<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
Commission File Numbers: 333-57285-01
333-57285
Mediacom LLC
Mediacom Capital Corporation*
(Exact names of Registrants as specified in their charters)
New York 06-1433421
New York 06-1513997
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Numbers)
100 Crystal Run Road
Middletown, New York 10941
(Address of principal executive offices)
914-695-2600
(Registrants' telephone number including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days:
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: Not Applicable
State the aggregate market value of the common equity held by non-affiliates
of the Registrants: Not Applicable
Indicate the number of shares outstanding of the Registrants' common stock:
Not Applicable
*Mediacom Capital Corporation meets the conditions set forth in General
Instruction I (1) (a) and (b) of Form 10-K and is therefore filing this form
with the reduced disclosure format.
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
1998 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
<TABLE>
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Page
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Item 1. Business ............................................................................... 1
Item 2. Properties ............................................................................. 21
Item 3. Legal Proceedings ...................................................................... 21
Item 4. Submission of Matters to a Vote of Security Holders .................................... 21
PART II
Item 5. Market for Registrants, Common Equity and Related Stockholder Matters .................. 22
Item 6. Selected Financial Data ................................................................ 23
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................................ 24
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ............................. 34
Item 8. Financial Statements and Supplementary Data ............................................ 35
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure ................................................................. 56
PART III
Item 10. Directors and Executive Officers of the Registrant ..................................... 57
Item 11. Executive Compensation ................................................................. 59
Item 12. Security Ownership of Certain Beneficial Owners and Management ......................... 60
Item 13. Certain Relationships and Related Transactions ......................................... 61
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ........................ 62
</TABLE>
<PAGE>
PART I
------
ITEM 1. BUSINESS
Introduction
Mediacom LLC ("Mediacom" and collectively with its operating
subsidiaries, the "Company") was founded in July 1995 by Rocco B. Commisso
principally to acquire, operate and develop cable television systems in selected
non-metropolitan markets of the United States. As of December 31, 1998, the
Company had completed nine acquisitions of cable television systems (the
"Systems") that on such date passed approximately 520,000 homes and served
approximately 354,000 basic subscribers. The Company is among the top 25
multiple system operators ("MSOs") in the United States, operating in 14 states
and serving 313 franchise communities.
In pursuing its business strategy, the Company has sought to take
advantage of opportunities to acquire underperforming and undervalued cable
television systems and to build subscriber clusters through regionalized
operations. From the commencement of operations in March 1996 to December 1997,
the Company completed six acquisitions of cable television systems that, as of
December 31, 1998, served approximately 65,250 basic subscribers in California,
Arizona, Delaware and Maryland. In 1998, the Company completed three
acquisitions of cable television systems that, as of December 31, 1998, served
approximately 288,750 basic subscribers in eleven states, principally Alabama,
California, Florida, Kentucky, Missouri and North Carolina. The aggregate
purchase price for the Company's nine acquisitions was approximately $432.4
million (before closing costs).
The Company is committed to the rapid deployment of state-of-the-art
technology in the Systems. In 1998, the Company accelerated its capital
improvement program to upgrade the Systems' cable television network affecting
approximately 75.0% of its customer base. Upon the program's anticipated
completion in June 2000, the Company expects that approximately 85.0% of its
customer base will be served by Systems with 550MHz (78 analog channels) to
750MHz bandwidth capacity (78 analog channels, with 200MHz bandwidth capacity
reserved for digital cable television and other services). The result of this
capital improvement program will be a significant increase in network capacity,
quality and reliability. The upgraded network will enable the Company to provide
new and enhanced cable services, including digital cable television and high-
speed Internet access.
Mr. Commisso is the Chairman and Chief Executive Officer of the Company
and has over 21 years of experience with the cable television industry. Mr.
Commisso has assembled a management team with significant business experience in
acquiring, developing, operating and financing cable television operations. The
eleven most senior executives and managers of the Company have an average of
over 17 years of experience with the cable television industry. Prior to
founding Mediacom, Mr. Commisso served as Executive Vice President, Chief
Financial Officer and Director of Cablevision Industries Corporation from August
1986 to March 1995.
Mediacom was organized as a New York limited liability company to serve
as the holding company for its four operating subsidiaries, each of which is a
Delaware limited liability company. The operating subsidiaries are wholly-owned
by Mediacom, except for a 1.0% ownership interest in a subsidiary, Mediacom
California LLC, held by Mediacom Management Corporation ("Mediacom Management").
Mediacom Capital Corporation ("Mediacom Capital"), a New York corporation
wholly-owned by Mediacom, was formed in 1998 specifically to permit Mediacom to
issue debt in the public market and does not conduct operations of its own.
Pursuant to separate management agreements with Mediacom's operating
subsidiaries, Mediacom Management, a Delaware corporation wholly-owned by Mr.
Commisso, is paid management fees for managing the day-to-day operations of the
operating subsidiaries. In accordance with the operating agreement governing the
affairs and operations of Mediacom, Mr. Commisso is the sole manager of Mediacom
and has overall management and effective control of the business and affairs of
the Company.
1
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This Form 10-K contains certain forward-looking statements concerning
the Company's operations, economic performance and financial condition,
including, in particular, the likelihood of the Company's success in developing
and expanding its business. The statements are based upon a number of
assumptions and estimates which are inherently subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Company, and reflect future business decisions which are subject to change. Some
of these assumptions inevitably will not materialize, and unanticipated events
will occur which will affect the Company's actual results.
Recent Developments
On February 26, 1999, Mediacom and Mediacom Capital jointly issued $125
million aggregate principal amount of 7 7/8% Senior Notes (the "7 7/8% Senior
Notes") due February 2011. The net proceeds from this offering of approximately
$121.9 million were used to repay a substantial portion of outstanding
indebtedness under the Company's bank credit facilities. Interest on the 7 7/8%
Senior Notes will be payable semi-annually on February 15 and August 15 of each
year, commencing on August 15, 1999.
Cable Television Industry
Video Services
Cable television systems receive a variety of television, radio, and
data signals transmitted to the headend facilities by means of off-air antennas,
microwave relay systems and satellite earth stations. These signals are then
modulated, amplified and distributed, primarily through fiber optic and coaxial
cable, to customers who pay a fee for this service. Cable television systems may
also originate their own television programming and other information services
for distribution through the system. The cable television industry is regulated
by the Federal Communications Commission (the "FCC"), some state governments and
substantially all local governments. Cable television systems generally are
constructed and operated pursuant to non-exclusive franchises or similar
licenses granted by local governmental authorities for a specified term of
years, generally for extended periods of up to 15 years.
The cable television industry developed in the United States in the late
1940's and early 1950's in response to the needs of residents in predominantly
rural and mountainous areas of the country where the quality of off-air
television reception was inadequate due to factors such as topography and
remoteness from television broadcast towers. In the late 1960's, cable
television systems also developed in small and medium-sized cities and suburban
areas that had a limited availability of clear off-air television station
signals. All of these markets are regarded within the cable industry as
"classic" cable television markets. In more recent years, cable television
systems have been constructed in large urban cities and nearby suburban areas,
where good off-air reception from multiple television stations usually is
already available, in order to receive the numerous, satellite-delivered
channels carried by cable television systems which are not otherwise available
via broadcast television reception.
Cable television systems offer customers various levels (or "tiers") of
cable television services consisting of: (i) off-air television signals of local
network, independent and educational stations; (ii) a limited number of
television signals from so-called "superstations" originating from distant
cities (such as WGN); (iii) various satellite-delivered, non-broadcast channels
(such as Cable News Network ("CNN"), MTV: Music Television ("MTV"), the USA
Network ("USA"), Entertainment and Sports Programming Network ("ESPN") and
Turner Network Television ("TNT"); (iv) certain programming originated locally
by the cable television system (such as public, governmental and educational
access programs); and (v) informational displays featuring news, weather, stock
market and financial reports, and public service announcements. For an extra
monthly charge, cable television systems also offer premium television services
to their customers, such as Home Box Office ("HBO"), Showtime and regional
sports networks. These services are satellite-delivered channels consisting
principally of feature films, live sports events, concerts and other special
entertainment features, usually presented without commercial interruption.
A customer generally pays an initial installation charge and fixed
monthly fees for basic and premium television services and for other services
(such as the rental of converters and remote control devices). Such monthly
service fees constitute the primary source of revenue for cable operators. In
addition to customer revenue from these services, cable operators generate
revenue from additional fees paid by customers for pay-per-view programming of
movies and special events and from the sale of available advertising spots on
advertiser-supported programming. Cable operators also offer to their customers
home shopping services, which pay the cable operators a share of revenue from
sales of products in the cable operators' service areas.
2
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In 1999, the Company plans to introduce digital cable television in
Systems that pass approximately 175,000 homes. To receive this service, the
Company's customers will require a digital set top converter. Digital cable
television is a computerized method of defining, transmitting and storing
information that makes up a television signal. Since digital signals can be
"compressed," they can transmit up to 12 channels in the space currently used to
transmit just one analog channel. The Company expects to provide to its digital
cable subscribers programming packages which include up to 15 new basic
services, up to 42 additional "multichannel" premium services, enhanced pay-per-
view options with up to 30 movie and sports channels, up to 40 channels of CD-
quality music, and an interactive on-screen program guide to help them navigate
the new digital choices.
High-Speed Data Services
The Company's accelerated capital improvement program and deployment of
fiber optic technology allows the use of the expanded bandwidth capacity for
high-speed cable modem services. High-speed cable modem services are now
available at speeds far in excess of that which is currently available through
the 56 kilobit per second telephone modem. In one of its Systems passing
approximately 17,000 homes, the Company currently offers high-speed Internet
access through the use of one-way cable modems, which permit data to be
downstreamed at high speed while utilizing a telephone line return path. The
Company also offers dial-up telephone Internet access in two of its markets.
This establishes the Company as an Internet service provider in these markets
and creates a customer base that can be upgraded to the high-speed cable modem
service in the future.
Business Strategy
The Company's ongoing business strategy is to: (i) acquire
underperforming and undervalued cable television systems primarily in non-
metropolitan markets, as well as related telecommunications businesses; (ii)
invest in the development of a state-of-the-art technological platform for
delivery of broadband video and other services to its customers; (iii) provide
superior customer service; and (iv) deploy a flexible financing strategy to
complement the Company's growth objectives and operating plans. The key elements
of the Company's business strategy are:
Pursue Strategic Acquisitions. The Company generally targets systems in
geographic proximity to its existing operations. By acquiring and developing
within its geographic proximity, the Company expects to realize significant
operating efficiencies through the consolidation of many managerial,
administrative and technical functions. The Company will pursue "fill-in"
acquisitions in geographic areas where it is the dominant provider of cable
television services. The Company may also expand its base of operations into
other markets or pursue related telecommunications businesses if such
acquisitions are consistent with its overall business strategy.
The Company is regularly presented with opportunities to acquire cable
television systems that are evaluated on the basis of the Company's acquisition
strategy. Although the Company presently does not have any definitive agreements
to acquire or sell any of its cable television systems, it is negotiating with
prospective sellers to acquire additional cable television systems. If
definitive agreements for all such potential acquisitions are executed, and if
such acquisitions are then consummated, the Company's customer base would
approximately double in size. These acquisitions are subject to the negotiation
and completion of definitive documentation, which will include customary
representations and warranties and will be subject to a number of closing
conditions. Financing for these potential transactions has not been determined;
however, if such acquisitions are consummated, the Company believes its total
indebtedness would substantially increase. No assurance can be given that such
definitive documents will be entered into or that, if entered into, the
acquisitions will be consummated.
Target Non-Metropolitan Markets. The Company has acquired clusters of
cable television systems serving primarily suburban areas within the top 50 to
100 television markets and small and medium sized communities where customers
generally require cable television to clearly receive a full complement of off-
air television signals. The Company believes that there are advantages in
acquiring and operating cable television systems in such markets, such as: (i)
less direct competition given the lower housing densities and the resulting
higher costs per customer of installing cable service; (ii) higher subscriber
penetration levels and lower customer turnover based on fewer competing
entertainment alternatives; and (iii) generally lower overhead and operating
costs than similar costs incurred by cable operators serving larger markets.
3
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Invest in Technology and Capital Improvements. As part of its commitment
to customer satisfaction, the Company emphasizes high technical performance
standards. In 1998, the Company accelerated its capital improvement program to
upgrade the Systems' cable television network affecting approximately 75.0% of
its basic subscribers. Upon the program's anticipated completion in June 2000,
the Company expects that substantially all of its Systems will have a minimum
bandwidth capacity of 450MHz and that over 85.0% of its customer base will be
served by Systems with 550MHz to 750MHz bandwidth capacity. In most of the
Systems, the Company is deploying fiber optic cable to upgrade the technical
quality of the network using high capacity, hybrid fiber-coaxial ("HFC")
architecture. The result of the accelerated capital improvement program and
deployment of HFC architecture will be a significant increase in network
capacity, quality and reliability, enabling the Company also to deliver more
quickly to its customer base additional programming and new services.
The capital improvement program also provides for the interconnection of
cable television systems within a regional cluster through the use of fiber
optic cable, thus facilitating the consolidation of headend facilities. By
serving larger clusters of customers from a single headend facility, it becomes
economically feasible in smaller communities to launch new and enhanced
services, such as digital cable television and high-speed Internet access, and
to introduce local advertising sales. By the end of 1999, the Company expects to
reduce its headend facilities to 138 and to serve approximately 75.0% of its
basic subscribers from 34 headend facilities.
Expand Service Offerings. The Company has generally acquired cable
television systems that have underserved their customers. As a result, the
Company believes that significant opportunities exist to increase the revenues
of the Systems by promoting and expanding the programming services and pricing
options available to its customers. The Company has utilized the expanded analog
channel capacity, resulting from the Systems' technical upgrades, to introduce
several new basic programming services, multichannel premium services, and
numerous pay-per-view channels. In addition, the Company plans to introduce
digital cable television in Systems passing over 175,000 homes in 1999 and high-
speed Internet access to Systems passing over 400,000 homes over the next three
years.
Deploy Flexible Financing Strategy. The Company has deployed a financing
strategy which utilizes a blend of equity and debt capital to complement the
Company's acquisition and operating activities. Through its holding company
structure, the Company has raised equity from its members and issued public
long-term debt at the holding company level, while utilizing its subsidiaries to
access debt capital, principally in the commercial bank market, through two
stand-alone borrowing groups. The Company believes that this financing strategy
is beneficial because it broadens the Company's access to various debt markets,
enhances its flexibility in managing the Company's capital structure, reduces
the overall cost of debt capital and permits the Company to maintain a
substantial liquidity position in the form of unused and available bank credit
commitments.
As of December 31, 1998, Mediacom had raised $135.5 million of equity
commitments from its members, of which $125.0 million has been invested in
Mediacom, and had issued $200.0 million of senior notes in the public debt
market. In addition, the Company had established two subsidiary borrowing groups
which have obtained in the aggregate $325.0 million of bank credit facilities.
Such credit facilities are non-recourse to Mediacom, have no cross-default
provisions relating directly to each other and permit the subsidiaries, subject
to covenant and other restrictions, to make distributions to Mediacom. As of
December 31, 1998, the Company had approximately $189.9 million of unused bank
credit commitments, all of which could have been borrowed and distributed to
Mediacom under the most restrictive covenants in the Company's bank credit
agreements.
4
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Development of the Systems
The Company commenced operations in March 1996 with the acquisition of
its first cable television system. As of December 31, 1998, the Company had
completed nine acquisitions of cable television systems. The following table
summarizes certain information relating to the acquisitions of the Systems in
chronological order:
<TABLE>
<CAPTION>
Purchase
Price Basic
Location of Systems Predecessor Owner(1) Acquisition Date (in millions)(2) Subscribers(3)
- ------------------- ---------------- ---------------- ------------ -----------
<S> <C> <C> <C> <C>
Ridgecrest, CA Benchmark Communications March 1996 $ 18.8 9,450
Kern Valley, CA Booth American Company June 1996 11.0 6,100
Nogales, AZ Saguaro Cable TV Investors, L.P. December 1996 11.4 8,100
Valley Center, CA Valley Center CableSystems, L.P. December 1996 2.5 1,900
Dagsboro, DE American Cable TV Investors 5, Ltd. June 1997 42.6 29,800
Sun City, CA Cox Communications, Inc. September 1997 11.5 9,900
Clearlake, CA Jones Intercable, Inc. January 1998 21.4 17,750
Various States Cablevision Systems Corporation January 1998 308.2 267,200
Caruthersville, MO Cablevision Systems Corporation October 1998 5.0 3,800
------- -------
$ 432.4 354,000
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</TABLE>
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(1) Purchased from the named party, one or more of its affiliates, or the
controlling or managing operator.
(2) Represents the final purchase price before closing costs.
(3) As of December 31, 1998.
Description of the Operating Regions
The Systems are managed from four operating regions: Southern, Mid-
Atlantic, Central and Western. The table below and the discussion that follows
provide an overview of selected operating and technical statistics for each of
the Company's four operating regions as of December 31, 1998.
Southern Mid-Atlantic Central Western Total
-------- ------------ ------- ------- -----
Homes passed 189,000 123,000 124,400 83,600 520,000
Miles of plant 4,775 2,930 2,960 1,285 11,950
Density(1) 40 42 42 65 44
Basic subscribers 134,200 85,500 81,100 53,200 354,000
Basic penetration 71.0% 69.5% 65.2% 63.6% 68.1%
Premium service units 202,000 82,900 101,700 20,500 407,100
Premium penetration 150.5% 97.0% 125.4% 38.5% 115.0%
Average monthly basic
revenues per basic
subscriber(2) $ 24.39 $ 24.76 $ 25.02 $ 28.97 $ 25.31
Average monthly
revenues per basic
subscriber(3) $ 33.22 $ 31.45 $ 31.63 $ 36.26 $ 32.88
Weighted average
analog channel
capacity(4) 63 64 54 72 63
(1) Homes passed divided by miles of plant.
(2) Represents average monthly revenues from basic and expanded basic
programming services for the three months ended December 31, 1998, divided
by basic subscribers as of the end of such period.
(3) Represents average monthly revenues for the three months ended December 31,
1998, divided by basic subscribers as of the end of such period.
(4) Determined on a per subscriber basis.
5
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Southern Region. The Southern Region represents the Company's largest
region. Over 82.0% of the region's basic subscribers are located in the suburbs
and outlying areas of Pensacola, Fort Walton Beach and Panama City, Florida;
Mobile and Huntsville, Alabama; and Biloxi, Mississippi. As of December 31,
1998, the region's Systems passed approximately 189,000 homes and served
approximately 134,200 basic subscribers. The internal subscriber growth for this
region was 3.1% in 1998. The Company measures internal subscriber growth as the
percentage change in basic subscribers from the prior period excluding the
effects of acquisitions completed during the current period. All of the region's
basic subscribers are serviced from a regional customer service center in Gulf
Breeze, Florida, which provides 24-hour, 7-day per week service.
As of December 31, 1998, the weighted average analog channel capacity of
the region's Systems was 63 channels and the region's basic subscribers were
served by 53 headend facilities. Upon completion of the capital improvement
program in June 2000, the Company anticipates that approximately 83.0% of the
Southern Region's basic subscribers will be served by Systems with 550MHz to
750MHz bandwidth capacity. The Company eliminated four headend facilities
through fiber interconnection in 1998, and expects to eliminate at least one
additional headend facility by the end of 1999. The Company plans to launch
digital cable television in three of the Southern Region's Systems in 1999
passing approximately 72,000 homes.
Mid-Atlantic Region. The Mid-Atlantic Region's Systems serve communities
in lower Delaware, southeastern Maryland and the northeastern and western areas
of North Carolina. As of December 31, 1998, the region's Systems passed
approximately 123,000 homes and served approximately 85,500 basic subscribers.
The internal subscriber growth for this region was 4.9% in 1998. Approximately
65.0% of the region's basic subscribers are serviced from a regional customer
service center in Hendersonville, North Carolina, which provides 24-hour, 7-day
per week service.
As of December 31, 1998, the weighted average analog channel capacity of
the region's Systems was 64 channels and the region's basic subscribers were
served by 17 headend facilities. Upon completion of the capital improvement
program in June 2000, the Company expects that approximately 93.0% of the Mid-
Atlantic Region's basic subscribers will be served by Systems with 550MHz to
750MHz bandwidth capacity. By the end of 1999, the Company expects that five
headend facilities will be eliminated through fiber interconnection. In 1999,
the Company plans to launch digital cable television in two of the Mid-Atlantic
Region's Systems passing approximately 75,000 homes.
Central Region. The Central Region's Systems serve the suburbs and
outlying areas of Kansas City and Springfield, Missouri, and Topeka, Kansas, and
communities in the western portion of Kentucky. As of December 31, 1998, the
region's Systems passed approximately 124,400 homes and served approximately
81,100 basic subscribers. The internal subscriber growth rate of this region was
1.0% in 1998. Substantially all of the region's basic subscribers are serviced
from a regional customer service center in Benton, Kentucky, which provides 24-
hour, 7-day per week service.
As of December 31, 1998, the weighted average analog channel capacity of
the region's Systems was 54 channels and the region's basic subscribers were
served by 73 headend facilities. Upon completion of the capital improvement
program in June 2000, the Company anticipates that approximately 94.0% of the
Central Region's basic subscribers will be served by Systems with 550MHz to
750MHz bandwidth capacity. The Company eliminated two headend facilities through
fiber interconnection in 1998, and expects to eliminate seven other headend
facilities by the end of 1999. The Company plans to launch digital cable
television in one of the Central Region's Systems in 1999 passing approximately
11,000 homes.
Western Region. The Western Region's Systems serve communities in the
following areas: (i) Clearlake, California; (ii) the Indian Wells Valley in
central California; (iii) portions of Riverside County and San Diego County,
California; and (iv) Nogales, Arizona and outlying areas. As of December 31,
1998, the region's Systems passed approximately 83,600 homes and served
approximately 53,200 basic subscribers. The Western Region's internal subscriber
growth was flat in 1998. The region's basic subscribers are serviced from seven
local offices.
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As of December 31, 1998, the region's Systems had been significantly
upgraded. All of the region's basic subscribers are served by Systems with a
minimum 450MHz bandwidth capacity and approximately 65.0% are served by Systems
with 550MHz bandwidth capacity. As a result, the weighted average analog channel
capacity of the region's Systems was 72 channels. The region's basic subscribers
are served by nine headend facilities and the Company expects that one headend
facility will be eliminated through fiber interconnection by the end of 1999.
The Company plans to launch digital cable television in one of the Western
Region's Systems in 1999 passing approximately 17,000 homes.
Technological Overview
The following table summarizes the Systems' bandwidth capacity as of
December 31, 1998. On such date, the Systems have a weighted average analog
channel capacity of 63 channels.
<TABLE>
<CAPTION>
Basic Weighted
Subscribers Percentage of Basic Subscribers by Channel Capacity Average
as of ------------------------------------------------------------------------------- Analog
Operating December 31 30 Channels 36 Channels 42 Channels 54 Channels 62 Channels 78 Channels Channel
Regions 1998 (270MHz) (300MHz) (330MHz) (400MHz) (450MHz) (550MHz) Capacity
- ------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Southern 134,200 0.3% 16.5% 10.5% 4.1% 21.2% 47.4% 63
Mid-Atlantic 85,500 0.0 11.0 25.4 0.6 3.2 59.8 64
Central 81,100 0.8 26.4 29.9 4.3 6.5 32.1 54
Western 53,200 0.0 0.0 0.0 0.0 35.0 65.0 72
----------- ----------- ----------- ----------- ----------- ----------- ----------- --------
Total 354,000 0.3% 15.0% 17.0% 2.7% 15.5% 49.5% 63
=========== =========== =========== =========== =========== =========== =========== ========
</TABLE>
Since its commencement of operations in March 1996, the Company made a
commitment to upgrade the Systems in order to increase programming choices,
provide new and enhanced services, and improve overall customer satisfaction.
