cablevision Indemnitees for, any and all Indemnifiable Losses
arising out of, by reason of or otherwise related to the Actions described in
ITT's filings on Schedule 14D-9 with the SEC, to the extent Cablevision or any
of its Affiliates is made a party thereto or is required to answer to any
subpoena or similar process in connection therewith.
SECTION 5.09. Procedures for Indemnification. If a claim or demand
is made against any person who is entitled to indemnification hereunder (an
"Indemnitee") by any person who is not a party, or an Affiliate of a party, to
this Agreement (a "Third Party Claim") as to which such Indemnitee is entitled
to indemnification pursuant to this Agreement, such Indemnitee shall notify the
party obligated hereunder to indemnify such Indemnitee (the "Indemnifying
Party") in writing, and in reasonable detail, of the Third Party Claim promptly
(and in any event within 15 business days) after receipt by such Indemnitee of
written notice of the Third Party Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure (except that the Indemnifying Party shall not be liable
for any expenses incurred during the period in which the Indemnitee failed to
give such notice). Thereafter, the Indemnitee shall deliver to the Indemnifying
Party, promptly after the Indemnitee's receipt thereof, copies of all notices
and documents (including court papers) received by the Indemnitee relating to
the Third Party Claim.
If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to partici-
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54
pate in the defense thereof and, if it so chooses and acknowledges in writing
its obligation to indemnify the Indemnitee therefor, to assume the defense
thereof with counsel selected by the Indemnifying Party; provided that such
counsel is not reasonably objected to by the Indemnitee. Should the Indemnifying
Party so elect to assume the defense of a Third Party Claim, the Indemnifying
Party shall not be liable to the Indemnitee for legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense thereof;
provided that if there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the reasonable judgment of the
Indemnitee for the same counsel to represent both the Indemnitee and the
Indemnifying Party, then the Indemnitee shall be entitled to retain its own
counsel, at the expense of the Indemnifying Party. If the Indemnifying Party
assumes such defense, the Indemnitee shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party shall control such defense. The Indemnifying Party shall be
liable for the fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has failed to assume the defense
thereof (other than during the period prior to the time the Indemnitee shall
have given notice of the Third Party Claim as provided above). If the
Indemnifying Party so elects to assume the defense of any Third Party Claim, all
of the Indemnitees shall cooperate with the Indemnifying Party in the defense or
prosecution thereof.
If the Indemnifying Party acknowledges in writing liability for a
Third Party Claim, then in no event will the Indemnitee admit any liability with
respect to, or settle, compromise or discharge, any Third Party Claim without
the Indemnifying Party's prior written consent; provided, however, that the
Indemnitee shall have the right to settle, compromise or discharge such Third
Party Claim without the consent of the Indemnifying Party if the Indemnitee
releases in writing the Indemnifying Party from its indemnification obligation
hereunder with respect to such Third Party Claim and such settlement, compromise
or discharge would not otherwise adversely affect the Indemnifying Party. If the
Indemnifying Party acknowledges in writing liability for a Third Party Claim,
the Indemnitee will agree to any settlement, compromise or discharge of a Third
Party Claim that the Indemnifying Party may recommend and that by its terms
obligates the Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and releases the Indemnitee completely in
connection with such Third Party Claim and that would not otherwise adversely
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55
affect the Indemnitee; provided, however, that all of the Indemnitees that are
subject to the Third Party Claims that are to be settled, compromised or
discharged may unanimously refuse to agree to any such settlement, compromise or
discharge if each Indemnitee agrees that the Indemnifying Party's
indemnification obligation with respect to such Third Party Claim shall not
exceed the amount that would be required to be paid by or on behalf of the
Indemnifying Party in connection with such settlement, compromise or discharge.
Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third Party Claim (and shall be liable for
the fees and expenses of counsel incurred by the Indemnitee in defending such
Third Party Claim) if the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the Indemnitee
which the Indemnitee reasonably determines, after conferring with its counsel,
cannot be separated from any related claim for money damages. If such equitable
relief or other relief portion of the Third Party Claim can be so separated from
that for money damages, the Indemnifying Party shall be entitled to assume the
defense of the portion relating to money damages.
SECTION 5.10. Indemnification Payments. Indemnification required by
this Article V shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
loss, liability, claim, damage or expense is incurred.
SECTION 5.11. Contribution. (a) If the indemnification from the
Indemnifying Party provided for in Section 5.01(i) or (ii), Section 5.05(i) or
(ii) or Section 5.07(i) or (ii) is unavailable to an Indemnitee hereunder in
respect of any Indemnifiable Losses for which it is entitled to indemnification
hereunder, then the Indemnifying Party, in lieu of indemnifying such Indemnitee,
shall contribute to the amount paid or payable by such Indemnitee as a result of
such Indemnifiable Losses in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnitee in connection with the
Action which resulted in such Indemnifiable Losses, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnitee shall be determined by reference to, among other things, whether
any action in question, including in respect of any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such
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56
Indemnifying Party or Indemnitee, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action and the
terms of this Agreement. The amount paid or payable by a party as a result of
Indemnifiable Losses shall be deemed to include, subject to the limitations set
forth in Section 5.09, any legal and other fees and expenses reasonably incurred
by such Indemnitee in connection with any Action.
(b) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5.11 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(c) If indemnification is available under this Article V, the
Indemnifying parties shall indemnify each Indemnitee to the full extent provided
in this Article V, without regard to the relative fault of said Indemnifying
parties or Indemnitee or any other equitable consideration provided for in this
Section 5.11.
(d) The provisions of this Section 5.11 shall be applicable in
respect of each registration pursuant to this Agreement and shall be in addition
to any liability which any party may have to any other party.
SECTION 5.12. Survival of Obligations. The obligations of the
parties under this Article V shall survive the consummation of the transactions
contemplated hereby or any termination of this Agreement
ARTICLE VI
Covenants
SECTION 6.01. Cooperation; Further Assurances. (a) Without limiting
any other provision of this Agreement, each of the parties hereto shall, and
shall cause their respective Affiliates to, proceed expeditiously and cooperate
fully in making application for all necessary regulatory approvals, in the
procurement of any other consents and approvals, and in the taking of any other
action and the satisfaction of all other requirements prescribed by law or
otherwise, necessary for consummation of
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57
the transactions contemplated hereby on the terms provided herein. Each of the
parties hereto shall, and shall cause their respective Affiliates to, use all
reasonable efforts (i) to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements which may be imposed on such party
with respect to the transactions contemplated hereby and (ii) to promptly obtain
(and to cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or any other
public or private third party (including the NBA and the NHL) which is required
to be obtained or made by such party in connection with the transactions
contemplated hereby. Each of the parties hereto shall not, and shall not permit
any of their respective Subsidiaries or Affiliates to, take any action that
would, or that could reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to any of the Closings set forth
in Section 7.01 not being satisfied.
(b) Each party shall use all reasonable efforts to cause the Initial
Closing to occur on or prior to June 1, 1997 or, if the Initial Closing does not
occur by that date, shall continue to use all reasonable efforts to cause the
Initial Closing to occur as soon thereafter as practicable (except that
Cablevision shall not be obligated to cause RGC and GHC to pay the Shares
Purchase Price or the Initial Transferred Interest Purchase Price, respectively,
at the Initial Closing and ITT shall not be obligated to cause ITTE or ITT MSG
to comply with their respective obligations to deliver the Shares and the
Initial Transferred Interest at the Initial Closing) and each other Closing to
occur on the applicable Closing Date. Each of ITT MSG and ITTE hereby agrees to
reasonably cooperate with Cablevision, RGC and GHC in connection with the taking
of any actions that are required to permit MSG to redeem any ITT MSG Interest
and MSGE to redeem the Shares pursuant to this Agreement.
(c) Each of the parties hereto shall provide to (i) any lending
institution that will finance the payment by Cablevision or MSG of the Initial
Transferred Interest Purchase Price in order to arrange such financing, (ii)
advisors to ITT required for preparation of fairness opinions or (iii) any
Selected Investment Banking Firm providing services pursuant to any provision of
this Agreement, and each of their respective accountants, counsel and other
designated representatives, reasonable access and
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duplicating rights during normal business hours and upon reasonable advance
notice, subject to appropriate confidentiality provisions, to all information
within the possession or control of ITT MSG, Cablevision or MSG, as the case may
be, reasonably requested by such lending institution, advisors or Selected
Investment Banking Firm.
SECTION 6.02. Antitrust Notification. Each of the parties hereto
shall, and shall cause their respective Affiliates, if necessary, with respect
to any transfer of an ITT MSG Interest to Cablevision or MSG or any of their
respective Affiliates or a transfer of the Shares to Cablevision, RGC or MSGE,
or any of their respective Affiliates, to file with the United States Federal
Trade Commission (the "FTC"), the United States Department of Justice (the
"DOJ") and any similar applicable state authority at least 60 days prior to the
Closing of such transfer the notification and report form required for such
transaction and any supplemental information requested in connection therewith
pursuant to the HSR Act or any applicable state law or regulation. Any such
notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act or any applicable
state law or regulation. Each of the parties hereto shall, and shall cause their
respective Affiliates to, furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR Act or
any applicable state law or regulation. Each of the parties hereto shall, and
shall cause their respective Affiliates to, keep each other apprised of the
status of any communications with, and any inquiries or requests for additional
information from, the FTC and the DOJ and shall comply promptly with any such
inquiry or request. Each of the parties hereto shall, and shall cause their
respective Affiliates to, use all reasonable efforts to obtain any clearance
required under the HSR Act for the consummation of any transactions contemplated
hereby; provided that Cablevision shall be solely responsible for any filing
fees payable under the HSR Act.
SECTION 6.03. League Approvals. Each of the parties hereto shall,
and shall cause their respective Affiliates, if necessary, to, as promptly as
practicable, but in no event later than 10 business days following the execution
and delivery of this Agreement, file with the NBA and the NHL notification of
this Agreement, the Partnership Agreement and the Ancillary Agreements, as
necessary, and the transactions contemplated hereby and thereby and a request
for the consent of the NBA and the NHL for all the
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59
transactions contemplated hereby and shall promptly file such other supplemental
information, certifications, declarations or filings as shall be requested in
connection therewith pursuant to the League Rules. Any such notification and
consent request shall be in compliance with the League Rules and shall request,
to the extent permitted by League Rules, the NBA and the NHL to consent to all
the transactions contemplated hereby in advance of the Initial Closing so that
no further notification or consent shall be required in connection with any
transaction contemplated hereby that is consummated after the Initial Closing.
In the event that such advance approval is not available, the parties hereto
agree to use all reasonable efforts to obtain the consent of the NBA and the NHL
to any transactions contemplated to occur at a Closing sufficiently in advance
of such Closing to permit such Closing to occur on the applicable anniversary of
the Initial Closing Date.
Each of the parties hereto shall, and shall cause their respective
Affiliates to, furnish each other such necessary information and reasonable
assistance as may be requested in connection with the preparation of any filing
or submission which is necessary under the League Rules. Each of the parties
hereto shall, and shall cause their respective Subsidiaries to, keep each other
apprised of the status of any communications with, and any inquiries or requests
for additional information from, the NBA and the NHL and shall comply promptly
with any such inquiry or request. Each of the parties hereto shall, and shall
cause their respective Affiliates to, use all reasonable efforts to obtain
consents required under the League Rules for the consummation of all the
transactions contemplated hereby (which efforts are intended to contemplate,
among other things, arrangements similar to those contemplated by the NBA
Consent Agreement and NHL Consent Agreements and other efforts expended to
obtain the consent of the NBA and the NHL to the MSG Acquisition except that
none of ITT nor any of its Affiliates shall be required to agree to any terms
similar to those set forth in Section 7(d) of the Rangers Consent Agreement and
except that the arrangements contemplated by this Section 6.03 shall reflect the
expected relative ownership of MSG following the Initial Closing); provided that
MSG shall be solely responsible for any filing or application fees payable to
the NBA and the NHL.
SECTION 6.04. Publicity. ITT MSG and Cablevision agree that, from
the date hereof through the Second Put Closing Date, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
either party or any of its Affiliates or MSG without the prior consent of the
other party (which consent shall not be
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unreasonably withheld), except as such release or announcement may be required
by law or the rules or regulations of any United States or foreign securities
exchange, in which case the party required to make the release or announcement
shall allow the other party reasonable time to review such release or
announcement in advance of such issuance.
SECTION 6.05. Governance of MSG. Each of the parties hereto agrees
that there will be no change in the composition of the Board of Directors of
MSGE prior to the Initial Closing (other than as permitted by the existing
governing documents of MSGE).
SECTION 6.06. Existing Agreements; Contribution of SportsChannel New
York. (a) All agreements, understandings and arrangements among the parties
hereto and their Affiliates relating to their interests in and the operation of
MSG shall remain in full force and effect until the Initial Closing (and, except
as otherwise expressly provided in this Agreement, nothing in this Agreement
shall have any effect whatsoever on the rights and obligations of the parties
hereto or their Affiliates under any such agreements, understandings or
arrangements or be given any effect in the interpretation of any such agreement,
understanding or arrangement); provided that, if all of the conditions to
consummation of the Initial Closing are satisfied but RGC or GHC does not
consummate the Initial Closing within five business days following the
satisfaction of all conditions to the Initial Closing set forth in Section 7.01
(otherwise than by a breach by ITTE or ITT MSG), without limiting any other
remedies that may be available to ITTE or ITT MSG or any of their respective
Affiliates, (i) all restrictions on the Transfer by ITT or any of its Affiliates
of the Shares or the ITT MSG Interest pursuant to any agreement, understanding
or arrangement between the parties (including the provisions of this Agreement,
the restrictions on Transfer set forth in Section 11 of the Bid Agreement and
the right of first refusal set forth in Section 12 of the Bid Agreement and the
buy-sell arrangements set forth in Section 13 of the Bid Agreement) immediately
shall be null and void and of no further force or effect and (ii) ITT MSG shall
have the right, exercisable immediately by delivery of written notice thereof to
Cablevision, to cause to occur, and upon such exercise Cablevision shall and
shall cause its Affiliates to effect, the Mandatory Contribution (as defined in
the SportsChannel Contribution Agreement) upon the terms set forth in and in
compliance with the SportsChannel Contribution Agreement (the "Contribution
Right"); provided that, if ITT MSG exercises its right to cause Cablevision to
effect the Mandatory Contribution, from and after the
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61
consummation of such Mandatory Contribution, the right of first refusal
provision set forth in Section 12 of the Bid Agreement shall be reinstated and
shall be deemed to apply to transfers of interests in Partners as well as any
direct transfer of any MSG Interest. If ITT MSG exercises the Contribution
Right, Cablevision agrees to cause its Affiliates to consummate the Mandatory
Contribution.
(b) Following the Initial Closing, all agreements, understandings
and arrangements among the parties hereto relating to their interests in and the
operation of MSG (other than this Agreement, the Partnership Agreement and the
Ancillary Agreements) shall terminate and be of no further force or effect and
this Agreement, the Partnership Agreement and the Ancillary Agreements shall
govern the relationship among the parties relating to their interests in and
operation of MSG; provided, however, that if a Put Obligation Breach, a Put
Obligation Failure or an Acceleration Event occurs and is continuing, then from
and after and during the continuance of such event, without limiting any other
remedies that may be available to ITT MSG or its Affiliates, (i) all
restrictions on the Transfer pursuant to any agreement, understanding or
arrangement among the parties hereto (including pursuant to this Agreement or
the Partnership Agreement) by ITT MSG or any of its Affiliates of the ITT MSG
Interest (other than those set forth in Sections 6.1(b), 6.1(c) (other than
clause (ii) thereof) and 6.1(d) of the Partnership Agreement) immediately shall
be inapplicable and of no force or effect and (ii) the right of first refusal
set forth in Section 6.6 of the Partnership Agreement shall be effective.
(c) Each of the parties hereto shall, and shall cause their
respective Affiliates to, use all reasonable efforts to obtain the complete
discharge and release (i) at or prior to the Initial Closing, of all obligations
of ITT, ITTE, ITT MSG and each of their respective Affiliates under any of the
MSG Acquisition Agreements to the extent such obligations are not conditioned
upon ITT or its Affiliates continuing to own an ownership interest in an NBA or
NHL franchise (including (A) ITT's guarantee and other obligations pursuant to
Section 5.04(e) of the Merger Agreement of the obligations of Paramount
Communications Inc. under the Guaranty made as of November 22, 1988 to the New
York Yankees Limited Partnership and (B) ITT's obligations under Section 7 of
the Consent Agreement dated as of March 10, 1995 among the NHL, MSG, MSGE, ITTE,
ITT MSG, ITT, GHC, RGC, Rainbow and Cablevision (the "Rangers Consent
Agreement")) and (ii) at or prior to any Closing or the consummation of any
other transaction contemplated hereby following which ITT MSG and its Affiliates
shall
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cease to own any MSG Interest, of all obligations of ITT and its Affiliates
under any of the MSG Acquisition Agreements to the extent such obligations are
conditioned upon ITT or its Affiliates continuing to own an ownership interest
in an NBA or NHL franchise. In the event that ITT is not released from its
obligations pursuant to Section 7(d)(ii) of the Rangers Consent Agreement and
ITT is required to purchase the Rangers pursuant to Section 7(d)(ii) of the
Rangers Consent Agreement, all rights, options, contracts or other arrangements
of MSG and any of its Affiliates relating to the Rangers that are on terms less
favorable to the Rangers than Arm's-length basis terms shall be automatically
revised to reflect then prevailing market conditions.
SECTION 6.07. Compliance by Affiliates. Each of the parties hereto
agrees to cause all their respective Affiliates to comply with the terms and
provisions of this Agreement, the Partnership Agreement and the Ancillary
Agreements and to take all action necessary to enable each of them to comply
with all their respective obligations under this Agreement, the Partnership
Agreement and the Ancillary Agreements (except that Cablevision shall not be
obligated to cause RGC and GHC to pay the Shares Purchase Price or the Initial
Transferred Interest Purchase Price, respectively, at the Initial Closing and
ITT shall not be obligated to cause ITTE or ITT MSG to comply with their
respective obligations to deliver the Shares and the Initial Transferred
Interest at the Initial Closing).
SECTION 6.08. Other Agreements. (a) Bank Credit Agreement. RGC and
GHC shall use all reasonable efforts to ensure that (i) the terms and provisions
of the Bank Credit Agreement shall be consistent in all material respects with,
and shall not contain any provisions that are likely to impair the timely
consummation of the transactions contemplated by this Agreement, in each case,
that are not contemplated by the Commitment Letter and (ii) in particular, the
conditions to obligations of the lenders under the Bank Credit Agreement to
provide funds relating to "material adverse" changes shall be substantially
identical to the conditions to a Closing set forth in Section 7.01(a)(vii).
(b) Aircraft Matters. ITT shall cause ITT Flight Operations, Inc., a
Pennsylvania corporation ("Flight"), to provide to MSG an option, exercisable
for a 45-day period commencing on the date hereof, to provide aircraft services
on the following terms:
(i) MSG would "dry" lease the Aircraft on customary terms and
conditions to Flight for a period
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of two years, which shall be automatically renewed for one year periods
thereafter unless notice of termination shall thereafter be given by
either party within 90 days of the expiration of the lease period.
(ii) Flight would manage, maintain, operate and store the Aircraft
for MSG and its Affiliates and, in exchange for such services, MSG and its
Affiliates would reimburse Flight for all direct operating expenses
relating to the Aircraft, including all insurance costs, and would pay
Flight a monthly management fee of $75,000, a monthly hangar rental fee of
$10,000 and monthly administrative fee in an amount equal to 10% of all
direct operating expenses relating to the Aircraft. MSG would have the
right to terminate such agreement on 90 days notice if it receives a
written offer to provide equivalent services that it concludes is more
advantageous to MSG than such agreement. The Flight Management Agreement
would also provide that all net income received by Flight as a result of
the use of the Aircraft by third parties shall be paid as follows: (1) in
the case of any use of the Aircraft obtained or booked by Flight, 85% to
MSG and the balance to Flight; and (2) in the case of any use of the
Aircraft obtained or booked by MSG or its Affiliates, 92.5% to MSG and the
balance to Flight.
(iii) Notwithstanding anything to the contrary contained in Sections
6.08(b)(i) and (ii), Flight shall be entitled to terminate all aircraft
services then being provided to MSG and its Affiliates, without any cost
and expense, upon 90 days prior notice to MSG.
SECTION 6.09. Tax Matters. (a) The tax returns of MSG for the tax
years ended December 31, 1996 and thereafter shall be prepared as soon as
practicable after the end of the taxable year by a firm of nationally recognized
accountants. Such firm shall be retained by MSGE with the agreement of ITT and
Cablevision, which agreement shall not be unreasonably withheld. Such tax
returns shall be prepared in a manner consistent with the tax returns for the
tax year ended December 31, 1995.
(b) In connection with the examination of the tax returns of MSG for
the tax year ended December 31, 1995 by the Internal Revenue Service or by any
state or local taxing authority, MSGE shall grant powers of attorney to
represent MSGE in its role as the "Tax Matters Partner" (pursuant to Section
6231 of the Code) to individuals designated by ITTE.
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ARTICLE VII
Closing Conditions
SECTION 7.01. Conditions to Closings. (a) Conditions to the
Obligations of Cablevision, RGC and GHC. The obligations of each of Cablevision,
RGC or GHC to consummate the transactions contemplated to occur at any Closing
is subject to the satisfaction (or waiver by Cablevision, RGC or GHC, as the
case may be) as of the time of such Closing of the following conditions:
(i) The representations and warranties of each of ITTE and ITT MSG
made in this Agreement shall be true and correct, as of the date hereof
and as of the time of the applicable Closing as though made as of such
time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties shall be true and correct on and as of such earlier date). ITTE
and ITT MSG shall have performed or complied in all material respects with
all obligations and covenants required by this Agreement to be performed
or complied with by each of them by the time of such Closing. ITT MSG
shall have delivered to Cablevision a certificate dated such Closing Date
and signed by an authorized officer of ITT MSG confirming the foregoing.
(ii) RGC or MSGE (dependent upon which purchases the Shares) and GHC
or MSG (dependent upon which purchases the Initial Transferred Interest),
at the Initial Closing, and Cablevision or MSG (dependent upon which
purchases the applicable ITT MSG Interest), at any subsequent Closing,
shall have received an opinion dated the applicable Closing Date of
Cravath, Swaine & Moore, counsel to ITTE and ITT MSG, in form and
substance reasonably satisfactory to Cablevision and an opinion dated such
Closing Date of the general counsel of ITT or an officer responsible for
legal affairs of the parent of ITTE or ITT MSG in form and substance
reasonably satisfactory to Cablevision.
(iii) The parties shall have received all authorizations, consents,
orders and approvals of all Governmental Entities required in order to
consummate the transactions contemplated to occur at the applicable
Closing. No statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order
enacted, entered, promulgated, enforced or issued by any Governmental
Entity or other legal restraint or
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prohibition shall be in force and have the effect of (A) preventing the
consummation of the transactions contemplated to occur at such Closing,
(B) prohibiting or materially limiting the ownership or operation by
Cablevision, RGC, GHC, MSGE or MSG of, or compelling Cablevision, RGC,
GHC, MSGE or MSG to dispose of or hold separate any material portion of,
the business or assets of MSG, in each case as a result of the
transactions contemplated to occur at such Closing or (C) imposing
material limitations on the ability of Cablevision, RGC or GHC to acquire
or hold, or exercise full rights of ownership of, the Shares or the ITT
MSG Interest to be transferred at such Closing.