During the third quarter of 1998, the Company modified its previously disclosed
five-year capital improvement program by accelerating the program's completion
to two-and-a-half years. Moreover, various Systems that were originally
scheduled to be upgraded to 550MHz bandwidth capacity have been redesigned at
750MHz bandwidth capacity, with two-way capability and greater utilization of
fiber optic technology. This program will enable the Company to deliver digital
cable television and high-speed cable modem service earlier and in a more
widespread manner than previously planned, beginning in 1999. Completion of the
capital improvement program is expected by June 2000, at which time the Company
anticipates that over 85.0% of its customer base will be served by Systems with
550MHz to 750MHz bandwidth capacity.
An integral part of the Company's capital improvement program is the
deployment of high capacity, HFC architecture in the upgrade of the Systems. In
most Systems affected by the program, the Company deploys fiber to individual
nodes serving an average of 250 homes and coaxial cable from the node to the
home. This HFC network design provides increased channel capacity, superior
signal quality, improved reliability, reduced system maintenance costs and a
platform to develop high-speed data services, Internet access and emerging
telecommunication services to its customers.
The Company plans to eliminate several headend facilities through fiber
interconnection. In 1998, the Company eliminated six headend facilities. The
Company anticipates that the number of headend facilities will be reduced
further from 152 as of December 31, 1998, to 138 as of December 31, 1999, and
that approximately 75.0% of its basic subscribers will be served from 34 headend
facilities at the end of 1999.
The Company plans to deploy digital cable television technology capable
of expanding channel capacity significantly, with up to 12 digital channels
transmitted in the bandwidth normally used by one analog channel. Digital
transmission will allow the Company to introduce digital cable television
packages which include numerous new basic programming and multichannel premium
services, a wider variety of pay-per-view channels, an interactive program guide
and digital music services. In 1999, the Company expects to introduce digital
cable television in Systems that pass approximately 175,000 homes.
7
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The Company provides Internet access to its customers through high-speed
cable modems and through traditional telephone dial-up modems. As of December
31, 1998, the Company served approximately 5,000 residential and commercial
Internet access customers in its Western Region. The Company currently is in
discussions with a number of service providers of high-speed Internet access and
is reviewing plans to launch its own high-speed Internet access in several of
the Systems. Over the next three years, the Company expects to launch high-speed
Internet access in Systems passing over 400,000 homes through a combination of
agreements with service providers and its own launches of such service.
As a result of this accelerated capital improvement program, total
capital expenditures (other than those related to acquisitions) were
approximately $53.7 million for 1998, of which approximately 64.0% were spent to
upgrade the Company's cable plant. The remaining capital expenditures primarily
funded plant extensions, new services, converters and replacements. Total
capital expenditures of approximately $63.0 million are planned in 1999, of
which approximately 64.0% will be spent to upgrade the network.
Marketing, Programming and Rates
The Company's marketing programs and campaigns are based upon offering a
variety of cable services creatively packaged and tailored to appeal to its
different markets and to segments within each market. The Company routinely
surveys its customer base to ensure that it is meeting the demands of its
customers and stays abreast of its competition in order to effectively counter
competitors' service offerings and promotional campaigns. The Company uses a
coordinated array of marketing techniques to attract and retain customers and to
increase premium service penetration, including door-to-door and direct mail
solicitation, telemarketing, media advertising, local promotional events
typically sponsored by programming services and cross-channel promotion of new
services and pay-per-view.
The Company has various contracts to obtain basic and premium
programming for the Systems from program suppliers whose compensation is
typically based on a fixed fee per customer. The Company's programming contracts
are generally for a fixed period of time and are subject to negotiated renewal.
Some program suppliers provide volume discount pricing structures or offer
marketing support to the Company. The Company's successful marketing of multiple
premium service packages emphasizing customer value enables the Company to take
advantage of such cost incentives. In addition, the Company is a member of the
National Cable Television Cooperative, Inc., a programming consortium consisting
of small to medium-sized MSOs serving, in the aggregate, over twelve million
cable subscribers. The consortium helps create efficiencies in the areas of
obtaining and administering programming contracts, as well as secures more
favorable programming rates and contract terms for small to medium-sized cable
operators. The Company intends to negotiate programming contract renewals both
directly and through the consortium to obtain the best available contract terms.
The Company's programming costs are expected to increase in the future due to
additional programming being provided to its customers, increased costs to
purchase programming, inflationary increases and other factors affecting the
cable television industry. The Company believes that it will be able to pass
through expected increases in its programming costs to customers, although there
can be no assurance that it will be able to do so. The Company also has various
retransmission consent arrangements with commercial broadcast stations which
generally expire in December 1999 and beyond. None of these consents require
payment of fees for carriage, however, the Company has entered into agreements
with certain stations to carry satellite-delivered cable programming which is
affiliated with the network carried by such stations.
Although services vary from system to system due to differences in
channel capacity, viewer interests and community demographics, the majority of
the Systems offer a "basic service tier," consisting of local television
channels (network and independent stations) available over-the-air, satellite-
delivered "superstations" originating from distant cities (such as WGN), and
local public, governmental, home-shopping and leased access channels. The
majority of the Systems offer, for a monthly fee, an expanded basic tier of
various satellite-delivered, non-broadcast channels (such as CNN, MTV, USA, ESPN
and TNT). In addition to these services, the Systems typically provide one or
more premium services such as HBO, Cinemax, Showtime, The Movie Channel and
Starz!, which are combined in different packages to appeal to the various
segments of the viewing audience. These services are satellite-delivered
channels consisting principally of feature films, original programming, live
sports events, concerts and other special entertainment features, usually
presented without commercial interruption. Such premium programming services are
offered by the Systems both on a per-channel basis and as part of premium
service packages designed to enhance customer value and to enable the Company to
take advantage of programming agreements offering cost incentives based on
premium service unit growth. Basic subscribers may subscribe for one or more
premium service units. A
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"premium service unit" is a single premium service for which a subscriber must
pay an additional monthly fee in order to receive the service. The significant
expansion of bandwidth capacity resulting from the Company's capital improvement
program will allow it to expand the use of "tiered" and multichannel packaging
strategies for marketing premium services and promoting niche programming
services. The Company believes that these packaging strategies will increase
basic and premium penetration as well as revenue per basic subscriber. The
Systems also typically provide one or more pay-per-view services purchased from
independent suppliers such as Viewer's Choice and Showtime Event Television.
These services are satellite-delivered channels, consisting principally of
feature films, live sporting events, concerts and other special "events,"
usually presented without commercial interruption. Such pay-per-view services
are offered by the Company on a "per viewing" basis, with subscribers only
paying for programs which they select for viewing.
Monthly customer rates for services vary from market to market,
primarily according to the amount of programming provided. At December 31, 1998,
the Company's monthly basic service rates for residential customers ranged from
$3.89 to $17.00, the combined monthly basic and expanded basic service rates for
residential customers ranged from $21.50 to $36.95 and per-channel premium
service rates (not including special promotions) ranged from $2.95 to $11.95 per
service. For the three months ended December 31, 1998, the weighted average
monthly rate for the Company's combined basic and expanded basic services was
approximately $25.31.
A one-time installation fee, which the Company may wholly or partially
waive during a promotional period, is usually charged to new customers. The
Company charges monthly fees for converters and remote control tuning devices
and also charges administrative fees for delinquent payments for service.
Customers are free to discontinue service at any time without additional charge
in the majority of the Systems and may be charged a reconnection fee to resume
service. Commercial customers, such as hotels, motels and hospitals, are charged
negotiated monthly fees and a non-recurring fee for the installation of service.
Multiple dwelling unit accounts may be offered a bulk rate in exchange for
single-point billing and basic service to all units.
In addition to customer fees, the Company derives modest amounts of
revenues from the sale of local spot advertising time on locally originated and
satellite-delivered programming and from affiliations with home shopping
services (which offer merchandise for sale to customers and compensate system
operators with a percentage of their sales receipts).
The Company is an eligible "small cable company" under certain FCC
rules, which enables it to utilize a simplified rate setting methodology for
most of the Systems in establishing maximum rates for basic and expanded basic
services. This methodology almost always results in rates that exceed those
produced by the cost-of-service rules applicable to larger cable operators.
Approximately 75.0% of the basic subscribers served by the Systems are covered
by such FCC rules. The Company believes that its rate practices are generally
consistent with the current practices in the industry.
Customer Service and Community Relations
The Company is dedicated to providing superior customer service. The
Company expects that its accelerated capital improvement program will
significantly strengthen customer service as it will enhance the reliability of
the technical network, provide better picture quality and permit the
introduction of new programming and other services to the Company's customer
base. The Company has implemented stringent internal customer service standards,
which it believes meet or exceed those established by the National Cable
Television Association. The Company's three regional calling centers offer 24-
hour, 7-day per week coverage to over 76.0% of the Systems' customers on a toll-
free basis. The Company believes customer service is also enhanced by the
regional calling centers' ability to coordinate effectively technical service,
installation appointments, and response time to customer inquiries.
In addition, the Company is dedicated to fostering strong community
relations in the communities served by the Systems. The Company supports local
charities and community causes through staged events and promotional campaigns.
The Company also installs and provides free cable television service and, where
available, Internet access to public schools, government buildings and not-for-
profit hospitals in its franchise areas. The Company believes that its relations
with the communities in which the Systems operate are good.
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Franchises
Cable television systems are generally operated under non-exclusive
franchises granted by local governmental authorities. These franchises typically
contain many conditions, such as: time limitations on commencement and
completion of construction; conditions of service, including number of channels,
types of programming and the provision of free service to schools and certain
other public institutions; and the granting of insurance and indemnity bonds by
the Company. The provisions of local franchises are subject to federal
regulation under the Cable Communications Policy Act of 1984 (the "1984 Cable
Act"), as amended by the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act").
As of December 31, 1998, the Systems were subject to 313 franchises.
These franchises, which are non-exclusive, provide for the payment of fees to
the issuing authority. In most of the Systems, such franchise fees are passed
through directly to the customers. The 1984 Cable Act prohibits franchising
authorities from imposing franchise fees in excess of 5% of gross revenues and
also permit the cable television system operator to seek renegotiation and
modification of franchise requirements if warranted by changed circumstances.
Substantially all of the Systems' basic subscribers are in service areas
that require a franchise. The table below groups the franchises of the Systems
by date of expiration and presents the approximate number and percentage of
basic subscribers for each group of franchises as of December 31, 1998.
<TABLE>
<CAPTION>
Percentage of Number of Percentage of
Number of Total Basic Total Basic
Year of Franchise Expiration Franchises Franchises Subscribers Subscribers
---------------------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
1999 through 2002 86 27.5% 112,000 31.6%
2003 and thereafter 227 72.5 242,000 68.4
---------- ---------- ----------- -----------
Total 313 100.0% 354,000 100.0%
========== ========== =========== ===========
</TABLE>
The 1984 Cable Act provides, among other things, for an orderly
franchise renewal process in which franchise renewal will not be unreasonably
withheld or, if renewal is denied and the franchising authority acquires
ownership of the system or effects a transfer of the system to another person,
the operator generally is entitled to the "fair market value" for the system
covered by such franchise. In addition, the 1984 Cable Act established
comprehensive renewal procedures which require that an incumbent franchisee's
renewal application be assessed on its own merits and not as part of a
comparative process with competing applications.
The Company believes that it generally has good relationships with its
franchising communities. The Company has never had a franchise revoked or failed
to have a franchise renewed. In addition, substantially all of the franchises of
the Company eligible for renewal have been renewed or extended prior to their
stated expirations, and no franchise community has refused to consent to a
franchise transfer to the Company.
Competition
Cable television systems face competition from alternative methods of
distributing video programming and from other sources of news, information and
entertainment, such as off-air television broadcast programming, newspapers,
movie theaters, live sporting events, interactive online computer services and
home video products, including videotape cassette recorders. The extent to which
a cable television system is competitive depends, in part, upon that system's
ability to provide, at a reasonable price to customers, a greater variety of
programming and other communications services, and superior technical
performance and customer service.
Cable television systems generally operate pursuant to franchises
granted on a nonexclusive basis. The 1992 Cable Act prohibits franchising
authorities from unreasonably denying requests for additional franchises and
permits franchising authorities to operate cable television systems. Well-
financed businesses from outside the cable television industry (such as the
public utilities that own the poles to which cable is attached) may become
competitors for franchises or providers of competing services. Competition from
other video service providers exists in areas served by the Company. In a
limited number of the franchise areas served by the Systems, the Company faces
direct competition from
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other franchised cable operators. There can be no assurance, however, that
additional cable television systems will not be constructed in other franchise
areas of the Systems.
Cable operators also face competition from private satellite master
antenna television ("SMATV") systems that serve condominium, apartment and
office complexes and private residential developments. SMATV systems offer both
improved reception of local television stations and many of the same satellite-
delivered program services offered by franchised cable television systems. SMATV
operators often enter into exclusive agreements with building owners or
homeowners associations, although some states have enacted laws that authorize
franchised cable operators access to such private complexes. These laws have
been challenged in the courts with varying results. In addition, some companies
are developing and/or offering to these private residential and commercial
developments packages of telephony, data and video services. The
Telecommunications Act of 1996 (the "1996 Telecom Act") states that SMATV
systems can interconnect non-commonly owned buildings without having to comply
with local, state and federal regulatory requirements that are imposed on cable
television systems providing similar services, as long as they do not use public
rights-of-way. For instance, while a franchised cable television system
typically is obligated to extend service to all areas of a community regardless
of population density or economic risk, a SMATV system may confine its operation
to small areas that are easy to serve and are more likely to be profitable. The
ability of the Company to compete for customers in residential and commercial
developments served by SMATV operators is uncertain.
The FCC has recently allocated a sizable amount of spectrum in the 27-31
GHz band for use by a new wireless service, Local Multipoint Distribution
Service ("LMDS"), which among other uses, can deliver over 100 channels of
programming directly to consumers' homes. The FCC completed an auction of this
spectrum to the public in March 1998, with cable operators and local telephone
companies restricted in their participation in this auction. The extent to which
the winning licensees for the LMDS service will use this spectrum in particular
regions of the country to deliver multichannel video programming and other
services to subscribers, and therefore provide competition to franchises cable
television systems, is uncertain at this time.
Individuals presently have the option to purchase earth stations, which
allow the direct reception of satellite-delivered broadcast and non-broadcast
program services formerly available only to cable television subscribers. Most
satellite-distributed program signals are electronically scrambled so as to
permit reception only with authorized decoding equipment for which the consumer
must pay a fee. The 1992 Cable Act enhances the right of satellite distributors
and other competitors to purchase non-broadcast satellite-delivered programming.
The fastest growing method of satellite distribution is by high-powered direct
broadcast satellites (DBS) utilizing video compression technology. This
technology has the capability of providing more than 100 channels of programming
over a single high-powered DBS satellite with significantly higher capacity
available if multiple satellites are placed in the same orbital position. DBS
service can be received virtually anywhere in the United States through the
installation of a small rooftop or side-mounted antenna. Three service providers
are presently heavily marketing DBS service on a nationwide basis. The 1996
Telecom Act and FCC regulations preempt certain local restrictions on the
location and use of DBS and other satellite receiver dishes.
High-power DBS services are currently being provided by DirecTV, Inc.
("DirecTV") and EchoStar Communications Corporation ("EchoStar"), and medium-
power service is being provided by PrimeStar, Inc. ("PrimeStar"). Recently
announced transactions would result in DirecTV and EchoStar obtaining additional
high-power DBS channel capacity through the acquisition of other DBS facilities,
and DirecTV's acquiring PrimeStar's medium-power DBS business. If these
transactions are approved and consummated, DirecTV and EchoStar will be able to
significantly increase the number of channels on which they can provide
programming to subscribers and will improve significantly their competitive
positions vis-a-vis cable operators. The Company is unable to predict the impact
that these enhanced DBS operations may have on its business and operations.
DBS systems currently have certain advantages over cable television
systems with respect to programming and digital quality, as well as
disadvantages that include high upfront costs and a lack of local programming,
service and equipment distribution. Legislation has been introduced in Congress
to include carriage of local signals by DBS providers under the copyright law.
The ability of DBS to deliver local signals would eliminate a significant
advantage that cable operators currently have over DBS providers. The Company
will magnify its competitive service price points and seek to maintain
programming parity with DBS by increasing the channel capacity of most of the
Systems to a minimum of 78 channels and by introducing new basic and premium
channels, additional pay-per-view programming, digital cable television, and
high-speed Internet access.
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Cable television systems also compete with wireless program distribution
services such as multichannel, multipoint distribution systems ("MMDS"), which
uses low power microwave frequencies to transmit video programming over the air
to customers. Wireless distribution services generally provide many of the
programming services provided by cable television systems, and digital
compression technology is likely to increase significantly MMDS' channel
capacity. MMDS service requires unobstructed "line of sight" transmission paths.
In the majority of the Company's franchise service areas, prohibitive topography
and "line of sight" access has and is likely to continue to limit competition
from MMDS systems. The Company is not aware of any significant MMDS operation
currently within its cable television franchise service areas. However, Wireless
One, Inc., an MMDS operator, does compete in five market areas in the Southern
Region. The Company estimates that Wireless One's overall penetration in these
markets is less than 1.5%. The Company is not aware of any other MMDS operator
in any of its other markets. The Company is unable to predict whether MMDS will
have a material impact on its business operations.
The 1996 Telecom Act makes it easier for local exchange carriers
("LECs") and others to provide a wide variety of video services competitive with
services provided by cable television systems and to provide cable television
services directly to subscribers. For example, telephone companies may now
provide video programming directly to their subscribers in their telephone
service territory, subject to certain regulatory requirements. Various LECs
currently are providing video programming services within and outside their
telephone service areas through a variety of distribution methods, including
both the deployment of broadband wire facilities and the use of wireless
transmission facilities. Cable television systems could be placed at a
competitive disadvantage if the delivery of video programming services by LECs
becomes widespread, since LECs are not required, under certain circumstances, to
obtain local franchises to deliver such video services or to comply with the
variety of obligations imposed upon cable television systems under such
franchises. Issues of cross-subsidization by LECs of video and telephony
services also pose strategic disadvantages for cable operators seeking to
compete with LECs that provide video services. The Company cannot predict the
likelihood of success of video service ventures by LECs or the impact on the
Company of such competitive ventures. The Company believes, however, that the
non-metropolitan markets in which it provides or expects to provide cable
television services are unlikely to support competition in the provision of
video and telecommunications broadband services given the lower population
densities and higher capital costs per household of installing plant. The 1996
Telecom Act's provision promoting facilities-based broadband competition is
primarily targeted at larger markets, and its prohibition on buy-outs and joint
ventures between incumbent cable operators and LECs exempts small cable
operators and carriers meeting certain criteria. The Company believes that
significant growth opportunities exist for the Company by establishing
cooperative rather than competitive relationships with LECs within its service
areas, to the extent permitted by law.
The Company's Systems offer or plan to offer high-speed Internet access
to subscribers. These Systems will compete with a number of other companies,
many of whom have substantial resources, such as existing Internet service
providers, commonly known as ISPs, and local and long distance telephone
companies. Recently a number of ISPs have requested local authorities and the
FCC to provide rights of access to cable television systems' broadband
infrastructure in order that they be permitted to deliver their services
directly to their customers. In a recent report, the FCC declined to institute a
proceeding to examine this issue, and concluded that alternative means of access
are or soon will be made to a broad range of ISPs. Because the FCC believes the
marketplace is working and expanding consumer choice for broadband services, it
declined to take action on ISP access to broadband cable facilities and
indicated that it would continue to monitor the issue. Several local
jurisdictions are also reviewing this issue.
Other new technologies may become competitive with services that cable
television systems can offer. The 1996 Telecom Act directed the FCC to
establish, and the FCC has adopted regulations and policies for the issuance of
licenses for digital television ("DTV") to incumbent television broadcast
licensees. DTV is expected to deliver high definition television pictures,
multiple digital-quality program streams as well as CD-quality audio programming
and advanced digital services, such as data transfer or subscription video. The
FCC also has authorized television broadcast stations to transmit textual and
graphic information useful both to consumers and businesses. The FCC also
permits commercial and noncommercial FM stations to use their subcarrier
frequencies to provide non-broadcast services including data transmissions. The
FCC established an over-the-air Interactive Video and Data Service that will
permit two-way interaction with commercial and educational programming along
with informational and data services. LECs and other common carriers provide
facilities for the transmission and distribution to homes and businesses of
video services, including interactive computer-based services like the Internet,
data and other non-video services.
The 1996 Telecom Act provides that registered utility holding companies
and their subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act of 1935, as
amended. Electric utilities must establish separate subsidiaries known as
"exempt telecommunications
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<PAGE>
companies" and must apply to the FCC for operating authority. Due to their
resources, electric utilities could be formidable competitors to traditional
cable television systems.
Advances in communications technology as well as changes in the
marketplace and the regulatory and legislative environments are constantly
occurring. Thus, it is not possible to predict the effect that ongoing or future
developments might have on the cable industry or on the operations of the
Company.
Employees
Other than the executive officers named under "Directors and Executive
Officers of the Registrants," Mediacom has no employees. As of December 31,
1998, the operating subsidiaries of Mediacom had approximately 650 full-time
equivalent employees. None of the Company's employees is represented by a labor
union. The Company considers its relations with its employees to be good.
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Legislation and Regulation
The cable television industry is regulated by the FCC, some state
governments and substantially all local governments. In addition, various
legislative and regulatory proposals under consideration from time to time by
Congress and various federal agencies have in the past, and may in the future,
materially affect the Company and the cable television industry. The following
is a summary of federal laws and regulations materially affecting the growth and
operation of the cable television industry and a description of certain state
and local laws. The Company believes that the regulation of its industry remains
a matter of interest to Congress, the FCC and other regulatory authorities.
There can be no assurance as to what, if any, future actions such legislative
and regulatory authorities may take or the effect thereof on the Company.
Federal Legislation
The principal federal statute governing the cable television industry is
the Communications Act of 1934 (the "Communications Act"). As it affects the
cable television industry, the Communications Act has been significantly amended
on three occasions, by the 1984 Cable Act, the 1992 Cable Act, and the 1996
Telecom Act. The 1996 Telecom Act altered the regulatory structure governing the
nation's telecommunications providers. It removed barriers to competition in
both the cable television market and the local telephone market. Among other
things, it also reduced the scope of cable rate regulation. In addition, the
1996 Telecom Act required the FCC to undertake a host of rulemakings to
implement the 1996 Telecom Act, the final outcome of which cannot yet be
determined.
FCC Regulation
The FCC, the principal federal regulatory agency with jurisdiction over
cable television, has adopted regulations covering such areas as cross-ownership
between cable television systems and other communications businesses, carriage
of television broadcast programming, cable rates, consumer protection and
customer service, leased access, indecent programming, programmer access to
cable television systems, programming agreements, technical standards, consumer
electronics equipment compatibility, ownership of home wiring, program
exclusivity, equal employment opportunity, consumer education and lockbox
enforcement, origination cablecasting and sponsorship identification, children's
programming, signal leakage and frequency use, maintenance of various records,
and antenna structure notification, marking and lighting. The FCC has the
authority to enforce these regulations through the imposition of substantial
fines, the issuance of cease and desist orders and/or the imposition of other
administrative sanctions, such as the revocation of FCC licenses needed to
operate certain transmission facilities often used in connection with cable
operations. Below is a brief summary of certain of these federal regulations as
adopted to date.
Rate Regulation
The 1984 Cable Act codified existing FCC preemption of rate regulation
for premium channels and optional non-basic program tiers. The 1984 Cable Act
also deregulated basic cable rates for cable television systems determined by
the FCC to be subject to effective competition. The 1992 Cable Act substantially
changed the previous statutory and FCC rate regulation standards. The 1992 Cable
Act replaced the FCC's old standard for determining effective competition, under
which most cable television systems were not subject to local rate regulation,
with a statutory provision that resulted in nearly all cable television systems
becoming subject to local rate regulation of basic service. The 1996 Telecom Act
expands the definition of effective competition to cover situations where a
local telephone company or its affiliate, or any multi-channel video provider
using telephone company facilities, offers comparable video service by any means
except DBS. Satisfaction of this test deregulates both basic and cable
programming service tiers ("CPST"). Additionally, the 1992 Cable Act required
the FCC to adopt a formula for franchising authorities to implement to assure
that basic cable rates are reasonable; allowed the FCC to review rates for cable
programming service tiers (other than per-channel or per-program services) in
response to complaints filed by franchising authorities and/or cable customers;
prohibited cable television systems from requiring basic subscribers to purchase
service tiers above basic service in order to purchase premium services if the
system is technically capable of doing so; required the FCC to adopt regulations
to establish, on the basis of actual costs, the price for installation of cable
service, remote controls, converter boxes and additional outlets; and allowed
the FCC to impose restrictions on the retiering and rearrangement of cable
services under certain limited circumstances. The 1996 Telecom Act limits the
class of complainants regarding CPST rates to franchising authorities only,
after first receiving two rate complaints from local subscribers.
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The 1996 Telecom Act sunsets FCC regulation of CPST rates for all cable
television systems (regardless of size) on March 31, 1999. Efforts to delay or
reverse this regulatory sunset have thus far been unsuccessful, but can be
expected to continue. The 1996 Telecom Act also relaxes existing uniform rate
requirements by specifying that uniform rate requirements do not apply where the
operator faces "effective competition," and by exempting bulk discounts to
multiple dwelling units, although complaints about predatory pricing still may
made to the FCC.
The FCC's regulations contain standards for the regulation of basic
service and CPST rates (other than per-channel or per-program services). Local
franchising authorities and the FCC, respectively, are empowered to order a
reduction of existing rates which exceed the maximum permitted level for basic
and CPST services and associated equipment, and refunds can be required. The FCC
adopted a benchmark price cap system for measuring the reasonableness of
existing basic service and CPST rates. Alternatively, cable operators have the
opportunity to make cost-of-service showings, which, in some cases, may justify
rates above the applicable benchmarks. The rules also require that charges for
cable-related equipment (e.g., converter boxes and remote control devices) and
installation services be unbundled from the provision of cable service and based
upon actual costs plus a reasonable profit. The regulations also provide that
future rate increases may not exceed an inflation-indexed amount, plus increases
in certain costs beyond the cable operator's control, such as taxes, franchise
fees and increased programming costs. Cost-based adjustments to these capped
rates can also be made in the event a cable operator adds or deletes channels.
In addition, new product tiers consisting of services new to the cable
television system can be created free of rate regulation as long as certain
conditions are met such as not moving services from existing tiers to the new
tier. There is also a streamlined cost-of-service methodology available to
justify a rate increase on basic and regulated CPST tiers for "significant"
system rebuilds or upgrades.
As a further alternative, in 1995 the FCC adopted a simplified cost-of-
service methodology which can be used by "small cable systems" owned by "small
cable companies" (the "small system rules"). A "small system" is defined as a
cable television system that has, on a headend basis, 15,000 or fewer basic
subscribers. A "small cable company" is defined as an entity serving a total of
400,000 or fewer basic subscribers that is not affiliated with a larger cable
television company, (i.e., a larger cable television company does not own more
than a 20 percent equity share or exercise de jure control). This small system
rate-setting methodology establishes maximum rates for the basic and CPST
services, as well as for installation and equipment charges. This methodology
almost always results in rates that exceed those produced by the cost-of-service
rules applicable to larger cable operators. Under this simplified cost-of-
service methodology, a small cable company's rate showing is presumed reasonable
so long as the aggregate monthly per-subscriber, per-channel charge for all
regulated services does not exceed $1.24. Once the initial rates are set they
can be adjusted periodically for inflation and external cost changes as
described above. When an eligible "small system" grows larger than 15,000 basic
subscribers, it can maintain its then current rates but it cannot increase its
rates in the normal course until an increase would be warranted under the rules
applicable to larger cable television systems. When a "small cable company"
grows larger than 400,000 basic subscribers, the qualified systems it then owns
will not lose their small system eligibility. If a small cable company sells a
qualified system, or if the company itself is sold, the qualified systems retain
that status even if the acquiring company is not a small cable company. The
Company is an eligible "small cable company" under these rules because it has
fewer than 400,000 basic subscribers and is not affiliated with another MSO that
would bring it over that limit. Approximately 75.0% of the basic subscribers
served by the Systems are covered by the small system rules.
Finally, there are regulations which require cable television systems to
permit customers to purchase video programming on a per channel or a per program
basis without the necessity of subscribing to any tier of service, other than
the basic service tier, unless the cable television system is technically
incapable of doing so. Generally, this exemption from compliance with the
statute for cable television systems that do not have such technical capability
is available until a cable television system obtains the capability, but not
later than December 2002.
Carriage of Broadcast Television Signals
The 1992 Cable Act contains signal carriage requirements which allow
commercial television broadcast stations that are "local" to a cable television
system, (i.e., the system is located in the station's Area of Dominant
Influence) to elect every three years whether to require the cable television
system to carry the station, subject to certain exceptions, or whether the cable
television system will have to negotiate for "retransmission consent" to carry
the station. The next election between must-carry and retransmission consent
will be October 1, 1999. A cable television system is generally required to
devote up to one-third of its activated channel capacity for the carriage of
local commercial television stations whether pursuant to mandatory carriage
requirements or retransmission consent requirements of the 1992 Cable Act. Local
non-commercial television stations are also given mandatory carriage
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rights, subject to certain exceptions, within the larger of: (i) a 50 mile
radius from the station's city of license; or (ii) the station's Grade B contour
(a measure of signal strength). Unlike commercial stations, noncommercial
stations are not given the option to negotiate retransmission consent for the
carriage of their signal. In addition, cable television systems have to obtain
retransmission consent for the carriage of all "distant" commercial broadcast
stations, except for certain "superstations" (i.e., commercial satellite-
delivered independent stations such as WGN). To date, compliance with the
"retransmission consent" and "must carry" provisions of the 1992 Cable Act has
not had a material effect on the Company, although this result may change in the
future depending on such factors as market conditions, channel capacity and
similar matters when such arrangements are renegotiated. The FCC has initiated a
rulemaking proceeding on the carriage of television signals in high definition
and digital formats. The outcome of this proceeding could have a material effect
on the number of services that a cable operator will be required to carry.
Franchise Fees
Although franchising authorities may impose franchise fees under the
1984 Cable Act, such payments cannot exceed 5% of a cable television system's
annual gross revenues. Under the 1996 Telecom Act, franchising authorities may
not exact franchise fees from revenues derived from telecommunications services
although they may be able to exact some additional compensation for the use of
public rights-of-way. Franchising authorities are also empowered in awarding new
franchises or renewing existing franchises to require cable operators to provide
cable-related facilities and equipment and to enforce compliance with voluntary
commitments. In the case of franchises in effect prior to the effective date of
the 1984 Cable Act, franchising authorities may enforce requirements contained
in the franchise relating to facilities, equipment and services, whether or not
cable-related. The 1984 Cable Act, under certain limited circumstances, permits
a cable operator to obtain modifications of franchise obligations.
Renewal of Franchises
The 1984 Cable Act established renewal procedures and criteria designed
to protect incumbent franchisees against arbitrary denials of renewal. While
these formal procedures are not mandatory unless timely invoked by either the
cable operator or the franchising authority, they can provide substantial
protection to incumbent franchisees. Even after the formal renewal procedures
are invoked, franchising authorities and cable operators remain free to
negotiate a renewal outside the formal process. Nevertheless, renewal is by no
means assured, as the franchisee must meet certain statutory standards. Even if
a franchise is renewed, a franchising authority may impose new and more onerous
requirements such as upgrading facilities and equipment, although the
municipality must take into account the cost of meeting such requirements.
Historically, franchises have been renewed for cable operators that have
provided satisfactory services and have complied with the terms of their
franchises. At this time, the Company is not aware of any current or past
material failure on its part to comply with its franchise agreements. The
Company believes that it has generally complied with the terms of its franchises
and has provided quality levels of service.
The 1992 Cable Act makes several changes to the process under which a
cable operator seeks to enforce his renewal rights which could make it easier in
some cases for a franchising authority to deny renewal. Franchising authorities
may consider the "level" of programming service provided by a cable operator in
deciding whether to renew. For alleged franchise violations occurring after
December 29, 1984, franchising authorities are no longer precluded from denying
renewal based on failure to substantially comply with the material terms of the
franchise where the franchising authority has "effectively acquiesced" to such
past violations. Rather, the franchising authority is estopped if, after giving
the cable operator notice and opportunity to cure, it fails to respond to a
written notice from the cable operator of its failure or inability to cure.
Courts may not reverse a denial of renewal based on procedural violations found
to be "harmless error."
Channel Set-Asides
The 1984 Cable Act permits local franchising authorities to require
cable operators to set aside certain television channels for public, educational
and governmental access programming. The 1984 Cable Act further requires cable
television systems with thirty-six or more activated channels to designate a
portion of their channel capacity for commercial leased access by unaffiliated
third parties to provide programming that may compete with services offered by
the cable operator. The 1992 Cable Act requires leased access rates to be set
according to a formula determined by the FCC. The leased access rules were
recently modified by the FCC to provide for lower rates than the original
formula produced.
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<PAGE>
Ownership
The 1996 Telecom Act repealed the statutory ban against LECs providing
video programming directly to customers within their local exchange telephone
service areas. Thus, under the 1996 Telecom Act and FCC rules recently adopted
to implement the 1996 Telecom Act, LECs may now provide video service as
broadcasters, common carriers, or cable operators. In addition, LECs and others
may also provide video service through "open video systems" ("OVS"), a
regulatory regime that may give them more flexibility than traditional cable
television systems. OVS operators (including LECs) may operate open video
systems without obtaining a local cable franchise, although they can be required
to obtain a franchise by local governmental bodies. In general, OVS operators
must make their systems available to programming providers on rates, terms and
conditions that are reasonable and nondiscriminatory. Where carriage demand by
programming providers exceeds the channel capacity of an open video system, two-
thirds of the channels must be made available to programmers unaffiliated with
the OVS operator.
The Unites States Court of Appeals for the Fifth Circuit recently
invalidated several rules of the FCC pertaining to OVS and upheld others. The
principal overturned rule was the FCC's preemption of local government authority
to require an OVS operator to obtain a franchise. The court held that local
governments do, in fact, have the authority to require a franchise, but do not
have to do so. This ruling does not affect the provisions of the 1996 Telecom
Act exempting OVS operators from such regulatory burdens as rate regulation and
customer service requirements. The Company expects the FCC to modify its open
video rules to comply with the court's decision, but is unable to predict the
impact any rule modifications may have on the Company's business and operations.
The 1996 Telecom Act generally prohibits LECs from purchasing cable
television systems (i.e., any ownership interest exceeding 10%) located within
the LEC's telephone service area, prohibits cable operators from purchasing LECs
whose service areas are located within the cable operator's franchise area, and
prohibits joint ventures between cable operators and LECs operating in
overlapping markets. There are some statutory exceptions, including a rural
exemption that permits buyouts in which the purchased cable television system or
LEC serves a non-urban area with fewer than 35,000 inhabitants, and exemptions
for the purchase of small cable television systems located in non-urbanized
areas. Also, the FCC may grant waivers of the buyout provisions in cases where:
(i) the cable operator or the LEC would be subject to undue economic distress if
such provisions were enforced; (ii) the system or facilities would not be
economically viable in the absence of a buyout or a joint venture; or (iii) the
anticompetitive effects of the proposed transaction are clearly outweighed by
the transaction's effect in light of community needs. The respective local
franchising authority must approve any such waiver.
Pursuant to the 1992 Cable Act, the FCC has imposed limits on the number
of cable television systems that a single cable operator can own. In general, no
cable operator can have an attributed interest in cable television systems that
pass more than 30% of all homes nationwide. Attributable interests for these
purposes include voting interests of 5% or more (unless there is another single
holder of more than 50% of the voting stock), officerships, directorships and
general partnership interests. The FCC has stayed the effectiveness of these
rules pending the outcome of an appeal from the U.S. District Court decision
holding the multiple ownership limit provision of the 1992 Cable Act
unconstitutional. The FCC is also considering changes to these rules.
The FCC has also adopted rules that limit the number of channels on a
cable television system that can be occupied by national video programming
services in which the entity that owns the cable television system has an
attributed interest. The limit is 40% of the first 75 activated channels.
The 1996 Telecom Act provides that registered utility holding companies
and subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act of 1935, as
amended. Electric utilities must establish separate subsidiaries known as
"exempt telecommunications companies" and must apply to the FCC for operating
authority. Due to their resources, electric utilities could be formidable
competitors to traditional cable television systems.
EEO
The 1984 Cable Act includes provisions to ensure that minorities and
women are provided equal employment opportunities within the cable television
industry. The statute requires the FCC to adopt reporting and certification
rules that apply to all cable operators with more than five full-time employees.
Pursuant to the requirements of the 1992 Cable Act, the FCC has imposed more
detailed annual EEO reporting requirements on cable operators and has expanded
those requirements to all multichannel video service distributors. Failure to
comply with the EEO
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<PAGE>
requirements can result in the imposition of fines and/or other administrative
sanctions, or may, in certain circumstances, be cited by a franchising authority
as a reason for denying a franchisee's renewal request.
Privacy
The 1984 Cable Act imposes a number of restrictions on the manner in
which cable operators can collect and disclose data about individual system
customers. The statute also requires that the cable operator periodically
provide all customers with written information about its policies regarding the
collection and handling of data about customers, their privacy rights under
federal law and their enforcement rights. In the event that a cable operator
were found to have violated the customer privacy provisions of the 1984 Cable
Act, it could be required to pay damages, attorneys' fees and other costs. Under
the 1992 Cable Act, the privacy requirements were strengthened to require that
cable operators take such actions as are necessary to prevent unauthorized
access to personally identifiable information.
Franchise Transfers
The 1992 Cable Act requires franchising authorities to act on any
franchise transfer request within 120 days after receipt of all information
required by FCC regulations and by the franchising authority. Approval is deemed
to be granted if the franchising authority fails to act within such period.
Technical Requirements
The FCC has imposed technical standards applicable to all classes of
channels that carry downstream National Television System Committee (NTSC) video
programming. The FCC also has adopted additional standards applicable to cable
television systems using frequencies in the 108-137MHz and 225-400MHz bands in
order to prevent harmful interference with aeronautical navigation and safety
radio services and has also established limits on cable television system signal
leakage. Periodic testing by cable operators for compliance with the technical
standards and signal leakage limits is required and an annual filing of the
results of these measurements is required. The 1992 Cable Act requires the FCC
to periodically update its technical standards to take into account changes in
technology. Under the 1996 Telecom Act, local franchising authorities may not
prohibit, condition or restrict a cable television system's use of any type of
subscriber equipment or transmission technology.
The FCC has adopted regulations to implement the requirements of the
1992 Cable Act designed to improve the compatibility of cable television systems
and consumer electronics equipment. These regulations, inter alia, generally
prohibit cable operators from scrambling their basic service tier and from
changing the infrared codes used in their existing customer premises equipment.
This latter requirement could make it more difficult or costly for cable
operators to upgrade their customer premises equipment and the FCC has been
asked to reconsider its regulations. The 1996 Telecom Act directs the FCC to set
only minimal standards to assure compatibility between television sets, VCRs and
cable television systems, and to rely on the marketplace. Pursuant to this
statutory mandate, the FCC has adopted rules to assure the competitive
availability to consumers of customer premises equipment, such as converters,
used to access the services offered by cable television systems and other
multichannel video programming distributors ("MVPD"). Pursuant to those rules,
consumers are given the right to attach compatible equipment to the facilities
of their MVPD so long as the equipment does not harm the network, does not
interfere with the services purchased by other customers, and is not used to
receive unauthorized services. As of July 1, 2000, MVPDs (other than DBS
operators) are required to separate security from non-security functions in the
customer premises equipment which they sell or lease to their customers and
offer their customers the option of using component security modules obtained
from the MVPD with set-top units purchased or leased from retail outlets. As of
January 1, 2005, MVPDs will be prohibited from distributing new set-top
equipment integrating both security and non-security functions to their
customers.
Pursuant to the 1992 Cable Act, the FCC has adopted rules implementing
an Emergency Alert System ("EAS"). The rules require all cable television
systems to provide an audio and video EAS message on at least one programmed
channel and a video interruption and an audio alert message on all programmed
channels. The audio alert message is required to state which channel is carrying
the full audio and video EAS message. The FCC rules permit cable television
systems either to provide a separate means of alerting persons with hearing
disabilities of EAS messages, such as a terminal that displays EAS messages and
activates other alerting mechanisms or lights, or to provide audio and video EAS
messages on all channels. Cable television systems with 10,000 or more basic
subscribers per headend were required to install EAS equipment capable of
providing audio and video EAS messages on all programmed channels by December
31, 1998. Cable television
18
<PAGE>
systems with 5,000 or more but fewer than 10,000 basic subscribers per headend
will have until October 1, 2002 to comply with that requirement. Cable
television systems with fewer than 5,000 basic subscribers per headend will have
a choice of providing either a national level EAS message on all programmed
channels or installing EAS equipment capable of providing audio alert messages
on all programmed channels, a video interrupt on all channels, and an audio and
video EAS message on one programmed channel. This must be accomplished by
October 1, 2002.
Pole Attachments
The FCC currently regulates the rates and conditions imposed by
investor-owned public utilities for use of their poles and conduits unless state
public service commissions are able to demonstrate that they adequately regulate
the rates, terms and conditions of cable television pole attachments. A number
of states and the District of Columbia have certified to the FCC that they
adequately regulate the rates, terms and conditions for pole attachments. Of the
states in which the Company operates, California, Delaware and Kentucky have
made such certification. In the absence of state regulation, the FCC administers
such pole attachment and conduit use rates through use of a formula which it has
devised. Pursuant to the 1996 Telecom Act, the FCC has adopted a new rate
formula for any attaching party, including cable television systems, which offer
telecommunications services. This new formula will result in higher attachment
rates than at present, but they will apply only to cable television systems
which elect to offer telecommunications services. Any increases pursuant to this
new formula will not begin until 2001, and will be phased in by equal increments
over the five ensuing years. The FCC has also initiated a proceeding to
determine whether it should adjust certain elements of the current rate formula.
If adopted, these adjustments could increase rates for pole attachments and
conduit space .
Other FCC Matters
FCC regulation pursuant to the 1934 Communications Act, as amended, also
includes matters regarding a cable television system's carriage of local sports
programming; restrictions on origination and cablecasting by cable operators;
rules governing political broadcasts; nonduplication of network programming;
deletion of syndicated programming; registration procedure and reporting
requirements; customer service; closed captioning; obscenity and indecency;
program access and exclusivity arrangements; and limitations on advertising
contained in nonbroadcast children's programming.
The FCC recently adopted new procedural guidelines governing the
disposition of home run wiring (a line running to an individual subscriber's
unit from a common feeder or riser cable) in multi-dwelling units ("MDUs"). MDU
owners can use these new rules to attempt to force cable operators without
contracts to either sell, abandon or remove home run wiring and terminate
service to MDU subscribers unless operators retain rights under common or state
law to maintain ownership rights in the home run wiring. In a separate
proceeding, the FCC has preempted restrictions on the deployment of private
antennas on rental property within the exclusive use of a tenant (such as
balconies and patios).
The 1996 Telecom Act requires video programming distributors to employ
technology to restrict the reception of programming by persons not subscribing
to those channels. In the case of channels primarily dedicated to sexually-
oriented programming, the distributor must fully block reception of the audio
and video portion of the channels; a distributor that is unable to comply with
this requirement may only provide such programming during a "safe harbor" period
when children are not likely to be in the audience, as determined by the FCC.
With respect to other kinds of channels, the 1996 Telecom Act requires that the
audio and video portions of the channel be fully blocked, at no charge, upon
request of the person not subscribing to the channel.
Internet Access
The Company's Systems offer or plan to offer high-speed Internet access
to subscribers. These Systems will compete with a number of other companies,
many of whom have substantial resources, such as existing Internet service
providers, commonly known as ISPs, and local and long distance phone companies.
Recently a number of ISPs have requested local authorities and the FCC to
provide rights of access to cable television systems' broadband infrastructure
in order that they be permitted to deliver their services directly to their
customers. In a recent report, the FCC declined to institute a proceeding to
examine the issue, and concluded that alternative means of access are or soon
will be made to a broad range of ISPs. Because the FCC believes the marketplace
is working and expanding customer choice for broadband services, it declined to
take action regarding ISP access to broadband cable facilities and indicated
that it would continue to monitor the issue. Several local jurisdictions also
are reviewing this issue.
19
<PAGE>
Copyright
Cable television systems are subject to federal copyright licensing
covering carriage of broadcast signals. In exchange for making semi-annual
payments to a federal copyright royalty pool and meeting certain other
obligations, cable operators are granted a statutory license to retransmit
broadcast signals. The amount of this royalty payment varies, depending on the
amount of system revenues from certain sources, the number of distant signals
carried, and the location of the cable television system with respect to over-
the-air television stations. Any future adjustment to the copyright royalty
rates will be done through an arbitration process to be supervised by the U.S.
Copyright Office. Cable operators are liable for interest on underpaid and
unpaid royalty fees, but are not entitled to collect interest on refunds
received for overpayment of copyright fees. The 1992 Cable Act's retransmission
consent provisions expressly provide that retransmission consent agreements
between television broadcast stations and cable operators do not obviate the
need for cable operators to obtain a copyright license for the programming
carried on each broadcaster's signal.
Copyrighted music performed in programming supplied to cable television
systems by pay cable networks (such as HBO) and basic cable networks (such as
USA Network) is licensed by the networks through private agreements with the
American Society of Composers and Publishers ("ASCAP") and BMI, Inc. ("BMI"),
the two major performing rights organizations in the United States. As a result
of extensive litigation, both ASCAP and BMI now offer "through to the viewer"
licenses to the cable networks which cover the retransmission of the cable
networks' programming by cable television systems to their customers.
Licenses to perform copyrighted music by cable television systems
themselves, including on local origination channels, in advertisements inserted
locally on cable television networks, and in cross promotional announcements,
must be obtained by the cable operator. Cable television industry negotiations
with ASCAP, BMI and SESAC, Inc. (a smaller performing rights organization) are
in progress.
State and Local Regulation
Cable television systems generally are operated pursuant to nonexclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. The terms and conditions of franchises vary materially
from jurisdiction to jurisdiction, and even from city to city within the same
state, historically ranging from reasonable to highly restrictive or burdensome.
Franchises generally contain provisions governing fees to be paid to the
franchising authority, length of the franchise term, renewal, sale or transfer
of the franchise, territory of the franchise, design and technical performance
of the cable television system, use and occupancy of public streets and number
and types of cable television services provided. The terms and conditions of
each franchise and the laws and regulations under which it was granted directly
affect the profitability of the cable television system. The 1984 Cable Act
places certain limitations on a franchising authority's ability to control the
operation of a cable television system. The 1992 Cable Act prohibits exclusive
franchises, and allows franchising authorities to exercise greater control over
the operation of franchised cable television systems, especially in the area of
customer service and rate regulation. The 1992 Cable Act also allows franchising
authorities to operate their own multichannel video distribution system without
having to obtain a franchise and permits states or local franchising authorities
to adopt certain restrictions on the ownership of cable television systems.
Moreover, franchising authorities are immunized from monetary damage awards
arising from regulation of cable television systems or decisions made on
franchise grants, renewals, transfers and amendments. The 1996 Telecom Act
prohibits a franchising authority from either requiring or limiting a cable
operator's provision of telecommunications services.
Various proposals have been introduced at the state and local levels
with regard to the regulation of cable television systems, and a number of
states have adopted legislation subjecting cable television systems to the
jurisdiction of centralized state governmental agencies, some of which impose
regulation of a character similar to that of a public utility. To date, other
than Delaware, no state in which the Company currently operates has enacted
state level regulation.