(iv) There shall not be pending or threatened by any Governmental
Entity any Action (or by any other person any Action which has a
reasonable likelihood of success), (A) challenging or seeking to restrain
or prohibit consummation of the transactions contemplated to occur at the
applicable Closing or seeking to obtain from Cablevision or any of its
Affiliates in connection with such transactions any damages that are
material in relation to the investment to be made by Cablevision, RGC or
GHC in MSG, (B) seeking to prohibit or materially limit the ownership or
operation by Cablevision, RGC, GHC, MSGE or MSG or any of their respective
Affiliates of any material portion of the business or assets of MSG, or to
compel Cablevision, MSGE or MSG to dispose of or hold separate any
material portion of the business or assets of MSG, in each case as a
result of the transactions contemplated to occur at such Closing, or (C)
seeking to impose material limitations on the ability of Cablevision (or,
in respect of the Initial Closing, any person controlling Cablevision),
RGC or GHC to acquire or hold, or exercise full rights of ownership of,
the Shares or the ITT MSG Interest to be transferred at such Closing, as
the case may be; provided, however, that this condition shall be deemed to
be waived by Cablevision, RGC and GHC as to any Action (except for any
Action by any Governmental Entity) if the sole potential impact of such
Action would be a judgment for money damages and ITT provides to
Cablevision, RGC and GHC and their respective Affiliates complete
indemnification in form and substance reasonably satisfactory to
Cablevision with respect to any such Action.
(v) Any waiting period under the HSR Act applicable to the
transactions contemplated to occur at the applicable Closing shall have
expired or been terminated.
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(vi) Cablevision, RGC, GHC and MSG shall have received all necessary
approvals from the NBA and the NHL in accordance with the League Rules to
enable them to consummate the transactions contemplated by this Agreement
to occur at such Closing and such approvals shall be in effect.
(vii) With respect to the Initial Closing only, the Agent Bank shall
not have exercised its right to refuse to provide funds to MSG due to (A)
there occurring after the date of the Commitment Letter any material
adverse change in or any event, development or circumstance that has had
or will with the passage of time have a material adverse effect on, the
business, assets, operations, property or financial condition of MSG and
its subsidiaries, taken as a whole, other than changes relating to the
economy in general or resulting from industry-wide developments affecting
companies in similar businesses, (B) the Agent Bank's becoming aware after
the date of the Commitment Letter but prior to the execution and delivery
of this Agreement of any information or other matter affecting MSG,
Cablevision, Rainbow or the transactions contemplated by the Commitment
Letter which is inconsistent in a material and adverse manner with any
such information or other matter disclosed to the Agent Bank prior to the
date of the Commitment Letter or (C) there having occurred a material
disruption of or material adverse change in financial, banking or capital
market conditions generally (in contrast to market reception of the
Facilities (as defined in the Commitment Letter) in particular) that, in
the Agent Bank's reasonable judgment, materially impairs syndication of
the credit facilities arranged pursuant to the Commitment Letter; provided
that the failure of any such condition is not caused by any action by
SportsChannel New York or any action by Cablevision or any of its
Affiliates under affiliation agreements with MSG.
(viii) Each of the Ancillary Agreements and the Partnership
Agreement shall have been executed and delivered by each party thereto and
shall be in full force and effect in accordance with their terms.
(b) Conditions to the Obligations of ITTE and ITT MSG. The
obligations of each of ITTE or ITT MSG to consummate the transactions
contemplated to occur at any
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Closing is subject to the satisfaction (or waiver by ITTE or ITT MSG) as of the
time of such Closing of the following conditions:
(i) The representations and warranties of Cablevision, RGC, GHC and
MSG made in this Agreement shall be true and correct, as of the date
hereof and as of the time of the applicable Closing as though made as of
such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations
and warranties shall be true and correct on and as of such earlier date).
Cablevision, RGC, GHC and MSG shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by each of them by the time of
such Closing. Cablevision shall have delivered to ITT MSG a certificate
dated the applicable Closing Date and signed by an authorized officer of
Cablevision confirming the foregoing.
(ii) ITT MSG and, at the Initial Closing, ITTE shall have received
an opinion dated the applicable Closing Date of Sullivan & Cromwell,
counsel to Cablevision, RGC and GHC, in form and substance reasonably
satisfactory to ITT MSG, an opinion dated such Closing Date of the general
counsel of Cablevision or an officer responsible for legal affairs of the
parent of RGC or GHC in form and substance reasonably satisfactory to ITT
MSG and, at a Closing at which MSG is to redeem an ITT MSG Interest, an
opinion dated such Closing Date of the general counsel of MSG, in form and
substance reasonably satisfactory to ITT MSG.
(iii) The parties shall have received all authorizations, consents,
orders and approvals of all Governmental Entities required in order to
consummate the transactions contemplated to occur at the applicable
Closing. No statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order
enacted, entered, promulgated, enforced or issued by any Governmental
Entity or other legal restraint or prohibition shall be in force and have
the effect of preventing the consummation of the transactions contemplated
to occur at such Closing.
(iv) There shall not be pending or threatened by any Governmental
Entity any Action (or by any other person any Action which has a
reasonable likelihood of success), challenging or seeking to restrain or
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prohibit consummation of the transactions contemplated to occur at the
applicable Closing or seeking to obtain from ITT MSG or any of its
Subsidiaries or any of their respective Affiliates in connection with such
transactions any damages that are material in relation to the investment
that ITT MSG has in MSG immediately prior to such Closing.
(v) Any waiting period under the HSR Act applicable to the
transactions contemplated to occur at the applicable Closing shall have
expired or been terminated.
(vi) Cablevision, RGC, GHC and MSG shall have received all necessary
approvals from the NBA and the NHL in accordance with the League Rules to
enable them to consummate all the transactions contemplated by this
Agreement and such approvals shall be in effect.
(vii) (A) If Cablevision Shares are to be issued at the applicable
Closing, the Registration Statement covering the resale of such
Cablevision Shares and complying with the requirements of Sections 2.06
and 4.02 shall have become effective under the Securities Act and shall
not be the subject of any stop order or proceedings seeking a stop order,
(B) Cablevision and its Affiliates, as necessary, and ITT MSG and its
Affiliates, as necessary, shall have received all state securities or
"blue sky" authorizations necessary to sell such Cablevision Shares as
contemplated by this Agreement and (C) all actions, filings, documents and
other things necessary for the closing of the registered resale of
Cablevision Shares contemplated by Section 2.06 to occur simultaneously
with such Closing shall be completed, prepared and in final order.
(viii) All Cablevision Shares to be issued at the applicable Closing
shall have been approved for listing on the American Stock Exchange, Inc.
or such other exchange or automated interdealer quotation system upon
which such Cablevision Shares are then listed, subject only to official
notice of issuance.
(ix) Each of the Ancillary Agreements and the Partnership Agreement
shall be executed and delivered by each party thereto and shall be in full
force and effect in accordance with their terms.
SECTION 7.02. Frustration of Closing Conditions. None of
Cablevision, RGC or GHC, on the one hand, and neither of ITTE or ITT MSG, on the
other hand, may rely on
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the failure of any condition set forth in Section 7.01(a) or 7.01(b),
respectively, to be satisfied if such failure was caused by its or its
Affiliate's failure to act in good faith or to cooperate and use all reasonable
efforts to cause the applicable Closing to occur as required by Section 6.01.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Assignment. This Agreement and the rights and
obligations hereunder shall not be assignable by any of the parties hereto
(including by operation of law in connection with a merger, consolidation or
Transfer of substantially all the assets (or equivalent transaction)) without
the prior written consent of Cablevision and ITT MSG. Notwithstanding the
foregoing sentence, (a) each of ITTE and ITT MSG shall be entitled to assign all
its rights and obligations hereunder and under the Partnership Agreement to any
majority owned Subsidiary or Subsidiaries of ITT or of ITTSC, or any direct or
indirect parent of ITTE or ITT MSG (each a "Permitted Transferee"), if such
Subsidiary or Subsidiaries or such parent (i) directly or indirectly owns the
Shares and the ITT MSG Interest, to the extent not previously Transferred
pursuant to the terms of this Agreement or the Partnership Agreement, and (ii)
agrees in writing to be bound by all of the provisions of this Agreement as if
such Subsidiary or Subsidiaries or such parent were ITT MSG and upon such
assignment the assignor shall be forever discharged and released from any
liability or further obligation under this Agreement, except for liabilities
that accrued on or prior to such assignment, (b) Cablevision shall be entitled
to consolidate or merge with or into, or Transfer all or substantially all of
its assets to, any person without the consent of any party hereto, if (i) the
entity formed by such consolidation or merger (if other than Cablevision) or to
which such Transfer shall have been made agrees in writing to be bound by all
the provisions of this Agreement applicable to Cablevision as if such person
were Cablevision and (ii) immediately after such transaction, and after giving
effect thereto, the person formed by or surviving any such consolidation or
merger (if other than Cablevision), or to which such Transfer shall have been
made shall have a Cash Flow Ratio (as such term is defined in the Indenture,
dated as of November 1, 1995, between Cablevision and The Bank of New York, as
Trustee (without regard to whether such Indenture shall be in effect or have
been amended in any respect) not in excess of 9 to 1; provided, that,
notwithstanding the
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foregoing, if the conditions set forth in clauses (i) and (ii) above are not met
and ITT MSG withholds its consent to such consolidation, merger or Transfer,
Cablevision may consolidate or merge with or into, or Transfer all or
substantially all its assets to, any person, if immediately prior to or
simultaneously with such Transfer, Cablevision offers to purchase (and if ITT
MSG accepts such offer, purchases), or, at the election of Cablevision, offers
to cause MSG to redeem (and if ITT MSG accepts such offer, MSG redeems), the
Interests of ITT MSG for a price in cash equal to the aggregate of the Put
Purchase Prices, as reduced for the prior payments of the First Put Purchase
Price, if exercised and paid, and as adjusted pursuant to Section 2.11; and
provided further that, in any event, Cablevision or such successor entity shall
not be entitled to pay a Put Purchase Price in shares of common stock unless,
following such transaction, the common stock of Cablevision or such successor
entity is registered under Section 12 of the Exchange Act and listed on a
national securities exchange or approved for trading through the Nasdaq Stock
Market and (c) Cablevision, RGC or GHC shall be permitted to assign,
hypothecate, pledge and encumber all of its rights (but none of its liabilities
and obligations) under this Agreement as required by the lenders under any bank
credit facility to which it is a party; provided that in connection therewith
the assignor shall not be released or discharged in any respect from any of
their respective obligations hereunder. Any attempted assignment in violation of
this Section 8.01 shall be void.
SECTION 8.02. Successors and Assigns; No Third-Party Beneficiaries.
This Agreement shall be binding on the parties hereto and their respective
permitted successors and permitted assigns. Except as provided in Section 6.06
with respect to ITT, ITTSC or any of their Affiliates and Article V, this
Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implied shall give or be construed to
give to any person, other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
SECTION 8.03. Termination. (a) Anything contained herein to the
contrary notwithstanding, this
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Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Initial Closing Date:
(i) by mutual written consent of ITT MSG and Cablevision;
(ii) by ITT MSG if any of the conditions set forth in Section
7.01(b) shall have become incapable of fulfillment prior to the Initial
Closing, and shall not have been waived by ITT MSG;
(iii) by Cablevision if any of the conditions set forth in Section
7.01(a) shall have become incapable of fulfillment prior to the Initial
Closing, and shall not have been waived by Cablevision;
(iv) by ITT MSG or Cablevision at any time on or after August 1,
1997, if prior to August 1, 1997, the conditions to the Initial Closing
set forth in Sections 7.01(a)(vi) and 7.01(b)(vi) shall not have been
satisfied; or
(v) by ITT MSG or Cablevision at any time on or after December 15,
1997, if the Initial Closing shall not have occurred by such time;
provided, however, that the party seeking termination pursuant to clause (ii),
(iii), (iv) or (v) is not in breach of any of its representations, warranties,
covenants or agreements contained in this Agreement.
(b) ITT MSG may terminate this Agreement and abandon any
transactions contemplated hereby and not yet consummated upon the occurrence and
during the continuation of an Acceleration Event.
(c) In the event of termination of this Agreement pursuant to this
Section 8.03, written notice thereof shall forthwith be given to the other
parties and the transactions contemplated by this Agreement shall be terminated,
without further action by either party.
(d) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 8.03, this
Agreement shall become void and of no further force or effect, except for the
provisions of Article V, Sections 6.04, 6.06, 8.01, 8.02, 8.03, 8.04, 8.05,
8.06, 8.07, 8.09, 8.11, 8.12, 8.13, 8.14, 8.15 and 8.16 and the provisions of
any Section relating to the payment of fees and expenses of a Selected
Investment
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Banking Firm or Appraiser (including fees and expenses of their counsel) or
other fees and expenses.
(e) Each Affiliate of Cablevision and ITT MSG, respectively, that is
a party to this Agreement shall be deemed to agree with any action taken
pursuant to this Section 8.03 by Cablevision or ITT MSG, respectively.
SECTION 8.04. Survival of Representations. The representations and
warranties in this Agreement and in any certificate delivered pursuant hereto
shall survive the Closings.
SECTION 8.05. Expenses. Whether or not the transactions contemplated
hereby are consummated, and except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
SECTION 8.06. Attorney Fees. If Cablevision or any of its Affiliates
(other than MSG on or prior to the Initial Closing Date) or ITT MSG or any of
its Affiliates (other than MSG) (such party and its Affiliates, a "breaching
party") shall breach any provision of this Agreement, such breaching party
shall, on demand, indemnify and hold harmless the other party and its Affiliates
that are party to this Agreement for and against all reasonable out-of-pocket
expenses, including legal fees, incurred by such other party or such Affiliates
by reason of the enforcement and protection of its rights under this Agreement
in respect of such breach. The payment of such expenses is in addition to any
other relief to which such other party may be entitled.
SECTION 8.07. Amendments. No amendment, modification or waiver in
respect of this Agreement shall be effective unless it shall be in writing and
signed by the party against which it is enforced.
SECTION 8.08. Notices. All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered personally, or by
telecopy or telefacsimile, upon confirmation of receipt, (ii) on the second
business day following the date of dispatch if delivered by Federal Express or
other nationally reputable next-day courier service or (iii) on the third
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be
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delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice, as follows:
(i) if to Cablevision, RGC or GHC,
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telefacsimile: (516) 496-1780
Attention: Robert S. Lemle, Esq.
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telefacsimile: (212) 558-3588
Attention: John P. Mead, Esq.; and
(ii) if to ITTE or ITT MSG,
ITT Corporation
1330 Avenue of the Americas
New York, New York 10019-5490
Telefacsimile: (212) 258-1463
Attention: Patrick L. Donnelly, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Telefacsimile: (212) 474-3700
Attention: George W. Bilicic, Jr.
SECTION 8.09. Interpretation; Exhibits and Schedules. The headings
contained in this Agreement, in any Exhibit or Schedule hereto and in the table
of contents to this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. All Exhibits
and Schedules annexed hereto or referred to herein are hereby incorporated in
and made a part of this Agreement as if set forth in full herein. Any
capitalized terms used in any Exhibit but not otherwise defined therein, shall
have the meaning as defined in this
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Agreement. For all purposes of this Agreement, references to the NHL and the NBA
shall include references to the women's professional basketball league and the
arena football league.
SECTION 8.10. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
SECTION 8.11. Entire Agreement. Following the Initial Closing, this
Agreement, the Partnership Agreement and the Ancillary Agreements shall contain
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter. Following the Initial Closing,
neither party shall be liable or bound to any other party in any manner by any
representations, warranties or covenants relating to such subject matter except
as specifically set forth herein or in the Partnership Agreement or in any of
the Ancillary Agreements.
SECTION 8.12. Brokers' or Finders' Fees. Each party hereto hereby
represents and warrants that no brokers or finders have acted for such party in
connection with this Agreement or the transactions contemplated hereby and that
no brokerage fee, finder's fee or commission is or will become payable in
respect thereof and agrees to indemnify the other parties against any claim for
any such fee or commission based on such party's actions or alleged actions.
SECTION 8.13. Severability. If any provision of this Agreement (or
any portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
SECTION 8.14. Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, covenants, conditions and
provisions of this Agreement, the party or parties who are or are to be thereby
adversely affected, in addition to any and all other rights and remedies at law
or in equity, shall have the right of specific performance and injunctive relief
giving effect to
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75
its or their rights under this Agreement and all such rights and remedies shall
be cumulative. The parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are inadequate compensation for
any loss, that the adversely affected party or parties shall be entitled to
obtain specific performance and injunctive relief without the necessity of
proving irreparable injury or posting bond or other security, and that any
defense in any action for specific performance or injunctive relief that a
remedy at law would be adequate is waived.
SECTION 8.15. Consent to Jurisdiction. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the parties hereto agrees to commence any action, suit or
proceeding relating hereto either in the United States District Court for the
Southern District of New York or if such suit, action or other proceeding may
not be brought in such court for jurisdictional reasons, in the Supreme Court of
the State of New York, New York County. Each of the parties hereto further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction in this Section
8.15. Each of the parties hereto irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (i) the Supreme
Court of the State of New York, New York County, or (ii) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
<PAGE>
76
SECTION 8.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
ITT EDEN CORPORATION,
by /s/ RICHARD S. WARD
------------------------------
Name: Richard S. Ward
Title: President
ITT MSG INC.,
by /s/ RICHARD S. WARD
------------------------------
Name: Richard S. Ward
Title: President
CABLEVISION SYSTEMS CORPORATION,
by /s/ MARC LUSTGARTEN
------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
RAINBOW GARDEN CORP.,
by /s/ MARC LUSTGARTEN
------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
GARDEN L.P. HOLDING CORP.,
by /s/ MARC LUSTGARTEN
------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
<PAGE>
77
MSG EDEN CORPORATION,
by /s/ KENNETH W. MUNOZ
------------------------------
Name: Kenneth W. Munoz
Title: Executive Vice
President
MADISON SQUARE GARDEN, L.P.,
by MSG Eden Corporation, as
general partner,
by /s/ KENNETH W. MUNOZ
------------------------------
Name: Kenneth W. Munoz
Title: Executive Vice
President
Only as to Section 5.08 and
Article VIII:
ITT CORPORATION,
by /s/ ROBERT A. BOWMAN
------------------------------
Name: Robert A. Bowman
Title: President
Only as to Section 5.02 and
Article VIII:
RAINBOW MEDIA HOLDINGS, INC.,
by /s/ MARC LUSTGARTEN
-----------------------------
Name: Marc Lustgarten
Title: Vice Chairman
<PAGE>
EXHIBIT A
BILL OF SALE AND ASSIGNMENT OF PARTNERSHIP INTEREST
THIS BILL OF SALE AND PARTNERSHIP INTEREST ASSIGNMENT is made as of
_______, 199_ by ITT MSG Inc., a Delaware corporation ("ITT MSG") in favor of
[Cablevision Systems Corporation, a Delaware corporation ("CV")] [Madison Square
Garden, L.P., a Delaware limited partnership ("MSG")]. WHEREAS, ITT MSG and CV
and certain of its subsidiaries and MSG have entered into a Partnership Interest
Transfer Agreement dated as of April 15, 1997 (the "Transfer Agreement") (all
capitalized terms used but not defined herein shall have the meanings assigned
to them in the Transfer Agreement), pursuant to which, among other things, ITT
MSG has agreed to transfer certain partnership interests in MSG to CV or, at
CV's election, to MSG, in accordance with and subject to the terms and
conditions set forth in the Transfer Agreement;
NOW, THEREFORE, for and in consideration of [the payment by [CV]
[MSG] of $_________] [the issuance by CV of ______ shares of Cablevision Common
Stock] (the "Purchase Price") to ITT MSG pursuant to and in accordance with the
terms of the Transfer Agreement, in exchange for the transfer of [a portion]
[50%] [all] of the entire interest in MSG, including all partnership interests,
all other equity or ownership interest and all other rights to share in profits,
losses and distributions of MSG beneficially
<PAGE>
2
owned by ITT MSG as of the date hereof [such that following such transfer ITT
MSG shall own [the Applicable Percentage] of MSG] (the "Transferred Interest")
pursuant to the Transfer Agreement, the receipt and sufficiency of which
consideration is hereby acknowledged and in further consideration of the mutual
covenants and agreements contained in the Transfer Agreement, and pursuant to
the terms of the Transfer Agreement, ITT MSG does hereby assign, transfer,
convey and deliver to [CV] [MSG], its successors and assigns, effective as of
the date hereof, all of ITT MSG's right, title and interest in and to the
Transferred Interest. [CV] [MSG] hereby accepts the assignment, transfer and
conveyance to it of all of ITT MSG's right, title and interest in and to the
Transferred Interest.
ITT MSG does hereby agree, from and after the date hereof upon the
request of [CV] [MSG], to execute such other documents as [CV] [MSG] may
reasonably require in order to obtain the full benefit of this Bill of Sale and
Assignment of Partnership Interest and ITT MSG's obligations hereunder and under
the Transfer Agreement.
ITT MSG and [CV] [MSG] do hereby agree that this Bill of Sale and
Assignment of Partnership Interest shall be governed by and construed in
accordance with the substantive laws of the state of New York without regard to
conflicts of laws provisions.
<PAGE>
3
IN WITNESS WHEREOF the undersigned have caused this instrument to be
duly executed as of the date first written above.
ITT MSG INC., [CABLEVISION SYSTEMS CORPORATION],
[MADISON SQUARE GARDEN, L.P.],
by by
- --------------------- ---------------------
Name: Name:
Title: Title:
Consent to Assignment:
The undersigned, as general partner of Madison Square Garden, L.P., hereby
consents to the foregoing assignment:
MSG EDEN CORPORATION,
by
- ---------------------
Name:
Title:
<PAGE>
1
EXHIBIT B
SPORTSCHANNEL CONTRIBUTION AGREEMENT
SPORTSCHANNEL CONTRIBUTION AGREEMENT, dated as of April 15,
1997, among Rainbow Media Holdings, Inc., a Delaware corporation
("Rainbow"), Garden L.P. Holding Corp., a Delaware corporation and a
subsidiary of Rainbow ("GHC"), Rainbow Garden Corporation, a
Delaware corporation and a subsidiary of Rainbow ("RGC"),
SportsChannel New York Holding Partnership, a New York general
partnership and a subsidiary of Rainbow ("SCNYHP"), SportsChannel
Associates Holding Corporation, a New York corporation and a
subsidiary of Rainbow ("SCAHC", and together with Rainbow, GHC, RGC
and SCNYHP, the "Rainbow Group"), MSG Eden Corporation, a Delaware
corporation ("MSGE"), ITT MSG, Inc., a Delaware corporation ("ITT
MSG"), ITT Eden Corporation, a Delaware corporation ("ITTE" and,
together with ITT MSG, the "ITT Group"), and Madison Square Garden,
L.P., a Delaware limited partnership ("MSG").