The foregoing does not purport to describe all present and proposed
federal, state and local regulations and legislation relating to the cable
television industry. Other existing federal regulations, copyright licensing
and, in many jurisdictions, state and local franchise requirements, currently
are the subject of a variety of judicial proceedings, legislative hearings and
administrative and legislative proposals which could change, in varying degrees,
the manner in which cable television systems operate. Neither the outcome of
these proceedings nor their impact upon the cable television industry or the
Company can be predicted at this time.
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ITEM 2. PROPERTIES
The Company's principal physical assets consist of cable television
operating plant and equipment, including signal receiving, encoding and decoding
devices, headend facilities and distribution systems and customer house drop
equipment for each of the Systems. The signal receiving apparatus typically
includes a tower, antenna, ancillary electronic equipment and earth stations for
reception of satellite signals. Headend facilities, consisting of associated
electronic equipment necessary for the reception, amplification and modulation
of signals, are located near the receiving devices. Some basic subscribers of
the Systems utilize converters that can be addressed by sending coded signals
from the headend facility over the cable network. The Company's distribution
system consists primarily of coaxial and fiber optic cables and related
electronic equipment.
The Company owns or leases parcels of real property for signal reception
sites (antenna towers and headend facilities), microwave facilities and business
offices, and owns all of its service vehicles. The Company believes that its
properties, both owned and leased, are in good condition and are suitable and
adequate for the Company's operations.
The Company's cables generally are attached to utility poles under pole
rental agreements with local public utilities, although in some areas the
distribution cable is buried in underground ducts or trenches. The physical
components of the Systems require periodic upgrading to improve system
performance and capacity.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is
a party or to which any of its properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the three
months ended December 31, 1998.
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PART II
-------
ITEM 5. MARKET FOR REGISTRANTS, COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no public trading market for Mediacom's membership interests.
There are nine holders of Mediacom's membership interests. There is no public
trading market for the common stock of Mediacom Capital, which is a wholly-owned
subsidiary of Mediacom.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table presents: (i) selected historical financial data for
the period from January 1, 1996, through March 11, 1996, and as of and for the
years ended December 31, 1994, and 1995, derived from the audited financial
statements of Benchmark Acquisition Fund II Limited Partnership (the
"Predecessor Company"); and (ii) selected historical consolidated financial and
operating data as of and for the period from the commencement of operations
(March 12, 1996) to December 31, 1996, and for the years ended December 31,
1997, and 1998, derived from the Company's audited consolidated financial
statements and should be read in conjunction with those statements.
<TABLE>
<CAPTION>
Predecessor Company The Company(1)
============================================== ==============================================
Jan. 1, 1996 Mar. 12, 1996
Year Ended Year Ended through through Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1995 Mar. 11, 1996 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1998
------------------------------------------------ -----------------------------------------------
(dollars in thousands, except per subscriber data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
- -----------------------------
Revenues $ 5,075 $ 5,171 $1,038 $ 5,411 $ 17,634 $ 129,297
Service costs 1,322 1,536 297 1,511 5,547 43,849
Selling, general and
administrative expenses 1,016 1,059 222 931 2,696 25,596
Management fee expense 252 261 52 270 882 5,797
Depreciating and amortization 4,092 3,945 527 2,157 7,636 65,793
------- ------- ------ -------- -------- ---------
Operating income (loss) $(1,607) $(1,630) $ (60) $ 542 $ 873 $ (11,738)
Interest expense, net 878 935 201 1,528 4,829 23,994
Other expense - - - 967 640 4,058
------- ------- ------ -------- -------- ---------
Net loss $(2,485) $(2,565) $ (261) $ (1,953) $ (4,596) $ (39,790)
======= ======= ====== ======== ======== =========
Other Financial Data:
- ---------------------
EBITDA (2) $ 2,485 $ 2,315 $ 467 $ 2,699 $ 8,509 $ 54,055
EBITDA margin (3) 49.0% 44.8% 45.0% 49.9% 48.3% 41.8%
Annualized EBITDA (4) $ 11,998 $ 59,996
Ratio of total indebtedness
to annualized EBITDA 6.07x 5.63x
Net cash flows from operating
activities $ 1,395 $ 1,478 $ 226 $ 237 $ 7,007 $ 53,556
Net cash flows from investing
activities (552) (261) (86) (45,257) (60,008) (397,085)
Net cash flows from financing
activities (919) (1,077) - 45,416 53,632 344,714
Operating Data (end of
period, except average):
- -------------------------
Homes passed 38,749 87,750 520,000
Basic subscribers 27,153 64,350 354,000
Basic penetration 70.1% 73.3% 68.1%
Premium service units 11,691 39,288 407,100
Premium penetration 43.1% 61.1% 115.0%
Average monthly revenue per
basic subscriber (5) $32.11 $32.88
Annualized EBITDA per basic
subscriber (6) $ 186 $ 169
Balance Sheet Data (end of
period):
- --------------------------
Total assets $11,755 $ 8,149 $ 46,560 $102,791 $ 451,152
Total indebtedness 13,294 12,217 40,529 72,768 337,905
Total members' equity (2,003) (4,568) 4,537 24,441 78,651
</TABLE>
- ----------
(1) See Note 3 to the Company's audited consolidated financial statements for
information with respect to acquisitions completed during the years ended
December 31, 1998 and 1997.
(2) EBITDA represents operating income (loss) before depreciation and
amortization. EBITDA is not intended to be a performance measure that should
be regarded as an alternative to either operating income or net income as an
indicator of operating performance, or an alternative to the statement of
cash flows as a measure of liquidity. EBITDA is not intended to represent
funds available for debt service, dividends, reinvestment or other
discretionary uses, and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles. EBITDA is included herein because the
Company believes that EBITDA is a meaningful measure of performance as it is
commonly used in the cable television industry to analyze and compare cable
television companies on the basis of operating performance, leverage and
liquidity and a company's overall ability to service its debt. The Company's
definition of EBITDA may not be identical to similarly titled measures
reported by other companies.
(3) Represents EBITDA as a percentage of revenues.
(4) EBITDA for the three months ended December 31, 1998 and 1997, multiplied by
four.
(5) Represents average monthly revenue for the three months ended December 31,
1998 and 1997, divided by basic subscribers as of the end of the period.
(6) Annualized EBITDA divided by basic subscribers as of the end of the period.
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
Mediacom was founded in July 1995 principally to acquire, operate and
develop cable television systems in selected non-metropolitan markets of the
United States. The Company's business strategy is to: (i) acquire
underperforming and undervalued cable television systems primarily in non-
metropolitan markets, as well as related telecommunications businesses; (ii)
invest in the development of a state-of-the-art technological platform for
delivery of broadband video and other services to its customers; (iii) provide
superior customer service; and (iv) deploy a flexible financing strategy to
complement the Company's growth objectives and operating plans. The Company
commenced operations in March 1996 with the acquisition of its first cable
television system. As of December 31, 1998, the Company had completed nine
acquisitions of cable television systems that on such date passed approximately
520,000 homes and served approximately 354,000 basic subscribers. All
acquisitions have been accounted for under the purchase method of accounting
and, therefore, the Company's historical results of operations include the
results of operations for each acquired system subsequent to its respective
acquisition date.
General
The Company's revenues are primarily attributable to monthly
subscription fees charged to basic subscribers for the Company's basic and
premium cable television programming services. Basic revenues consist of monthly
subscription fees for all services (other than premium programming) as well as
monthly charges for customer equipment rental and installation fees. Premium
revenues consist of monthly subscription fees for programming provided in
packages on a per channel basis. Other revenues are derived from pay-per-view
charges, late payment fees, advertising revenues and commissions related to the
sale of goods by home shopping services. The Company generated significant
increases in revenues for each of the past two years and for the period ended
December 31, 1996, substantially due to acquisitions. The following table sets
forth for the periods indicated the percentage of the Company's total revenues
attributable to the sources indicated:
1998 1997 1996
---- ---- ----
Basic revenues 80.0% 81.0% 80.0%
Premium revenues 15.0% 9.0% 8.0%
Other revenues 5.0% 10.0% 12.0%
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
The Company's operating expenses consist of service costs and selling,
general, and administrative ("SGA") expenses directly attributable to the
Systems. Service costs include fees paid to programming suppliers, expenses
related to copyright fees, wages and salaries of technical personnel and plant
operating costs. Programming fees have historically increased at rates in excess
of inflation due to increases in the number of programming services offered by
the Company and improvements in the quality of programming. The Company believes
that under the FCC's existing cable rate regulations, it will be able to
increase its rates for cable television services to more than cover any
increases in the costs of programming. However, competitive factors may limit
the Company's ability to increase its rates. The Company benefits from its
membership in a cooperative with over twelve million basic subscribers which
provides its members with significant volume discounts from programming
suppliers and cable equipment vendors. SGA expenses directly attributable to the
Systems include wages and salaries for customer service and administrative
personnel, franchise fees and expenses related to billing, marketing, bad debt,
advertising sales and office administration.
The Company relies on Mediacom Management for all of its strategic,
managerial, financial and operational oversight and advice. In exchange for all
such services, Mediacom Management is entitled to receive annual management fees
from 4.0% to 5.0% of the annual gross revenues of the Company. Mediacom
Management is also entitled to receive a fee of 0.5% or 1.0% of the purchase
price of acquisitions made by the Company and such fees are included in other
expenses. See Item 13: Certain Relationships and Related Transactions.
-------------------------------------------------------
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<PAGE>
EBITDA represents operating income (loss) before depreciation and
amortization. EBITDA is not intended to be a performance measure that should be
regarded as an alternative either to operating income or net income as an
indicator of operating performance, or an alternative to the statement of cash
flows as a measure of liquidity as determined in accordance with generally
accepted accounting principles. EBITDA is included herein because the Company
believes that EBITDA is a meaningful measure of performance as it is commonly
used by the cable television industry and by the investment community to analyze
and compare cable television companies on the basis of operating performance,
leverage and liquidity. In addition, the primary debt instruments of the Company
contain certain covenants, compliance with which is measured by computations
similar to determining EBITDA. The Company's definition of EBITDA may not be
identical to similarly titled measures reported by other companies.
The high level of depreciation and amortization associated with the
Company's acquisition activities as well as the interest expense related to its
financing activities have caused the Company to report net losses in its limited
operating history. The Company believes that such net losses are common for
cable television companies and anticipates that it will continue to incur net
losses for the foreseeable future.
Results of Operations
The following table sets forth the Company's historical percentage
relationship to revenues of items in the consolidated statements of operations:
Percentage of Revenues
Year Ended December 31,
1998 1997 1996
------- ------- -------
Revenues
100.0% 100.0% 100.0%
Service costs
33.9 31.5 27.9
SGA expenses 19.8 15.3 17.2
Management fee expense 4.5 5.0 5.0
------- ------- -------
EBITDA 41.8% 48.2% 49.9%
Depreciation and amortization 50.9 43.3 39.9
------- ------- -------
Operating income (loss) (9.1%) 4.9% 10.0%
Interest expense 18.6 27.4 28.2
Other expenses 3.1 3.6 17.9
------- ------- -------
Net loss (30.8%) (26.1%) (36.1%)
======= ======= =======
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
The following historical information for the years ended December 31,
1998 and 1997 includes the results of operations of the Lower Delaware System
(acquired on June 24, 1997), the Sun City System (acquired on September 19,
1997), the Clearlake System (acquired on January 9, 1998), the Cablevision
Systems (acquired on January 23, 1998), and the Caruthersville System (acquired
on October 1, 1998) (collectively, the "Acquired Systems") only for that portion
of the respective period that such cable television systems were owned by the
Company. See Note 3 of the Company's audited consolidated financial statements.
The Acquired Systems comprise a substantial portion of the Company's
basic subscribers. At December 31, 1998, the Acquired Systems served
approximately 328,350 basic subscribers, representing 92.8% of the approximately
354,000 subscribers served by the Company as of such date. Accordingly, the
acquisitions of the Acquired Systems have had a significant impact on the
results of operations for the year ended December 31, 1998, compared to the
prior year. Consequently, the Company believes that any comparison of its
results of operations between the years ended December 31, 1998 and 1997 are not
indicative of the Company's results of operations in the future.
25
<PAGE>
Revenues increased to approximately $129.3 million for the year ended
December 31, 1998, from approximately $17.6 million for the prior fiscal year
principally due to: (i) the inclusion of the results of operations of the Lower
Delaware System and the Sun City System for the full year ended December 31,
1998; (ii) the inclusion of the results of operations of the Clearlake System,
the Cablevision Systems and the Caruthersville System from their respective
acquisition dates; (iii) the implementation of average monthly basic service
rate increases of approximately $3.34 per basic subscriber; and (iv) internal
basic subscriber growth of approximately 2.5%.
Service costs increased to approximately $43.8 million for the year
ended December 31, 1998, from approximately $5.5 million for the prior fiscal
year. Substantially all of this increase was due to the inclusion of the results
of operations of the Acquired Systems. Of the service costs for the year ended
December 31, 1998, approximately 72.0% were attributable to programming and
copyright costs, 11.0% to technical personnel costs, and 17.0% to plant
operating costs. Of the service costs for the prior fiscal year, approximately
70.0% were attributable to programming and copyright costs, 15.0% to technical
personnel costs, and 15.0% to plant operating costs.
SGA expenses increased to approximately $25.6 million for the year ended
December 31, 1998, from approximately $2.7 million for the prior fiscal year.
Substantially all of this increase was due to the inclusion of the results of
operations of the Acquired Systems. Of the SGA expenses for the year ended
December 31, 1998, 28.0% were attributable to customer service and
administrative personnel costs, 23.0% to franchise fees, other fees and taxes,
12.0% to customer billing expenses, and 37.0% to marketing, advertising sales
and office administration expenses. Of the SGA expenses for the prior fiscal
year, approximately 36.0% were attributable to customer service and
administrative personnel costs, 9.0% to franchise fees, other fees and taxes,
13.0% to customer billing expenses, and 42.0% to marketing, advertising sales
and office administration expenses.
Management fee expense increased to approximately $5.8 million for the
year ended December 31, 1998, from approximately $0.9 million for the prior
fiscal year due to the higher revenues generated in 1998.
Depreciation and amortization expense increased to approximately $65.8
million for the year ended December 31, 1998, from approximately $7.6 million
for the prior fiscal year.
Due to the factors described above, the Company generated an operating
loss of approximately $11.7 million for the year ended December 31, 1998,
compared to operating income of $0.9 million for the prior fiscal year.
Interest expense, net, increased to approximately $24.0 million for the
year ended December 31, 1998, from approximately $4.8 million for the prior
fiscal year. This increase was substantially due to the additional debt incurred
in connection with the purchase of the Acquired Systems. Other expenses
increased to approximately $4.1 million for the year ended December 31, 1998,
from approximately $0.6 million for the prior fiscal year. This increase was
substantially due to acquisition fees paid to Mediacom Management in connection
with the acquisitions of the Clearlake System and the Cablevision Systems. Due
to the factors described above, the net loss increased to approximately $39.8
million for the year ended December 31, 1998, from approximately $4.6 million
for the prior fiscal year.
EBITDA increased to approximately $54.1 million for the year ended
December 31, 1998, from approximately $8.5 million for the prior fiscal year.
This increase was substantially due to the inclusion of the results of
operations of the Acquired Systems. EBITDA as a percentage of revenues decreased
to 41.8% for the year ended December 31, 1998, from 48.3% for the prior fiscal
year. This decrease was principally due to the higher programming costs and SGA
expenses of the Acquired Systems in relation to the revenues generated by such
cable television systems.
Year Ended December 31, 1997 Compared to the Period from March 12, 1996
(commencement of operations) to December 31, 1996
The following historical information includes the results of operations
of the Ridgecrest System (acquired on March 12, 1996, which is the date of
commencement of operations of the Company), the Kern Valley System (acquired on
June 28, 1996), the Valley Center and Nogales Systems (acquired on December 27,
1996), the Lower Delaware System (acquired on June 24, 1997) and the Sun City
System (acquired on September 19, 1997) only for that portion of the respective
period that such Systems were owned by the Company. See Item I: Business--
------------------
Development of the Systems and Note 3 of the Company's audited consolidated
- --------------------------
financial statements.
26
<PAGE>
The results of operations of the Company for the year ended December 31,
1997, were impacted by the inclusion of: (i) the full year of results of
operations of the Ridgecrest System, the Kern Valley System, the Nogales System
and the Valley Center System (collectively, the "1996 Systems"); (ii) the
results of operations of the Lower Delaware System from the date of its
acquisition on June 24, 1997; and (iii) the results of operations of the Sun
City System from the date of its acquisition on September 19, 1997. Revenues
increased to approximately $17.6 million for the year ended December 31, 1997,
from approximately $5.4 million for the period ended December 31, 1996.
Service costs increased to approximately $5.5 million for the year ended
December 31, 1997, from approximately $1.5 million for the period ended December
31, 1996. Substantially all of this increase was due to the inclusion of the
results of operations of the aforementioned acquisitions in 1997 and the full
year of results of operations of the 1996 Systems. Of the service costs for the
year ended December 31, 1997, approximately 70.0% were attributable to
programming and copyright costs, 15.0% to technical personnel costs, and 15.0%
to plant operations. Of the service costs for the period ended December 31,
1996, approximately 72.0% were attributed to programming and copyright costs,
13.0% to technical personnel costs and 15.0% to plant operating costs.
SGA expenses increased to approximately $2.7 million for the year ended
December 31, 1997, from approximately $0.9 million for the period ended December
31, 1996. Substantially all of this increase was due to the inclusion of the
results of operations of the aforementioned acquisitions in 1997 and the full
year of results of operations of the 1996 Systems. Of the SGA expenses for the
year ended 1997, approximately 36.0% were attributed to customer service and
administrative personnel costs, 9.0% to franchise fees, other fees and taxes,
13.0% to customer billing expenses and 42.0% to marketing, advertising sales and
office administrative expenses. Of the SGA expenses for the period ended
December 31, 1996, approximately 28.0% were attributed to customer billing
service and administrative personnel costs, 8.0% to franchise fees and other
fees and taxes, 10.0% to customer billing expenses and 54.0% to marketing,
advertising sales and office administrative expenses.
Management fee expense increased to approximately $0.9 million for the
year ended December 31, 1997, from approximately $0.3 million for the period
ended December 31, 1996, due to the higher revenues generated in 1997.
Depreciation and amortization expense increased to approximately $7.6
million for the year ended December 31, 1997, from approximately $2.2 million
for the period ended December 31, 1996. This increase was substantially due to
the inclusion of the results of operations of the aforementioned acquisitions in
1997 and the 1996 Systems.
Due to the factors described above, the Company generated operating
income of approximately $0.9 million for the year ended December 31, 1997,
compared to approximately $0.5 million for the period ended December 31, 1996.
Interest expense increased to approximately $4.8 million for the year
ended December 31, 1997, from approximately $1.5 million for the period ended
December 31, 1996. This increase was principally due to the increased levels of
debt incurred in connection with the aforementioned acquisitions in 1997. Other
expenses decreased to approximately $0.6 million for the year ended December 31,
1997, from approximately $1.0 million for the period ended December 31, 1996.
This decrease was principally due to pre-acquisition expenses recorded in 1996.
Due to the factors described above, the net loss increased to approximately $4.6
million for the year ended December 31, 1997, from approximately $2.0 million
for the period ended December 31, 1996.
EBITDA increased to approximately $8.5 million for the year ended
December 31, 1997, from approximately $2.7 million for the period ended December
31, 1996. This increase was substantially due to the inclusion of the results of
operations of the aforementioned acquisitions in 1997 and the results of
operations for the full year of the 1996 Systems. EBITDA as a percentage of
revenues decreased to 48.3% for the year ended December 31, 1997, from 49.9% for
the period ended December 31, 1996. This decrease was principally due to the
higher programming costs of the Systems acquired during 1997 in relation to the
revenues generated by such cable television systems.
27
<PAGE>
Selected Pro Forma Results
The Company has reported the results of operations of the Acquired
Systems from the date of their respective acquisition. The following financial
information for the three months and for the years ended December 31, 1998, and
1997, presents selected unaudited pro forma operating results assuming the
purchase of the Acquired Systems had been consummated on January 1, 1997. See
Note 3 to the Company's audited consolidated financial statements for a
description of the Company's acquisitions in 1997 and 1998.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
------------------ ----------
December 31, December 31,
------------ ------------
1998 1997 1998 1997
--------- --------- ---------- ----------
(dollars in thousands, except per subscriber data)
<S> <C> <C> <C> <C>
Revenues $ 34,923 $ 30,757 $ 136,148 $ 120,511
Costs and expenses:
Service costs 10,973 12,477 46,408 48,849
SGA expenses 7,493 7,171 26,501 27,845
Management fee expense 1,458 723 6,071 1,480
--------- --------- ---------- ----------
EBITDA $ 14,999 $ 10,386 $ 57,168 $ 42,337
========= ========= ========== ==========
EBITDA margin(1) 42.9% 33.8% 42.0% 35.1%
Basic subscribers(2) 354,000 345,525 354,000 345,525
Average monthly revenue
per basic subscriber(3) $32.88 $29.67 $32.88 $29.67
</TABLE>
- ----------
(1) Represents EBITDA as a percentage of revenues.
(2) As of end of period.
(3) Represents average monthly revenues for the three months ended December 31,
1998 divided by the number of basic subscribers at the end of the period.
Pro Forma Results for the Year Ended December 31, 1998 Compared to Pro
Forma Results for the Year Ended December 31, 1997
Revenues increased to approximately $136.1 million for the year ended
December 31, 1998, from approximately $120.5 million for the prior fiscal year.
This increase was attributable principally to internal subscriber growth of
approximately 2.5% and higher average monthly revenue per subscriber.
Service costs and SGA expenses in the aggregate decreased to
approximately $72.9 million for the year ended 1998 from approximately $76.7
million for the prior fiscal year. This decrease was principally due to the
allocation in 1997 of annual corporate overhead expenses and employee stock
expense of the previous owners of the Acquired Systems, offset by an increase in
management fee expense to approximately $6.1 million for the year ended 1998
from approximately $1.5 million for the prior fiscal year. This increase in
management fee expense was due to the higher revenues generated in 1998.
EBITDA increased to approximately $57.2 million for the year ended 1998
from approximately $42.3 million for the prior fiscal year. EBITDA as a
percentage of revenues increased to 42.0% for the year ended 1998 period from
35.1% for the prior fiscal year. This increase was due to internal subscriber
growth, higher average monthly revenue per subscriber, and the aforementioned
decrease in service costs and SGA expenses, offset by an increase in management
fee expense.
28
<PAGE>
Actual Results for Three Months Ended December 31, 1998 Compared to Pro
Forma Results for Three Months Ended December 31, 1997.
Revenues increased to approximately $34.9 million for the three months
ended December 31, 1998, from approximately $30.8 million for the corresponding
period of 1997. This increase was attributable principally to internal
subscriber growth of approximately 2.5% and higher average monthly revenue per
subscriber.
Service costs and SGA expenses in the aggregate decreased to
approximately $18.5 million for the 1998 period from approximately $19.6 million
for the corresponding period of 1997. This decrease was principally due to the
allocation in the 1997 period of annual corporate overhead expenses and employee
stock expense of the previous owners of the Acquired Systems, offset by an
increase in management fee expense to approximately $1.5 million for the 1998
period from approximately $0.7 million for the corresponding period of 1997.
This increase in management fee expense was due to the higher revenues generated
in the 1998 period.
EBITDA increased to approximately $15.0 million for the 1998 period from
approximately $10.4 million for the corresponding period of 1997. EBITDA as a
percentage of revenues increased to 42.9% for the 1998 period from 33.8% for the
corresponding period of 1997. The increase was due to internal subscriber
growth, higher average monthly revenue per subscriber, and the aforementioned
decrease in service costs and SGA expenses, offset by the increase in management
fee expense.