WHEREAS ITTE and RGC together own all of the issued and outstanding
shares of capital stock of MSGE, which is the general partner and owner of a 1%
general partnership interest in MSG;
WHEREAS ITT MSG and GHC each own a 49.5% limited partnership
interest in MSG;
WHEREAS ITT Corporation ("ITT"), ITTE, ITT MSG, Cablevision Systems
Corporation, a Delaware corporation ("Cablevision"), RGC, GHC and MSG are
entering into a Partnership Interest Transfer Agreement dated the date hereof
(the "Transfer Agreement"), pursuant to which, among other things, (i) ITTE has
agreed to sell to RGC, or at RGC's election, to MSGE, and RGC has agreed to
purchase or cause MSGE to redeem, all of ITTE's interest in MSGE; (ii) ITT MSG
has agreed to sell to GHC, or at GHC's election, to MSG, and GHC has agreed to
purchase or cause MSG to redeem, a portion of ITT MSG's interest in MSG; and
(iii) the parties thereto have set forth certain rights with respect to the
transfer to Cablevision, or at Cablevision's election, MSG of ITT MSG's
remaining interest in MSG, in each case, upon the terms and subject to the
conditions set forth in the Transfer Agreement; and
WHEREAS MSGE, ITT MSG and GHC are entering into an amended and
restated agreement of limited partnership dated
<PAGE>
2
the date hereof (the "Partnership Agreement"), to set forth, among other things,
each partner's rights and obligations with respect to MSG and to provide for the
operation of the business of MSG, in each case from and after the Initial
Closing (as defined in the Transfer Agreement);
WHEREAS the parties hereto desire to cause to be contributed as a
capital contribution to MSG all the partnership interests in SportsChannel New
York (as defined below);
WHEREAS, pursuant to the Transfer Agreement, ITT MSG has the right,
under certain circumstances if the Initial Closing does not occur, to cause to
be contributed as a capital contribution to MSG all the partnership interests in
SportsChannel New York;
WHEREAS SCNYHP and SCAHC each own a 50% general partnership interest
in SportsChannel New York, representing all the outstanding partnership
interests in SportsChannel New York; and
WHEREAS the parties hereto desire to set forth the terms of, and
certain representations, warranties, conditions, covenants and agreements
relating to, the contribution of SportsChannel New York as a capital
contribution to MSG.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, conditions, covenants and agreements set forth
herein, in the Transfer Agreement and in the Partnership Agreement, the parties
hereto hereby agree as follows:
1. Definitions. (a) Unless otherwise expressly set forth herein,
capitalized terms used but not defined in this Agreement shall have the meanings
ascribed thereto in the Transfer Agreement.
(b) For purposes of this Agreement:
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"SportsChannel Interest" shall mean the entire interest in
SportsChannel New York, including all partnership interests and any other
ownership or equity
<PAGE>
3
interests in, and all rights to control, SportsChannel New York.
"SportsChannel New York" shall mean SportsChannel Associates,
a New York general partnership.
"Valuation Condition" shall mean, as of the Contribution Date
(as defined below),
(i) The representations and warranties of each member of the
Rainbow Group made in this Agreement shall be true and correct
(without regard to any materiality qualifications contained
therein), as of the date of this Agreement, and as of the
Contribution Date as though made as of such time except to the
extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties
shall be true and correct on and as of such earlier date) and except
for any instance that has not had or would not reasonably be
expected to have a material adverse effect on the value of
SportsChannel New York;
(ii) Each member of the Rainbow Group shall have performed or
complied with all obligations and covenants required by this
Agreement to be performed or complied with by each of them except
for any instance that has not had or would not reasonably be
expected to have a material adverse effect on the value of
SportsChannel New York;
(iii) Except as to items indicated by an asterisk on the SCNY
Disclosure Schedule, no change shall have taken place in the
business, assets, properties, condition (financial or otherwise),
results of operations or prospects of SportsChannel New York since
the date of the Reference Balance Sheet which has or would
reasonably be expected to have a material adverse effect on the
value of SportsChannel New York; and
(iv) ITT MSG shall have received a certificate dated the
Contribution Date of the chief financial officer of Rainbow as to
the satisfaction of the conditions set forth in paragraphs (i)
through (iii) of this definition.
2. Initial Closing Contribution. (a) Upon the terms and subject to
the conditions set forth in this Agreement, on the Initial Closing Date, or,
subject to Section 8(b), if the conditions to the Voluntary Contribution (as
defined below) set forth in Section 7 shall
<PAGE>
4
not have been satisfied or waived by such date, as soon as practicable after
such conditions shall have been satisfied or waived (such date, the "Voluntary
Contribution Date"), the Rainbow Group shall cause to be contributed as a
capital contribution to MSG all of the SportsChannel Interest, such that
immediately following such contribution MSG will own all of the SportsChannel
Interest, and none of the Rainbow Group, ITTE or ITT MSG, other than through
their ownership of MSGE and MSG, nor any other third party, shall own any
SportsChannel Interest (the transactions contemplated by this Section 2(a) are
collectively referred to as the "Voluntary Contribution").
(b) If the Valuation Condition is satisfied as of the Voluntary
Contribution Date, the SportsChannel Interest contributed to MSG pursuant to
Section 2(a) shall be deemed for purposes of the Partnership Agreement as
Contributed Property (as defined in the Partnership Agreement) with a Fair
Market Value (as defined in the Partnership Agreement) of $170 million.
(c) If the Valuation Condition is not satisfied as of the Voluntary
Contribution Date, the SportsChannel Interest contributed to MSG pursuant to
Section 2(a) shall be deemed for purposes of the Partnership Agreement as
Contributed Property and the Fair Market Value of such Contributed Property
shall be determined in accordance with the terms of the Partnership Agreement.
The Rainbow Group shall not be required to cause the Voluntary Contribution to
occur on any date on which the Valuation Condition is not satisfied. On the
Voluntary Contribution Date, the Voluntary Contribution shall be effected by the
delivery by SCNYHP and SCAHC to MSG of appropriate instruments of transfer to
effect delivery to MSG of title to the SportsChannel Interest.
3. ITT MSG Contribution Right. (a) If ITT MSG exercises its
Contribution Right pursuant to Section 6.06(a) of the Transfer Agreement, then,
on the terms and subject to the conditions set forth in this Agreement, on a
date as soon as practicable following the satisfaction or waiver of the
conditions to the Mandatory Contribution (as defined below) set forth in Section
7 (such date, the "Mandatory Contribution Date" and, together with the Voluntary
Contribution Date, the "Contribution Date"),
(i) ITT MSG shall purchase and the Rainbow Group shall cause SCAHC
to sell, transfer and deliver to ITT MSG (the "Exchange") all of its 50% of the
SportsChannel Interest (the "Transferred Interest") for a purchase price, if the
Valuation Condition is satisfied as of the Mandatory
<PAGE>
5
Contribution Date (as defined below), equal to $85 million or, if the Valuation
Condition is not met as of the Mandatory Contribution Date, equal to one-half of
the Fair Market Value of SportsChannel New York (either of such purchase prices,
the "One-half SCNY Value"), so that following the Exchange, the Rainbow Group
and the ITT Group each collectively own an interest equal to 50% of the
SportsChannel Interest (the "Retained Interest"). The Exchange shall be
accomplished by (A) the delivery by ITT MSG to SCAHC, by wire transfer to a bank
account designated by SCAHC at least two business days prior to the date of the
Exchange, immediately available funds in an amount equal to the One-half SCNY
Value and (B) the delivery by the Rainbow Group to ITT MSG of a duly executed
instrument of transfer in form and substance reasonably satisfactory to ITT MSG
to effect the transfer of the Transferred Interest; and
(ii) Immediately following the Exchange, ITT MSG shall contribute
the Transferred Interest and the Rainbow Group shall cause to be contributed the
Retained Interest, each as a capital contribution to MSG, such that immediately
following such contribution MSG will own all of the SportsChannel Interest, and
none of the Rainbow Group or the ITT Group, other than through their ownership
of MSG, nor any other third party, shall own any SportsChannel Interest (the
transactions contemplated by this Section 3(a) are collectively referred to as
the "Mandatory Contribution"). Immediately following the Mandatory Contribution,
the ITT Group and the Rainbow Group shall each collectively own an interest
equal to 50% of the entire interest in MSG and SCNYHP shall be admitted as a
partner to MSG.
(b) The contributions of the Transferred Interest and the Retained
Interest to MSG pursuant to Section 3(a)(ii) shall each be deemed as a capital
contribution to MSG with a value equal to the One-half SCNY Value.
4. Representations and Warranties of the Rainbow Group. Each member
of the Rainbow Group hereby, jointly and severally, represents and warrants to
each member of the ITT Group as follows:
(a) Organization and Authority. Each of Rainbow, RGC, GHC and SCAHC
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. SCNYHP is a general partnership
duly organized and validly existing under the laws of the State of New York.
Each member of the Rainbow Group has all necessary power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The
<PAGE>
6
execution and delivery of this Agreement by each member of the Rainbow Group,
the performance by each member of the Rainbow Group of its obligations hereunder
and the consummation by each member of the Rainbow Group of the transactions
contemplated hereby have been duly authorized by all requisite action on the
part of each member of the Rainbow Group. This Agreement has been duly executed
and delivered by each member of the Rainbow Group, and this Agreement
constitutes a legal, valid and binding obligation of each member of the Rainbow
Group enforceable against each member of the Rainbow Group in accordance with
its terms.
(b) Organization and Qualification of SportsChannel New York.
SportsChannel New York is a general partnership duly organized and validly
existing under the laws of the State of New York. SportsChannel New York has all
necessary power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on its business as it has been
and is now being conducted. SportsChannel New York is duly licensed or qualified
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, operated or leased by it or the nature of its
activities or the operation of its business makes such licensing or
qualification necessary or desirable, except for such failures which would not,
individually or in the aggregate, have a material adverse effect on the assets,
business, financial condition or prospects of SportsChannel New York. All
partnership action taken by SportsChannel New York in connection with the
transactions contemplated by this Agreement has been duly authorized and
SportsChannel New York has not taken any action that in any respect conflicts
with, constitutes a default under or results in a violation of any provision of
its partnership agreement, other than any conflicts, defaults or violations
which would not have a material adverse effect on the assets, business,
financial condition, or prospects of SportsChannel New York. Rainbow has
furnished to ITT MSG a complete and correct copy of the partnership agreement of
SportsChannel New York, as amended to date, and such partnership agreement is in
full force and effect.
(c) Partners of SportsChannel New York. Each of SCNYHP and SCAHC
currently owns 50% of the SportsChannel Interest, and SCNYHP and SCAHC are the
only partners of SportsChannel New York. Except as set forth in the SCNY
Disclosure Schedule and except for this Agreement, there are no options,
warrants, convertible securities or rights of conversion or other rights,
agreements, arrangements or commitments relating to the partnership interests of
SportsChannel New York or obligating SportsChannel New York,
<PAGE>
7
any member of the Rainbow Group or any Affiliate thereof, to issue or to sell
any partnership or other interest in SportsChannel New York. Except as set forth
in the SCNY Disclosure Schedule, each of SCNYHP and SCAHC has good and valid
title, free and clear of all pledges, liens, claims, encumbrances, security
interests, options, charges and any other restrictions on title, to the
SportsChannel Interest. Immediately following the Contribution or the Mandatory
Contribution, MSG and MSGE together will have good and valid title, free and
clear of all pledges, liens, claims, encumbrances, security interests, options,
charges and any other restrictions on title to the SportsChannel Interest.
(d) Subsidiaries. SportsChannel New York has no Subsidiaries.
(e) No Conflicts; Consents. Except as set forth in the SCNY
Disclosure Schedule and except as may result solely from facts and circumstances
relating to ITT and its Affiliates, the execution and delivery of this Agreement
by each member of the Rainbow Group do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under or result in the creation of any lien, claim, encumbrance, security
interest, option, charge or restriction of any kind upon the SportsChannel
Interest or any of the properties or assets of SportsChannel New York under, any
provision of (i) the charter, by-laws, partnership agreement or comparable
governing instruments of any member of the Rainbow Group or SportsChannel New
York and any of their respective Subsidiaries, (ii) any material note, bond,
mortgage, indenture, deed of trust, license, lease, contract or agreement to
which any member of the Rainbow Group or SportsChannel New York or any of their
respective Subsidiaries is a party or by which any of their respective
properties or assets are bound or (iii) any judgment, order or decree, or
statute, law, ordinance, rule or regulation applicable to any member of the
Rainbow Group or SportsChannel New York or any of their respective Subsidiaries
or their respective properties or assets, other than, in the case of clauses
(ii) and (iii) above, any such items that, individually or in the aggregate,
would not have a material adverse effect on the assets, business, financial
condition or prospects of SportsChannel New York or on the ability of any member
of the Rainbow Group or SportsChannel New York to consummate the transactions
contemplated hereby. No consent, approval, license, permit, order or
<PAGE>
8
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to any member of
the Rainbow Group or SportsChannel New York in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than (I) compliance with and filings,
under the HSR Act, if applicable, (II) compliance with and filings, if any,
under the Securities Act or the Exchange Act, (III) those that may be required
as a result of any facts or circumstances relating solely to ITT or its
Affiliates and (IV) any consents, approvals, licenses, permits, orders or author
izations, that, if not obtained or made, would not, individually or in the
aggregate, have a material adverse effect on the assets, business, financial
condition or prospects of SportsChannel New York or on the ability of any member
of the Rainbow Group to consummate or cause to be consummated the transactions
contemplated hereby.
(f) Financial Statements; Undisclosed Liabilities. (i) True and
complete copies of the audited balance sheet of SportsChannel New York for each
of the three fiscal years ended as of December 31, 1994, 1995 and 1996 and the
related audited statements of income, partners' capital and cash flows of
SportsChannel New York, together with all related notes and schedules thereto,
accompanied by the reports of KPMG Peat Marwick LLP (collectively referred to
herein as the "Financial Statements") have been delivered by Rainbow to ITT. The
Financial Statements (1) were prepared in accordance with the books of account
and other financial records of SportsChannel New York, (2) present fairly the
financial condition and results of operations of SportsChannel New York as of
the dates thereof or for the periods covered thereby, (3) have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with the past practices of SportsChannel New York and (4) include all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation of the financial condition of SportsChannel New York and
the results of the operations of SportsChannel New York as of the dates thereof
or for the periods covered thereby.
(ii) Other than those reflected or reserved against on the balance
sheet as of December 31, 1996 (the "Reference Balance Sheet"), there are no
material liabilities of SportsChannel New York that are required to be disclosed
on a balance sheet in accordance with GAAP except for (A) liabilities created by
this Agreement or (B) liabilities incurred in the ordinary course of business,
<PAGE>
9
consistent with past practices, after December 31, 1996 and prior to the date
hereof.
(g) Material Transactions. Except as set forth in the SCNY
Disclosure Schedule, since December 31, 1996, SportsChannel New York has not
entered into or become bound by any:
(i) employment agreement or employment contract that has an
aggregate future liability in excess of $500,000;
(ii) agreement, contract or other arrangement with any member of the
Rainbow Group or any of their respective Affiliates (A) that was entered into or
became binding on or prior to the date hereof or (B) that was entered into or
became binding after the date hereof and that has not been entered on an
Arm's-length Basis; or
(iii) agreement, contract or other instrument under which
SportsChannel New York has borrowed any money from, or issued any note, bond,
debenture or other evidence of indebtedness to, any person or any other note,
bond, debenture or other evidence of indebtedness issued to any person in any
such case which, individually, is in excess of $500,000.
(h) Litigation. Except as set forth in the SCNY Disclosure Schedule,
there are no Actions against SportsChannel New York (or by or against any member
of the Rainbow Group or any Affiliate thereof and relating to the business of
SportsChannel New York) pending or, to the best knowledge of each member of the
Rainbow Group after due inquiry, threatened, before any court or governmental
agency, other than any Actions which, if determined adversely to SportsChannel
New York, would not have a material adverse effect on the assets, business,
financial condition or prospects of SportsChannel New York.
(i) Compliance with Laws. SportsChannel New York has all material
permits, licenses, approvals, authorizations, registrations and qualifications,
and has made all material filings, with and under, or required by, all orders,
rules or regulations of any court or governmental agency or body that are
necessary to enable SportsChannel New York to carry on its business as currently
conducted, and all such material permits, licenses, approvals, authorizations,
registrations and qualifications are in full force and effect, and no suspension
of them is, to the best knowledge of each member of the Rainbow Group,
<PAGE>
10
threatened. Except as set forth on the SCNY Disclosure Schedule, no consents or
approvals of third parties are required to be obtained by the Rainbow Group or
SportsChannel New York in order to consummate the transactions contemplated
hereby except (a) where failure to obtain such consent or approval would not
prevent any member of the Rainbow Group or any of their Affiliates from
performing any of its material obligations under this Agreement or do not have a
material adverse effect on the assets, business, financial condition or
prospects of SportsChannel New York, (b) where such consent or approval has been
obtained, and (c) as may be necessary as a result of any facts or circumstances
relating solely to ITT or its Affiliates.
(j) Assets. Except as disclosed in the SCNY Disclosure Schedule and
except for such failures that would not have a material adverse effect on the
assets, business, financial condition or prospects of SportsChannel New York,
SportsChannel New York owns, leases or has the legal right to use all the
properties and assets used in the conduct of its business or otherwise owned,
leased or used by SportsChannel New York free and clear of any mortgage, pledge,
security interest, encumbrance, lien or charge.
Each representation and warranty of each member of the Rainbow Group
is made on the assumption that there are no facts or circumstances particularly
applicable to ITT or any of its Affiliates and that no action has been taken by
ITT or any of its Affiliates that would make such representation or warranty
untrue. Any matter set forth in the SCNY Disclosure Schedule shall be deemed to
be disclosed with respect to all representations made herein. The
representations and warranties set forth in this Section 4 are included only for
the purpose of determining whether clause (i) of the definition of "Valuation
Condition" has been satisfied.
5. Representations and Warranties of the ITT Group. Each member of
the ITT Group hereby, jointly and severally, represents and warrants to each
member of the Rainbow Group as follows:
(a) Organization and Authority. Each member of the ITT Group is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each member of the ITT Group has all
necessary corporate power and authority to enter into this Agreement, to carry
out its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by
<PAGE>
11
each member of the ITT Group, the performance by each member of the ITT Group of
its obligations hereunder and the consummation by each member of the ITT Group
of the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of each member of the ITT Group. This
Agreement has been duly executed and delivered by each member of the ITT Group,
and this Agreement constitutes a legal, valid and binding obligation of each
member of the ITT Group enforceable against each member of the ITT Group in
accordance with its terms.
(b) No Conflicts; Consents. The execution and delivery of this
Agreement by each member of the ITT Group do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under or result in the creation of any lien, claim, encumbrance, security
interest, option, charge or restriction of any kind upon any of the properties
or assets of SportsChannel New York under, any provision of (i) the charter or
by-laws of any member of the ITT Group, (ii) any material note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to which any member of the ITT Group is a party or by which any of
their respective properties or assets are bound or (iii) any judgment, order or
decree, or statute, law, ordinance, rule or regulation applicable to any member
of the ITT Group or their respective properties or assets, other than, in the
case of clauses (ii) and (iii) above, any such items that, individually or in
the aggregate, would not have a material adverse effect on the ability of any
member of the ITT Group to consummate the transactions contemplated hereby. No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to any member of the ITT Group in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than (I) compliance with and filings,
under the HSR Act, if applicable, (II) compliance with and filings, if any,
under the Securities Act or the Exchange Act, (III) those that may be required
as a result of any facts or circumstances relating solely to any member of the
Rainbow Group or any of their Affiliates and (IV) any consents, approvals,
licenses, permits, orders or author izations, that, if not obtained or made,
would not, individually or in the aggregate, have a material adverse
<PAGE>
12
effect on the ability of any member of the ITT Group to consummate the
transactions contemplated hereby.
(c) Litigation. Except as disclosed in the ITT Group Disclosure
Schedule, there are no Actions against any member of the ITT Group or any of its
affiliates pending or, to the best knowledge of each member of the ITT Group
after due inquiry, threatened, before any court or governmental agency, other
than any Actions which, if determined adversely to such member of the ITT Group,
would not have a material adverse effect on the ability of such member of the
ITT Group to consummate the transactions contemplated by this Agreement.
Each representation and warranty of each member of the ITT Group is
made on the assumption that there are no facts or circumstances particularly
applicable to any member of the Rainbow Group or any of their respective
Affiliates and that no action has been taken by any member of the Rainbow Group
or any of such Affiliates that would make such representation or warranty
untrue. Any matter set forth in the ITT Group Disclosure Schedule shall be
deemed to be disclosed with respect to all representations made herein.
6. Covenants. (a) Cooperation; Further Assurances. Each of the
parties hereto shall, and shall cause their respective Affiliates to, proceed
expeditiously and cooperate fully in making application for all necessary
regulatory approvals, in the procurement of any other consents and approvals,
and in the taking of any other action and the satisfaction of all other
requirements pre scribed by law or otherwise, necessary for consummation of the
transactions contemplated hereby on the terms provided herein. Each of the
parties hereto shall, and shall cause their respective Affiliates to, use all
reasonable efforts (i) to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements which may be imposed on such party
with respect to the transactions contemplated hereby and (ii) to promptly obtain
(and to cooperate with the other parties to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or any other
public or private third party which is required to be obtained or made by such
party in connection with the transactions contemplated hereby. Each party shall
use all reasonable efforts to cause the Voluntary Contribution to occur on the
Initial Closing Date or as soon as reasonably practicable thereafter and the
Mandatory Contribution to occur as soon as practicable following the exercise by
ITT MSG of the Contribution Right.
<PAGE>
13
(b) Access. Prior to the earlier to occur of the Voluntary
Contribution Date and the Mandatory Contribution Date, each member of the
Rainbow Group shall, and shall cause SportsChannel New York to, give ITT MSG and
its Affiliates, representatives, employees, counsel and accountants reasonable
access, during normal business hours and upon reasonable notice, to the
personnel, properties, books and records of SportsChannel New York; provided,
however, that such access does not unreasonably disrupt the normal operations of
SportsChannel New York or any member of the Rainbow Group.
(c) Ordinary Conduct. Except as otherwise expressly permitted by the
terms of this Agreement, prior to the earlier to occur of the Voluntary
Contribution Date or the Mandatory Contribution Date, each member of the Rainbow
Group shall cause the business of SportsChannel New York to be conducted in the
ordinary course in substantially the same manner as conducted as of December 31,
1996 and (except where the Rainbow Group reasonably determines that it is in the
best interests of SportsChannel New York to do otherwise) shall make all
reasonable efforts consistent with past practices to preserve relationships with
customers, suppliers and others with whom SportsChannel New York deals.
(d) Tax Matters. (i) If any assets of SportsChannel New York held on
the Contribution Date (excluding goodwill in an amount equal to $3,727,712 plus
the book value of the "current assets" of SportsChannel New York as determined
in accordance with generally accepted accounting principles and adjusted for
Federal income tax purposes)) are treated as not subject to depreciation or
amortization (hereafter references to "depreciation" shall be deemed to include
amortization), or are treated as subject to depreciation with a life in excess
of 15 full years, then each member of the Rainbow Group agrees to indemnify each
member of the ITT Group, ITT, ITTSC and their respective Affiliates and hold
them harmless for any taxes paid by any of them (any such person, the
"Taxpayer") (together with any penalties paid to the applicable taxing authority
with respect to such amount and increased by interest at the rate provided in
Section 6621(a)(2) of the Code from the original due date of the relevant tax
return) that it would not have paid but for the shortfall in depreciation. The
indemnity under this Section 6(d) shall be payable whether the loss of the
deduction for depreciation increased the amount of tax payable by the Taxpayer
for the year or reduced the amount of a refund or credit received by the
Taxpayer for the year (or for a carryback year). The indemnity under this
Section 6(d) shall: (A) be computed on an after-tax basis, e.g., a
<PAGE>
14
$100 shortfall in depreciation would result in an indemnity payment (before
addition of interest, assuming no penalties and assuming, for purposes of this
example, a 35% Federal income tax rate and an agreed allowance of 5% for state
taxes) of $66.67, (B) be subject to a maximum amount of $533,333 with respect to
each originating tax year (prorated in the case of partial calendar years),
whether resulting in an increase in tax in such year or in a carryback or
carryover tax year, and an aggregate maximum over the 15- year (or if shorter,
the number of years (or partial years) during which ITT MSG or any Permitted
Transferee owns a limited partnership interest in MSG) term of the indemnity
obligation of $8 million (or a proportionate amount thereof in the case of a
term shorter than 15 years) and (C) not cover any taxes paid with respect to
deductions lost as a result of any change of law or any taxes paid other than as
a result of the loss of a deduction for depreciation with respect to the assets
held by SportsChannel New York on the Contribution Date. With respect to clause
(B) of the immediately preceding sentence, the maximum amounts of $533,333 and
$8 million shall be proportionately reduced to the extent that the Taxpayer
holds less than a 50% direct or indirect partnership interest in MSG.
(ii) Any payments to be made hereunder by any member of the Rainbow
Group shall be due by wire transfer in immediately available funds, with respect
to any tax year being contested, 20 days after the settlement or final
resolution of such contest, and, with respect to any tax year not being
contested, one day prior to the original due date for the Taxpayer's annual tax
return for the year in which the deduction would otherwise have been available.
No payment shall be due hereunder earlier than 10 days after the Taxpayer
notifies Rainbow of the amount of such payment, such notification to be
accompanied by a Certification of an authorized officer of the Taxpayer (the
"Certification"). The Certification shall state that the Taxpayer paid Federal
income tax (or suffered a reduction in a Federal tax refund or credit) with
respect to the shortfall in depreciation and will show the difference between
the amount of Federal income tax that the Taxpayer actually paid with respect to
the year and the amount that the Taxpayer would have paid had the shortfall in
depreciation been allowed as a deduction. The tax on which the amount payable
under this Section 6(d) is calculated with respect to any year shall be the
amount of Federal income tax shown in the Certification plus an amount equal to
5% of the amount of the shortfall in depreciation for the year. At Rainbow's
request, the Taxpayer will provide Rainbow with a statement from a nationally
recognized firm of public accountants, reasonably acceptable to Rainbow, that
the Certification with respect
<PAGE>
15
to Federal income tax is accurate. For this purpose, Rainbow agrees that Arthur
Andersen LLP is acceptable to Rainbow.
(e) Antitrust Notification. If necessary in connection with the
transactions contemplated to occur on the Contribution Date, each member of the
Rainbow Group and ITT MSG covenants and agrees to, as promptly as practicable,
file or cause to be filed with the FTC and the DOJ the notification and report
form, if any, required for the transactions contemplated hereby to occur on the
Contribution Date and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information shall be in substantial compliance with the
requirements of the HSR Act. Each member of the Rainbow Group and ITT MSG shall
furnish to each other such necessary information and reasonable assistance as
the others may reasonably request in connection with the preparation of any
filing or submission pursuant to this Section 6(e). Each member of the Rainbow
Group and ITT MSG shall keep each other apprised of the status of any
communications with, and any inquiries or requests for additional information
from, the FTC and the DOJ and shall comply promptly with any such inquiry or
request. Each member of the Rainbow Group and ITT MSG shall use all reasonable
efforts to obtain any necessary clearance required under the HSR Act for the
transactions contemplated hereby; provided that MSG shall be solely responsible
for any filing fees payable under the HSR Act.
7. Conditions to Contribution. (a) Conditions to the Obligations of
the Rainbow Group. The right of each member of the Rainbow Group to consummate
the transactions contemplated to occur on the Contribution Date is subject to
the satisfaction (or waiver by Rainbow) as of the Contribution Date of the
following conditions:
(i) The parties shall have received all authorizations, consents,
orders and approvals of all Governmental Entities required in order to
consummate the transactions contemplated hereby to occur on the
Contribution Date. No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition shall be in
force and have the effect of (A) preventing the consummation of the
transactions contemplated hereby to occur or (B) prohibiting or materially
limiting the ownership or operation by MSG of, or compelling MSG to
dispose of or hold separate,
<PAGE>
16
any material portion of the business or assets of SportsChannel New York
as a result of the transactions contemplated to occur on the Contribution
Date.
(ii) There shall not be pending or threatened by any Governmental
Entity any Action (or by any other person any Action which has a
reasonable likelihood of success), (A) challenging or seeking to restrain
or prohibit consummation of the transactions contemplated hereby to occur
on the Contribution Date, (B) seeking to prohibit or materially limit the
ownership or operation by MSG of any material portion of the business or
assets of SportsChannel New York or to compel MSG to dispose of or hold
separate any material portion of the business or assets of SportsChannel
New York or (C) seeking to obtain from any member of the Rainbow Group or
MSG or any of their Subsidiaries or Affiliates in connection with such
transactions any damages that are material in relation to the investment
that the Rainbow Group collectively will have in MSG immediately before
such transactions, in each case, as a result of the transactions
contemplated hereby to occur on the Contribution Date; provided, however,
that this condition shall be deemed to be waived by each member of the
Rainbow Group as to any Action (except for any Action by any Governmental
Entity) if the sole potential impact of such Action would be a judgment
for money damages and the ITT Group provides to each member of the Rainbow
Group and their respective Affiliates complete indemnification in form and
substance reasonably satisfactory to Rainbow with respect to any such
Action.
(iii) With respect to the Voluntary Contribution Date only, the
Initial Closing under the Transfer Agreement shall have occurred or be
occurring simultaneously.
(b) Conditions to the Consent of the ITT Group. The consent of the
ITT Group to the valuation of the contribution of SportsChannel New York at $170
million is subject to the satisfaction (or waiver by ITT MSG) as of the time of
the Contribution Date of the following conditions:
(i) The ITT Group shall have received an opinion dated the
Contribution Date of the general counsel of Cablevision or an officer
responsible for legal affairs of the parent of RGC or GHC reasonably
satisfactory to ITT MSG as to the matters set forth in Section 4(a) in
form and substance reasonably satisfactory to ITT MSG.
<PAGE>
17
(ii) The parties shall have received all authorizations, consents,
orders and approvals of all Governmental Entities required in order to
consummate the transactions contemplated hereby to occur on the
Contribution Date. No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition shall be in
force and have the effect of preventing the consummation of the
transactions contemplated hereby to occur on the Contribution Date.
(iii) There shall not be pending or threatened by any Governmental
Entity any Action (or by any other person any Action which has a
reasonable likelihood of success), challenging or seeking to restrain or
prohibit consummation of the transactions contemplated hereby to occur on
the Contribution Date or seeking to obtain from any member of the ITT
Group or any of its Subsidiaries or Affiliates in connection with such
transactions any damages that are material in relation to the investment
that ITT MSG is expected to have in MSG immediately before the Initial
Closing.
(iv) With respect to the Voluntary Contributon Date only, the
Initial Closing under the Transfer Agreement shall have occurred or be
occurring simultaneously.
(c) Frustration of Closing Conditions. No member of the Rainbow
Group, on the one hand, and no member of the ITT Group, on the other hand, may
rely on the failure of any condition set forth in Section 7(a) or 7(b),
respectively, to be satisfied if such failure was caused by its or its
Affiliate's failure to act in good faith or to cooperate and use all reasonable
efforts to cause the Contribution to occur.
8. Miscellaneous. (a) Assignment. This Agreement and the rights and
obligations hereunder shall not be assignable by any of the parties hereto
without the prior written consent of each other party. Notwithstanding the
foregoing sentence, ITTE and ITT MSG shall each be entitled to assign all its
rights and obligations hereunder to any majority owned Subsidiary or
Subsidiaries of ITT or of ITT Sheraton Corporation ("ITTSC"), or any direct or
indirect parent of ITTE or ITT MSG, if such Subsidiary or Subsidiaries or such
parent agrees in writing to be bound by all of the provisions of this Agreement
as if such Subsidiary or Subsidiaries or such parent were ITTE or ITT
<PAGE>
18
MSG, as the case may be, and upon such assignment the assignee shall be forever
discharged and released from any liability or further obligation under this
Agreement. Any attempted assignment in violation of this Section 8(a) shall be
void.
(b) Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time:
(i) prior to the Contribution Date by the mutual written consent of
ITT MSG and Rainbow; and
(ii) by any party if the Initial Closing has occurred and the
Voluntary Contribution does not occur within 90 days following the Initial
Closing Date.
(c) No Third-Party Beneficiaries. This Agreement shall be binding on
the parties hereto and their successors and permitted assigns. Except as set
forth in Section 6(d), this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person, other than the parties hereto and
such permitted assigns, any legal or equitable rights hereunder.
(d) Representations and Warranties; Valuation Condition. The
representations and warranties in this Agreement and in any certificate
delivered pursuant hereto shall survive the Contribution Date. In the event that
the Valuation Condition has not been met as of the Contribution Date and (x) the
parties have proceeded hereunder as if such Valuation Condition had been met or
(y) the Rainbow Group elects to consummate the Voluntary Contribution
notwithstanding that such Valuation Condition has not been met, (i) ITT MSG
shall be entitled to cause SportsChannel New York to be revalued by a Selected
Investment Banking Firm and all necessary adjustments to the capital
contributions and partnership interests in MSG, including all rights to profits
and losses, shall be made accordingly and (ii) ITT MSG shall not be entitled to
breach of contract damages under this Agreement; provided, however, in the case
of clause (x) above, the Rainbow Group shall have 90 days following the
discovery of the failure of the Valuation Condition to be met to cure such
failure.
(e) Expenses. Whether or not the transactions contemplated hereby
are consummated, and except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the
<PAGE>
19
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
(f) Attorney Fees. If any party to this Agreement shall breach any
provision of this Agreement (a "breaching party"), such breaching party shall,
on demand, indemnify and hold harmless the other parties and their respective
Affiliates for and against all reasonable out-of-pocket expenses, including
legal fees, incurred by such other party or such Affiliates by reason of the
enforcement and protection of its rights under this Agreement in respect of such
breach. The payment of such expenses is in addition to any other relief to which
such other party may be entitled.
(g) Amendments. No amendment, modification or waiver in respect of
this Agreement shall be effective unless it shall be in writing and signed by
the party against which it is enforced.
(h) Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given (i) on the date of delivery if delivered personally, or by
telecopy or telefacsimile, upon confirmation of receipt, (ii) on the second
business day following the date of dispatch if delivered by Federal Express or
other nationally reputable next-day courier service or (iii) on the third
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice, as follows:
(i) if to any member of the Rainbow Group,
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telefacsimile: (516) 496-1780
Attention: Robert S. Lemle, Esq.
and Hank Ratner
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telefacsimile: (212) 558-3588
<PAGE>
20
Attention: John P. Mead, Esq.; and
(ii) if to ITTE or ITT MSG,
ITT Corporation
1330 Avenue of the Americas
New York, New York 10019-5490
Telefacsimile: (212) 258-1463
Attention: Patrick L. Donnelly, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Telefacsimile: (212) 474-3700
Attention: George W. Bilicic, Jr.
(i) Interpretation; Appendixes and Schedules. The headings contained
in this Agreement, in any Appendix or Schedule hereto are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. All Appendixes and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Appendix but not otherwise defined
therein, shall have the meaning given to such term by this Agreement.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
(k) Entire Agreement. This Agreement shall contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Nothing in this Agreement shall have any effect
whatsoever on the rights and obligations of the parties hereto or their
Affiliates that may have accrued prior to the closing under any agreement
between them or any of their Affiliates or be given any effect in the
interpretation of any such agreement.
<PAGE>
21
(l) Brokers' or Finders' Fees. Each party hereto hereby represents
and warrants that no brokers or finders have acted for such party in connection
with this Agreement or the transactions contemplated hereby and that no
brokerage fee, finder's fee or commission is or will become payable in respect
thereof and agrees to indemnify the other parties against any claim for any such
fee or commission based on such party's actions or alleged actions.
(m) Severability. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
(n) Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, covenants, conditions and provisions
of this Agreement, the party or parties who are or are to be thereby adversely
affected, in addition to any and all other rights and remedies at law or in
equity, shall have the right of specific performance and injunctive relief
giving effect to its or their rights under this Agreement and all such rights
and remedies shall be cumulative. The parties agree that the remedies at law for
any breach or threatened breach, including monetary damages, are inadequate
compensation for any loss, that the adversely affected party or parties shall be
entitled to obtain specific performance and injunctive relief without the
necessity of proving irreparable injury or posting bond or other security, and
that any defense in any action for specific performance or injunctive relief
that a remedy at law would be adequate is waived.
(o) Consent to Jurisdiction. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County, and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the parties hereto agrees to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern
District of New York or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in the Supreme Court of the
State of New York, New York County. Each of the parties hereto further agrees
that service of any process, summons,
<PAGE>
22
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 8(o). Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
<PAGE>
23
(p) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
RAINBOW MEDIA HOLDINGS, INC.,
by /s/ MARC LUSTGARTEN
---------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
GARDEN L.P. HOLDING, CORP.,
by /s/ MARC LUSTGARTEN
---------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
RAINBOW GARDEN CORP.,
by /s/ MARC LUSTGARTEN
---------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
SPORTSCHANNEL NEW YORK HOLDING
PARTNERSHIP,
by Rainbow Media Holdings, Inc.,
as general partner,
by /s/ MARC LUSTGARTEN
---------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
SPORTSCHANNEL ASSOCIATES HOLDING
CORPORATION,
by /s/ MARC LUSTGARTEN
---------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
<PAGE>
24
MSG EDEN CORPORATION,
by /s/ KENNETH W. MUNOZ
---------------------------------
Name: Kenneth W. Munoz
Title: Executive Vice
President
ITT MSG INC.,
by /s/ RICHARD S. WARD
---------------------------------
Name: Richard S. Ward
Title: President
ITT EDEN CORPORATION,
by /s/ RICHARD S. WARD
---------------------------------
Name: Richard S. Ward
Title: President
MADISON SQUARE GARDEN, L.P.,
by MSG Eden Corporation, as
general partner
by /s/ KENNETH W. MUNOZ
---------------------------------
Name: Kenneth W. Munoz
Title: Executive Vice
President
<PAGE>
EXHIBIT C
AIRCRAFT CONTRIBUTION AGREEMENT
AIRCRAFT CONTRIBUTION AGREEMENT, dated as of April 15, 1997,
among Garden L.P. Holding Corp., a Delaware corporation ("GHC"), MSG
Eden Corporation, a Delaware corporation ("MSGE"), ITT MSG, Inc., a
Delaware corporation ("ITT MSG"), ITT Flight Operations, Inc., a
Pennsylvania corporation ("ITTF"), and Madison Square Garden, L.P.,
a Delaware limited partnership ("MSG").
WHEREAS MSG is the general partner of MSG;
WHEREAS GHC is a 49.5% limited partner in MSG;
WHEREAS ITT MSG is a 49.5% limited partner in MSG;
WHEREAS MSGE, ITT MSG and GHC are entering into an amended and
restated agreement of limited partnership dated as of the date hereof (the
"Partnership Agreement"), to set forth, among other things, each partner's
rights and obligations with respect to MSG and to provide for the operation of
the business of MSG;
WHEREAS ITTF owns and operates the Aircraft (as defined herein) and
the parties hereto desire to cause all of ITTF's right, title and interest in
and to the Aircraft to be contributed as a capital contribution to MSG; and
WHEREAS the parties hereto desire to set forth the terms of, and
certain representations, warranties, conditions, covenants and agreements
relating to, the contribution of the Aircraft as a capital contribution to MSG.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, conditions, covenants and agreements set forth
herein, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement:
"Aircraft" shall mean the following aircraft together with all
appliances, units, components, instruments, appurtenances, accessories,
furnishings, and other equipment of whatever nature installed thereon or
<PAGE>
2
attached thereto, all as more fully described in the specifications provided to
GHC's representatives on or prior to the date hereof:
Make and Model: Boeing 737-400
Manufacturer's Serial Number: 23976
U.S. Registration Number: N37NY
Country of Registration: United States
Make and Model of Engines: CFM International
CFM-56-3-C1
Engine Serial Numbers: Left: 725144
Right: 725163
"FAA" shall mean the Federal Aviation Administration.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
2. Aircraft Contribution. (a) Upon the terms and subject to the
conditions set forth in this Agreement, on the date agreed by the parties for
the consummation of the Aircraft Contribution but in any event not earlier than
the effective date of the Partnership Agreement (the "Aircraft Contribution
Date"), ITTF and ITT MSG shall cause to be contributed as a capital contribution
to MSG or, at the election of MSG, a wholly owned subsidiary corporation to be
formed by MSG ("Aircraft Sub"), all of ITTF's right, title and interest in and
to the Aircraft (the "Aircraft Contribution").
(b) The Aircraft contributed to MSG or Aircraft Sub pursuant to
Section 2(a) shall be deemed a capital contribution of property by ITT MSG to
MSG with a value of $0 until the expiration unexercised of the Third Year Call
Right (as referred to in Section 3.3 of the Partnership Agreement) and $38
million thereafter.
(c) Manner of Effecting the Aircraft Contribution. On the Aircraft
Contribution Date, the Aircraft Contribution shall be effected by the delivery
by ITTF to MSG or Aircraft Sub of possession of the Aircraft and a duly executed
bill of sale in a form approved by the FAA so as to vest good and marketable
title to the Aircraft in MSG, in such form as to permit registration of the
Aircraft by MSG or Aircraft Sub in the United States (the "FAA Bill of Sale")
and the bill of sale (the "ITTF Bill of Sale") in the form attached hereto as
Appendix A, and such other documents and instruments as MSG shall reasonably
<PAGE>
3
request, to effect the contribution of the Aircraft as contemplated hereby.
Title to the Aircraft shall pass from ITTF to MSG or Aircraft Sub at the place
of delivery thereof. ITTF confirms that the foregoing contribution of the
Aircraft includes the transfer and assignment to MSG or Aircraft Sub of all
rights of ITTF in, to or under all covenants, conditions, warranties,
representations and guarantees of manufacturers, suppliers and the like relating
to or benefitting the Aircraft. ITTF shall reasonably assist MSG or Aircraft Sub
to maintain continuity of warranties for MSG's benefit.
3. Representations and Warranties of MSG. MSG hereby, represents and
warrants to ITTF as follows:
MSG is a limited partnership duly organized and validly existing
under the laws of the State of Delaware. MSG has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by MSG, the performance by MSG of its obligations
hereunder and the consummation by MSG of the transactions contemplated hereby
have been duly authorized by all requisite action on the part of MSG. This
Agreement has been duly executed and delivered by MSG, and this Agreement
constitutes a legal, valid and binding obligation of MSG enforceable against it
in accordance with its terms.
4. Representations and Warranties of ITTF and ITT MSG. Each of ITTF
and ITT MSG hereby represents and warrants to MSG as follows:
Each of ITTF and ITT MSG is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of ITTF and ITT MSG has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by each of ITTF and ITT MSG, the performance by each
of ITTF and ITT MSG of its obligations hereunder and the consummation by each of
ITTF and ITT MSG of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of each of ITTF and ITT
MSG. This Agreement has been duly executed and delivered by each of ITTF and ITT
MSG, and this Agreement constitutes a legal, valid and binding obligation of
each of ITTF and ITT MSG enforceable against each of ITTF and ITT MSG in
accordance with its terms.
<PAGE>
4
5. Representations and Warranties of ITTF. ITTF hereby represents
and warrants to MSG as follows:
(a) Aircraft Condition. Except as provided in the next sentence, the
Aircraft is delivered and sold hereunder "as-is", and neither ITTF nor any of
its Affiliates nor any of its officers, directors, employees or agents have
made, nor shall any of them be deemed to have made, any representations or
warranty, express or implied, as to the airworthiness, value, condition, design,
operation, merchantability or fitness for use of the Aircraft or engines or any
other thing to be delivered hereunder, or as to the quality of the material or
workmanship of the Aircraft or any part thereof or as to any other
representation or warranty whatsoever, expressed or implied. The Aircraft (i) is
and shall be delivered in good operating condition, (ii) has incorporated all
United States Airworthiness Directives and manufacturer's mandatory service
bulletins with respect to the Aircraft and (iii) has been maintained up to the
time of delivery in accordance with FAA Standards for this class of aircraft and
Part 91 of the existing FAA regulations.
(b) The Aircraft. ITTF has good and valid title to the Aircraft free
and clear of all liens, claims, encumbrances, security interests, options,
charges and restrictions of any kind. At the Aircraft Contribution Date, upon
delivery to MSG or Aircraft Sub of the Aircraft and the FAA Bill of Sale and the
ITT Bill of Sale in accordance with the terms hereof, good and valid title to
the Aircraft will pass to MSG or Aircraft Sub free and clear of any pledges,
liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind, other than those arising from the acts of MSG,
Aircraft Sub, RGC, GHC or any of their respective Affiliates.
6. Covenants. (a) Antitrust Notification. If necessary in connection
with the transactions contemplated hereby, each of MSG, ITTF and ITT MSG
covenants and agrees to file or cause to be filed with the Federal Trade
Commission (the "FTC") and the United States Department of Justice (the "DOJ")
the notification and report form, if any, required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"). Any such notification and report form and supplemental
information shall be in substantial compliance with the requirements of the HSR
Act. Each of MSG, ITTF and ITT MSG shall furnish to each other such necessary
information and reasonable assistance as the others may reasonably request in
<PAGE>
5
connection with the preparation of any filing or submission pursuant to this
Section 6. Each of MSG, ITTF and ITT MSG shall keep each other apprised of the
status of any communications with, and any inquiries or requests for additional
information from, the FTC and the DOJ and shall comply promptly with any such
inquiry or request. Each of MSG, ITTF and ITT MSG shall use all reasonable
efforts to obtain any necessary clearance required under the HSR Act for the
transactions contemplated hereby; provided that MSG shall be solely responsible
for any filing fees payable under the HSR Act.
(b) Delivery of Aircraft; Risk of Loss. Delivery of the Aircraft
shall be made to MSG on the Aircraft Contribution Date at Wilmington, Delaware
or such other location as shall be agreed upon by the parties. Delivery of the
Aircraft shall be evidenced by the execution of a delivery receipt by MSG or
Aircraft Sub in customary form reasonably acceptable to ITTF and MSG. Once MSG
or Aircraft Sub has executed the delivery receipt and delivered it to ITTF, all
risk of loss, damage or destruction to the Aircraft shall pass from ITTF and ITT
MSG to MSG or Aircraft Sub. On delivery of the Aircraft, ITTF shall deliver to
MSG or Aircraft Sub a valid U.S. Certificate of Airworthiness, and any and all
log books, flight manuals, maintenance manuals, writing diagrams, checklists and
any other records, paperwork or minor equipment as is normally considered a part
of the Aircraft and its records.
(c) Inspection. Upon receipt of written notice from MSG, ITTF shall
make the Aircraft available to MSG at a reasonable time and at a location as
agreed among the parties, for a pre-purchase inspection. Such inspection shall
be a normal and customary inspection of the Aircraft as to condition, use and
operation and the records maintained in connection therewith, by any person
designated by MSG, at the expense of MSG.
(d) Citizenship Affidavit. MSG or Aircraft Sub agrees to, prior to
the Aircraft Contribution Date, execute and cause to be filed, an affidavit
swearing to its status as a United States citizen in compliance with and as
contemplated by the rules and regulations of the FAA.
7. Conditions to Closing. (a) Conditions to the Obligations of MSG.
The obligations of MSG to consummate the transactions contemplated to occur on
the Aircraft Contribution Date is subject to the satisfaction (or waiver
<PAGE>
6
by MSG) as of the Aircraft Contribution Date of the following conditions:
(i) The representations and warranties of each of ITT MSG and ITTF
made in this Agreement shall be true and correct in all material respects,
as of the date hereof and as of the Aircraft Contribution Date as though
made as of such time, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects on and as of such earlier date). ITT MSG and ITTF shall have
performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by
each of them by the Aircraft Contribution Date.
(ii) The parties shall have received all authorizations, consents,
orders and approvals of all Federal, state, local or foreign governments
or any court of competent jurisdiction, administrative agency or
commission or other nongovernmental authority or instrumentality, domestic
or foreign (a "Governmental Entity") required in order to consummate the
transactions contemplated hereby to occur on the Aircraft Contribution
Date. No statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order
enacted, entered, promulgated, enforced or issued by any Governmental
Entity or other legal restraint or prohibition shall be in force and have
the effect of (A) preventing the consummation of the transactions
contemplated hereby to occur on the Aircraft Contribution Date or (B)
prohibiting or materially limiting the ownership by MSG or Aircraft Sub
of, or compelling MSG or Aircraft Sub to dispose of or hold separate, the
Aircraft, as a result of the transactions contemplated to occur on the
Aircraft Contribution Date.