The pro forma financial information presented above has been prepared
for comparative purposes only and does not purport to be indicative of the
operating results which actually would have resulted had the acquisitions of the
Acquired Systems been consummated on January 1, 1997.
Liquidity and Capital Resources
The cable television business is a capital intensive business that
generally requires financing for the upgrade, expansion and maintenance of the
technical infrastructure. In addition, the Company has pursued, and continues to
pursue, a business strategy that includes selective acquisitions. The Company
has funded its working capital requirements, capital expenditures and
acquisitions through a combination of internally generated funds, long-term
borrowings and equity contributions. The Company intends to continue to finance
such expenditures through these same sources.
During 1997 and 1998, the Company upgraded certain Systems serving
approximately 129,800 basic subscribers as of December 31, 1998. During the
third quarter of 1998, the Company modified its previously announced five-year
capital improvement program by accelerating its planned completion date to June
30, 2000. Moreover, various projects that were originally scheduled to be
upgraded to 550MHz bandwidth capacity are being redesigned at 750MHz capacity,
with two-way capability, and greater utilization of fiber optic technology. This
accelerated program will enable the Company to deliver digital cable television
and high-speed cable modem service earlier and more widespread than previously
planned, beginning in 1999. Upon the program's anticipated completion in June
30, 2000, the Company expects that over 85% of its customer base will be served
by Systems with 550MHz to 750MHz bandwidth capacity. For the year ended December
31, 1997, the Company's capital expenditures (other than those related
toacquisitions) were $4.7 million. As a result of the Company's accelerated
capital improvement program, total capital expenditures (other than those
related to acquisitions) were approximately $53.7 million for 1998. In addition,
the Company plans to spend approximately $63.0 million in 1999. The Company
intends to utilize cash generated from operations and its available unused
credit commitments under its bank credit facilities, as described below, to fund
the foregoing capital expenditures.
From the Company's commencement of operations in March 1996 through
December 31, 1997, the Company invested approximately $97.8 million (before
closing costs) to acquire cable television systems serving approximately 65,250
basic subscribers as of December 31, 1998. In 1998, the Company invested
approximately $334.6 million (before closing costs) to acquire cable television
systems serving approximately 288,750 basic subscribers as of December 31, 1998.
In the aggregate, the Company has invested approximately $432.4 million (before
closing costs) to acquire the Systems.
29
<PAGE>
On January 9, 1998, the Company completed the acquisition of the
Clearlake System, serving approximately 17,200 subscribers on such date, for a
purchase price of $21.4 million (before closing costs). The acquisition of the
Clearlake System and related closing costs and adjustments were financed with
cash on hand and borrowings under the Company's bank credit facilities. See
Notes 3 and 8 to the Company's audited consolidated financial statements.
On January 23, 1998, the Company completed the acquisition of the
Cablevision Systems, serving approximately 260,100 subscribers on such date, for
a purchase price of approximately $308.2 million (before closing costs). The
acquisition of the Cablevision Systems and related closing costs and adjustments
were financed with: (i) $211.0 million of borrowings under the Company's bank
credit facilities; (ii) the proceeds of $20.0 million aggregate principal amount
of the notes issued by the Company to a bank (the "Holding Company Notes"); and
(iii) $94.0 million of equity capital contributed to Mediacom by its members. On
April 1, 1998, the Holding Company Notes were repaid in full from the net
proceeds of the 8 1/2% Senior Notes offering (see below). See Notes 1, 3 and 8
to the Company's audited consolidated financial statements.
On October 1, 1998, the Company acquired the assets of a cable
television system serving approximately 3,800 subscribers in Caruthersville,
Missouri, for a purchase price of $5.0 million (before closing costs). The
acquisition of the Caruthersville System was financed with cash on hand and
borrowings under the Company's bank credit facilities. See Notes 3 and 8 to the
Company's audited consolidated financial statements.
Mediacom is a limited liability company that serves as the holding
company for its various subsidiaries, each of which is also a limited liability
company. The Company's financing strategy is to raise equity from its members
and issue public long-term debt at the holding company level, while utilizing
its subsidiaries to access debt capital, principally in the commercial bank
market, through two stand-alone borrowing groups. The Company believes that this
financing strategy is beneficial because it broadens the Company's access to
various debt markets, enhances its flexibility in managing the Company's capital
structure, reduces the overall cost of debt capital and permits the Company to
maintain a substantial liquidity position in the form of unused and available
bank credit commitments.
Financings of the subsidiaries are currently effected through two stand-
alone borrowing groups, each with separate lending groups. The credit
arrangements in these borrowing groups are non-recourse to Mediacom, have no
cross-default provisions relating directly to each other, have different
revolving credit and term periods and contain separately negotiated covenants
tailored for each borrowing group. These credit arrangements permit the
subsidiaries, subject to covenant restrictions, to make distributions to
Mediacom. As of December 31, 1998, the Company was in compliance with all of the
financial and other covenants provided for in its bank credit agreements.
As of December 31, 1998, in order to finance its working capital
requirements, capital expenditures and acquisitions and to provide liquidity for
future capital requirements, the Company had completed the following financing
arrangements: (i) a $100.0 million bank credit facility expiring in September
2005; (ii) a $225.0 million bank credit facility expiring in September 2006;
(iii) a seller note in the original principal amount of $2.8 million issued in
connection with the acquisition of a cable television system; (iv) $200.0
million offering of 8 1/2% Senior Notes (see below); and (v) $125.0 million of
equity capital invested in Mediacom by the members of Mediacom. See Notes 1 and
8 to the Company's audited consolidated financial statements.
On April 1, 1998, Mediacom and Mediacom Capital jointly issued $200.0
million aggregate principal amount of 8 1/2% Senior Notes (the "8 1/2% Senior
Notes") due on April 15, 2008. Mediacom used approximately $20.0 million of the
net proceeds of this offering to repay in full the principal amount of the
Holding Company Notes. The remaining net proceeds of approximately $173.5
million were used to repay a portion of outstanding indebtedness under the
Company's bank credit facilities.
As of December 31, 1998 the Company had entered into interest rate swap
agreements to hedge a notional amount of $60.0 million of borrowings under the
Company's bank credit facilities, which expire from 1999 through 2002. As a
result of the Company's interest rate swap agreements, and after giving pro
forma effect to the issuance of the 8 1/2% Senior Notes, approximately 78.0% of
the Company's indebtedness was at fixed interest rates or subject to interest
rate protection as of December 31, 1998.
30
<PAGE>
As a result of the financing transactions described above, as of
December 31, 1998, the Company had the ability to borrow up to approximately
$189.9 million under the Company's bank credit facilities, all of which could
have been borrowed and distributed to Mediacom under the most restrictive
covenants in the Company's bank credit agreements. For the three months ended
December 31, 1998, the weighted average interest rate on all indebtedness
outstanding under the Company's bank credit facilities was approximately 6.9%
before giving effect to the aforementioned interest rate swap agreements, and
7.2% after giving effect to said interest rate swap agreements.
On February 26, 1999, Mediacom and Mediacom Capital jointly issued $125
million aggregate principal amount of 7 7/8% Senior Notes (the "7 7/8% Senior
Notes") due February 2011. The net proceeds from this offering of approximately
$121.9 million were used to repay a substantial portion of outstanding
indebtedness under the Company's bank credit facilities. Interest on the 7 7/8%
Senior Notes will be payable semi-annually on February 15 and August 15 of each
year, commencing on August 15, 1999. After giving pro forma effect to the
offering of the 7 7/8% Senior Notes and use of net proceeds therefrom, as of
December 31, 1998, the Company would have had approximately $311.6 million of
unused credit commitments, all of which could have been borrowed and distributed
to Mediacom under the most restrictive covenants in the Company's bank credit
agreements.
The Company is regularly presented with opportunities to acquire cable
television systems that are evaluated on the basis of the Company's acquisition
strategy. Although the Company presently does not have any definitive agreements
to acquire or sell any of its cable television systems, it is negotiating with
prospective sellers to acquire additional cable television systems. If
definitive agreements for all such potential acquisitions are executed, and if
such acquisitions are then consummated, the Company's customer base would
approximately double in size. These acquisitions are subject to the negotiation
and completion of definitive documentation, which will include customary
representations and warranties and will be subject to a number of closing
conditions. Financing for these potential transactions has not been determined;
however, if such acquisitions are consummated, the Company believes its total
indebtedness would substantially increase. No assurance can be given that such
definitive documents will be entered into or that, if entered into, the
acquisitions will be consummated.
Although the Company has not generated earnings sufficient to cover
fixed charges, the Company has generated cash and obtained financing sufficient
to meet its debt service, working capital, capital expenditure and acquisition
requirements. The Company expects that it will continue to be able to generate
funds and obtain financing sufficient to service its obligations. There can be
no assurance that the Company will be able to refinance its indebtedness or
obtain new financing in the future or, if the Company were able to do so, that
the terms would be favorable to the Company.
Recent Accounting Pronouncements
In 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income," Statement of Financial Accounting Standard No. 131, "Disclosure about
Segments of an Enterprise and Related Information" and Statement of Financial
Accounting Standard No. 132, "Employer's Disclosure about Pension and Other Post
Retirement Benefits" which are effective for the Company's fiscal 1998 financial
statements. During the years ended December 31, 1998 and 1997 and the period
ended December 31, 1996, the Company had no items of comprehensive income. Refer
to Note 13 of the Company's audited consolidated financial statements for
disclosure about segments and other related information. Additionally, the
Company does not have any defined benefit plans, therefore, additional
disclosures are not applicable to the notes of the financial statements.
In 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") and
Statement of Position 98-5, "Reporting on the Costs of Start up Activities"
("SOP 98-5") were issued. SFAS 133 establishes accounting and reporting
standards requiring that every derivative instrument be recorded in the balance
sheet as either an asset or liability measured at its fair value. The Company
will adopt SFAS 133 in fiscal 1999 but has not quantified the impact or not yet
determined the timing or method of the adoption. SOP 98-5 provides guidance on
accounting for the costs of start-up activities, which include preopening costs,
preoperating costs, organization costs, and start-up costs. The Company will
adopt SOP 98-5 in fiscal 1999. As of December 31, 1998, the Company had
approximately $2.8 million of organization costs on its balance sheet. In
accordance with SOP 98-5, these organization costs will be reported as a
cumulative effect of a change in accounting principle in fiscal 1999.
31
<PAGE>
Inflation and Changing Prices
The Company's costs and expenses are subject to inflation and price
fluctuations. However, because changes in costs are generally passed through to
subscribers, such changes are not expected to have a material effect on the
Company's results of operations.
Year 2000
The Company has formed a Year 2000 program management team responsible
for overseeing, coordinating and reporting on the Year 2000 remediation efforts.
The Company has implemented a company-wide effort to assess and remediate its
computer systems, related software and equipment to ensure such systems,
software and equipment recognize, process and store information in the year 2000
and thereafter. Such Year 2000 remediation efforts include an assessment of the
most critical systems, such as customer service and billing systems, headend
facilities, business support operations, and other equipment and facilities. The
Company is also verifying the Year 2000 readiness of its significant suppliers
and vendors.
The program management team has defined a four-step approach to
determining the Year 2000 readiness of the Company's internal systems, software
and equipment. Such approach is intended to provide a detailed method for
tracking the evaluation, repair, and testing of systems, software, and
equipment, as follows:
Phase 1: Assessment -- involves the inventory of all systems, software and
equipment and the identification of any Year 2000 issues.
Phase 2: Remediation -- involves repairing, upgrading and/or replacing any non-
compliant equipment and systems.
Phase 3: Testing -- involves testing systems, software, and equipment for Year
2000 readiness, or in certain cases, relying on test results provided
to the Company.
Phase 4: Implementation -- involves placing compliant systems, software and
equipment into production or service.
The following is the status of the Year 2000 readiness project as of
December 31, 1998: Phase 1 was substantially complete, with final completion by
April 1999; Phase 2 was underway with final completion expected by June 1999;
and Phases 3 and 4 are in the early stages, with final completion expected by
September 1999.
The completion dates set forth above are based on current expectations.
However, due to the uncertainties inherent in Year 2000 remediation, no
assurances can be given as to whether such projects will be completed on such
dates.
Third Party Systems, Software and Equipment
The program management team is surveying the Company's significant
third-party vendors and suppliers whose systems, services or products are
important to its operations (e.g., suppliers of addressable controllers and set-
top boxes, and the provider of billing services). The Year 2000 readiness of
such providers is critical to the continued provision of cable television
service without interruptions. The project management team has received
information that the most critical systems, services or products supplied to its
cable television systems by third-parties are either Year 2000 ready or are
expected to be Year 2000 ready by mid-1999. The project management team is
currently developing contingency plans for systems provided by vendors who have
not responded to its surveys or systems that may not be Year 2000 ready in a
timely fashion.
In addition to the survey process described above, the project
management team has identified the Company's most critical supplier/vendor
relationships and has instituted a verification process to determine the
vendors' Year 2000 readiness. Such verification includes reviewing vendors' test
and other data and engaging in regular communications with vendors' Year 2000
teams. The Company is currently testing to validate the Year 2000 compliance of
certain critical products and services.
32
<PAGE>
Costs
As of December 31, 1998, Year 2000 costs incurred were not material.
Although no assurances can be given, the Company currently expects that the
total projected costs associated with the Year 2000 program will be less than
$350,000.
Contingency Plans
The failure to correct a material Year 2000 problem could result in an
interruption or failure of certain important business operations. The Company
believes that its Year 2000 program will significantly reduce risks associated
with the changeover to the Year 2000 and is currently developing certain
contingency plans to minimize the effect of any potential Year 2000 related
disruptions. The risks and the uncertainties discussed below and the associated
contingency plans relate to systems, software, equipment, and services that the
Company has deemed critical in regard to customer service, business operations,
financial impact or safety.
The failure of addressable controllers contained in the headend
facilities could disrupt the delivery of premium services to customers and could
necessitate crediting customers for failure to receive such premium services. In
this unlikely event, the Company expects that it will identify and transmit the
lowest cost programming tier. Unless other contingency plans are developed with
the program suppliers, premium and pay-per-view channels would not likely be
transmitted until the addressable controller share had been repaired.
A failure of the services provided by the Company's billing systems
service provider could result in a loss of customer records which could disrupt
the ability to bill customers for a protracted period. The Company plans to
prepare electronic backup records of its customer billing information prior to
the Year 2000 to allow for data recovery as its first step to remedy this
situation in the event of billing systems failure. The Company will continue to
monitor the Year 2000 readiness of its customer-billing supplier.
Advertising revenue could be adversely affected by the failure of
certain advertising insertion equipment which could impede or prevent the
insertion of advertising spots in cable television programming. The Company
anticipates that it can minimize such effect by manually resetting the dates
each day until the equipment is repaired.
The financial impact of any or all of the above worst-case scenarios has
not been and cannot be estimated by the Company due to the numerous
uncertainties and variables associated with such scenarios.
33
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, the Company uses interest rate swap
agreements in order to fix the interest rate for the duration of the contract as
a hedge against interest rate volatility. As of December 31, 1998, the Company
had interest rate exchange agreements (the "Swaps") with various banks pursuant
to which the interest rate on $60.0 million is fixed at a weighted average swap
rate of approximately 6.2%, plus the average applicable margin over the
Eurodollar Rate option under the Company's bank credit facilities. Under the
terms of the Swaps, which expire from 1999 through 2002, the Company is exposed
to credit loss in the event of nonperformance by the other parties of Swaps. The
fair value of the Swaps is the estimated amount that the Company would receive
or pay to terminate the Swaps, taking into account current interest rates and
the current creditworthiness of the Swap counterparties. The Company would have
paid approximately $1.5 million at December 31, 1998 to terminate the Swaps,
inclusive of accrued interest. The table below provides information for the
Company's long term debt. See Notes 8 and 12 to the Company's audited
consolidated financial statements.
<TABLE>
<CAPTION>
Expected Maturity
---------------------------------------------------------
(All dollar amounts in 000's)
1999 2000 2001 2002 2003 Thereafter Total Fair Value
------ ------ ------ ------ ------ ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate $ - $ - $ - $ - $ - $203,480 $203,480 $207,980
Weighted average
interest rate - - - - - 8.5% 8.5%
Variable rate $2,000 $2,300 $6,600 $9,500 $13,600 $100,425 $134,425 $134,425
Weighted average
interest rate 6.9% 6.9% 6.9% 6.9% 6.9% 6.9% 6.9%
</TABLE>
34
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's audited consolidated financial statements, and related
notes thereto, and the report of the Company's independent public accountants
follow.
MEDIACOM LLC AND SUBSIDIARIES
-----------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants 36
Consolidated Balance Sheets as of December 31, 1998 and 1997 37
Consolidated Statements of Operations for the Years Ended December 31, 1998 and
1997, for the Period from Commencement of Operations (March 12, 1996) to
December 31, 1996, and for the Period from January 1, 1996 through March 11, 1996 38
Consolidated Statements of Changes in Members' Equity for the Years Ended December
31, 1998 and 1997, and for the Period from Commencement of Operations (March 12,
1996) to December 31, 1996 39
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998 and
1997, for the Period from Commencement of Operations (March 12, 1996) to
December 31, 1996, and for the Period from January 1, 1996 through March 11, 1996 40
Notes to Consolidated Financial Statements 41
Valuation and Qualifying Accounts 52
MEDIACOM CAPITAL CORPORATION
----------------------------
INDEX TO FINANCIAL STATEMENT
----------------------------
Report of Independent Public Accountants 53
Balance Sheet as of December 31, 1998 54
Notes to Balance Sheet 55
</TABLE>
35
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mediacom LLC:
We have audited the accompanying consolidated balance sheets of Mediacom LLC (a
New York limited liability company) and subsidiaries as of December 31, 1998,
1997 and 1996, and the related consolidated statements of operations, changes in
members' equity and cash flows for the years ended December 31, 1998 and 1997,
and for the period from the commencement of operations (March 12, 1996) to
December 31, 1996 and the statements of operations and cash flows from the
period January 1, 1996 through March 11, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Mediacom LLC and
its subsidiaries as of December 31, 1998, 1997 and 1996, and the results of
their operations, members' equity and cash flows for the years ended December
31, 1998 and 1997, and for the period from commencement of operations (March 12,
1996) to December 31, 1996 and the statements of operations and cash flows from
the period January 1, 1996 through March 11, 1996 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. Schedule II - Valuation and
Qualifying Accounts is presented for purposes of complying with the Securities
and Exchange Commissions rules and is not part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.
Arthur Andersen LLP
Stamford, Connecticut
March 5, 1999
36
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All dollar amounts in 000's)
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1997
---- ----
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 2,212 $ 1,027
Subscriber accounts receivable, net of allowance for doubtful accounts of $298
in 1998 and $56 in 1997 2,512 618
Prepaid expenses and other assets 1,712 1,358
Investment in cable television systems:
Inventory 8,240 1,032
Property, plant and equipment, at cost 314,627 51,735
Less - accumulated depreciation (45,423) (5,737)
---------- --------
Property, plant and equipment, net 269,204 45,998
Intangible assets, net of accumulated amortization of $25,578 in 1998 and
$3,377 in 1997 148,897 47,859
---------- --------
Total investment in cable television systems 426,341 94,889
Other assets, net of accumulated amortization of $4,583 in 1998 and $627 in 1997 18,375 4,899
---------- --------
Total assets $ 451,152 $102,791
========== ========
LIABILITIES AND MEMBERS' EQUITY
LIABILITIES
Debt $337,905 $ 72,768
Accounts payable 2,678 853
Accrued expenses 29,446 4,021
Subscriber advances 1,510 603
Management fees payable 962 105
---------- --------
Total liabilities 372,501 78,350
---------- --------
MEMBERS' EQUITY
Capital contributions 124,990 30,990
Accumulated deficit (46,339) (6,549)
---------- --------
Total members' equity 78,651 24,441
---------- --------
Total liabilities and members' equity $451,152 $102,791
========== =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
37
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All dollar amounts in 000's)
<TABLE>
<CAPTION>
The Company Predecessor
============================================== ===============
March 12,
1996
through January 1, 1996
Year Ended December 31, December 31, through
1998 1997 1996 March 11, 1996
--------- ------- -------- ---------------
<S> <C> <C> <C> <C>
Revenues $129,297 $17,634 $ 5,411 $1,038
Costs and expenses:
Service costs 43,849 5,547 1,511 297
Selling, general, and
administrative expenses 25,596 2,696 931 222
Management fee expense 5,797 882 270 52
Depreciation and amortization 65,793 7,636 2,157 527
--------- ------- -------- ---------------
Operating income (loss) (11,738) 873 542 (60)
--------- ------- -------- ---------------
Interest expense, net 23,994 4,829 1,528 201
Other expenses 4,058 640 967 -
--------- ------- -------- ---------------
Net loss $(39,790) $(4,596) $(1,953) $ (261)
========= ======= ======== ===============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
38
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
(All dollar amounts in 000's)
<TABLE>
<S> <C>
Balance, Commencement of Operations (March 12, 1996) $ 5,490
Capital Contributions 1,000
Net Loss (1,953)
--------
Balance, December 31, 1996 4,537
Capital Contributions 24,500
Net Loss (4,596)
--------
Balance, December 31, 1997 24,441
Capital Contributions 94,000
Net Loss (39,790)
--------
Balance, December 31, 1998 $78,651
========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
39
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts in 000's)
<TABLE>
<CAPTION>
The Company Predecessor
========================================= ===========
March 12, January 1,
1996 1996
through through
Year Ended December 31, December 31, March 11,
1998 1997 1996 1996
-------- ------- -------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(39,790) $(4,596) $(1,953) $ (261)
Adjustments to reconcile net loss to net cash
flows from operating
activities:
Accretion of interest on seller note 287 264 129 -
Depreciation and amortization 65,793 7,636 2,157 527
Changes in assets and liabilities, net of effects
from acquisitions:
Increase in subscriber
accounts receivable (1,437) (351) (267) (40)
Decrease (increase) in prepaid
expenses and other assets 329 (34) (1,323) -
Increase (decrease) in accounts payable 1,822 (242) 514 -
Increase in accrued expenses 24,843 3,762 840 -
Increase in subscriber advances 852 498 105 -
Increase in management fees payable 857 70 35 -
-------- ------- ------- -------
Net cash flows from operating activities 53,556 7,007 237 226
-------- ------- ------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures (53,721) (4,699) (671) (86)
Acquisitions of cable television systems (343,330) (54,842) (44,539) -
Other, net (34) (467) (47) -
-------- ------- ------- -------
Net cash flows used in investing activities (397,085) (60,008) (45,257) (86)
-------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
New borrowings 488,200 72,225 39,200 -
Repayment of debt (223,350) (40,250) (1,600) -
Increase in seller note - - 2,800 -
Capital contributions 94,000 24,500 6,490 -
Financing costs (14,136) (2,843) (1,474) -
-------- ------- ------- -------
Net cash flows from financing activities 344,714 53,632 45,416 -
-------- ------- ------- -------
Net increase in cash and cash equivalents 1,185 631 396 140
CASH AND CASH EQUIVALENTS, beginning of period 1,027 396 - 266
-------- ------- ------- -------
CASH AND CASH EQUIVALENTS, end of period $ 2,212 $ 1,027 $ 396 $ 406
======== ======= ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for interest $ 21,127 $ 4,485 $ 1,190 $ 201
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
40
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
(1) The Limited Liability Company:
Organization
Mediacom LLC ("Mediacom" and collectively with its subsidiaries,
the "Company"), a New York limited liability company, was formed on July 17,
1995 and initially conducted its affairs pursuant to an operating agreement
dated March 12, 1996 (the "1996 Operating Agreement"). On March 31 and June 16,
1997, the 1996 Operating Agreement was amended and restated upon the admission
of new members to Mediacom (the "1997 Operating Agreement"). On January 20,
1998, the 1997 Operating Agreement was amended and restated upon the admission
of additional members to Mediacom (the "1998 Operating Agreement"). As of
December 31, 1998, the Company had acquired and was operating cable television
systems in fourteen states, principally Alabama, California, Florida, Kentucky,
Missouri and North Carolina. (See Note 3).