(iii) There shall not be pending or threatened by any Governmental
Entity any action, suit, arbitration, inquiry, proceeding or investigation
(an "Action") (or by any other person any Action which has a reasonable
likelihood of success), (A) challenging or seeking to restrain or prohibit
consummation of the transactions contemplated hereby to occur on the
Aircraft Contribution Date, (B) seeking to prohibit or materially limit
the ownership by MSG or Aircraft Sub of the Aircraft, or the operation of
the Aircraft as contemplated by the parties, or to compel MSG or
<PAGE>
7
Aircraft Sub to dispose of or hold separate the Aircraft or (C) seeking to
obtain from GHC, MSGE, MSG or any of their subsidiaries or affiliates in
connection with such transactions any damages that are material in
relation to the value of the Aircraft, in each case as a result of the
transactions contemplated hereby to occur on the Aircraft Contribution
Date; provided, however, that this condition shall be deemed to be waived
by MSG as to any Action (except for any Action by any Governmental Entity)
if the sole potential impact of such Action would be a judgment for money
damages and ITT MSG and ITTF provides to MSG and its Affiliates complete
indemnification in form and substance reasonably satisfactory to MSG with
respect to any such Action.
(b) Conditions to the Obligations of ITTF and ITT MSG. The
obligations of ITTF and ITT MSG to consummate the transactions contemplated to
occur on the Aircraft Contribution Date is subject to the satisfaction (or
waiver by ITTF and ITT MSG) as of the Aircraft Contribution Date of the
following conditions:
(i) The representations and warranties of MSG made in this Agreement
shall be true and correct in all material respects, as of the date hereof
and as of the Aircraft Contribution Date as though made as of such time,
except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties
shall be true and correct in all material respects on and as of such
earlier date). MSG shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to
be performed or complied with by it by the Aircraft Contribution Date.
(ii) The parties shall have received all authorizations, consents,
orders and approvals of all Governmental Entities required in order to
consummate the transactions contemplated to occur on the Aircraft
Contribution Date. No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition shall be in
force and have the effect of preventing the consummation of the
transactions contemplated hereby to occur on the Aircraft Contribution
Date.
<PAGE>
8
(iii) There shall not be pending or threatened by any Governmental
Entity any Action (or by any other person any Action which has a
reasonable likelihood of success), challenging or seeking to restrain or
prohibit consummation of the transactions contemplated hereby to occur on
the Aircraft Contribution Date or seeking to obtain from ITTF or ITT MSG
or any of their respective Subsidiaries or Affiliates in connection with
such transactions any damages that are material in relation to the value
of the Aircraft.
(c) Frustration of Closing Conditions. None of MSG, on the one hand,
nor ITTF and ITT MSG, on the other hand, may rely on the failure of any
condition set forth in Section 7(a) or 7(b), respectively, to be satisfied if
such failure was caused by it or its Affiliate's failure to act in good faith.
8. Miscellaneous. (a) Assignment. Other than the assignment to
Aircraft Sub of the right to take title to the Aircraft, this Agreement and the
rights and obligations hereunder shall not be assignable by any of the parties
hereto without the prior written consent of each other party. Notwithstanding
the foregoing sentence, ITTF and ITT MSG shall be entitled to assign all its
rights and obligations hereunder to any majority owned Subsidiary or
Subsidiaries of ITT Corporation or of ITT Sheraton Corporation, or any direct or
indirect parent of ITTF or ITT MSG, if such Subsidiary or Subsidiaries or such
parent agrees in writing to be bound by all of the provisions of this Agreement
as if such Subsidiary or Subsidiaries or such parent were ITTF or ITT MSG, as
the case may be, and upon such assignment the assignee shall be forever
discharged and released from any liability or further obligation under this
Agreement. Any attempted assignment in violation of this Section 8(a) shall be
void.
(b) No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person, other
than the parties hereto and such permitted assigns, any legal or equitable
rights hereunder.
(c) Survival of Representations. The representations and warranties
in this Agreement and in any certificate delivered pursuant hereto shall survive
the Aircraft Contribution Date. ITTF agrees to indemnify, defend and hold
harmless GHC, MSGE, MSG, each affiliate of GHC, MSGE and MSG, each of their
respective directors, officers, employees and agents and each of the heirs,
<PAGE>
9
executors, successors and assigns of any of the foregoing from and against, and
pay or reimburse such persons for, any and all losses, liabilities, claims,
damages, demands, costs or expenses (including attorneys' fees and any and all
out-of-pocket expenses) whatsoever, arising out of, by reason of or otherwise
related to any breach of this Agreement by ITTF or ITT MSG.
(d) Expenses. Whether or not the transactions contemplated hereby
are consummated, and except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
(e) Attorney Fees. If any party to this Agreement shall breach any
provision of this Agreement (a "breaching party"), such breaching party shall,
on demand, indemnify and hold harmless the other parties and their respective
Affiliates for and against all reasonable out-of-pocket expenses, including
legal fees, incurred by such other party or such Affiliates by reason of the
enforcement and protection of its rights under this Agreement in respect of such
breach. The payment of such expenses is in addition to any other relief to which
such other party may be entitled.
(f) Amendments. No amendment, modification or waiver in respect of
this Agreement shall be effective unless it shall be in writing and signed by
the party against which it is enforced.
(g) Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given (i) on the date of delivery if delivered personally, or by
telecopy or telefacsimile, upon confirmation of receipt, (ii) on the second
business day following the date of dispatch if delivered by Federal Express or
other nationally reputable next-day courier service or (iii) on the third
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below,
<PAGE>
10
or pursuant to such other instructions as may be designated in writing by the
party to receive such notice, as follows:
(i) if to MSG,
Madison Square Garden, L.P.
Two Penn Plaza
New York, New York 10121
Telefacsimile: (212) 465-6310
Attention: President
with copies to:
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telefacsimile: (516) 496-1780
Attention: Robert S. Lemle, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telefacsimile: (212) 558-3588
Attention: John P. Mead, Esq.; and
(ii) if to ITTF or ITT MSG,
ITT Corporation
1330 Avenue of the Americas
New York, New York 10019-5490
Telefacsimile: (212) 258-1463
Attention: Patrick L. Donnelly, Esq.
(h) Interpretation; Appendixes and Schedules. The headings contained
in this Agreement, in any Appendix or Schedule hereto are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. All Appendixes and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Appendix but not otherwise defined
therein, shall have the meaning given to such term by this Agreement.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be
<PAGE>
11
considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to
the other parties.
(j) Entire Agreement. This Agreement shall contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(k) Brokers' or Finders' Fees. Each party hereto hereby represents
and warrants that no brokers or finders have acted for such party in connection
with this Agreement or the transactions contemplated hereby and that no
brokerage fee, finder's fee or commission is or will become payable in respect
thereof and agrees to indemnify the other parties against any claim for any such
fee or commission based on such party's actions or alleged actions.
(l) Severability. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
(m) Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, covenants, conditions and provisions
of this Agreement, the party or parties who are or are to be thereby adversely
affected, in addition to any and all other rights and remedies at law or in
equity, shall have the right of specific performance and injunctive relief
giving effect to its or their rights under this Agreement and all such rights
and remedies shall be cumulative. The parties agree that the remedies at law for
any breach or threatened breach, including monetary damages, are inadequate
compensation for any loss, that the adversely affected party or parties shall be
entitled to obtain specific performance and injunctive relief without the
necessity of proving irreparable injury or posting bond or other security, and
that any defense in any action for specific performance or injunctive relief
that a remedy at law would be adequate is waived.
(n) Consent to Jurisdiction. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York
<PAGE>
12
County, and (b) the United States District Court for the Southern District of
New York, for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby. Each of the parties
hereto agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties hereto further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this Section 8(n). Each of the parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New York
County, or (ii) the United States District Court for the Southern District of
New York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
(o) Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned (i) at the election of ITTF or ITT
MSG at any time prior to the Aircraft Contribution Date or (ii) by any party
hereto 180 days after the effective date of the Partnership Agreement; provided
that no party hereto may terminate this Agreement if it has failed to act in
good faith or to cooperate to cause the Aircraft Contribution to occur.
<PAGE>
13
(p) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
GARDEN L.P. HOLDING CORP.,
by /s/ MARC LUSTGARTEN
-------------------------------
Name: Marc Lustgarten
Title: Vice Chairman
MSG EDEN CORPORATION,
by /s/ KENNETH W. MUNOZ
-------------------------------
Name: Kenneth W. Munoz
Title: Executive Vice
President
ITT MSG INC.,
by /s/ RICHARD S. WARD
-------------------------------
Name: Richard S. Ward
Title: President
ITT FLIGHT OPERATIONS, INC.,
by /s/ RICHARD S. WARD
-------------------------------
Name: Richard S. Ward
Title: President
MADISON SQUARE GARDEN, L.P.,
by MSG Eden Corporation, as
general partner
by /s/ KENNETH W. MUNOZ
------------------------------
Name: Kenneth W. Munoz
Title: Executive Vice
President
<PAGE>
Appendix A
Bill of Sale
For valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, ITT Flight Operations, Inc., a Pennsylvania corporation
("ITTF"), owner of the full legal and beneficial right, title and interest in
and to the Boeing 737-400 aircraft bearing manufacturer's serial number 23976
together with the two (2) CFM56-3C-1 engines bearing manufacturer's serial
numbers 725144 and 725163 and all appliances, parts and equipment installed on
or furnished with such aircraft and engines (hereinafter collectively referred
to as the "Aircraft"), does hereby sell, grant, transfer and deliver all its
legal and beneficial right, title and interest in and to the Aircraft, unto
[Madison Square Garden L.P., a Delaware limited partnership,] having an office
at 2 Pennsylvania Plaza, 14th Floor, New York, NY 10021 ("MSG") and its
successors and assigns, to have and to hold the Aircraft forever. This Bill of
Sale is executed and delivered to MSG by ITTF pursuant to the terms of an
Aircraft Contribution Agreement dated as of April 15, 1997, among ITTF, ITT MSG,
Inc. and MSG.
ITTF does hereby transfer full legal and beneficial right, title and
interest in and to the Aircraft unto MSG, free and clear of any and all liens,
claims, charges or encumbrances.
This Bill of Sale shall be governed by and shall be construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, ITTF has caused this Bill of Sale to be duly
executed the __th day of ______, 1997.
ITT FLIGHT OPERATIONS, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
[EXHIBIT 50]
Amended and Restated
Agreement of Limited Partnership
of
MADISON SQUARE GARDEN, L.P.
(formerly MSG Holdings, L.P.),
a Delaware limited partnership
Dated as of April 15, 1997
among
MSG EDEN CORPORATION,
ITT MSG INC.
and
GARDEN L.P. HOLDING CORP.
<PAGE>
TABLE OF CONTENTS
Page No.
--------
ARTICLE 1 Construction.................................................2
1.1 Defined Terms................................................2
1.2 Interpretation..............................................12
ARTICLE 2 General Provisions..........................................12
2.1 Formation...................................................12
2.2 Nature of the Partnership...................................12
2.3 Name........................................................12
2.4 Purposes....................................................13
2.5 Place of Business...........................................13
2.6 Partners' Names and Addresses...............................13
2.7 Title to Partnership Property...............................13
2.8 Registered Office and Registered Agent......................13
2.9 Organization Certificates...................................14
2.10 Duration of the Partnership.................................14
ARTICLE 3 Capital of the Partnership..................................14
3.1 Capital Contributions to the Partnership....................14
3.2 Loans by Partners...........................................16
3.3 Contribution of SportsChannel New York;
Contribution of Aircraft....................................17
ARTICLE 4 Management of the Partnership...............................17
4.1 Management..................................................17
4.2 Transactions with Related Persons; Fiduciary
Duties; Partnership Opportunities...........................18
4.3 Right of Public to Rely on Authority of the
General Partner.............................................19
4.4 Liability of the General Partner;
Indemnification.............................................19
4.5 Limitations on Limited Partners.............................20
4.6 Rights of Partners..........................................21
4.7 Liability of Limited Partners...............................21
ARTICLE 5 Capital Accounts, Distributions and
Allocations.................................................21
5.1 Establishment of Capital Accounts...........................21
5.2 Distributions...............................................24
5.3 Allocations.................................................24
5.4 Conformity with Tax Regulations.............................26
5.5 Negative Capital Accounts...................................28
-i-
<PAGE>
ARTICLE 6 Transfer of Interests; Additional Partners..................28
6.1 Transfer of a Limited Partner's Interest;
Substitution................................................28
6.2 Bankruptcy or Dissolution of a Limited
Partner.....................................................31
6.3 Transfer of the General Partner's Interest..................31
6.4 Deemed Withdrawal of the General Partner....................32
6.5 Right of First Refusal......................................33
ARTICLE 7 Dissolution and Liquidation.................................35
7.1 Events of Dissolution.......................................35
7.2 Priority on Liquidation.....................................36
7.3 Statements on Liquidation...................................36
7.4 Return of Capital; Partition................................36
ARTICLE 8 Records and Accounting......................................37
8.1 Books and Records...........................................37
8.2 Required Reports to Partners................................37
8.3 Annual Tax Returns..........................................38
8.4 Actions in Event of Audit...................................38
8.5 Costs.......................................................39
ARTICLE 9 Miscellaneous...............................................39
9.1 Notices.....................................................39
9.2 Power of Attorney...........................................40
9.3 Amendment...................................................41
9.4 Entire Agreement............................................41
9.5 Effectiveness...............................................41
9.6 No Third Party Beneficiaries................................41
9.7 Creditors...................................................41
9.8 Agreement in Counterparts...................................41
9.9 Captions....................................................42
9.10 Governing Law...............................................42
9.11 Partial Invalidity..........................................42
9.12 Confidential Information....................................42
9.13 Equitable Remedies..........................................42
-ii-
<PAGE>
Schedules
Schedule I Names and Addresses of the General Partner
and Limited Partners
Schedule II Capital Contributions and Profit Percentages
-iii-
<PAGE>
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
April 15, 1997, by and among MSG EDEN CORPORATION, a Delaware corporation (the
"General Partner"), as general partner, and ITT MSG INC., a Delaware corporation
("ITT Partner"), and GARDEN L.P. HOLDING CORP., a Delaware corporation ("Rainbow
Partner"), as limited partners.
RECITALS
Pursuant to the Bid Agreement (as amended from time to time, the
"Bid Agreement"), dated August 15, 1994, by and among ITT Corporation, a
Delaware corporation, Cablevision Systems Corporation, a Delaware corporation
("Cablevision"), and Rainbow Programming Holdings, Inc., a New York corporation,
the parties agreed to form a Delaware limited partnership named Madison Square
Garden, L.P. (formerly named MSG Holdings, L.P. and herein called the
"Partnership") for the purpose, among others, of acquiring and operating the
business theretofore conducted by Madison Square Garden Corporation, a Delaware
corporation.
The Partnership was formed as a Delaware limited partnership under
the Act by the filing of a Certificate of Limited Partnership with the Secretary
of State of the State of Delaware on August 19, 1994. The Amended and Restated
Certificate of Limited Partnership as in force on the date of execution hereof
was filed with the Secretary of State of the State of Delaware on April 11,
1995.
On the date hereof, ITT Corporation, a Nevada corporation ("ITT
Corporation"), ITT Eden Corporation, a Delaware corporation ("ITT Eden"), ITT
Partner, Cablevision, Rainbow Garden Corp., a Delaware corporation ("RGC"),
Rainbow Partner and the Partnership are entering into a certain Partnership
Interest Transfer Agreement (the "Transfer Agreement") pursuant to which, among
other matters, (i) ITT Eden shall sell to RGC, or at RGC's election, to the
General Partner, and RGC shall purchase, or at RGC's election, cause the General
Partner to redeem, from ITT Eden all of the capital stock that ITT Eden
beneficially owns in the General Partner, (ii) ITT Partner shall sell to Rainbow
Partner, or at Rainbow Partner's election, cause the Partnership to redeem, and
Rainbow Partner shall purchase, or at Rainbow Partner's election, cause the
Partnership to redeem, from ITT Partner certain Limited Partner Interests, (iii)
ITT Partner shall have a first option to require Cablevision to purchase, or at
Cablevision's election, permit the Partnership to redeem, a portion of ITT
Partner's remaining Limited Partner Interest on the terms and subject to the
conditions set forth in the Transfer Agreement, (iv)
<PAGE>
ITT Partner shall have a second option to require Cablevision to purchase, or at
Cablevision's election, permit the Partnership to redeem, ITT Partner's
remaining Limited Partner Interest on the terms and subject to the conditions
set forth in the Transfer Agreement, and (v) Cablevision shall have the right to
require ITT Partner to sell to Cablevision, or at Cablevision's election,
require the Partnership to redeem, ITT Partner's remaining Limited Partner
Interest, if any, on the terms and subject to the conditions set forth in the
Transfer Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
Construction
1.1 Defined Terms. As used herein, the following terms shall have
the following meanings:
Acceleration Event: shall have the meaning set forth in the Transfer
Agreement.
Accountants: KPMG Peat Marwick LLP or such other firm of nationally
recognized independent public accountants as the General Partner may from time
to time designate as the independent accountants of the Partnership, provided
that such firm of nationally recognized independent public accountants is
independent of the Partnership within the meaning of Rule 2-01 of Regulation S-X
promulgated by the Securities and Exchange Commission.
Act: the Delaware Revised Uniform Limited Partnership Act, as it may
be amended from time to time, and any successor to such Act.
Adjusted Basis: at any relevant time, the Partnership's adjusted
basis in any Partnership asset, as determined for Federal income tax purposes
pursuant to Section 1011 of the Code.
Affiliate: with respect to a specified Person, an officer or
director of such Person, or a Person who, directly or indirectly through one or
more intermediaries, owns, Controls, is owned or Controlled by, or is under
common ownership or Control with, the Person specified; provided, that none of
the Partnership and its subsidiaries shall be an Affiliate.
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Agreement: this Amended and Restated Agreement of Limited
Partnership, as it may be amended and in force from time to time.
Aircraft: shall have the meaning set forth in the Aircraft
Contribution Agreement.
Aircraft Contribution Agreement: shall mean the Aircraft
Contribution Agreement, dated as of April 15, 1997, among Rainbow Partner, MSG
Eden Corporation ITT Partner, the Partnership and ITT Flight Operations, Inc.
Allocated Interest Offer Price: In the case of any proposed sale of
an Offered Interest (as defined in Section 6.5) in conjunction with other
property owned by ITT Partner or an Affiliate of ITT Partner, an amount equal to
the product of the purchase price for all such property and a fraction, the
numerator of which is equal to the Fair Market Value of the Offered Interest and
the denominator of which is equal to the Fair Market Value of all such property
to be sold.
Appraiser: an investment banking firm chosen by ITT Partner from a
list of three investment banking firms chosen by Rainbow Partner from the
following: Bear, Stearns & Co. Inc., Goldman, Sachs & Co., Lazard Freres & Co.
LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc or, in each case, their respective
successors. Each of the parties hereto shall provide to any Appraiser providing
services pursuant to any provision of this Agreement reasonable access and
duplicating rights during normal business hours and upon reasonable advance
notice, subject to appropriate confidentiality provisions, to all information
within the possession or control of such party reasonably requested by such
Appraiser.
Arm's-length basis: As to any transaction, agreement or other
arrangement, being on terms that would be reached by unrelated parties not under
any compulsion to contract.
Bankruptcy: with respect to the Partnership or any Partner,
(i) the Partnership or such Partner, pursuant to or within the
meaning of Title 11, United States Code, or any similar Federal or state
law for the relief of debtors (a "Bankruptcy Law"),
(a) commencing a voluntary case;
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(b) consenting to the entry of an order for relief against it
in an involuntary case;
(c) consenting to the appointment of a custodian of it or for
any substantial part of its property;
(d) making a general assignment for the benefit of its
creditors; or
(e) taking any comparable action under any foreign laws
relating to insolvency; or
(ii) a court of competent jurisdiction entering an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Partnership or such Partner in
an involuntary case;
(b) appoints a custodian of the Partnership or such Partner or
for any substantial part of its property;
(c) orders the winding up or liquidation of the Partnership or
such Partner; or
(d) any similar relief is granted under any foreign laws and
the order or decree remains unstayed and in effect for 60 days.
Bona Fide Offer: shall have the meaning assigned to such term in
Section 6.5(b).
Capital Account: the account for each Partner on the books of the
Partnership established and maintained as provided in Section 5.1.
Capital Contribution: the amount reflected on Schedule II as the
Capital Contribution of each Partner immediately prior to the Initial Closing
Date, as such amount may be adjusted from time to time in accordance with
Section 3.1(a).
Capital Deficit: with respect to any Partner, the amount of the
negative balance, if any, in its Capital Account.
Carrying Value: as of the time of determination, (i) with respect to
Contributed Property, and such other Partnership property whose value is
restated pursuant to Section 5.1(d), the Fair Market Value of such property
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(calculated for this purpose without regard to any outstanding indebtedness
secured by or relating to such property) on the date of its contribution reduced
(but not below zero) by all depreciation, depletion, amortization and similar
expense charged to the Capital Accounts pursuant to Section 5.1(b) with respect
to such property, and (ii) with respect to any other property, the Adjusted
Basis of such property.
Code: the United States Internal Revenue Code of 1986, as amended
from time to time.
Consent: the written consent of a Person, and a correlative meaning
when used as a verb. Whenever this Agreement requires the Consent of a Person,
such Consent may be given or withheld in the sole and absolute discretion of
such Person and any fraudulently obtained Consent shall be invalid.
Contributed Property: any property or other asset (other than money)
contributed as a Capital Contribution by a Partner to the Partnership in
accordance with the terms hereof.
Control (including, with correlative meaning, the terms "Controlled
by" and "under common Control with"): with respect to a specified Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities or partnership inter ests, by contract or
otherwise.
Fair Market Value: with respect to any property, business or other
asset, the price at which a willing seller would sell and a willing buyer would
buy such property, business or other asset having full knowledge of the facts,
and assuming each party acts on an Arm's-length basis with the expectation of
concluding the purchase or sale within a reasonable time but neither of which is
under compulsion to complete the transaction. Unless expressly indicated herein
to the contrary, any determination of Fair Market Value shall reflect any
outstanding indebtedness secured by or relating to such property, business or
other asset. In all cases where this Agreement requires the determination of
Fair Market Value, the General Partner shall notify each Partner of its proposal
for the Fair Market Value within ten business days after the requirement for a
Fair Market Value determination arises. Any Partner may object to such
determination within five business days of the receipt thereof by giving the
General Partner written notice of such objection, including in such notice such
Partner's proposal
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for the Fair Market Value. Upon receipt of such notice, (i) for so long as ITT
Partner is a Partner, Fair Market Value shall be determined by an Appraiser and
(ii) at any time that ITT Partner is not a Partner, Fair Market Value shall be
determined by an independent investment banking firm selected by the General
Partner. If no notice of objection is received by the General Partner within the
time period specified above, the General Partner's proposed Fair Market Value
shall constitute the Fair Market Value for all purposes hereof. All fees and
expenses of an Appraiser (including fees and expenses of counsel) related to its
determination of Fair Market Value shall be paid by the Partnership unless the
General Partner's proposal for the Fair Market Value is closer to the Fair
Market Value determined by the Appraiser than the proposal of the objecting
Partner in which case the fees and expenses of the Appraiser shall be borne 50%
by the General Partner and 50% by the objecting Partner. The Fair Market Value
of SportsChannel New York and the Aircraft, if contributed pursuant to the
SportsChannel Contribution Agreement or the Aircraft Contribution Agreement,
respectively, shall be as provided in Section 3.3.
Financing Document: any loan agreement, security agreement,
mortgage, indenture, bond, note, debenture or other instrument or agreement
relating to indebtedness of the Partnership for borrowed money or for an
obligation which is represented by one or more securities issued by the
Partnership.
Fiscal Year: the taxable year of the Partnership for Federal income
tax purposes determined under Section 706 of the Code and the Tax Regulations,
including any portion of a calendar year with respect to which the Partnership
is required to file a Federal income tax return.
Gain or Loss on Disposition: the gain or loss for Federal income tax
purposes arising from a sale, exchange or other taxable disposition of any
capital asset, or any material portion thereof (excluding, however, any gain or
loss from sales of services or property in the ordinary course of the business
of the Partnership).
General Partner: MSG Eden Corporation and any other Person now or
hereafter admitted to the Partnership as a general partner in accordance with
this Agreement, for so long as MSG Eden Corporation or such other Person remains
so admitted as a general partner.
Governmental Authority: any Federal, state, local or other body,
whether administrative, legislative,
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executive or judicial, or any quasi-governmental body, having jurisdiction over
the Partnership's assets, a Partner or the Partnership.
Initial Closing Date: shall have the meaning assigned to such term
in the Transfer Agreement.
Initial Liquidation Payment Date: shall have the meaning assigned to
such term in Section 7.3.
Interest: shall have the meaning assigned to the term "partnership
interest" in Section 17-101(12) of the Act and shall include a Partner's share
of the income, loss and capital of the Partnership and at any date shall be
equal to the Partner's initial Interest as set forth on Schedule II, adjusted
through that date as set forth in this Agreement.
ITT Corporation: ITT Corporation, a Nevada corporation, and its
successors and permitted assigns.
ITT Eden: ITT Eden Corporation, a Delaware corporation.
ITT Partner: ITT MSG Inc., a Delaware corporation, and any Person
who is substituted for ITT Partner pursuant to this Agreement or the Transfer
Agreement.
ITT Sheraton Corporation: ITT Sheraton Corporation, a Delaware
corporation, and currently a wholly-owned subsidiary of ITT Corporation, and its
successors and permitted assigns.
Limited Partner: Rainbow Partner, ITT Partner and any other Person
now or hereafter admitted to the Partnership as a limited partner in accordance
with this Agreement, for so long as Rainbow Partner, ITT Partner or such other
Person remains so admitted as a limited partner.
Limited Partner Interest: the Interest of a Limited Partner in its
capacity as a limited partner of the Partnership.
Loan Notice: shall have the meaning assigned to such term in Section
3.2(b).
Loss: see definition of Profit or Loss.
Loss on Disposition: see definition of Gain or Loss on Disposition.
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Loss Percentage: with respect to each Limited Partner, a percentage
that is equal to that Limited Partner's Profit Percentage.
Merger: the merger pursuant to the certain Agreement and Plan of
Merger, dated as of August 27, 1994, among the Partnership, Viacom, Inc., a
Delaware corporation, Paramount Communications Realty Corporation, a Delaware
corporation, ITT Corporation, a Delaware corporation, and RGC, on March 10,
1995, pursuant to which the Partnership succeeded to the assets and business of
Madison Square Garden Corporation from Paramount Communications Realty
Corporation.
Minimum Gain Attributable to Partner Nonrecourse Debt: with respect
to any Partner Nonrecourse Debt, an amount equal to the Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability
of the Partnership, as determined in accordance with ss.l.704-2(i)(3) of the Tax
Regulations.
Minimum Gain: shall have the meaning set forth in ss.l.704-2(d) of
the Tax Regulations.
Net Agreed Value: (i) in the case of Contributed Property, its Fair
Market Value at the time of its contribution to the Partnership and (ii) in the
case of any property distributed to a Partner, its Fair Market Value at the time
of such distribution.
Nonrecourse Deductions: shall have the meaning set forth in
ss.l.704-2(b)(1) and (c) of the Tax Regulations.
Nonrecourse Liability: any liability of the Partnership treated as a
nonrecourse liability under ss.l.704- 2(b)(3) of the Tax Regulations.
Offer Notice: shall have the meaning assigned to such term in
Section 6.5(b).
Offered Interest: shall have the meaning assigned to such term in
Section 6.5(a).
Offered Interest Closing Date: shall have the meaning assigned to
such term in Section 6.5(c).
Parent: shall mean any Person that has a Parent Percentage equal to
or greater than 67%.
Parent Transfer: shall have the meaning assigned to such term in
Section 6.5(a).
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Parent Percentage: shall mean (i) the Partner Interest Fair Market
Value of any Interest held directly or indirectly by any Person divided by (ii)
the Fair Market Value of such Person, expressed as a percentage. Solely for the
purposes of calculating Fair Market Value in clause (ii) of this definition,
SportsChannel New York shall be treated as if it had never been contributed to
the Partnership.
Partner Interest Fair Market Value: as to any Interest, the product
of (i) the Profit Percentage attributable to such Interest times (ii) the
difference between (a) the Fair Market Value of the Partnership and (b) on any
date on or after the date on which SportsChannel New York has been contributed
to the Partnership, the Fair Market Value of SportsChannel New York at the time
of its contribution to the Partnership, as calculated pursuant to Section 3.3
hereof.
Partner Loan: any loan made by a Partner or an Affiliate of a
Partner to the Partnership pursuant to Section 3.2.
Partner Nonrecourse Debt: shall have the meaning set forth in
ss.l.704-2(b)(4) of the Tax Regulations.
Partner Nonrecourse Deductions: the overall amount and particular
items determined in accordance with ss.l.704-2(i)(2) of the Tax Regulations.
Partners: the General Partner and the Limited Partners collectively,
and, in the singular form, any one of them.
Partnership: Madison Square Garden, L.P. (formerly MSG Holdings,
L.P.), the limited partnership that is continued pursuant to this Agreement.
Permitted ITT Transferee: ITT Corporation, ITT Sheraton Corporation,
or any majority-owned subsidiary of either of them that is not Controlled by any
entity other than either of them.
Person: an individual, firm, corporation, trust, partnership
(whether general or limited), limited liability company or other entity or any
governmental body or subdivision, agency, commission or authority thereof.
Profit Percentage: with respect to each Partner, a fraction having a
numerator equal to the Total Capital Contributions made to the Partnership with
respect to the Interest of such Partner, as adjusted from time to time
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pursuant to Section 3.1(a), and a denominator equal to the Total Capital
Contribution, as adjusted from time to time pursuant to Section 3.1(a),
expressed as a percentage; provided, however, that for purposes of computing
Profit Percentage hereunder, Rainbow Partner's Capital Contribution shall be
deemed to be increased to the extent that ITT Partner's and the General
Partner's Capital Contributions are reduced pursuant to Section 3.1(a) by any
redemption pursuant to Section 2.01, 2.03 or 2.04 of the Transfer Agreement.
Profit or Loss: the income or loss of the Partnership for Federal
income tax purposes, other than Gain or Loss on Disposition.
Put Obligation Breach: shall have the meaning set forth in the
Transfer Agreement.
Put Obligation Failure: shall have the meaning set forth in the
Transfer Agreement.
Rainbow: Rainbow Media Holdings, Inc., a Delaware corporation, and
an entity which immediately following the Initial Closing will indirectly own
the General Partner and Rainbow Partner, and its successors and permitted
assigns.
Rainbow Partner: Garden L.P. Holding Corp., a Delaware corporation,
and any Person who is substituted for Rainbow Partner pursuant to this Agreement
or the Transfer Agreement.
Recapture Income: any gain recognized upon the disposition of a
partnership asset that is not capital gain because such gain represents the
recapture (under Section 1245 or Section 1250 of the Code or otherwise) of
deductions previously taken for federal income tax purposes with respect to such
asset.
Regulatory Allocations: shall have the meaning assigned to such term
in Section 5.4(h).
Related Person: as to each Partner, (i) such Partner, (ii) each
Affiliate of such Partner, (iii) each director, officer or general partner of,
or any stockholder or limited partner owning an equity interest greater than 10%
in, such Partner or any Affiliate of such Partner, or (iv) each Person other
than the Partnership in which such Partner or any Affiliate of such Partner has
an equity interest greater than 10%.
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RGC: Rainbow Garden Corp., a Delaware corporation.
SportsChannel Contribution Agreement: that certain SportsChannel
Contribution Agreement, dated as of April 15, 1997, by and among SportsChannel
New York Holding Partnership, SportsChannel Associates Holding Corporation, ITT
Partner, the Partnership and the other parties named therein.
SportsChannel New York: SportsChannel Associates, a New York general
partnership, and its successors and assigns.
Tax Regulations: the Income Tax Regulations promulgated under the
Code from time to time.
Total Capital Contribution: the aggregate of all Capital
Contributions, as adjusted from time to time pursuant to this Agreement.
Transfer: any sale, transfer, delegation, exchange, assignment,
hypothecation, pledge, encumbrance, creation of an option or right to purchase
or other disposition of any kind, of an Interest in the Partnership or of any
direct interest in a Partner or any direct equity interest in the Parent of a
Partner (voluntarily, involuntarily or by operation of law) and correlative
meanings when used as a verb.
Transfer Agreement: that certain Partnership Interest Transfer
Agreement, dated as of April 14, 1997, by and among ITT Eden Corporation, a
Delaware corporation, ITT Partner, Cablevision, RGC, Rainbow Partner, the
Partnership and the other parties named therein.
Transferee: the Person who acquires all or part of an Interest by
means of a Transfer.
Transferor: the Person who Transfers all or part of an Interest.
Unrealized Gain: the excess, if any, of the Fair Market Value of
property (calculated for this purpose without regard to any outstanding
indebtedness secured by or relating to such property) as of the date of
determination of such value over the Carrying Value of such property as of such
date.
Unrealized Loss: the excess, if any, of the Carrying Value of
property as of the date of determination
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of such value over the Fair Market Value of such property (calculated for this
purpose without regard to any outstanding indebtedness secured by or relating to
such property) as of such date.
1.2 Interpretation. When the context in which words are used in this
Agreement indicates that such is the intent, singular words shall include the
plural and vice versa and masculine words shall include the feminine and the
neuter genders and vice versa. References to Articles, Sections, Exhibits,
Schedules or other subdivisions are to the appropriate subdivisions of this
Agreement unless the context otherwise requires. The words "herein", "hereof",
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section, Exhibit, Schedule or other
subdivision.
ARTICLE 2
General Provisions
2.1 Formation. The Partnership was formed as a Delaware limited
partnership under the Act by the filing of a Certificate of Limited Partnership
with the Secretary of State of the State of Delaware on August 19, 1994. The
Amended and Restated Certificate of Limited Partnership as in force on the date
of execution hereof was filed with the Secretary of State of the State of
Delaware on April 11, 1995.
2.2 Nature of the Partnership. It is intended that the Partnership
continue to be a limited partnership meeting the definition of "Partnership"
contained in Section 7701 of the Code and the Tax Regulations. All rights,
liabilities and obligations of the General Partner and the Limited Partners,
both as among themselves and as to Persons not parties to this Agreement, shall
be as provided in the Act, except to such extent as may be otherwise expressly
provided herein.
2.3 Name. The name of the Partnership shall continue to be "Madison
Square Garden, L.P." (formerly MSG Holdings, L.P.). The Partnership may conduct
business under any other or additional name or names and variations thereof as
the General Partner may from time to time determine. The General Partner shall
execute and cause to be filed on behalf of the Partnership such partnership or
assumed or fictitious name certificates as may from time to time be required by
law to be published or filed in connection with the continuation, qualification
and operation of the
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Partnership. Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto acknowledge that this Agreement provides ITT
Partner with limited rights and, except as provided herein, nothing herein shall
be construed as a waiver of the General Partner's responsibilities to ITT
Partner as a fiduciary under relevant Delaware law.
2.4 Purposes. The purposes of the Partnership shall be to own,
operate, manage, finance, expand, develop, sell and otherwise deal with the
assets and businesses owned and conducted by Madison Square Garden Corporation
prior to the Merger and such others as may be incidental thereto or as otherwise
determined by the General Partner. Subject to Section 4.1, in connection
therewith, the Partnership may acquire, finance, mortgage, pledge and assign any
assets, enter into such merger agreements, acquisition agreements, franchise
agreements, licensing agreements, broadcasting agreements, assignments,
financing agreements, security agreements and other instruments and agreements
of any kind, enter into partnerships and joint ventures, and do any and all
other acts and things that the General Partner may deem to be necessary or
useful for the conduct of the Partnership's business or the winding up thereof.
2.5 Place of Business. The principal place of business of the
Partnership shall be at Two Pennsylvania Plaza, New York, New York 10121. The
General Partner may, at any time and from time to time, change the location of
the Partnership's principal place of business, upon written notice of such
change to the other Partners, and may establish such additional place or places
of business of the Partnership as the General Partner may from time to time
determine.
2.6 Partners' Names and Addresses. The names and addresses of the
General Partner and the Limited Partners are set forth on Schedule I.
2.7 Title to Partnership Property. All property owned by the
Partnership, whether real or personal, tangible or intangible, shall be deemed
owned by the Partnership as an entity, and no Partner, individually, shall have
any ownership of such property. The Partnership may hold any of its assets in
its own name or in the name of any other Person as its nominee.
2.8 Registered Office and Registered Agent. The address of the
registered office of the Partnership in the State of Delaware is c/o Corporation
Service Company, 1013 Centre Road, Wilmington, Delaware 19805. The registered
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agent for service of process in the State of Delaware is Corporation Service
Company, 1013 Centre Road, Wilmington, Delaware 19805. The General Partner may
at any time change such office or agent, upon notice to the other Partners and
the taking of any other action, including the execution and filing of an
amendment to the Amended and Restated Certificate of Limited Partnership, as may
be required by the Act.
2.9 Organization Certificates. The General Partner shall cause to be
executed and filed:
(a) all such amendments or supplements to the Partnership's Amended
and Restated Certificate of Limited Partnership as from time to time may be
required by the Act; and
(b) all such further certificates, notices, statements or other
instruments as may be required by law for the formation, qualification or
operation of a limited partnership in all jurisdictions where the Partnership
may elect to do business, or otherwise necessary to carry out the purposes of
this Agreement.
2.10 Duration of the Partnership. The Partnership shall continue
until December 31, 2093, unless it is sooner dissolved in accordance with this
Agreement.
ARTICLE 3
Capital of the Partnership
3.1 Capital Contributions to the Partnership. (a) The Capital
Contribution and Profit Percentage of each Partner and the Total Capital
Contribution and the aggregate of all Profit Percentages immediately prior to
the Initial Closing Date and the aggregate of all Profit Percentages shall be
set forth on Schedule II. Schedule II shall be amended by the General Partner
from time to time, without further Consent of the Limited Partners, in
accordance with this Agreement as necessary to reflect any changes in the
Capital Contributions of the Partners and their Profit Percentages as set forth
below. The General Partner shall cause a copy of each amended Schedule II to be
dated and sent to each Partner. The amount of the Capital Contribution in
respect of any Partner and the Total Capital Contribution set forth on Schedule
II shall be adjusted as follows:
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(i) the amount of the Capital Contribution of any Partner shall be
increased by the amount of money and the Net Agreed Value of any property
(other than money) contributed to the Partnership by such Partner, as
determined in accordance with the terms hereof, and the Total Capital
Contribution shall be increased by a like amount;
(ii) in the event of a redemption by the Partnership of a Partner's
Interest, the Capital Contribution of such Partner shall be reduced by an
amount equal to the amount of such Partner's Capital Contribution
immediately prior to such redemption multiplied by the amount (expressed
as a decimal) that the Profit Percentage represented by the Interest so
redeemed bears to the Profit Percentage represented by all of such
Partner's Interests immediately prior to such redemption, and the Total
Capital Contribution shall be reduced by a like amount;
(iii) in the event of a Transfer of an Interest, the Capital
Contribution of the Transferor shall be reduced by an amount equal to the
amount of such Partner's Capital Contribution immediately prior to such
Transfer multiplied by the amount (expressed as a decimal) that the Profit
Percentage represented by the Interest so Transferred bears to the Profit
Percentage represented by all of such Partner's Interests immediately
prior to such Transfer, and the Transferee's Capital Contribution shall be
increased by (or established in, in the case of a new Partner) a like
amount.
Contemporaneously with any change to the amounts of any Capital
Contribution pursuant to the foregoing, the General Partner shall make
appropriate changes to the Profit Percentages set forth on Schedule II, in
accordance with this Agreement.
(b) The General Partner shall in its sole and absolute discretion be
permitted to (i) make additional Capital Contributions, (ii) request, but not
require, a Limited Partner to make additional Capital Contributions in
accordance with this Agreement, (iii) cause the Partnership to issue additional
Limited Partner Interests, which in no event shall be senior to the Limited
Partner Interests of ITT Partner, (iv) redeem any Capital Contributions or make
distributions in accordance with this Agreement (except as may be provided for
in the Transfer Agreement, there shall be no redemptions of Capital
Contributions unless each Partner is redeemed on a pro rata basis), and (v)
admit any
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Person as a Limited Partner in accordance with this Agreement. In the case of an
admission of a person as a new Limited Partner other than pursuant to a
Transfer, such person shall not be admitted as a Partner until it has executed a
written instrument satisfactory to the General Partner agreeing to become a
party hereto and to be bound by the provisions hereof.
(c) Other than pursuant to Section 3.3, a Partner shall not be (i)
permitted to make a Capital Contribution, without the Consent of the General
Partner, or (ii) required to make a Capital Contribution.
(d) Interest shall not accrue on any Capital Contribution or on
amounts in any Capital Account. A Partner may not withdraw or require repayment
of any Capital Contribution, except as herein expressly provided. A Partner
shall not have the right to demand or receive property other than money upon any
distribution in respect of its Interest or Capital Contributions and shall not
have priority over any other Partner either as to the return of Capital
Contributions or as to Profits, Losses or distributions, except as herein
expressly provided.
3.2 Loans by Partners. (a) A Partner shall not be required to lend
any money to the Partnership.
(b) If the Partnership's funds are insufficient to meet its costs,
expenses, obligations, liabilities or charges, or to make any expenditure
authorized by this Agreement, upon written request made by the General Partner
to all of the Partners (a "Loan Notice"), specifying the aggregate amount of the
requested Partner Loan and the terms and conditions of the requested Partner
Loan, including the date on which the Partner Loan must be made, any Limited
Partner or General Partner may (but shall not be required to) advance such funds
to the Partnership. ITT Partner shall have the right and option by written
notice delivered to the General Partner within 10 business days of the delivery
of the Loan Notice to commit to advance the entire principal amount of any
requested Partner Loan on the terms and conditions specified by the General
Partner. If ITT Partner does not exercise its right to advance requested Partner
Loan, each Partner agreeing to make a Partner Loan shall have the right, but not
the obligation, to participate in the total Partner Loan according to the ratio
that its Profit Percentage bears to the Profit Percentage of all Partners
participating in the Partner Loan. All amounts advanced to the Partnership as
Partner Loans shall be evidenced by a note or other instrument. No loans to the
Partnership (including guarantees of loans to the
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Partnership) may be made by any Partner or any Affiliate of a Partner except
pursuant to this Section 3.2.
(c) In the event that any Partner or any of its Affiliates shall
guarantee any obligation of the Partnership and shall be required to make
payment pursuant to such guaranty, such payment shall constitute a Partner Loan
pursuant to Section 3.2(b) from the date of such payment. Such Partner Loan
shall be payable on demand, on such terms and conditions specified by the
General Partner in a Loan Notice and subject to the provisions of Section 3.2(b)
permitting (i) ITT Partner to advance all of such Partner Loan and (ii) each
Partner to participate in the total Partner Loan according to the ratio that its
Profit Percentage bears to the Profit Percentage of all Partners participating
in the Partner Loan.
(d) The proceeds of a Partner Loan shall not be added to, or
otherwise affect, the Capital Account or Capital Contribution of any Partner.
(e) Unless a Partner Consents, each Partner Loan shall be without
recourse to such Partner and Affiliates of such Partner.
3.3 Contribution of SportsChannel New York; Contribution of
Aircraft.
(a) Notwithstanding anything in this Agreement to the contrary, on
or after the Initial Closing Date, Rainbow Partner or any of its Affiliates
shall have the right to cause to be contributed to the Partnership as a Capital
Contribution all of the interests in, or all of the assets and liabilities of,
SportsChannel New York in accordance with the terms of the SportsChannel
Contribution Agreement. The amount of such Capital Contribution shall be as
provided in the SportsChannel Contribution Agreement. If the provisions of
Section 2(b) of the SportsChannel Contribution Agreement apply, the Fair Market
Value of SportsChannel New York shall be $170,000,000.
(b) Notwithstanding anything in this Agreement to the contrary,
following the Initial Closing Date, ITT Partner or any of its Affiliates shall
have the right to cause to be contributed to the Partnership as a Capital
Contribution all of the ownership rights in the Aircraft in accordance with the
terms of the Aircraft Contribution Agreement. The amount of such Capital
Contribution shall be $0 until the expiration unexercised of the Third-Year Call
Right (as defined in the Transfer Agreement) and $38 million thereafter.
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(c) At the time of a contribution under Section 3.3(a) or Section
3.3(b), Schedule II hereto shall be appropriately adjusted.
ARTICLE 4
Management of the Partnership
4.1 Management. (a) Subject to the requirements of the Act and this
Agreement, the General Partner shall have exclusive management and control of
the business of the Partnership and all decisions regarding the affairs of the
Partnership shall be made by the General Partner. Except as otherwise provided
herein, the General Partner shall have all the rights and powers of a general
partner as provided in the Act or otherwise by law and any action taken by the
General Partner on behalf of the Partnership shall constitute the act of the
Partnership.
(b) In furtherance of the purposes of the Partnership as set forth
in this Agreement, the General Partner shall have the right, power and authority
to do on behalf of the Partnership all things which, in its judgment, are
necessary, proper or desirable to carry out its duties and responsibilities
hereunder. Without limiting the foregoing, the General Partner shall be
permitted to cause the Partnership to be a party to any merger or consolidation
without the approval or Consent of the Limited Partners. The General Partner
shall not perform any act that would reasonably be expected to subject any
Limited Partner to liability as a general partner in respect of the Partnership
in any jurisdiction. With respect to the exercise of its powers as General
Partner, the General Partner shall act in good faith and shall treat the Limited
Partners in a manner that is at all times fair to them, taking into account
their rights and obligations under this Agreement.
(c) With respect to all of its obligations, powers and
responsibilities under this Agreement, the General Partner is authorized to
execute and deliver, for and on behalf of the Partnership, such notes and other
evidences of indebtedness, contracts, agreements, assignments, deeds, leases,
loan agreements, mortgages, security instruments, certificates and other
instruments, agreements or documents as it deems proper, all on such terms and
conditions as it deems proper, subject only to the limitations contained herein.
4.2 Transactions with Related Persons; Fiduciary Duties; Partnership
Opportunities. (a) With respect to
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Partnership affairs, the General Partner shall always act as a fiduciary for the
benefit of the Partnership and in accordance with applicable law. Without
limiting the generality of the foregoing, an agreement or transaction between
the Partnership and any Partner or Related Person shall not be void or voidable
solely for this reason.
(b) Neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or the partnership relationship created hereby in or to
any other ventures or activities engaged in by any Partner or Affiliate of any
Partner or to the income or proceeds derived therefrom, and the pursuit of such
ventures or activities by any Partner or its Affiliate shall not be deemed
wrongful or improper. No Partner or Affiliate of a Partner shall be obligated to
present any particular business opportunity to the Partnership, even if related
or potentially related to the Partnership's business and even if such
opportunity is of a character which, if presented to the Partnership, could be
availed of by the Partnership, and each of them shall have the right to take or
exploit for its own account and benefit (individually or otherwise) or to
recommend to others any such particular business opportunity.