Mediacom Capital Corporation ("Mediacom Capital"), a New York
corporation wholly owned by Mediacom, was organized in March 1998 for the sole
purpose of acting as co-issuer with Mediacom of $200,000 aggregate principal
amount of 8 1/2% Senior Notes due 2008 (the "8 1/2% Senior Notes"), which were
issued on April 1, 1998. Mediacom Capital has nominal assets and does not
conduct operations of its own. The 8 1/2% Senior Notes are joint and several
obligations of Mediacom and Mediacom Capital, although Mediacom received all the
net proceeds of the 8 1/2% Senior Notes.
Capitalization
The Company was initially capitalized on March 12, 1996, with
equity contributions of $5,445 from Mediacom's members and $45 from Mediacom
Management Corporation ("Mediacom Management"), a Delaware corporation. On June
28, 1996, Mediacom received additional equity contributions of $1,000 from an
existing member.
On June 22 and September 18, 1997, Mediacom received additional
equity contributions of $19,500 and $5,000, respectively, from its members. On
January 22, 1998, Mediacom received additional equity contributions of $94,000
from its members.
Allocation of Losses, Profits and Distributions
For 1996, pursuant to the 1996 Operating Agreement, net losses
were allocated 98% to the manager as defined in the operating agreements (the
"Manager") and the balance to the other members ratably in accordance with their
respective membership units. For 1997, pursuant to the 1997 Operating Agreement,
net losses were allocated first to the Manager and the balance to the other
members ratably in accordance with their respective membership units. For 1998,
pursuant to the 1998 Operating Agreement, net losses are to be allocated first
to the Manager; second, to the member owning the largest number of membership
units in Mediacom; and third, to the members, other than the Manager, ratably in
accordance with their respective positive capital account balances and
membership units.
Profits are allocated first to the members to the extent of
their deficit capital account; second, to the members to the extent of their
preferred capital; third, to the members (including the Manager) until they
receive an 8% preferred return on their preferred capital (the "Preferred
Return"); fourth, to the Manager until the Manager receives an amount equal to
25% of the amount provided to deliver the Preferred Return to all members; the
balance, 80% to the members (including the Manager) in proportion to their
respective membership units and 20% to the Manager. The 1997 Operating Agreement
increased the Preferred Return from 8% to 12%.
Distributions are made first to the members (including the
Manager) in proportion to their respective membership units until they receive
amounts equal to their preferred capital; second, to the members (including the
Manager) in proportion to their percentage interests until all members receive
the Preferred Return; third, to the Manager until the Manager receives 25% of
the amount provided to deliver the Preferred Return; the balance, 80% to the
members (including the Manager) in proportion to their percentage interests and
20% to the Manager.
41
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
Redemption Rights
Except as set forth below, no member has the right to have its
membership interests redeemed or its capital contributions returned prior to
dissolution of Mediacom. Pursuant to the 1998 Operating Agreement, each member
has the right to require Mediacom to redeem its membership interests at any time
if the holding of such interests exceeds the amount permitted, or is otherwise
prohibited or becomes unduly burdensome, by any law to which such member is
subject, or, in the case of any member which is a Small Business Investment
Company as defined in and subject to regulation under the Small Business
Investment Act of 1958, as amended, upon a change in the Company's principal
business activities to an activity not eligible for investment by a Small
Business Investment Company or a change in the reported use of proceeds of a
member's investment in Mediacom. If Mediacom is unable to redeem for cash any or
all of such membership interests at such time, Mediacom will issue as payment
for such interests a junior subordinated promissory note with a five-year
maturity date and deferred interest which accrues and compounds at an annual
rate of 5% over the prime rate.
In addition, in connection with the Company's acquisition of the
Cablevision Systems on January 23, 1998 (See Note 3), the Federal Communications
Commission (the "FCC") issued a transactional forbearance from its cross-
ownership restrictions, effective for a period of one year, permitting a certain
existing member (the "Transactional Member") to purchase additional units of
membership interest in Mediacom. This temporary waiver was originally set to
expire on January 23, 1999. However, on January 15, 1999, the FCC granted an
extension of such waiver to July 23, 1999. If at the end of this extension, the
Transactional Member's membership interest in Mediacom remains above the
limitations imposed by the FCC's cross-ownership restrictions, Mediacom will be
required to repurchase such number of the Transactional Member's units of
membership interest which exceed the permissible ownership level. If such
repurchase were to occur on July 23, 1999 (i.e., upon expiration of the
transactional forbearance), and assuming no changes in the number of outstanding
membership units of Mediacom and no changes in such cross-ownership rules, the
repurchase price for such excess membership interests would be approximately
$7,500 plus accrued interest.
Duration and Dissolution
Mediacom will be dissolved upon the first to occur of the
following: (i) December 31, 2020; (ii) certain events of bankruptcy involving
the Manager or the occurrence of any other event terminating the continued
membership of the Manager, unless within one hundred eighty days after such
event the Company is continued by the vote or written consent of no less than
two-thirds of the remaining membership interests; or (iii) the entry of a decree
of judicial dissolution.
(2) Summary of Significant Accounting Policies:
Basis of Preparation of Consolidated Financial Statements
The consolidated financial statements include the accounts of
Mediacom and its subsidiaries. All significant intercompany transactions and
balances have been eliminated. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The financial statements for the period from January 1, 1996,
through March 11, 1996, and reflecting the results of operations and statement
of cash flows, are referred to as the "Predecessor" financial statements. The
Predecessor is Benchmark Acquisition Fund II Limited Partnership which owned the
assets comprising the cable television system serving at the time of its
acquisition by the Company 10,300 subscribers in Ridgecrest, California.
Accordingly, the accompanying financial statements of the Predecessor and the
Company are not comparable in all material respects since those financial
statements report results of operations and cash flows of these two separate
entities.
42
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
Revenue Recognition
Revenues are recognized in the period in which the related services are
provided to the Company's subscribers.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
Concentration of Credit Risk
The Company's accounts receivable is comprised of amounts due
from subscribers in varying regions throughout the United States. Concentration
of credit risk with respect to these receivables is limited due to the large
number of customers comprising the Company's customer base and their geographic
dispersion.
Property, Plant and Equipment
Property, plant and equipment is recorded at purchased and
capitalized cost. Repairs and maintenance are charged to operations, and
replacements, renewals and additions are capitalized. The Company capitalized a
portion of salaries and overhead related to the installation of property, plant
and equipment of approximately $6,548 and $681 in 1998 and 1997, respectively.
The Company capitalizes interest on funds borrowed for projects
under construction. Such interest is charged to property, plant and equipment
and amortized over the approximate life of the related assets. Capitalized
interest was approximately $1,014 in 1998.
Depreciation is calculated on a straight-line basis over the
following useful lives:
Buildings 45 years
Leasehold improvements Life of respective lease
Cable systems and equipment 5 to 10 years
Subscriber devices 5 years
Vehicles 5 years
Furniture, fixtures and office equipment 5 to 10 years
Intangible Assets
Intangible assets include franchising costs, goodwill, subscriber lists
and covenants not to compete. Amortization of intangible assets is calculated on
a straight-line basis over the following lives:
Franchising costs 15 years
Goodwill 15 years
Subscriber lists 5 years
Covenants not to compete 3 to 7 years
Impairment of Long-Lived Assets
The Company follows the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). SFAS 121
requires that long-lived assets and certain identifiable intangibles to be held
and used by any entity, be reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
There has been no impairment of long-lived assets of the Company under SFAS 121.
43
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
Other Assets
Other assets include organizational and financing costs. In accordance
with Statement of Position 98-5, organization costs of approximately $2,755 will
be reported as a cumulative effect of a change in accounting principle in fiscal
1999. See Note 5. Organizational costs are being amortized on a straight-line
basis over 5 years. Financing costs incurred to raise debt and equity capital
are deferred and amortized on a straight-line basis over the expected term of
such financings. Included in other assets are financing costs of approximately
$14,136 and $3,963 as of December 31, 1998 and 1997, respectively.
Income Taxes
Since Mediacom is a limited liability company and the Predecessor is a
limited partnership, they are not subject to federal or state income taxes, and
no provision for income taxes relating to their statements of operations have
been reflected in the accompanying financial statements. The members of Mediacom
and the limited partners of the Predecessor are required to report their share
of income or loss in their respective income tax returns.
(3) Acquisitions:
The Company has completed the undernoted acquisitions (the "Acquired
Systems") in 1998 and 1997. These acquisitions were accounted for using the
purchase method of accounting, and accordingly, the purchase price of these
Acquired Systems have been allocated to the assets acquired and liabilities
assumed at their estimated fair values at their respective date of acquisition.
The results of operations of the Acquired Systems have been included with those
of the Company since the dates of acquisition.
1998
On January 9, 1998, Mediacom California LLC ("Mediacom California"), a
subsidiary of Mediacom, acquired the assets of a cable television system serving
approximately 17,200 subscribers in Clearlake, California and surrounding
communities (the "Clearlake System") for a purchase price of $21,400. The
purchase price has been preliminarily allocated as follows: $8,560 to property,
plant and equipment, and $12,840 to intangible assets. Such allocations are
subject to adjustments based upon the final appraisal information received by
the Company. The final allocations of the purchase price are not expected to
differ materially from the preliminary allocations. Additionally, approximately
$226 of direct acquisition costs has been allocated to other assets. In the
first quarter of 1998, the Company recorded acquisition reserves related to this
acquisition in the amount of approximately $370, which are included in accrued
expenses. The acquisition of the Clearlake System and related closing costs and
adjustments were financed with borrowings under the Company's bank credit
facilities. See Note 8.
On January 23, 1998, Mediacom Southeast LLC, ("Mediacom Southeast"), a
wholly-owned subsidiary of Mediacom, acquired the assets of cable television
systems serving approximately 260,100 subscribers in various regions of the
United States (the "Cablevision Systems") for a purchase price of $308,200. The
purchase price has been allocated based on independent appraisal as follows:
$205,500 to property, plant and equipment, and $102,700 to intangible assets.
Additionally, approximately $3,500 of direct acquisition costs has been
allocated to other assets. In the first quarter of 1998, the Company recorded
acquisition reserves related to this acquisition in the amount of $3,750, which
are included in accrued expenses. The acquisition of the Cablevision Systems and
related closing costs and adjustments were financed with equity contributions,
borrowings under the Company's bank credit facilities, and other bank debt. See
Notes 1 and 8.
On October 1, 1998, Mediacom Southeast acquired the assets of a cable
television system serving approximately 3,800 subscribers in Caruthersville,
Missouri (the "Caruthersville System") for a purchase price of $5,000. The
purchase price has been preliminarily allocated as follows: $2,000 to property,
plant and equipment, and $3,000 to intangible assets. Such allocations are
subject to adjustments based upon the final appraisal information received by
the Company. The final allocations of the purchase price are not expected to
differ materially from the preliminary allocations. The acquisition of the
Caruthersville System and related closing costs and adjustments were financed
with borrowings under the Company's bank credit facilities. See Note 8.
44
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
1997
On June 24, 1997, Mediacom Delaware LLC ("Mediacom Delaware"), a wholly-
owned subsidiary of Mediacom, acquired the assets of cable television systems
serving approximately 29,300 subscribers in lower Delaware and southwestern
Maryland (the "Lower Delaware System") for a purchase price of $42,600. The
purchase price has been allocated as follows: $21,300 to property, plant and
equipment, and $21,300 to intangible assets. Additionally, $409 of direct
acquisition costs has been allocated to other assets.
On September 19, 1997, Mediacom California acquired the assets of a
cable television system serving approximately 9,600 subscribers in Sun City,
California (the "Sun City System") for a purchase price of $11,500. The purchase
price has been allocated as follows: $7,150 to property, plant and equipment,
and $4,350 to intangible assets. Additionally, $52 of direct acquisition costs
has been allocated to other assets.
(4) Pro Forma Results:
Summarized below are the pro forma unaudited results of operations for
the years ended December 31, 1998 and 1997, assuming the purchase of the
Acquired Systems had been consummated as of January 1, 1997. Adjustments have
been made to: (i) depreciation and amortization reflecting the fair value of the
assets acquired; and (ii) interest expense. The pro forma results may not be
indicative of the results that would have occurred if the combination had been
in effect on the dates indicated or which may be obtained in the future.
1998 1997
Revenue $ 136,148 $ 120,511
Operating loss (11,809) (15,352)
Net loss $ (41,340) $ (42,921)
(5) Recent Accounting Pronouncements:
In 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income," Statement of Financial Accounting Standard No. 131, "Disclosure about
Segments of an Enterprise and Related Information" and Statement of Financial
Accounting Standard No. 132, "Employer's Disclosure about Pension and Other Post
Retirement Benefits" which are effective for the Company's fiscal 1998 financial
statements. During the years ended December 31, 1998 and 1997 and the period
ended December 31, 1996, the Company had no items of comprehensive income. Refer
to Note 13 of the consolidated financial statements for disclosure about
segments and other related information. Additionally, the Company does not have
any defined benefit plans, therefore, additional disclosures are not applicable
to the notes of the financial statements.
In 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") and
Statement of Position 98-5, "Reporting on the Costs of Start up Activities"
("SOP 98-5") were issued. SFAS 133 establishes accounting and reporting
standards requiring that every derivative instrument be recorded in the balance
sheet as either an asset or liability measured at its fair value. The Company
will adopt SFAS 133 in fiscal 1999 but has not quantified the impact or not yet
determined the timing or method of the adoption. SOP 98-5 provides guidance on
accounting for the costs of start-up activities, which include preopening costs,
preoperating costs, organization costs, and start-up costs. The Company will
adopt SOP 98-5 in fiscal 1999. As of December 31, 1998, the Company had
approximately $2,800 of organization costs on its balance sheet. In accordance
with SOP 98-5, these organization costs will be reported as a cumulative effect
of a change in accounting principle in fiscal 1999.
45
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
(6) Property, Plant and Equipment:
As of December 31, 1998 and 1997, property, plant and equipment
consisted of:
1998 1997
--------- --------
Land and land improvements $ 341 $ 108
Buildings and leasehold improvements 5,731 337
Cable systems, equipment and subscriber devices 300,051 49,071
Vehicles 5,051 1,135
Furniture, fixtures and office equipment 3,453 1,084
--------- --------
$ 314,627 $ 51,735
Accumulated depreciation (45,423) (5,737)
--------- --------
$ 269,204 $ 45,998
========= ========
(7) Intangible Assets:
The following table summarizes the net asset value for each intangible
asset category as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Gross Asset Net Asset
----------- ---------
1998 Value Amortization Value
---- ----- ------------ -----
<S> <C> <C> <C>
Franchising costs $ 87,509 $ 7,983 $ 79,526
Goodwill 5,640 584 5,056
Subscriber lists 76,484 15,701 60,783
Covenants not to compete 4,842 1,310 3,532
---------- ---------- ----------
$ 174,475 $ 25,578 $ 148,897
========== ========== ==========
<CAPTION>
Gross Asset Net Asset
----------- ---------
1997 Value Amortization Value
---- ----- ------------ -----
<S> <C> <C> <C>
Franchising costs $ 22,181 $ 1,732 $ 20,449
Goodwill 5,640 232 5,408
Subscriber list 18,573 1,085 17,488
Covenants not to compete 4,842 328 4,514
---------- ---------- ----------
$ 51,236 $ 3,377 $ 47,859
========== ========== ==========
</TABLE>
(8) Debt:
As of December 31, 1998 and 1997, debt consisted of:
1998 1997
--------- ---------
Mediacom:
8-1/2% Senior Notes (a) $ 200,000 $ -
Subsidiaries:
Bank Credit Facilities (b) 134,425 69,575
Seller Note (c) 3,480 3,193
--------- ---------
$ 337,905 $ 72,768
========= =========
(a) On April 1, 1998, Mediacom and Mediacom Capital jointly issued $200,000
aggregate principal amount of 8 1/2% Senior Notes due on April 15, 2008.
The 8 1/2% Senior Notes are unsecured obligations of the Company, and the
indenture for the 8 1/2% Senior Notes stipulates, among other things,
restrictions on incurrence of indebtedness, distributions, mergers and
asset sales and has cross-default provisions related to other debt of the
Company. Interest accrues at 8 1/2% per annum, beginning from the date of
issuance
46
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
and is payable semi-annually on April 15 and October 15 of each year,
commencing on October 15, 1998. The 8 1/2% Senior Notes may be redeemed
at the option of Mediacom, in whole or part, at any time after April 15,
2003, at redemption prices decreasing from 104.25% of their principal
amount to 100% in 2006, plus accrued and unpaid interest.
(b) On January 23, 1998, Mediacom Southeast entered into an eight and one-
half year, $225,000 reducing revolver and term loan agreement (the
"Southeast Credit Facility"). On June 24, 1997, Mediacom California,
Mediacom Delaware and Mediacom Arizona LLC, a wholly-owned subsidiary of
Mediacom (collectively, the "Western Group"), entered into an eight and
one-half year, $100,000 reducing revolver and term loan agreement (the
"Western Credit Facility" and, together with the Southeast Credit
Facility, the "Bank Credit Facilities"). At December 31, 1998, the
aggregate commitments under the Bank Credit Facilities were $324,400. The
Bank Credit Facilities are non-recourse to Mediacom and have no cross-
default provisions relating directly to each other. The reducing
revolving credit lines under the Bank Credit Facilities make available a
maximum commitment amount for a period of up to eight and one-half years,
which is subject to quarterly reductions, beginning September 30, 1998,
ranging from 0.21% to 12.42% of the original commitment amount of the
reducing revolver. The term loans under the Bank Credit Facilities are
repaid in consecutive installments beginning September 30, 1998, ranging
from 0.42% to 12.92% of the original term loan amount. The Bank Credit
Facilities require mandatory reductions of the reducing revolvers and
mandatory prepayments of the term loans from excess cash flow, as
defined, beginning December 31, 1999. The Bank Credit Facilities provide
for interest at varying rates based upon various borrowing options and
the attainment of certain financial rations and for commitment fees of
3/8% to 1/2% per annum on the unused portion of available credit under
the reducing revolver credit lines. The effective interest rates on
outstanding debt under the Bank Credit Facilities were 7.2% and 8.8% for
the three months ending December 31, 1998 and December 31, 1997,
respectively, after giving effect to the interest rate swap agreements
discussed below.
The applicable margins for the respective borrowing rate options have
the following ranges:
Interest Rate Option Margin Rate
-------------------- ----------------
Base Rate 0.250% to 1.625%
Eurodollar Rate 1.250% to 2.625%
The Bank Credit Facilities require Mediacom's subsidiaries to maintain
compliance with certain financial covenants including, but not limited
to, the leverage ratio, the interest coverage ratio, the fixed charge
coverage ratio and the pro forma debt service coverage ratio, as defined
in the respective credit agreements. The Bank Credit Facilities also
require Mediacom's subsidiaries to maintain compliance with other
covenants including, but not limited to, limitations on mergers and
acquisitions, consolidations and sales of certain assets, liens, the
incurrence of additional indebtedness, certain restrictive payments, and
certain transactions with affiliates. The Company was in compliance with
all covenants as of December 31, 1998.
The Bank Credit Facilities are secured by Mediacom's pledge of all its
ownership interests in the subsidiaries and a first priority lien on all
the tangible and intangible assets of the operating subsidiaries, other
than real property in the case of the Southeast Credit Facility. The
indebtedness under the Bank Credit Facilities is guaranteed by Mediacom
on a limited recourse basis to the extent of its ownership interests in
the operating subsidiaries. At December 31, 1998, the Company had
approximately $189,900 of unused commitments under the Bank Credit
Facilities, all of which could have been borrowed by the operating
subsidiaries for purposes of distributing such borrowed proceeds to
Mediacom under the most restrictive covenants in the Company's bank
credit agreements.
As of December 31, 1998, the Company had entered into interest rate
exchange agreements (the "Swaps") with various banks pursuant to which
the interest rate on $60,000 is fixed at a weighted average swap rate of
approximately 6.2%, plus the average applicable margin over the
Eurodollar Rate option under the Bank Credit Facilities. Any amounts paid
or received due to swap arrangements are recorded as an
47
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
adjustment to interest expense. Under the terms of the Swaps, which
expire from 1999 through 2002, the Company is exposed to credit loss in
the event of nonperformance by the other parties to the Swaps. However,
the Company does not anticipate nonperformance by the counterparties.
(c) In connection with the acquisition of the Kern Valley System, the Western
Group issued to the seller an unsecured senior subordinated note (the
"Seller Note") in the amount of $2,800, with a final maturity of June 28,
2006. Interest is deferred throughout the term of the note and is payable
at maturity or upon prepayment. For the five-year period ending June 28,
2001, the annual interest rate is 9.0%. After the initial five-year
period, the annual interest rate increases to 15.0%, with an interest
clawback for the first five years. After the initial seven-year period,
the interest rate increases to 18.0%, with an interest clawback for the
first seven years. The Company intends to prepay the Seller Note plus
accrued interest on or before June 28, 2001, subject to prior approval by
the parties to the Western Credit Facilities, which the Company believes
it will obtain. The Company expects to repay the Seller Note with cash
flow generated from operations and future borrowings. There are no
penalties associated with prepayment of this note.
The Seller Note agreement contains a debt incurrence covenant limiting
the ability of the Western Group to incur additional indebtedness. The
Seller Note is subordinated and junior in right of payment to all senior
obligations, as defined in the Western Credit Facility.
The stated maturities of all debt outstanding as of December 31, 1998, are as
follows:
1999 $ 2,000
2000 2,300
2001 6,600
2002 9,500
2003 13,600
Thereafter 303,905
--------
$337,905
========
(9) Related Party Transactions:
Separate management agreements with each of Mediacom's subsidiaries
provide for Mediacom Management to be paid compensation for management services
performed for the Company. Under such agreements, Mediacom Management, which is
wholly-owned by the Manager, is entitled to receive annual management fees
calculated as follows: (i) 5.0% of the first $50,000 of annual gross operating
revenues of the Company; (ii) 4.5% of such revenues in excess thereof up to
$75,000; and (iii) 4.0% of such revenues in excess of $75,000. The Company
incurred management fees of approximately $5,797, $882, and $270 for the years
ended 1998 and 1997, and for the period ended December 31, 1996, respectively.
The operating agreement of Mediacom provides for Mediacom Management to
be paid a fee of 1.0% of the purchase price of acquisitions made by the Company
until the Company's pro forma consolidated annual operating revenues equal
$75,000 and 0.5% of such purchase price thereafter. The Company incurred
acquisition fees of approximately $3,327, $544, and $441 for the years ended
1998 and 1997, and for the period ended December 31, 1996, respectively. The
acquisition fees are included in other expenses in the statement of operations.
In addition, the operating agreements of the Company provide for the
reimbursement of reasonable out-of-pocket expenses of Mediacom Management
incurred in connection with the operation of the business of the Company and
acting for or on behalf of the Company in connection with any potential
acquisitions. The Company reimbursed Mediacom Management approximately $53, $59,
and $29 for the years ended 1998 and 1997, and for the period ended December 31,
1996, respectively.
48
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
(10) Employee Benefit Plans:
Substantially all employees of the Company are eligible to participate
in a deferred arrangement pursuant to IRC Section 401(k) (the "Plan"). Under
such arrangement, eligible employees may contribute up to 15% of their current
pre-tax compensation to the Plan. The Plan permits, but does not require,
matching contributions and non-matching (profit sharing) contributions to be
made by the Company up to a maximum dollar amount or maximum percentage of
participant contributions, as determined annually by the Company. The Company
presently matches 50% on the first 6% of employee contributions. The Company's
contributions under the Plan totaled approximately $264, $14, and $10 for the
years ended 1998 and 1997, and for the period ended December 31, 1996,
respectively.
(11) Commitments and Contingencies:
Under various lease and rental agreements for offices, warehouses and
computer terminals, the Company had rental expense of approximately $588, $138,
and $22 for the years ended 1998 and 1997, and for the period ended December 31,
1996, respectively. Future minimum annual rental payments are as follows:
1999 $1,815
2000 1,190
2001 768
2002 379
2003 267
In addition, the Company rents utility poles in its operations generally
under short-term arrangements, but the Company expects these arrangements to
recur. Total rental expense for utility poles was approximately $1,709, $102,
and $24 for the years ended 1998 and 1997, and for the period ended December 31,
1996, respectively.
Legal Proceedings
Management is not aware of any legal proceedings currently that will
have a material adverse impact on the Company's financial statements.
Regulation in the Cable Television Industry
The cable television industry is subject to extensive regulation by
federal, local and, in some instances, state government agencies. The Cable
Television Consumer Protection and Competition Act of 1992 and the Cable
Communication Policy Act of 1984 (collectively, the "Cable Acts"), both of which
amended the Communications Act of 1934 (as amended, the "Communications Act"),
established a national policy to guide the development and regulation of cable
television systems. The Communications Act was recently amended by the
Telecommunications Act of 1996 (the "1996 Telecom Act"). Principal
responsibility for implementing the policies of the Cable Acts and the 1996
Telecom Act has been allocated between the FCC and state or local regulatory
authorities.
Federal Law and Regulation
The Cable Acts and the FCC's rules implementing such acts generally have
increased the administrative and operational expenses of cable television
systems and have resulted in additional regulatory oversight by the FCC and
local or state franchise authorities. The Cable Acts and the corresponding FCC
regulations have established, among other things: (i) rate regulations; (ii)
mandatory carriage and retransmission consent requirements that require a cable
television system under certain circumstances to carry a local broadcast station
or to obtain consent to carry a local or distant broadcast station; (iii) rules
for franchise renewals and transfers; and (iv) other requirements covering a
variety of operational areas such as equal employment opportunity, technical
standards and customer service requirements.
49
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
The 1996 Telecom Act deregulates rates for cable programming services
tiers ("CPST") on March 31, 1999 and, for certain small cable operators,
immediately eliminates rate regulation of CPST, and, in certain limited
circumstances, basic services. The FCC is currently developing permanent
regulations to implement the rate deregulation provisions of the 1996 Telecom
Act. The Company is currently unable to predict the ultimate effect of the Cable
Acts or the 1996 Telecom Act on its financial statements.
The FCC and Congress continue to be concerned that rates for regulated
programming services are rising at a rate exceeding inflation. It is therefore
possible that the FCC will further restrict the ability of cable television
operators to implement rate increases and/or Congress will enact legislation
which would, for example, delay or suspend the scheduled March 1999 termination
of CPST rate regulation.
State and Local Regulation
Cable television systems generally operate pursuant to non-exclusive
franchises, permits or licenses granted by a municipality or other state or
local governmental entity. The terms and conditions of franchises vary
materially from jurisdiction to jurisdiction. A number of states subject cable
television systems to the jurisdiction of centralized state government agencies.
To date, other than Delaware, no state in which the Company currently operates
has enacted state level regulation. The Company cannot predict whether any of
the states in which currently operates will engage in such regulation in the
future.
(12) Disclosures about Fair Value of Financial Instruments:
Debt
The fair value of the Company's debt is estimated based on the current
rates offered to the Company for debt of the same remaining maturities. The fair
value of the senior bank debt and the Seller Note approximates the carrying
value. The fair value at December 31, 1998 of the 8 1/2% Senior Notes was
approximately $204,500.
Interest Rate Exchange Agreements
The fair value of the Swaps is the estimated amount that the Company
would receive or pay to terminate the Swaps, taking into account current
interest rates and the current creditworthiness of the Swap counterparties. At
December 31, 1998, the Company would have paid approximately $1,464 to terminate
the Swaps, inclusive of accrued interest.
(13) FASB 131 - Disclosure about Segments of an Enterprise and Related
Information:
During the fourth quarter of fiscal year 1998, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosure about
Segments of an Enterprise and Related Information". This statement requires the
Company to report segment financial information consistent with the
presentations made to the Company's management for decision-making purposes. All
revenues of the Company are derived solely from cable television operations and
related activities. Decision making of the Company's management is based
primarily on consolidated system cash flow, defined as operating income before
management fee expense, and depreciation and amortization. For the years ended
1998 and 1997, and for the period ended December 31, 1996, the Company's
consolidated system cash flow was approximately $59,850, $9,390, and $2,960,
respectively.
(14) Subsequent Events:
On February 26, 1999, Mediacom and Mediacom Capital, a New York
corporation wholly-owned by Mediacom, jointly issued $125,000 aggregate
principal amount of 7 7/8% Senior Notes due on February 15, 2011. The net
proceeds from this offering of approximately $121,900 were used to repay a
substantial portion of outstanding indebtedness under the Company's bank credit
facilities. Interest on the 7 7/8% Senior Notes will be payable semi-annually on
February 15 and August 15 of each year, commencing on August 15, 1999.
50
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in 000's)
The Company is regularly presented with opportunities to acquire cable
television systems that are evaluated on the basis of the Company's acquisition
strategy. Although the Company presently does not have any definitive agreements
to acquire or sell any of its cable television systems, it is negotiating with
prospective sellers to acquire additional cable television systems. If
definitive agreements for all such potential acquisitions are executed, and if
such acquisitions are then consummated, the Company's customer base would
approximately double in size. These acquisitions are subject to the negotiation
and completion of definitive documentation, which will include customary
representations and warranties and will be subject to a number of closing
conditions. Financing for these potential transactions has not been determined;
however, if such acquisitions are consummated, the Company believes its total
indebtedness would substantially increase. No assurance can be given that such
definitive documents will be entered into or that, if entered into, the
acquisitions will be consummated.
51
<PAGE>
MEDIACOM LLC AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(All dollar amounts in 000's)
Schedule II
<TABLE>
<CAPTION>
Balance at Additions
beginning of charged to costs Balance at
period and expenses Deductions end of period
------------ ---------------- ---------- -------------
<S> <C> <C> <C> <C>
December 31, 1996
Allowance for doubtful accounts
Current receivables $ - $ 91 $ 66 $ 25
Acquisition reserves
Accrued expenses $ - $ - $ - $ -
December 31, 1997
Allowance for doubtful accounts
Current receivables $ 25 $ 45 $ 14 $ 56
Acquisition reserves
Accrued expenses $ - $ - $ - $ -
December 31, 1998
Allowance for doubtful accounts
Current receivables $ 56 $ 1,694 $ 1,452 $ 298
Acquisition reserves(1)
Accrued expenses $ - $ 4,120 $ - $ 4,120
</TABLE>
- ----------
(1) Addition was charged to intangible asset
52
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Mediacom Capital Corporation:
We have audited the accompanying balance sheet of Mediacom Capital Corporation
as of December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the consolidated financial position of Mediacom Capital
Corporation as of December 31, 1998, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Stamford, Connecticut
March 5, 1999
53
<PAGE>
MEDIACOM CAPITAL CORPORATION
BALANCE SHEET
December 31, 1998
ASSETS
------
Note receivable - from affiliate for issuance of common stock $ 100
------
Total assets $ 100
======
LIABILITIES AND OWNER'S EQUITY
------------------------------
Owner's equity
Common stock, par value $0.10; 200 shares authorized;
100 shares issued and outstanding $ 10
Additional paid-in capital 90
------
Total owner's equity $ 100
------
Total liabilities and owner's equity $ 100
======
The accompanying notes to the balance sheet
are an integral part of this statement.
54
<PAGE>
MEDIACOM CAPITAL CORPORATION
NOTES TO THE BALANCE SHEET
(All dollar amounts in 000's)
(1) Organization:
Mediacom Capital Corporation ("Mediacom Capital"), a New York
corporation wholly-owned by Mediacom LLC, was organized on March 9, 1998 for the
sole purpose of acting as co-issuer with Mediacom LLC of $200,000 aggregate
principal amount of the 8 1/2% Senior Notes due April 15, 2008. Mediacom Capital
has no operations.
(2) Subsequent Events:
On February 26, 1999, Mediacom LLC and Mediacom Capital jointly issued
$125,000 aggregate principal amount of 7 7/8% Senior Notes due on February 15,
2011. The net proceeds from this offering of approximately $121,900 were used to
repay a substantial portion of outstanding bank debt under the Company's bank
credit facilities. Interest on the 7 7/8% Senior Notes will be payable semi-
annually on February 15 and August 15 of each year, commencing on August 15,
1999.
55
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
56
<PAGE>
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
The following table sets forth certain information concerning the
executive officers of Mediacom (the "Executive Officers"), none of whom are
compensated by the Company for their respective services to the Company. The
Executive Officers are instead compensated by Mediacom Management which receives
management fees pursuant to management agreements with the Company. All such
Executive Officers hold the same positions in Mediacom Management and the
operating subsidiaries. Mr. Commisso is also the sole manager of Mediacom (the
"Manager") pursuant to the operating agreement of Mediacom, and the President
and sole Director of Mediacom Management and Mediacom Capital. Mr. Stephan is
also the Treasurer and Secretary of Mediacom Capital. Mr. Commisso and Mr.
Stephan are members of the executive committee (the "Executive Committee") of
Mediacom, for which Mr. Commisso acts as Chairman.
Executive Officers
Name Age Position
- ---- --- --------
Rocco B. Commisso 49 Chairman and Chief Executive Officer
Mark E. Stephan 42 Senior Vice President, Chief Financial Officer
and Treasurer
Joseph Van Loan 57 Senior Vice President, Technology
Italia Commisso Weinand 45 Senior Vice President, Programming and
Human Resources and Secretary
John G. Pascarelli 37 Vice President, Marketing
Brian M. Walsh 33 Vice President and Controller
The following table sets forth information concerning persons who hold
key operating management positions with the operating subsidiaries of the
Company.
Field Management
Name Age Position
- ---- --- --------
James M. Carey 47 Senior Vice President, Operations
Arnold Cool 50 Regional Manager, Central Region
Louis Gentile 39 Regional Manager, Western Region
Richard L. Hale 49 Regional Manager, Southern Region
Donald E. Zagorski 39 Regional Manager, Mid-Atlantic Region
Rocco B. Commisso has over 21 years of experience with the cable
television industry and has served as Chairman and Chief Executive Officer since
founding Mediacom in July 1995. From August 1986 to March 1995, Mr. Commisso
served as Executive Vice President, Chief Financial Officer and Director of
Cablevision Industries Corporation ("CVI"). At the time of Mr. Commisso's
arrival, CVI was a regional cable company serving less than 300,000 basic
subscribers in four states. During his tenure, CVI completed 40 acquisitions of
cable television systems with an aggregate value exceeding $1.2 billion. Mr.
Commisso was directly responsible for all aspects of CVI's financing activities,
including the completion of over 35 separate financing transactions with
aggregate capital commitments exceeding $5.0 billion.
Prior to that time, Mr. Commisso served as Senior Vice President of
Royal Bank of Canada's affiliate in the United States from 1981 where he founded
and directed a specialized lending group to manage the bank's lending activities
to media and communications companies. Mr. Commisso began his association with
the cable television industry in 1978 at The Chase Manhattan Bank, where he was
assigned to manage the bank's lending activities to communications firms
including the nascent cable television industry. Mr. Commisso holds a Bachelor
of Science in Industrial Engineering and a Masters of Business Administration
from Columbia University.
57
<PAGE>
Mark E. Stephan has 12 years of experience with the cable television
industry and has served as Senior Vice President, Chief Financial Officer and
Treasurer since March 1996. Previously, Mr. Stephan served as Vice President,
Finance for CVI from July 1993 to February 1996. From 1987 to June 1993, he
served as Manager of the telecommunications and media lending group of Royal
Bank of Canada where he engaged in financing activities for the cable
television, wireless telecommunications and diversified media industries. Mr.
Stephan holds a Bachelor of Science in Economics from Colorado State University.
Joseph Van Loan has 23 years of experience in the cable television
industry and has served as Senior Vice President of Technology since November
1996. Previously, Mr. Van Loan served as Senior Vice President of Engineering
for CVI from 1990. From 1988 to 1990, he managed a private telecommunications
consulting practice specializing in domestic and international cable television
and broadcasting. Prior to that time, Mr. Van Loan served as Vice President of
Engineering for Viacom Cable from 1976 to 1988. Mr. Van Loan received the 1986
Vanguard Award for Science and Technology from the National Cable Television
Association. Mr. Van Loan holds a Bachelor of Science in Electrical Engineering
from California State Polytechnic University.
Italia Commisso Weinand has 21 years of experience in the cable
television industry and has served as Senior Vice President of Programming and
Human Resources and Secretary since February 1998. Ms. Weinand joined the
Company in April 1996 as Vice President of Operations. Previously, she served as
System Manager and Regional Manager for Comcast Corporation from July 1985 to
March 1996. Prior to that time, Ms. Weinand held various management positions in
system operations, marketing, customer service, and government relations with
Time Warner Inc., Times Mirror Cable, and Tele-Communications, Inc., beginning
in 1978. Ms. Weinand holds a Bachelor of Science in Marketing from Fordham
University. Ms. Weinand is the sister of Mr. Commisso.
John G. Pascarelli has 19 years of experience in the cable television
industry and joined the Company as Vice President of Marketing in March 1998.
Previously, Mr. Pascarelli served as Vice President of Marketing for Helicon
Corporation from January 1996 to February 1998, and as Corporate and Divisional
Director of Marketing for CVI from November 1988 to December 1995. Mr.
Pascarelli has worked in the cable television industry since 1980 when he joined
Continental Cablevision as a sales manager and thereafter held positions in
sales and marketing with Cablevision Systems Corporation ("Cablevision") and
Storer Communications, Inc..
Brian M. Walsh has 11 years of experience in the cable television
industry and has served as Vice President and Controller since February 1998.
Mr. Walsh joined the Company in April 1996 as Director of Accounting.
Previously, he served as Divisional Business Manager for CVI from January 1994
to December 1995 and as Regional Business Manager for CVI from January 1992 to
December 1993. Mr. Walsh has worked in the cable television industry since 1988
when he joined CVI as a staff accountant. Mr. Walsh holds a Bachelor of Science
in Accounting from Siena College.
James M. Carey has 18 years of experience in the cable television
industry and has served as Senior Vice President of Operations of the Company
since February 1998, and as a consultant to the Company since September 1997.
Previously, Mr. Carey was founder and President of Infinet Results, a consulting
firm to the telecommunications industry, from December 1996 to August 1997.
Prior to that time, Mr. Carey served as Executive Vice President of Operations
at MediaOne Group, Inc. ("MediaOne") from August 1995 to November 1996, where he
was responsible for MediaOne's Atlanta cluster consisting of 500,000 basic
subscribers. From December 1988 to July 1995, he served as Regional Vice
President of CVI's Southern Region serving 180,000 basic subscribers. Mr. Carey
holds a Bachelor of Business Administration in Management from Georgia College.
Arnold Cool has 21 years of experience in the cable television industry
and has served as Regional Manager of the Central Region since September 1998.
Previously, Mr. Cool served as Director of Engineering for the Central Region
from February 1998 to September 1998. Prior to that time, he served as Chief
Engineer from November 1996 to January 1998, and as Technical Supervisor from
April 1993 to October 1996, for Cablevision's cable television systems in
Kentucky and Missouri. Mr. Cool has held various technical and supervisory
responsibilities for Cablevision and for smaller cable television companies
since 1978.
Louis Gentile has 10 years of experience in the cable television
industry and has served as Regional Manager of the Western Region since February
1999. Previously, Mr. Gentile served as Divisional Financial Director for
Mediacom Southeast from February 1998 to January 1999. Prior to that time, he
served as Regional Business Manager for Cablevision from March 1995 to January
1998 and as Business Manager for Cablevision's Florida Systems from January 1992
to February 1995. Mr. Gentile began his career in the cable television industry
in 1989 when he joined MultiVision Cable Television as an accountant. Mr.
Gentile holds a Masters of Business Administration from the
58
<PAGE>
Sacred Heart University Graduate School of Business Administration and a
Bachelor of Science in Accounting from Mercy College.
Richard L. Hale has 15 years of experience in the cable television
industry and has served as Regional Manager of the Southern Region since
September 1998. Previously, Mr. Hale served as Regional Manager for the Central
Region from January 1998 to August 1998. Prior to that time, Mr. Hale served as
Regional Manager of Cablevision's Kentucky/Missouri Region from February 1996 to
December 1997, as General Manager of Cablevision's cable television systems in
Arkansas and Missouri from February 1992 to January 1996, and as Regional Sales
and Marketing Director of such systems from 1988 to 1991. Mr. Hale began his
career in the cable television industry in 1984 as Regional Sales and Marketing
Director of Adams-Russell, Inc.
Donald E. Zagorski has 18 years of experience in the cable television
industry and has served as Regional Manager of the Mid-Atlantic Region since
September 1998. Previously, Mr. Zagorski served as General Manager of Mediacom's
Lower Delaware system since June 1997. Prior to that time, he served as System
and Regional Manager for Tele-Media Company from March 1990 to May 1997. From
1981 to 1988, Mr. Zagorski held various technical and supervisory positions with
Outer Banks Cablevision and Group W Cable. Mr. Zagorski holds a Bachelor of Arts
in Business Administration from the State University of New York.
Management and Executive Committee
The operating agreement of Mediacom provides that one Manager shall have
overall management and control of the business and affairs of the Company, and
that Rocco B. Commisso is to serve as the Manager. Mr. Commisso may designate a
corporation or other entity controlled by him to serve as Manager of Mediacom.
The operating agreement provides for the establishment of a five-member
Executive Committee to whom Mr. Commisso, as Manager, is required to report with
respect to certain matters. Approval of the Executive Committee must be obtained
for certain extraordinary actions. Mr. Commisso serves as Chairman of the
Executive Committee and is entitled to designate two additional members, one of
whom may be an employee of Mediacom Management or an operating subsidiary of
Mediacom. The remaining two members of the Executive Committee are designated by
the other member or members of Mediacom having the largest equity holdings. The
Executive Committee's members are Rocco B. Commisso, Mark E. Stephan, Robert L.
Winikoff, William S. Morris III and Craig S. Mitchell. Each member of the
Executive Committee shall serve until a successor is duly elected and duly
qualified.
ITEM 11. EXECUTIVE COMPENSATION
The Company does not make any payments in respect to compensation to any
of its executive officers. Such executive officers receive compensation from
Mediacom Management, which is entitled to receive management fees from the
Company in exchange for providing management services. See Item 13: Certain
----------------
Relationships and Related Transactions.
- --------------------------------------
59
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth as of December 31, 1998, certain information
regarding each of the beneficial owners of membership interests in Mediacom.
Rocco B. Commisso is the only executive officer of the Company owning such
interests. Mediacom Capital, a wholly-owned subsidiary of Mediacom, has no
assets and does not conduct any operations of its own.
<TABLE>
<CAPTION>
Percentage
of Outstanding
Number of Membership
Beneficial Owner Membership Units Interests
---------------- ---------------- --------------
<S> <C> <C>
Rocco B. Commisso 14,474.37 9.65%
c/o Mediacom LLC
100 Crystal Run Road
Middletown, NY 10941
Morris Communications Corporation 96,776.25 64.51
725 Broad Street
Augusta, GA 30901
CB Capital Investors, L.P.(1) 14,306.01 9.54
c/o Chase Manhattan Capital Corporation
380 Madison Avenue
New York, NY 10017
U.S. Investor, Inc.(2) 10,379.76 6.92
333 West Fort Street
Detroit, MI 48226
Private Market Fund, L.P. 7,931.33 5.29
c/o Pacific Corporate Group
1200 Prospect Street, Suite 200
La Jolla, CA 92037
BMO Financial 5,682.52 3.79
c/o Bank of Montreal
430 Park Avenue
New York, NY 10022
Other Investors 449.76 0.30
---------- ------
150,000.00 100.00%
========== ======
</TABLE>
- ---------
(1) Includes approximately 2.0% in respect of membership interests owned by its
affiliate, Chase Manhattan Capital, L.P.
(2) An affiliate of Booth American Company.
60
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Agreements
Separate management agreements with each of the Company's operating
subsidiaries provide for Mediacom Management, which is wholly-owned by Mr.
Commisso, to be paid annual management fees of 5.0% of the first $50.0 million
of annual gross operating revenues of the Company, 4.5% of such revenues in
excess thereof up to $75.0 million, and 4.0% of such revenues in excess of $75.0
million. In 1998, the aggregate amount of management fees paid to Mediacom
Management was approximately $5.8 million.
Transaction Fees and Expense Reimbursement
The operating agreement of Mediacom provides for Mediacom Management to be
paid a fee of 1.0% of the purchase price of acquisitions made by the Company
until the Company's pro forma consolidated annual revenues equal $75.0 million,
and 0.5% of such purchase price thereafter. In 1998, the aggregate amount of
acquisition fees paid to Mediacom Management was approximately $3.3 million.
Other Relationships with Members of Mediacom
Chase Manhattan Capital, L.P. and CB Capital Investors, L.P., which
collectively hold approximately 9.5% of the membership interests in Mediacom,
are affiliates of Chase Securities Inc. and The Chase Manhattan Bank ("Chase").
Chase is the administrative agent and a lender under each of the Company's two
bank credit facilities and has received customary fees for acting in such
capacities. Mediacom repaid promissory notes in the aggregate principal amount
of $20.0 million, which principal amount plus all interest accrued in the
amount of approximately $0.3 million was repaid to Chase in April 1998. In
1998, Chase received fees in the amount of approximately $0.2 million for
providing a letter of credit. Chase Securities Inc. was the initial purchaser
of the 8 1/2% Senior Notes offering and received fees of $5.5 million in 1998 in
connection with such offering. Chase Securities Inc. acted as placement agent
in connection with the placement of membership interests in Mediacom and as
advisory agent in connection with the Company's purchase of the Cablevision
Systems. For such placement and advisory services, Chase Securities Inc.
received fees totaling approximately $3.5 million in 1998.
Morris Communications Corporation, which holds approximately 64.5% of the
membership interests in Mediacom, received fees in 1998 of approximately $2.0
million with respect to its equity contribution to Mediacom.
In connection with the purchase of a cable television system in Kern
County, California from Booth American Company ("Booth"), Mediacom California
issued to Booth, who holds approximately 6.9% of the membership interests in
Mediacom, the Seller Note in the original principal amount of $2.8 million.
Interest is deferred throughout the term of the Seller Note and is payable at
maturity on June 28, 2006. The annual interest rate was 9.0% in 1998. See Note
8 of the Company's audited consolidated financial statements.
61
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits, which are numbered in accordance with Item 601 of
Regulation S-K, are filed herewith or, as noted, incorporated by
reference herein:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Descriptions
------ --------------------
<S> <C>
2.1 Asset Purchase and Sale Agreement dated May 23, 1996 between Mediacom California LLC and Booth
American Company.(1)
2.2 Asset Purchase Agreement dated August 29, 1996 between Mediacom LLC and Saguaro Cable TV
Investors, L.P.(1)
2.3 Asset Purchase Agreement dated August 29, 1996 between Mediacom California LLC and Valley Center
Cablesystems, L.P.(1)
2.4 Asset Purchase Agreement dated December 24, 1995 between Mediacom LLC and American Cable TV
Investors 5, Ltd.(1)
2.5 Asset Purchase Agreement dated May 22, 1997 between Mediacom California LLC and CoxCom, Inc.(1)
2.6 Asset Purchase Agreement dated September 18, 1997 between Mediacom California LLC and Jones Cable
Income Fund 1-B/C Venture.(1)
2.7 Asset Purchase Agreement dated August 29, 1997 among Mediacom LLC, U.S. Cable Television Group,
L.P., ECC Holding Corporation, Missouri Cable Partners, L.P. and Cablevision Systems Corporation.(1)
2.8 Asset Purchase Agreement, dated June 24, 1998, among Mediacom
Southeast LLC, Mediacom LLC, Bootheel Video, Inc., and CSC Holdings,
Inc.