4.3 Right of Public to Rely on Authority of the General Partner. No
Person dealing with the Partnership shall be required to determine the authority
of the General Partner to undertake any act or execute any contract on behalf of
the Partnership. Documents to be executed on behalf of the Partnership may be
executed by the General Partner or by any individual designated by the General
Partner as an officer of the Partnership and duly authorized by the General
Partner to sign such documents on behalf of the Partnership.
4.4 Liability of the General Partner; Indemnification. (a) Neither
the General Partner nor any of its Affiliates, employees or agents (in each
case, only if and to the extent acting in connection with the business of the
Partnership or on behalf of the Partnership) shall be liable to the Partnership
or to any Partner for any loss suffered by the Partnership or any Partner which
arises out of any action taken or omitted by the General Partner or its
Affiliates, employees or agents (in each case, only if and to the extent acting
in connection with the business of the Partnership or on behalf of the
Partnership) if the General Partner or its Affiliates, employees or agents in
good faith believed that such course of conduct was in the best interests of the
Partnership (and, in the case of any affirmative action taken on behalf of the
Partnership, the
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action was within the scope of the authority granted to the General Partner by
this Agreement) and such course of conduct did not constitute gross negligence,
willful misconduct or breach of fiduciary duty of the General Partner or a
breach of this Agreement by the General Partner.
(b) The General Partner and its Affiliates, employees and agents (in
each case, only if and to the extent acting in connection with the business of
the Partnership or on behalf of the Partnership) shall be indemnified by the
Partnership against any liability, loss or expense, including, without
limitation, reasonable attorney's fees incurred in investigating or defending
any claim or any proceeding with respect to a claim, litigation costs,
settlement amounts and judgments, incurred by any of them as a result of any
action taken or omitted by the General Partner in good faith within the scope of
the authority granted under this Agreement, unless the taking or omission of
such action constituted gross negligence, willful misconduct or a breach of
fiduciary duty of the General Partner or a breach of this Agreement by the
General Partner. Any indemnity under this Section 4.4(b) shall be paid from, and
only to the extent of, the assets of the Partnership and no Partner shall have
any personal liability therefor.
4.5 Limitations on Limited Partners. No Limited Partner, in its
capacity as a Limited Partner, shall (i) be permitted to take part in the
management or control of the business or affairs of the Partnership; (ii) have
any voice in the management or operation of any Partnership assets; (iii) have
the authority or power in its capacity as a Limited Partner to act as agent for
or on behalf of the Partnership or any other Partner, to do any act which would
be binding on the Partnership or any other Partner or to incur any expenditures
on behalf of or with respect to the Partnership; or (iv) hold itself out as
having any status other than that of a Limited Partner or as having rights,
powers or privileges other than those provided by this Agreement or the Transfer
Agreement. Any Limited Partner which acts in contravention of this Agreement and
thereby causes itself to be deemed a general partner for liability purposes
shall under no circumstances be construed as receiving a grant of power or
authority to act in such capacity under any provision of this Agreement. The
exercise by any Limited Partner of any rights granted pursuant to any provision
of this Agreement or the Transfer Agreement shall not be deemed to constitute
management or control of the Partnership business or otherwise to contravene the
provisions of the preceding sentence.
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4.6 Rights of Partners. (a) In addition to those rights provided by
this Agreement, the Partners shall have those rights specifically provided to
them in Section 17-305 of the Act with respect to access to the records and
other information at reasonable times and upon reasonable terms.
(b) The current representative of the Partnership to the Board of
Governors of the National Basketball Association shall continue to serve as such
until the end of the 1998-1999 NBA season, subject to the earlier termination of
such term at the pleasure and discretion of the General Partner or such
individual.
4.7 Liability of Limited Partners. The debts, obligations and
liabilities of the Partnership, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Partnership, and
no Limited Partner shall be obligated personally for any such debt, obligation
or liability of the Partnership; provided, however, that a Limited Partner may
be liable to the Partnership to the extent of previous distributions made to it
in the event that the Partnership does not have sufficient assets to discharge
its liabilities, but only to the extent that such liability is mandated by
applicable law. The Limited Partners shall not be obligated to make additional
contributions to the Partnership in respect of any such debts, obligations or
liabilities.
ARTICLE 5
Capital Accounts, Distributions and Allocations
5.1 Establishment of Capital Accounts. (a) A separate Capital
Account shall be maintained for each Partner. The Capital Account of each
Partner shall be (i) credited with the total of such Partner's Capital
Contributions (as adjusted pursuant to Section 3.1) plus all Profit and Gain on
Disposition computed in accordance with Section 5.1(b) and allocated to the
Partner in the manner provided in Section 5.3 (but without regard to Section
5.3(c)) or 5.4, and (ii) debited with the sum of (A) all Loss and Loss on
Disposition computed in accordance with Section 5.1(b) and allocated to the
Partner in the same manner as provided in Section 5.3 (but without regard to
Section 5.3(c)) or 5.4 and (B) all cash and the Net Agreed Value of any property
distributed by the Partnership to such Partner pursuant to Sections 5.2 (except
that in the case of a redemption of a Partner's Interest that has reduced such
Partner's Capital Contribution pursuant to Section 3.1(a)(ii), such Partner's
Capital Account shall be debited
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only by the excess, if any, of the amount distributed to such Partner upon such
redemption over the amount by which such Partner's Capital Contribution was so
reduced) and 7.2. Notwithstanding anything to the contrary contained herein, the
Capital Account of a Partner shall be determined in all events in accordance
with the rules set forth in ss.l.704- 1(b)(2)(iv) of the Tax Regulations. Any
reference in this Agreement to the Capital Account of a Partner shall be deemed
to refer to such Capital Account as the same may be credited or debited from
time to time in accordance herewith.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction to be reflected in Capital Accounts (including, without
limitation, all Profit, Loss and Gain or Loss on Disposition), the
determination, recognition and classification of each such item shall be the
same as its determination, recognition and classification for Federal income tax
purposes, except that:
(i) any deductions for depreciation, depletion, amortization or
similar expense attributable to a Partnership asset that is Contributed
Property or property the value of which is restated pursuant to Section
5.1(d) shall be determined as if the Adjusted Basis of the asset on the
date it was acquired by the Partnership was equal to the Carrying Value of
the asset as of such date;
(ii) any income, gain or loss attributable to the taxable
disposition of any Partnership asset shall be determined by the
Partnership as if the Adjusted Basis of such asset as of the date of its
disposition was equal to the amount of the Carrying Value of such asset as
of such date;
(iii) if the General Partner determines to make any distribution to
Partners (including a liquidating distribution pursuant to Section 7.2)
other than in money, the Capital Account of each Partner, immediately
prior to such distribution, shall be appropriately adjusted upward or
downward to reflect the portion of any Unrealized Gain or Unrealized Loss
attributable to the distributed property that would be allocated to such
Partner if the distributed property were sold for its Fair Market Value
(calculated for this purpose without regard to any outstanding
indebtedness secured by or relating to such property) on the date of the
distribution in a taxable disposition;
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(iv) all fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) an Interest in the Partnership that can
neither be deducted nor amortized under Section 709 of the Code shall be
treated as items of deduction; and
(v) the computation of all items of income, gain, loss and deduction
shall be made without regard to any election under Section 754 of the Code
which may be made by the Partnership (except to the extent required by
ss.1.704-1(b)(2)(iv)(m) of the Tax Regulations) and, as to those items
described in Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includible in gross
income or are neither currently deductible nor capitalizable for Federal
income tax purposes.
(c) A Transferee of an Interest shall succeed to the Capital Account
attributable to the transferred Interest, and there shall be no adjustment to
Capital Accounts as a result of the Transfer except as otherwise required under
ss.1.704-1 of the Tax Regulations. Nevertheless, as long as the version of Tax
Regulation ss. 1.708-1 published May 23, 1956 remains effective, (i) if the
Transfer causes a termination of the Partnership under Section 708(b)(1)(B) of
the Code, Partnership property shall be deemed to have been distributed in
liquidation of the Partnership to the Partners immediately subsequent to the
Transfer and recontributed by them in reconstitution of the Partnership; and
(ii) upon such recontribution, the Partnership property shall be treated as
Contributed Property and the Capital Accounts of the Partners in the
reconstituted Partnership shall be maintained in accordance with the principles
of this Article 5.
(d) Immediately prior to (i) a Capital Contribution as consideration
for an Interest or (ii) a distribution in excess of $1,000,000 of money or other
property by the Partnership to a Partner (including a Person withdrawing as a
Partner) as consideration for an Interest, the Carrying Value of the Partnership
Assets and the Capital Account of each Partner shall each be increased or
decreased, as the case may be, to reflect the Fair Market Value of all the
Partnership property (calculated for this purpose without regard to any
outstanding indebtedness secured by or relating to such property). Such
adjustment of the Capital Accounts shall reflect the manner in which the
unrealized income, gain, loss or deduction inherent in the Partnership property
(that has not previously been reflected in the Capital Accounts) would be
allocated among
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the Partners if there were a taxable disposition of all the Partnership property
for its Fair Market Value (calculated for this purpose without regard to any
outstanding indebtedness secured by or relating to such property) on the date of
the contribution or distribution. Thereafter, for tax purposes, the Partners'
shares of depreciation and gain or loss shall be determined in the manner
described in Tax Regulation ss. 1.704-1(b)(2)(iv)(f)(4).
5.2 Distributions.
(a) The Partnership may, from time to time, distribute cash or other
property to the Partners in amounts determined by the General Partner to the
extent such amounts are in excess of the amounts reasonably necessary for the
continued efficient operation of the business of the Partnership. Any such
distributions (other than any distribution that constitutes a redemption of any
portion of a Partner's Interest) shall be distributed among the Partners in
accordance with their respective Profit Percentages. The Partnership shall repay
principal and accrued interest on any Partner Loan prior to making any cash
distributions to the Partners.
(b) Subject to the terms of any Bank Credit Agreement (as defined in
the Transfer Agreement), the Partnership shall distribute in cash to ITT MSG any
amount that the Partnership becomes obligated to remit to ITT MSG pursuant to
Section 2.07(b) of the Transfer Agreement as a result of a transfer of assets by
the Partnership (or any of the Partnership's subsidiaries) (a "Remittance
Amount").
5.3 Allocations. (a) Subject to Section 5.4(b), Profits and Gain on
Disposition shall be allocated as follows:
(i) first, to Partners having Capital Deficits, in proportion
to and to the extent of their Capital Deficits;
(ii) in the case of any Gain on Disposition arising from a
transfer of assets by the Partnership (or any of the Partnership's
subsidiaries) in respect of which the Partnership is obligated to remit to
ITT MSG a Remittance Amount, a portion of such Gain on Disposition equal
to such Remittance Amount shall be allocated to ITT MSG (with any
remainder being allocated pursuant to clause (iii) hereof); and
(iii) then, among the Partners in accordance with their
respective Profit Percentages.
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(b) Subject to Section 5.4(b), Losses and Loss on Disposition shall
be allocated among the Partners in accordance with their respective Loss
Percentages.
(c) All items of income, gain, loss or deduction attributable to
Contributed Property (including depreciation on, and gain or loss with respect
to the disposition of, Contributed Property) shall be allocated for Federal
income tax purposes first, among the Partners in a manner that takes into
account the difference between the Fair Market Value of such property at the
time of its contribution (calculated for this purpose without regard to any
outstanding indebtedness secured by or relating to such property) and its
Adjusted Basis at that time (in accordance with Section 704(c) of the Code) and
second, any balance of such items in accordance with Section 5.3(a), 5.3(b) or
5.4, as appropriate. Each Partner that contributes Contributed Property to the
Partnership shall at the time of such contribution notify the Partnership of its
Adjusted Basis in the Contributed Property at such time.
(d) To the extent of any Recapture Income resulting from the sale or
other taxable disposition of a Partnership asset, the amount of any gain from
such disposition allocated to each of the Partners pursuant to the foregoing
provisions shall be deemed to be Recapture Income to the extent such Partner (or
a predecessor in interest) has been allocated or has claimed any deduction
directly or indirectly giving rise to the treatment of such gain as Recapture
Income.
(e) Subject to the requirements of Section 706 of the Code, all
allocations pursuant to Sections 5.3(a) and 5.3(b) shall be made by applying
each Partner's Profit or Loss Percentage on each day of the Fiscal Year to the
portion of the annual Profit or Loss of the Partnership allocated to each such
day under the daily pro rata method (excepting extraordinary asset dispositions,
the gain or loss from which will be allocated to the Partners in accordance with
their Interests on the date of the disposition).
(f) If at any time both Profit and Gain on Disposition are allocable
to the Partners, the aggregate amount of Profit and Gain on Disposition
allocated to each Partner shall, in each instance, include a pro rata portion of
each item of Profit and Gain on Disposition so allocable. If Profit, Gain on
Disposition, Loss or Loss on Disposition allocable at any time consists of more
than one kind of income, gain or loss in any instance (for example, ordinary
income or loss, long-term gain or loss, short-term gain or
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loss, or Section 1231 gain or loss), then, subject to Section 5.3(d), the
aggregate amount of Profit or Loss and Gain or Loss on Disposition allocated to
each Partner shall, in each instance, include a pro rata portion of each of the
constituent items so allocable.
5.4 Conformity with Tax Regulations. (a) Solely for purposes of
determining a Partner's Capital Account (and for purposes of determining the
amount of Capital Deficit that a Partner is obligated to restore on a
liquidation of the Partnership or such Partner's Interest under this Section
5.4), in applying the provisions of this Section 5.4 the anticipated
adjustments, allocations and distributions described in
ss.l.704-1(b)(2)(ii)(d)(4)-(6) of the Tax Regulations shall be taken into
account, and each Partner (including each General Partner) shall be deemed
obligated to restore its Capital Deficit to the extent of, and only to the
extent of, the sum of its share of Minimum Gain, as determined pursuant to
ss.l.704-2(g) of the Tax Regulations, and its share of Minimum Gain Attributable
to Partner Nonrecourse Debt, as determined pursuant to ss.l.704-2(i) of the Tax
Regulations.
(b) Notwithstanding the provisions of Section 5.3, Loss or Loss on
Disposition shall not be allocated to a Limited Partner (which is not also a
General Partner) to the extent the allocation would create or increase a Capital
Deficit of such Limited Partner that exceeds the amount such Limited Partner is
deemed to be obligated to restore on a liquidation of the Partnership pursuant
to Section 5.4(a). Any Loss which cannot be allocated to a Limited Partner
pursuant to the foregoing restriction shall be allocated to the other Partners
in the ratio of their Profit Percentages. Notwithstanding the provisions of
Section 5.3, in the event that at any time any Loss or Loss on Disposition has
been allocated to any Partner pursuant to this Section 5.4(b), all Profits and
Gain on Disposition arising thereafter shall first be specially allocated to the
Partners who received allocations of Loss and Loss on Disposition pursuant to
this Section 5.4(b) (in proportion to the maximum allocation to which each such
Partner is then entitled under this Section 5.4(b)) until the aggregate amount
of Profits and Gain on Disposition specially allocated to each such Partner
pursuant to this Section 5.4(b) equals the aggregate amount of Loss and Loss on
Disposition theretofore allocated to such Partner pursuant to this Section
5.4(b).
(c) Notwithstanding the provisions of Section 5.3, if any Limited
Partner (which is not also a General Partner) unexpectedly receives an
adjustment, allocation or distribution described in clause (4), (5) or (6) of
ss.l.704-
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1(b)(2)(ii)(d) of the Tax Regulations that creates or increases a Capital
Deficit of such Limited Partner that exceeds the amount such Limited Partner is
deemed to be obligated to restore on a liquidation of the Partnership or such
Partner's interest in the Partnership pursuant to Section 5.4(a), income and
gain (consisting of a pro rata portion of each item of Partnership income,
including gross income, and gain for such year) shall thereafter first be
allocated to such Partner in such amount and manner as will eliminate such
excess as quickly as possible.
(d) In accordance with and pursuant to ss.l.704- 2(f) and (i)(4) of
the Tax Regulations, if there is a net decrease in the Partnership's Minimum
Gain or its Minimum Gain Attributable to Partner Nonrecourse Debt or both during
any Fiscal Year, then before any other allocation is made of Partnership items
for such Fiscal Year, there shall be allocated to each Partner (including each
General Partner) items of income and gain for such year (and, if necessary,
subsequent years) in amount equal to such Partner's share of the net decrease in
Minimum Gain or Minimum Gain Attributable to Partner Nonrecourse Debt or both,
as determined pursuant to ss.1.704-2(g) and (i)(4) of the Tax Regulations. To
the extent that the Partnership has insufficient income and gain in any Fiscal
Year to make all of the allocations required under this Section 5.4(d), the
insufficiency shall be attributed first to the decrease in Minimum Gain
Attributable to Partner Nonrecourse Debt and second to the decrease in Minimum
Gain.
(e) The chargeback provisions, the qualified income offset and the
limitation on loss allocations provided herein are intended to satisfy the
"allocation of nonrecourse deductions" rules provided in ss.l.704-2 of the Tax
Regulations and the requirements of ss.l.704- 1(b)(2)(ii)(d) of the Tax
Regulations relating to the alternate test for economic effect and "qualified
income offset". The allocations under this Article 5 are further intended to
effect allocations for Federal income tax purposes in a manner consistent with
Sections 704(b) and 704(c) of the Code and to comply with any limitations or
restrictions therein. If for any reason the allocations contained in this
Agreement conflict with the allocation rules of the Tax Regulations under
Section 704 of the Code, such Tax Regulations shall control, except that if the
application of the Tax Regulations would cause distributions on liquidation of
the Partnership to differ from those that would otherwise have been made
pursuant to Section 5.2, the Partnership shall make special allocations of gross
income, as promptly as possible, to cause liquidating distributions, when made,
to correspond to the requirements of Section 5.2.
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(f) Nonrecourse Deductions shall be allocated to the Partners in
accordance with their respective Loss Percentages.
(g) Partner Nonrecourse Deductions for any taxable period shall be
allocated to the Partner or Partners bearing the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable, in accordance with the provisions of ss.1.704-2(i)
of the Tax Regulations.
(h) The allocations set forth in Sections 5.4(d), (f) and (g) (the
"Regulatory Allocations") are intended to comply with certain requirements of
ss.l.704-2 of the Tax Regulations. Notwithstanding the provisions of Section 5.3
and the other provisions of Section 5.4, the Regulatory Allocations shall be
taken into account in allocating other items of income (including gross income),
gain, loss and deduction among the Partners so that, to the extent possible, the
net result of such allocations of other items and the Regulatory Allocations to
each Partner shall be equal to the net amount that would have been allocated to
each such Partner if the Regulatory Allocations had not occurred.
5.5 Negative Capital Accounts. Notwithstanding anything to the
contrary in Sections 3.1(c) and 7.4, upon liquidation of the Partnership the
General Partner shall be obligated to pay to the Partnership (within the time
prescribed under ss.l.704-1(b)(2)(ii)(b)(3) of the Tax Regulations) any Capital
Deficit in its Capital Account (as determined after the allocation of items
provided for in this Article 5). A Limited Partner which is not also a General
Partner shall not be required to pay to the Partnership or to any other Partner
any Capital Deficit in its Capital Account at any time for any reason
whatsoever.
ARTICLE 6
Transfer of Interests; Additional Partners.
6.1 Transfer of a Limited Partner's Interest; Substitution. (a)
Except as provided herein, no Limited Partner may Transfer all or any part of
its Interest, except with the General Partner's prior Consent. Notwithstanding
the foregoing and subject to Sections 6.1(b) and 6.5, (i) at any time, Rainbow
Partner or any Affiliate of Rainbow Partner may Transfer all or any part of its
Interest without the General Partner's Consent and (ii) after the earliest of
(A) the third anniversary of the Initial Closing Date, (B)
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the date of any Put Obligation Breach (provided, that ITT Partner's right to
Transfer all or any part its Interest pursuant to this clause (B) shall
terminate upon the cure of such Put Obligation Breach), (C) the occurrence of
any Acceleration Event (provided, that ITT Partner's right to Transfer all or
any part its Interest pursuant to this clause (C) shall terminate upon the
waiver or cure of such Acceleration Event), or (D) the date of any Put
Obligation Failure (provided, that ITT Partner's right to Transfer all or any
part its Interest pursuant to this clause (D) shall terminate upon the cure of
such Put Obligation Failure), all or any part of ITT Partner's Interest may be
transferred without the General Partner's Consent. Notwithstanding anything to
the contrary contained in this Agreement and subject to Section 6.1(b), (I) all
or any part of ITT Partner's Interest may be transferred at any time to ITT or
any Permitted ITT Transferee without the Consent of the General Partner and
without compliance with Section 6.5; provided that if such Transfer is a direct
transfer of an Interest that such Transferee agrees in writing to be bound by
all of the provisions of this Agreement and the Transfer Agreement and upon such
Transfer, the Transferee will be deemed to be ITT Partner for all purposes of
this Agreement, (II) no Consent of the General Partner shall be required for any
Transfer of a Limited Partner Interest by ITT Partner pursuant to Sections 2.03,
2.04, 2.08, 2.09 or 2.10 of the Transfer Agreement, and (III) ITT Partner may
Transfer all or any part of its Interest without the Consent of the General
Partner and without compliance with Section 6.5 from and after any time that (x)
Cablevision shall cease to Control Rainbow and (y) a person that is not an
Affiliate of Cablevision does Control Rainbow, other than any changes in Control
that occur after a public offering of the equity securities of Rainbow or a
spin-off (or similar transaction or series of related transactions) by
Cablevision of equity securities of Rainbow.
(b) Notwithstanding anything herein to the contrary, a direct
transfer of a Limited Partner Interest shall not be made, recognized, Consented
to, or otherwise deemed effective in any respect unless in the opinion of
nationally recognized counsel chosen by the General Partner and reasonably
acceptable to the Transferee such transfer (i) may be effected without
registration under the Securities Act of 1933, as amended, and (ii) would not
result in the violation of any applicable state securities laws.
(c) Unless a transferee of a directly transferred Interest is
substituted as a Limited Partner in accordance with this Section 6.1(c), the
transferee shall not be
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entitled to any of the rights of a Limited Partner hereunder with respect to the
Interest transferred, other than the right to receive the allocations of
Profits, Losses, cash distributions and returns of capital to which its
transferor would otherwise be entitled with respect to such Interest. The
transferee of all or part of the Interest of a Limited Partner shall be
substituted as a Limited Partner with respect to the Interest transferred and
shall be entitled to all the rights of a Limited Partner with respect to such
Interest, only if and when:
(i) the transferor gives the transferee such right;
(ii) if Consent of the General Partner with respect to such transfer
is required, the General Partner Consents to the substitution;
(iii) the transferee pays to the Partnership all reasonable
out-of-pocket costs and expenses incurred by the Partnership in connection
with such substitution, including any costs incurred in amending the
Amended and Restated Certificate of Limited Partnership or any other
document filed with respect to the Partnership in any jurisdiction; and
(iv) the transferee executes and delivers such instruments, in form
and substance reasonably satisfactory to the General Partner, as the
General Partner reasonably deems necessary or desirable to effect such
substitution and to confirm the agreement of the Transferee to be bound by
all of the terms and provisions of this Agreement as a Partner and, to the
extent required therein, any other agreements between its Transferor and
any of its Affiliates on the one hand and Rainbow Partner or the
Partnership or any of their respective Affiliates on the other hand.
(d) The Partnership and the General Partner shall be entitled to
treat the record owner of any Interest as the absolute owner thereof in all
respects, and shall incur no liability for distributions of cash or other
property in good faith to such owner until such time as a direct transfer of
such Interest is completed in accordance with the provisions of this Agreement
and a written assignment of such Interest has been received by the General
Partner and recorded on the books of the Partnership (which recordation shall be
accomplished promptly by the General Partner upon its receipt of such written
assignment). In no
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event shall any Interest be Transferred to a Person which is the subject of
Bankruptcy, and any attempt to effect a Transfer to such a Person shall be void
and of no effect and shall not bind the Partnership or the General Partner.
(e) No Transfer of an Interest by a Limited Partner which requires
the Consent of the General Partner pursuant to this Section 6.1 shall be
effective without the prior written Consent of the General Partner and any such
purported Transfer shall be void and of no legal force or effect. Upon any
direct transfer pursuant to which the transferee has satisfied the conditions to
becoming a substituted Partner hereunder, such transferee shall be deemed
admitted to the Partnership and immediately and thereafter the transferor shall
be deemed withdrawn with respect to the Interest so transferred.
6.2 Bankruptcy or Dissolution of a Limited Partner. (a) The
Bankruptcy, dissolution or legal incapacity of a Limited Partner shall not
dissolve or terminate the Partnership.
(b) Upon the Bankruptcy, dissolution or other cessation of existence
of a Person that is a Limited Partner, an authorized representative of such
Person shall have all the rights of a Partner for the purpose of effecting the
orderly winding up and disposition of the business of such Person and such power
as such Person possessed hereunder to designate a successor as a Transferee of
its Interest and to join with such Transferee in making application to
substitute such Transferee as a Partner in accordance with the terms of this
Agreement.
6.3 Transfer of the General Partner's Interest. (a) Subject to
paragraph (c) of this Section 6.3, the General Partner shall have the absolute
right to Transfer all or any part of its Interest at any time in its sole and
absolute discretion.
(b) Upon 30 days prior notice to the other Partners, the General
Partner may voluntarily withdraw from the Partnership or Transfer its Interest,
but only if:
(i) there is or will be at least one remaining or successor General
Partner upon such withdrawal or Transfer;
(ii) any successor has satisfied the conditions set forth in
paragraph (c) of this Section 6.3;
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(iii) in the opinion of counsel acceptable to the General Partner,
such withdrawal or Transfer will not result in the treatment of the
Partnership as an association taxable as a corporation under the Code; and
(iv) such withdrawal or Transfer will not result in a violation of
or default under any Financing Document or other material agreement to
which the Partnership or the General Partner is a party.
(c) In the case of a direct transfer of the Interest of a General
Partner, the transferee may be admitted as a successor General Partner only if:
(i) such Person has accepted and agreed to be bound by all the terms
and provisions of this Agreement by executing a counterpart hereof and
such other documents and instruments as may be required or appropriate to
effect its admission as a General Partner;
(ii) a certificate evidencing the admission of such Person as a
General Partner has been filed or recorded in all places required by law;
(iii) if such Person is a corporation, it has provided to the
Partnership a certified copy of a resolution of its Board of Directors
authorizing it to become a General Partner and to execute and deliver this
Agreement and the documents and instruments referred to in clause (i)
above; and
(iv) it has delivered to the Partnership an opinion of counsel
satisfactory to all of the Limited Partners (in the reasonable exercise of
their judgment) to the effect set forth in clause (iii) of Section 6.1(c)
and further to the effect that it possesses all requisite corporate and
other power and authority to be a General Partner.
Upon any direct transfer pursuant to which the transferee has
satisfied the conditions to becoming a substituted Partner hereunder, such
transferee shall be deemed admitted to the Partnership immediately and
thereafter the Transferor shall be deemed withdrawn with respect to the Interest
so transferred.
6.4 Deemed Withdrawal of the General Partner. (a) Upon the
Bankruptcy of the General Partner or the occurrence with respect to the General
Partner of any event
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which under the Act causes the dissolution of a limited partnership, the General
Partner shall be deemed to have offered its resignation as a General Partner
and, unless a majority in interest of the remaining Partners shall otherwise
Consent within 30 days of such Bankruptcy or other occurrence, the General
Partner shall be deemed to have withdrawn as a General Partner.
(b) Upon the deemed withdrawal of a Person as a General Partner
pursuant to Section 6.4(a), the Interest of such Person as a General Partner
shall be forthwith converted into that of a Limited Partner, except that such
Person shall share in Profits and Losses in the same proportions as if such
Person had not withdrawn as a General Partner.
6.5 Right of First Refusal. (a) In addition to the restrictions on
Transfer pursuant to Section 6.1(a), after the earliest of (A) the third
anniversary of the Initial Closing Date, (B) the date of any Put Obligation
Breach, (C) the occurrence of any Acceleration Event or (D) the date of any Put
Obligation Failure, ITT Partner shall not have the right to Transfer all or any
part of its Interest to any Person that is not an ITT Permitted Transferee
without first offering to the Partnership a right of first refusal to purchase
all but not less than all of the Interest that is proposed to be so Transferred
or, in the case of a direct Transfer of any equity interest in ITT Partner or a
Parent of ITT Partner (a "Parent Transfer"), all of the equity interest proposed
to be Transferred (the "Offered Interest"), all on the terms hereinafter set
forth. This Section 6.5 shall not apply to any Transfer that is a hypothecation,
pledge or encumbrance whereby operating control of the asset Transferred remains
with the Transferee and which is primarily designed as a financing mechanism for
the benefit of the Transferee or its Affiliates, but this provision shall apply
to any attempt by the Transferee to realize upon such hypothecation, pledge or
encumbrance.
(b) The Offered Interest must be offered by means of a written
notice (an "Offer Notice") delivered to the Partnership in which ITT Partner
shall specify a price and related terms no less favorable to the Partnership
than those which ITT Partner or such Parent or the entity selling an interest in
a Parent, is willing to accept from a bona fide third party purchaser pursuant
to an offer from such third party purchaser (a "Bona Fide Offer"). The Offer
Notice shall include therein a statement setting forth the identity of, and the
price and terms offered by, such third party for the purchase of the Offered
Interest. In any case where a Bona Fide Offer has been made in respect of an
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Offered Interest in conjunction with other property, the price in respect of the
Offered Interest shall be the Allocated Interest Offer Price. In the case of an
Allocated Interest Offer Price, Rainbow Partner will furnish the selection of
three investment banking firms to act as Appraiser to ITT Partner within five
business days following receipt of the Offer Notice. The Appraiser shall be
instructed to determine the Allocated Interest Offer Price within 10 days of its
appointment.
(c) The Offered Interest must first be offered (in whole and not in
part) to the Partnership, (i) after the date of any Put Obligation Breach, Put
Obligation Failure or Acceleration Event (in each case, that has not been
cured), for a period of five business days, and (ii) in all other events, for a
period of 45 days. Within five days or 45 days, as applicable, after receipt of
the Offer Notice, the Partnership shall accept or reject such offer for the
Offered Interest by delivering a notice in writing to ITT Partner. If pursuant
to this Section 6.5, the Partnership has agreed to purchase the Offered
Interest, then such Offered Interest shall be purchased by the Partnership in
accordance with the terms offered by ITT Partner in the Offer Notice within 10
days (in the case of events in clause (i) of the first sentence of this Section
6.5) or 90 days (in the case of events in clause (ii) of the first sentence of
this Section 6.5), as applicable, of the Offer Notice or, if all required
third-party consents and approvals have not been obtained by such date, such
later date when all such required consents and approvals have been obtained
(such date, the "Offered Interest Closing Date"). If the Offered Interest has
not been accepted by the Partnership or if the Offered Interest has been
accepted by the Partnership but the Partnership shall not have purchased such
Offered Interest on or prior to the Offered Interest Closing Date or, in any
event, within 180 days of the Offer Notice, then ITT Partner may, within 180
days thereafter, Transfer the Offered Interest to such third party at a price
not less than the price at which, and on terms no more favorable to the third
party than those contained in the Bona Fide Offer (or, in the case of a Parent
Transfer, may complete such Parent Transfer within such period). If the Offered
Interest is not so disposed of within such 180-day period, then ITT Partner
shall, before disposing of all or any portion of its Interest (or permitting the
completion of a subsequent Parent Transfer), again be obligated to provide the
right of first refusal contained in this Section 6.5 to the Partnership. The
Partnership, Rainbow Partner and ITT Partner shall use all reasonable efforts to
obtain all required consents and approvals to permit the purchase of the Offered
Interest.
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(d) If the Partnership is unable to purchase any Offered Interest
because of the provisions of any Financing Document or other agreement to which
it is a party, the Partnership may assign its right to acquire the Offered
Interest to either General Partner or Rainbow Partner.
ARTICLE 7
Dissolution and Liquidation
7.1 Events of Dissolution. (a) The Partnership shall be dissolved
upon the earliest to occur of any of the following:
(i) a date designated by a General Partner by written notice given
to the other Partners at least 30 days prior to such date, informing them
of the General Partner's election to dissolve the Partnership as of such
date;
(ii) the sale or other disposition of all of the Partnership's
capital assets, other than money and money equivalents, except that if
non-monetary consideration is received upon such disposition the
Partnership shall not be dissolved until such consideration is converted
into money or money equivalents;
(iii) the Bankruptcy or withdrawal of a General Partner, unless
within 90 days thereafter each of the remaining Partners Consents to
continue the Partnership and, if there is no remaining General Partner,
all of the Limited Partners appoint a substitute or successor General
Partner; or
(iv) the expiration of the term of the Partnership set forth in
Section 2.10.
(b) Dissolution of the Partnership shall be effective on the day on
which the event giving rise to the dissolution occurs (or in the case of clause
(iii) above, 90 days after the Bankruptcy or withdrawal of a General Partner,
unless the Partnership is continued as specified in such clause (iii)), but the
Partnership shall not terminate until the assets of the Partnership have been
distributed and the Partnership's Amended and Restated Certificate of Limited
Partnership has been cancelled as provided herein. Notwithstanding a dissolution
of the Partnership, until the termination of the Partnership, the business of
the Partnership and the affairs of the Partners, as such, shall continue to be
governed by this Agreement. Upon a
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dissolution, the General Partner (or a liquidating trustee if there shall not be
a surviving General Partner) shall proceed to liquidate the assets of the
Partnership, apply and promptly distribute the proceeds thereof as contemplated
hereby and cause the cancellation of the Partnership's Amended and Restated
Certificate of Limited Partnership.
7.2 Priority on Liquidation. Upon dissolution of the Partnership,
the General Partner shall, to the extent feasible, proceed to wind up the
affairs and liquidate the assets of the Partnership, allowing a reasonable time
for the process of winding up and liquidation so as to minimize the losses that
would normally be incidental to such a process. The proceeds of such liquidation
shall be applied first, to the payment of the matured debts and liabilities of
the Partnership (other than amounts owing in respect of Partner Loans) and the
costs and expenses of dissolution and liquidation of the Partnership; second, to
the payment of amounts owing in respect of Partner Loans; third, to the setting
up of any reserves which the General Partner may deem reasonably necessary for
contingent, unmatured or unforeseen liabilities of the Partnership; and fourth,
to pay distributions to the Partners in proportion and to the extent of any
positive balances in their Capital Accounts (after crediting or charging each
Partner's Capital Account for the Partner's share of all Profit or Loss and Gain
or Loss on Disposition accrued through the date of such payment).
7.3 Statements on Liquidation. The General Partner shall furnish
each of the Partners with a statement setting forth (i) the assets and
liabilities of the Partnership as of the date of the dissolution and as of the
date of complete liquidation, specifying the amount of Partner Loans, (ii) the
share of each Partner thereof, (iii) the amounts in the Capital Accounts of each
Partner (determined after reflecting all allocations for such year pursuant to
Sections 5.3 and 5.4 and the revaluation of the Partnership's assets pursuant to
Section 5.1(d)), and (iv) a report in reasonable detail of the manner of
disposition of the assets. The General Partner shall furnish such statement to
each Limited Partner ten business days' prior to the first liquidation
distribution (the "Initial Liquidation Payment Date").
7.4 Return of Capital; Partition. No Partner shall have any right to
receive its Capital Contribution or any profit of the Partnership, or to seek or
obtain partition of assets of the Partnership, other than as provided in this
Agreement. The General Partner shall not be personally liable for the return of
the Capital
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Contributions of the Limited Partners or any portion thereof, and any such
return shall be made solely from Partnership assets.
ARTICLE 8
Records and Accounting
8.1 Books and Records. The General Partner or a representative
appointed by the General Partner shall maintain at the principal place of
business of the Partnership full, correct and complete copies of this Agreement,
the Transfer Agreement and the Partnership's Amended and Restated Certificate of
Limited Partnership and all amendments and supplements hereto and thereto, full,
true and correct copies of each material agreement of the Partnership, and
copies of all amendments thereof, any business or operating plan or budget of
the Partnership, and complete and accurate books of the Partnership showing all
receipts and expenditures, assets and liabilities, profits and losses, and all
other books, records and information required by the Act as necessary for
recording the Partnership's business and affairs, together with a current list
of the full name and last known business address of each Partner, executed
copies of all powers of attorney pursuant to which the Partnership's Amended and
Restated Certificate of Limited Partnership or any certificate of amendment
thereto has been executed, and copies of the Partnership's Federal, state and
local income tax returns and reports, if any. The Partnership's general ledger
shall be maintained on an accrual basis in accordance with generally accepted
accounting principles, and books and records shall be maintained at such office
until six years after the termination of the Partnership. Each Partner and its
duly authorized representative(s) shall have the right, at such Partner's
expense, at all reasonable times during normal business hours and upon at least
one day's prior notice but without unreasonable interference with the conduct of
the Partnership's business, to inspect and make copies of and take extracts from
all of the Partnership's documents, books and records.
8.2 Required Reports to Partners. The General Partner shall prepare
and furnish or cause to be prepared and furnished to each of the Partners the
following reports and information:
(a) Within 45 days after the end of each of the first three fiscal
quarters of each Fiscal Year, an unaudited balance sheet as of the end of such
quarter, and
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unaudited statements of profit and loss, changes in Partners' capital and
changes in cash flow of the Partnership for the quarter then ended and in the
case of the second and third such quarters, for the Fiscal Year to date, all
prepared in accordance with generally accepted accounting principles;
(b) Within 90 days after the end of each Fiscal Year, audited
financial statements of the Partnership for such Fiscal Year prepared in
accordance with generally accepted accounting principles and accompanied by the
Accountants' report on their examination of such financial statements;
(c) As soon as reasonably practicable after the end of each Fiscal
Year consistent with past practices, Form K-1 or any similar form required by
the Code or the Internal Revenue Service or any state or local taxing authority
for the preparation of the Partners' Federal income tax returns and their state
and local income tax returns for each jurisdiction in which the Partnership
conducts business; and
(d) Upon the request of any Partner, such other information relating
to the Partnership as such Partner may from time to time reasonably request.
8.3 Annual Tax Returns. (a) The General Partner is designated the
"Tax Matters Partner" for Federal income tax purposes pursuant to Section 6231
of the Code with respect to all taxable years of the Partnership and is
authorized to do whatever is necessary to qualify as such. The Tax Matters
Partner shall cause to be prepared by Accountants, and shall timely file or
cause to be filed, all tax returns of the Partnership required by any
Governmental Authority.
(b) The Tax Matters Partner shall do all acts, make all elections,
and take whatever reasonable steps are required to maximize, in the aggregate,
the Federal, state and local income tax advantages available to the Partnership
and shall defend all tax audits and litigation with respect thereto. The Tax
Matters Partner may make the election permitted by Section 754 of the Code if it
deems such election appropriate and in the best interests of the Partnership.
The Tax Matters Partner shall maintain the books, records and tax returns of the
Partnership in a manner consistent with the acts, elections and steps taken by
the Partnership.
8.4 Actions in Event of Audit. If an audit of any of the
Partnership's tax returns shall occur, the Tax
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Matters Partner shall, at the expense of the Partnership, notify the Partners
thereof, participate in the audit and contest, settle or otherwise compromise
assertions of the auditing agent which may be adverse to the Partnership. ITT
Partner shall retain its rights under Sections 6224 and 6226 through 6228 of the
Code to participate in all administrative and judicial proceedings related to
the determination of Partnership items, and ITT Partner shall also retain its
rights to join or refuse to join in any settlement agreements with the Internal
Revenue Service regarding Partnership items.
8.5 Costs. The Partnership shall indemnify and reimburse the Tax
Matters Partner for all third-party costs and expenses, including legal and
accounting fees, claims, liabilities, losses and damages borne by the Tax
Matters Partner, which were incurred in connection with any of its duties under
Sections 8.3 and 8.4, except to the extent caused by the gross negligence or
willful misconduct of the Tax Matters Partner. The payment of expenses to which
this indemnification applies shall be deemed an expense of the Partnership.
Neither the Tax Matters Partner nor any other Person shall have any obligation
to provide funds for any of the actions required by Sections 8.3 and 8.4. The
taking of any action and the incurring of any expense by the Tax Matters Partner
in connection with any such proceeding, except to the extent required by law,
shall be subject to the reasonable discretion of the Tax Matters Partner.
ARTICLE 9
Miscellaneous
9.1 Notices. Any and all notices, requests, demands, consents and
other communications required or permitted under this Agreement shall be
effective only if in writing, signed by or on behalf of the party by which
given, and shall be considered to have been duly given when (i) delivered by
hand, (ii) sent by telecopier (with receipt confirmed), provided that a copy is
mailed (on the same date) by certified or registered mail, return receipt
requested, postage prepaid, or (iii) received by the addressee, if sent by
Express Mail, Federal Express or other reputable express delivery service
(receipt requested), or by first class certified or registered mail, return
receipt requested, postage prepaid, in each case to the party for which intended
at its address set forth in Schedule I (or to such other addresses and
telecopier numbers as a party may from time to time designate as to itself by
notice given to the other parties in accordance with this Section 9.1);
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provided, however, that copies of all notices to ITT Partner shall also be sent
in the same manner to Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York 10019, Telecopier (212) 474-3700, in each case to the
attention of George W. Bilicic, Jr., and copies of all notices to the General
Partner or Rainbow Partner shall also be sent in the same manner to Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004, Telecopier (212) 558-3588,
in each case to the attention of John P. Mead. A notice of change of address
shall not be deemed given until received by the addressee.
9.2 Power of Attorney. (a) Each Limited Partner, including any
additional or substituted Limited Partner, by the execution of this Agreement or
any counterpart hereof, hereby irrevocably constitutes and appoints the General
Partner and its President and Vice Presidents, and each of them acting alone, in
each case with full power of substitution, its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead, to
make, execute, sign, acknowledge, swear to, deliver, file and record at the
appropriate public offices such documents and instruments and only such
documents and instruments as may be necessary or appropriate to (i) amend this
Agreement and the Partnership's Amended and Restated Certificate of Limited
Partnership as are necessary to admit to the Partnership a substituted Limited
Partner pursuant to Section 6.1, (ii) cancel the Partnership's Amended and
Restated Certificate of Limited Partnership pursuant to Section 7.1, (iii)
permit the Partnership to become or to continue as a limited partnership or
partnership wherein the Limited Partners have limited liability in the
jurisdictions where the Partnership may be doing business in accordance with
this Agreement, and (iv) file all fictitious or assumed name certificates
required or permitted to be filed on behalf of the Partnership. Such
authorization shall extend, without limitation, to any restatement of this
Agreement as so amended.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and coupled with an interest, and it shall survive the Bankruptcy or
legal disability of any of the Partners to the fullest extent permitted by law
and the Transfer or assignment of all or any part of the Interest of such
Partner and extend to its successors and assigns; provided, however, that if any
Limited Partner Transfers all or any part of its Interest, the foregoing power
of attorney of the Transferor shall survive such Transfer as to the Interest or
portion so Transferred only until such time as the Transferee shall have been
admitted to the Partnership as a substitute Partner and all required
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documents and instruments shall have been duly executed, filed and recorded to
effect such substitution.
9.3 Amendment. This Agreement may be changed or amended by the
General Partner without the Consent of the Limited Partners, provided, that a
change or amendment that adversely affects the rights of any Limited Partner
shall not be effective without the Consent of each Limited Partner so affected.
The power of attorney granted by Section 9.2 may be used by the General Partner
to execute on behalf of a Limited Partner any document evidencing or effecting
an amendment adopted in accordance with this Section 9.3.
9.4 Entire Agreement. Upon the effectiveness of this Agreement in
accordance with Section 9.5, this Agreement, the Transfer Agreement and the
Ancillary Agreements (as defined in the Transfer Agreement), including Exhibits,
Annexes, Appendixes and Schedules hereto and thereto, will constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties hereto
and thereto, with respect to the subject matter hereof and thereof.
9.5 Effectiveness. All of the terms and provisions of this Agreement
shall be effective only from and after the Initial Closing. Until the Initial
Closing, the rights, powers, and privileges and obligations of the parties with
respect to the Partnership and their interests therein shall be governed by the
Transfer Agreement, the Bid Agreement and any other agreements or understandings
between the parties then in effect. Nothing in this Agreement shall have any
effect whatsoever on the rights and obligations of the parties hereto or their
Affiliates that may have accrued prior to the Initial Closing under any
agreement between them or any of their Affiliates or be given any effect in the
interpretation of any such agreement.
9.6 No Third Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their successors and permitted assigns and
nothing herein express or implied shall give or be construed to give any Person,
other than the parties hereto and their successors and permitted assigns, any
legal or equitable rights hereunder.
9.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditor of any Partner or of the
Partnership.
9.8 Agreement in Counterparts. This Agreement may be executed in any
number of counterparts, and all
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counterparts so executed shall together constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.
9.9 Captions. Captions contained in this Agreement are inserted as a
matter of convenience and in no way define, limit, extend or describe the scope
of this Agreement or the intent of any provision hereof.
9.10 Governing Law. This Agreement and the rights and obligations of
the Partners hereunder shall be governed by the laws of the State of Delaware,
without regard to the conflicts of laws principles of such state.
9.11 Partial Invalidity. If any provision of this Agreement is held
to be invalid, unlawful or incapable of being enforced by reason of rule of law
or public policy, all other conditions and provisions of this Agreement that can
be given effect without such invalid, unlawful or unenforceable provisions
shall, nevertheless, remain in full force and effect.
9.12 Confidential Information. Each Partner acknowledges that, in
connection with its relationship with the General Partner and the Partnership,
the officers, directors and/or employees of such Partner will have access to
trade secrets and confidential information pertaining to the business of the
Partnership. Accordingly, each Partner agrees that so long as it shall continue
to own an Interest and for a period of 12 months after it ceases to own an
Interest it will neither disclose nor use any of such trade secrets or
confidential information, and will use all reasonable efforts to prevent any of
its employees and Affiliates from doing so, without the prior Consent of the
General Partner; provided, however, that nothing herein shall be construed to
prevent any Partner from disclosing information pursuant to the order of any
Governmental Authority or subpoena, or in any action or proceeding between
parties to this Agreement, or as required to comply with its reporting
obligations under applicable law. For purposes of this Section 9.12,
confidential information shall not include any information that is now known by
or readily available to the general public or that becomes known by or readily
available to the general public other than as a result of any breach of this
Section 9.12.
9.13 Equitable Remedies. If any Partner breaches or threatens to
breach any provision of this Agreement, the General Partner and the Partnership
shall, in addition to any other remedies available to it at law or in equity, be
entitled to obtain specific performance or injunctive relief
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against such Partner in any court of competent jurisdiction without the
necessity of proving irreparable injury or the inadequacy of remedies at law or
posting bond or other security.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
MSG EDEN CORPORATION GARDEN L.P. HOLDING CORP.
By: /s/ KENNETH W. MUNOZ By: /s/ MARC LUSTGARTEN
--------------------------- --------------------------
Name: Kenneth W. Munoz Name: Marc Lustgarten
Title: Executive Vice Title:
President
ITT MSG INC.
By: /s/ RICHARD S. WARD
---------------------------
Name: Richard S. Ward
Title: President
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