3.1(a) Articles of Organization of Mediacom LLC filed July 17, 1995.(1)
3.1(b) Certificate of Amendment of the Articles of Organization of Mediacom
LLC filed December 8, 1995.(1)
3.2 Third Amended and Restated Operating Agreement of Mediacom LLC.(1)
3.4 By-laws of Mediacom Capital Corporation.(1)
3.5 Certificate of Formation of Mediacom Arizona LLC filed September 5, 1996.(1)
3.6 Operating Agreement of Mediacom Arizona LLC.(1)
3.7 Certificate of Formation of Mediacom California LLC filed November 22, 1995.(1)
3.8 Operating Agreement of Mediacom California LLC.(1)
3.9 Certificate of Formation of Mediacom Delaware LLC filed December 27, 1996.(1)
3.10 Operating Agreement of Mediacom Delaware LLC.(1)
3.11 Certificate of Formation of Mediacom Southeast LLC filed August 21,
1997.(1)
</TABLE>
62
<PAGE>
<TABLE>
<S> <C>
3.12 Operating Agreement of Mediacom Southeast LLC.(1)
4.1(a) Indenture dated April 1, 1998 among Mediacom LLC, Mediacom Capital
Corporation, and Bank of Montreal Trust Company, as Trustee.(1)
4.1(b) Exchange and Registration Rights Agreement dated April 1, 1998 among Mediacom LLC, Mediacom
Capital Corporation and Chase Securities, Inc.(1)
4.1(c) Purchase Agreement dated March 27, 1998 among Mediacom LLC, Mediacom Capital Corporation, and
Chase Securities, Inc.(1)
4.2(a) Indenture dated February 26, 1999 among Mediacom LLC, Mediacom
Capital Corporation, and Bank of Montreal Trust Company, as
Trustee.
4.2(b) Exchange and Registration Rights Agreement dated February 26, 1999 among Mediacom LLC, Mediacom
Capital Corporation and Chase Securities, Inc.
4.2(c) Purchase Agreement dated February 19, 1999 among Mediacom LLC, Mediacom Capital Corporation,
and Chase Securities, Inc.
10.1 Management Agreement dated as of December 27, 1996 between Mediacom Arizona LLC and Mediacom
Management Corporation.(1)
10.2 First Amended and Restated Management Agreement dated December 27, 1996 between Mediacom
California LLC and Mediacom Management Corporation.(1)
10.3 Management Agreement dated June 24, 1997 between Mediacom Delaware LLC and Mediacom
Management Corporation.(1)
10.4 Management Agreement dated as of January 23, 1998 between Mediacom Southeast LLC and Mediacom
Management Corporation.(1)
10.5(a) Second Amended and Restated Credit Agreement dated June 24, 1997
among Mediacom California LLC, Mediacom Delaware LLC, Mediacom
Arizona LLC, The Chase Manhattan Bank and First Union National
Bank as lenders and managing agents, and various other lenders
.(1)
10.5(b) Amendment No. 1 dated January 23, 1998 among Mediacom California
LLC, Mediacom Delaware LLC, Mediacom Arizona LLC, The Chase
Manhattan Bank and First Union National Bank as lenders and
managing agents, and various other lenders.(1)
10.5(c) Amendment No. 2 dated March 24, 1998 among Mediacom California
LLC, Mediacom Delaware LLC, Mediacom Arizona LLC, The Chase
Manhattan Bank and First Union National Bank as lenders and
managing agents, and various other lenders.(1)
10.5(d) Amendment No. 3 dated July 1, 1998 among Mediacom California LLC,
Mediacom Delaware LLC, Mediacom Arizona LLC, The Chase Manhattan
Bank and First Union National Bank as lenders and managing agents,
and various other lenders.
10.5(e) Amendment No. 4 dated January 26, 1999 among Mediacom California
LLC, Mediacom Delaware LLC, Mediacom Arizona LLC, The Chase
Manhattan Bank and First Union National Bank as lenders and
managing agents, and various other lenders.
10.6(a) Credit Agreement dated January 23, 1998 among Mediacom Southeast
LLC, The Chase Manhattan Bank as lender and administrative agent,
and various other lenders.(1)
10.6(b) Amendment No. 1 dated March 24, 1998 among Mediacom Southeast LLC, The Chase Manhattan Bank
as lender and administrative agent, and various other lenders.(1)
</TABLE>
63
<PAGE>
<TABLE>
<S> <C>
10.6(c) Amendment No. 2 dated July 1, 1998 among Mediacom Southeast LLC,
The Chase Manhattan Bank as lender and administrative agent, and
various other lenders.
10.6(d) Amendment No. 3 dated January 26, 1999 among Mediacom Southeast
LLC, The Chase Manhattan Bank as lender and administrative agent,
and various other lenders.
12.1 Schedule of Earnings to Fixed Charges.
21.1 Subsidiaries of Mediacom LLC.(1)
27.1 Financial Data Schedule.
(b) Financial Statement Schedule
None.
(c) Reports on Form 8-K
None.
</TABLE>
(1) Such Exhibits were filed with the Company's Registration Statement on Form
S-4 (File No. 333-57285) and is incorporated herein by reference
64
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEDIACOM LLC
March 31, 1999 By: /s/ Rocco B. Commisso
-----------------------
Rocco B. Commisso
Manager, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Rocco B. Commisso Manager, Chairman and Chief March 31, 1999
- ---------------------------------------------------- Executive Officer (principal
Rocco B. Commisso executive officer)
/s/ Mark E. Stephan Senior Vice President, March 31, 1999
- ---------------------------------------------------- Chief Financial Officer and
Mark E. Stephan Treasurer (principal
financial officer and
principal accounting officer)
</TABLE>
65
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEDIACOM CAPITAL CORPORATION
March 31, 1999 By: /s/ Rocco B. Commisso
------------------------
Rocco B. Commisso
President, Chief Executive Officer,
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Rocco B. Commisso Chief Executive Officer, March 31, 1999
- ---------------------------------------------------- President and Director
Rocco B. Commisso (principal executive officer)
/s/ Mark E. Stephan Treasurer and Secretary March 31, 1999
- ---------------------------------------------------- (principal financial officer
Mark E. Stephan and principal accounting
officer)
</TABLE>
66
<PAGE>
Exhibit 2.8
EXECUTION COPY
--------------
ASSET PURCHASE AGREEMENT
AS OF JUNE 24, 1998
BY AND AMONG
BOOTHEEL VIDEO, INC.,
CSC HOLDINGS, INC.,
MEDIACOM SOUTHEAST LLC
AND
MEDIACOM LLC
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions........................................................ 1
1.01 Certain Definitions.......................................... 1
1.02 Other Definitional Provisions................................ 12
2. Purchase and Sale.................................................. 12
2.01 Transfer of Assets........................................... 12
2.02 Purchase Price............................................... 12
2.03 Estimated Statements......................................... 13
2.04 Post Closing Adjustments..................................... 13
2.05 Earnest Money Deposit........................................ 18
2.06 Sales and Transfer Taxes..................................... 18
2.07 Indemnity Escrow............................................. 18
2.08 Determination and Allocation of Purchase Price............... 19
3. Representations and Warranties of Seller........................... 19
3.01 Organization and Authority of Seller......................... 19
3.02 Legal Capacity; Approvals and Consents....................... 20
3.03 Financial Statements......................................... 21
3.04 Changes in Operation......................................... 21
3.05 Tax Returns.................................................. 21
3.06 Acquired Assets.............................................. 22
3.07 The CATV Business............................................ 24
3.08 Labor Contracts and Actions.................................. 27
3.09 Employee Benefit Plans....................................... 28
3.10 Contracts and CATV Instruments............................... 29
3.11 Legal and Governmental Proceedings and Judgments............. 30
3.12 Finders and Brokers.......................................... 30
3.13 Miscellaneous Assets......................................... 31
3.14 Characteristics of the CATV Systems.......................... 31
3.15 Insurance.................................................... 32
3.16 Accounts Receivable.......................................... 32
3.17 Overbuilds................................................... 32
3.18 Intangible Property.......................................... 32
3.19 Retransmission Agreements.................................... 33
3.20 Representation of CSC........................................ 33
4. Representations and Warranties of Buyer............................ 33
4.01 Organization and Authority of Buyer.......................... 33
-i-
<PAGE>
Page
----
4.02 Legal Capacity; Approvals and Consents...................... 33
4.03 Legal and Governmental Proceedings and Judgments............. 34
4.04 Finders and Brokers.......................................... 34
4.05 Buyer Consents............................................... 34
4.06 Acquisition of Rights........................................ 34
4.07 Representation of Mediacom................................... 35
5. Covenants.......................................................... 35
5.01 Business of Seller........................................... 35
5.02 Access to Information........................................ 37
5.03 Notification of Certain Matters.............................. 38
5.04 Forms 394.................................................... 38
5.05 Monthly Financial Statements................................. 38
5.06 Covenant Not to Compete...................................... 38
5.07 No Solicitation.............................................. 39
6. Deliveries at Closing.............................................. 40
6.01 Deliveries by Seller......................................... 40
6.02 Deliveries by Buyer.......................................... 41
7. Conditions to the Obligations of Buyer............................. 41
7.01 Receipt of Consents.......................................... 42
7.02 Seller's Authority........................................... 42
7.03 Performance by Seller........................................ 42
7.04 Absence of Breach of Warranties and Representations.......... 42
7.05 Absence of Proceedings....................................... 43
7.06 Maximum Negative Subscriber Adjustment....................... 43
8. Conditions to the Obligations of Seller............................ 43
8.01 Receipt of Consents.......................................... 43
8.02 Buyer's Authority............................................ 43
8.03 Performance by Buyer......................................... 43
8.04 Absence of Breach of Representations and Warranties.......... 44
8.05 Absence of Proceedings....................................... 44
8.06 Maximum Negative Subscriber Adjustment....................... 44
9. Covenants.......................................................... 44
9.01 Compliance with Conditions................................... 44
9.02 Compliance with HSR Act and Rules............................ 45
9.03 Applications for Consent to Transfer
-ii-
<PAGE>
Page
----
the Acquired Assets......................................... 46
9.04 Records, Taxes and Related Matters........................... 47
9.05 Non-Assignment............................................... 48
9.06 Use of Names and Logos....................................... 48
10. Survival of Representations, Warranties, Covenants
and Other Agreements; Indemnification............................. 49
10.01 Survival of Representations, Warranties,
Covenants and Other Agreements.............................. 49
10.02 Indemnification by Seller................................... 49
10.03 Indemnification by Buyer.................................... 50
10.04 Third Party Claims.......................................... 51
10.05 Environmental Matters....................................... 52
10.06 Sole Remedy Upon Closing.................................... 52
11. Further Assurances................................................. 53
12. Closing............................................................ 53
12.01 Closing..................................................... 53
12.02 Termination................................................. 53
12.03 Remedies Upon Default....................................... 55
12.04 Return of Earnest Money Escrow.............................. 56
13. Miscellaneous...................................................... 57
13.01 Amendments; Waivers......................................... 57
13.02 Entire Agreement............................................ 57
13.03 Binding Effect; Assignment.................................. 57
13.04 Construction; Counterparts.................................. 57
13.05 Notices..................................................... 58
13.06 Expenses of the Parties..................................... 59
13.07 Non-Recourse................................................ 59
13.08 Third Party Beneficiary..................................... 59
13.09 Governing Law............................................... 60
13.10 Press Releases.............................................. 60
13.11 Severability................................................ 60
-iii-
<PAGE>
EXHIBIT A - List of Communities Served
EXHIBIT B - Form of Bill of Sale, General Assignment and
Instrument of Assumption of Liabilities
EXHIBIT C - Form of Earnest Money Escrow Agreement
EXHIBIT D-1 - Form of Opinion of Seller's Massachusetts
Counsel
EXHIBIT D-2 - Form of Opinion of Seller's Missouri Counsel
EXHIBIT D-3 - Form of Opinion of CSC Holdings, Inc.'s
General Counsel
EXHIBIT E - Form of Opinion of Buyer's Counsel
EXHIBIT F - Form of Indemnity Escrow Agreement
EXHIBIT G - Form of Opinion of FCC Counsel to Seller
EXHIBIT H - Form of Earnest Money Letter of Credit
EXHIBIT I - Form of Indemnity Letter of Credit
-iv-
<PAGE>
Schedule 1.01(a) - CATV Licenses
Schedule 1.01(b) - Current Assets
Schedule 1.01(c) - Current Liabilities
Schedule 1.01(d) - Excluded Assets
Schedule 1.01(e) - Excluded Liabilities
Schedule 1.01(f) - Permitted Encumbrances
Schedule 3.02 - Seller's Consents and Approvals
Schedule 3.05 - Tax Notices and Assessments
Schedule 3.06(b) - Real Property
Schedule 3.06(d) - Environmental Matters
Schedule 3.07(c) - Notice of Claims or Purported
Defaults in CATV Instruments
Schedule 3.07(d) - Non-Compliance with Communications
Act or FCC Regulations
Schedule 3.09 - Employee Benefit Plans
Schedule 3.10(a) - Contracts in Default
Schedule 3.10(b) - Contracts and CATV Instruments
Schedule 3.11 - Legal Proceedings
Schedule 3.13 - Miscellaneous Assets
Schedule 3.14(a) - CATV System: Channel Capacity
Schedule 3.14(b) - CATV System: Physical
Characteristics
-v-
<PAGE>
Schedule 3.15 - Insurance
Schedule 3.17 - Overbuilds
Schedule 3.18 - Intangibles
Schedule 4.05 - Buyer's Consents and Approvals
-vi-
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement (the "Agreement") is made and entered into as
---------
of June 24, 1998, by and among Bootheel Video, Inc., a Massachusetts corporation
("Seller"), CSC Holdings, Inc., a Delaware corporation ("Cablevision"), Mediacom
------ -----------
Southeast LLC, a Delaware limited liability company ("Buyer") and Mediacom LLC,
-----
a New York limited liability company ("Mediacom").
--------
R E C I T A L S
---------------
Seller owns and operates cable television systems serving the communities
described in Exhibit A.
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
the CATV Business and the assets used or held for the operation thereof in
accordance with the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows, each intending to be legally
bound as and to the extent herein provided.
1. Definitions.
-----------
1.01 Certain Definitions. For the purposes of this Agreement, the
-------------------
following terms shall have the meanings set forth below:
Accounts Receivable: All active subscriber and advertising accounts
-------------------
receivable relating to the CATV Business.
Acquired Assets: All of the properties, assets, privileges, rights,
---------------
interests, claims and goodwill, real and personal, tangible and intangible, of
every type and description, including Seller's leasehold interests or rights to
possession, whether owned or leased or otherwise possessed, used or held for use
by Seller in connection with the CATV Business, now in existence or hereafter
acquired by Seller in compliance with the terms of this Agreement prior to the
Closing, including, without limitation, the Accounts Receivable, the CATV
Instruments, the Equipment, the Real Property,
<PAGE>
the Contracts, the Inventory and the Intangible Property; provided that Acquired
Assets shall exclude the Excluded Assets and any assets disposed of prior to the
Closing in the usual and ordinary course of business and not in violation of
this Agreement.
Agreement: This Agreement and the Schedules and Exhibits attached hereto.
---------
Asserted Claim: As defined in Section 10.04.
--------------
Assumed Liabilities: All liabilities, obligations and commitments of
-------------------
Seller (a) under the CATV Instruments, the CATV Licenses, the Equipment, the
Real Property, the Contracts, the Inventory, the Intangible Property and any
other Acquired Assets attributable to periods on and after the Closing Date, (b)
arising out of Buyer's ownership of the Acquired Assets attributable to periods
on and after the Closing Date and (c) to the extent (and only to the extent)
constituting Current Liabilities that are included in the Final Working Capital
Statement.
Basic Subscriber: As at any date of determination thereof, the sum of (a)
----------------
the total number of households (exclusive of accounts which are provided free
service as a courtesy and "second outlets," as such term is commonly understood
in the cable television industry, and exclusive of customers billed on a bulk-
billing or commercial-account basis and exclusive of senior citizen subscribers
that do not pay the regular monthly rate in respect of the service provided)
subscribing on such date to at least the most basic tier of service offered by
the CATV System and paying undiscounted regular monthly service fees and charges
imposed in respect of such service, and, if also subscribing to the expanded
basic tier, also paying undiscounted regular monthly service fees and charges
imposed in respect of such service, each of which has paid in full without
discount at least one monthly bill generated in the ordinary course of business,
none of which is pending disconnection for any reason, none of which is, as of
the date of determination, delinquent in payment for services for more than
sixty (60) days (measured from the first day of the month in which the service
with respect to which an unpaid billing statement relates was provided); and (b)
the total number of Equivalent Subscribers on such date; provided, there
-2-
<PAGE>
shall be excluded from the definition of Basic Subscriber any subscriber who
comes within the definition of Basic Subscriber because (i) its account has been
compromised or written off within the twelve (12) month period preceding the
date of determination, other than in the ordinary course of business consistent
with past practices for reasons such as service interruption or waiver of late
charges but not for the purpose of making it qualify as a Basic Subscriber or
(ii) it was obtained through offers made, promotions conducted or discounts
given which were designed to temporarily increase the number of Basic
Subscribers.
Basic Subscriber Estimate: As defined in Section 2.03.
-------------------------
Basic Subscriber Statement: As defined in Section 2.04(b).
--------------------------
Benefit Plans: As defined in Section 3.09(a).
-------------
Buyer: As defined in the Preamble to this Agreement.
-----
Buyer Required Consents: The Consents designated by Buyer by the letter
-----------------------
"B" on Schedules 3.02 and 4.05.
Buyer Indemnified Party: As defined in Section 10.03(a).
-----------------------
Buyer's Basket: As defined in Section 10.02(c).
--------------
Buyer's Counsel: Cooperman Levitt Winikoff Lester & Newman, P.C.
---------------
Buyer's Working Capital Objection: As defined in Section 2.04(a).
---------------------------------
Cablevision: As defined in the Preamble to this Agreement.
-----------
CATV: Cable television.
----
CATV Business: The CATV business to be transferred to Buyer, currently
-------------
owned and operated by Seller, which consists of the transmission, distribution
and local origination of audio and video signals over the CATV System used by
the CATV business located in the System Area.
-3-
<PAGE>
CATV Instruments: All franchises, ordinances or licenses granted to Seller
----------------
by any Governmental Authority; permits for wire crossings over or under
highways, railroads, and other property; construction permits and certificates
of occupancy; business radio, Earth Station and other FCC licenses; pole
attachment and other Contracts with utilities; federal, state, county and
municipal permits, orders, variances, exemptions, approvals, consents, licenses
and other authorizations; lease access agreements; and all other approvals,
consents and authorizations used or held for use in the CATV Business.
CATV Licenses: The franchises and licenses issued by any Governmental
-------------
Authority and the licenses issued by the FCC used in the CATV Business as
presently conducted by Seller, all of which are listed in Schedule 1.01(a).
CATV System: A complete CATV reception and distribution system consisting
-----------
of one or more head-ends, one or more microwave receive sites, trunk cable,
subscriber drops and associated electronic equipment, which is, or is capable of
being, operated as an independent system without inter-connections to other
systems.
Closing: A meeting for the purpose of concluding the transactions
-------
contemplated by this Agreement held at the place and on the date fixed in
accordance with Section 12.01.
Closing Date; Date of Closing: The date fixed for the Closing in
-----------------------------
accordance with Section 12.01.
Code: The Internal Revenue Code of 1986, as amended.
----
Communications Act: As defined in Section 3.07(d).
------------------
Consents: Any registration or filing with, consent or approval of, notice
--------
to, or action by any Person or Governmental Authority required to permit the
transfer of the Acquired Assets to Buyer, the assumption by Buyer of the Assumed
Liabilities, or the performance by Seller or Buyer of any of their respective
other obligations under this Agreement.
Contract: Any contract (other than a programming contract), mortgage, deed
--------
of trust, bond, indenture, lease,
-4-
<PAGE>
license, note, certificate, option, warrant, retransmission agreement, must-
carry election and lease access agreement (but only to the extent such agreement
or election is assignable in accordance with its terms), right, or other
instrument, document or written agreement relating to the CATV Business to which
Seller is a party or by which Seller or the assets of Seller included within the
CATV Business are bound, excluding any CATV Instrument.
Copyright Act: As defined in Section 3.07(e).
-------------
Covenantors: As defined in Section 5.06.
-----------
CPA Firm: As defined in Section 2.04(a).
--------
Current Assets: Means one hundred percent (100%) of Accounts Receivable
--------------
that are sixty (60) days or less past due and zero percent (0%) of Accounts
Receivable more than sixty (60) days past due (measured in each case from the
first day of the month in which the service with respect to an unpaid billing
statement relates was provided), plus all deposits with utilities, under leases
or related to guides, billing service (to the extent the contract pursuant to
which such service is provided is assigned to Buyer), postage, the pro rata
portion of any prepaid taxes in respect of the Acquired Assets, all prepaid
expenses, including in respect of pole rental or equipment maintenance
agreements that are Acquired Assets, and in respect of rent, postage,
promotional expenditures, guides, security service or two-way radio, and other
current assets (exclusive of Inventory), in each case relating to the CATV
Business and each as determined in accordance with GAAP (unless otherwise
specified herein) and consistent with Schedule 1.01(b) hereto but excluding any
such assets that are also Excluded Assets, which Schedule sets forth the type
and amounts of Current Assets as of March 31, 1998.
Current Liabilities: Means accounts payable and accrued expenses relating
-------------------
to the CATV Business and determined in accordance with GAAP, and consistent with
Schedule 1.01(c) hereto, which Schedule sets forth the type and amounts of
Current Liabilities as of March 31, 1998; provided, however, that there shall be
-------- -------
excluded from Current Liabilities any payable or expense that relates to a
contract commitment or
-5-
<PAGE>
arrangement, or other asset of Seller which is not being transferred to Buyer
hereunder.
DOJ: The United States Department of Justice.
---
Earnest Money Escrow: As defined in Section 2.05.
--------------------
Earnest Money Escrow Agent: As defined in Section 2.05.
--------------------------
Earnest Money Escrow Agreement: As defined in Section 2.05.
------------------------------
Earth Station: A satellite earth receiving station consisting of one or
-------------
more "dish" antennas, usually operated in conjunction with a building which
houses electronic signal processing and amplification equipment, all of which is
also referred to as a "head end".
Employees: Means all employees of Seller employed in the operation of the
---------
CATV Business.
Encumbrances: Means any security agreement, conditional sale or other
------------
title retention agreement, any lease, consignment or bailment given for purposes
of security, any lien, mortgage, pledge, encumbrance, adverse interest,
constructive trust or other trust, attachment, exception to or defect in title
or other ownership interest (including, but not limited to, reservations, rights
of entry, possibilities of reverter, encroachments, easements, rights-of-way,
rights of first refusal, restrictive covenants, leases, and licenses) of any
kind that otherwise constitutes an interest in or claim against property,
whether arising pursuant to any Law, under any Contract or otherwise.
Environmental Law: Means any Law governing the protection of the
-----------------
environment (including air, water, soil and natural resources) or the use,
storage, handling, release or disposal of any hazardous or toxic substance.
Environmental Reports: As defined in Section 10.05.
---------------------
Equipment: All tangible personalty; electronic devices; towers; trunk and
---------
distribution cable; decoders and spare decoders for scrambled satellite signals;
amplifiers; power
-6-
<PAGE>
supplies; conduit; vaults and pedestals; grounding and pole hardware; installed
subscriber's devices (including, without limitation, drop lines, converters,
encoders, transformers behind television sets, remote controls and fittings);
"head-ends" and "Hubs" (origination, transmission and distribution system)
hardware; tools; spare parts; maps and engineering data; vehicles; supplies,
tests and closed circuit devices; furniture and furnishings; billing equipment,
telephonic equipment and other equipment owned by Seller and used primarily in
the CATV Business whether or not located at the CATV System; and all other
tangible personal property and facilities owned by Seller and used in the CATV
Business.
Equivalent Subscriber: At any date of determination thereof, the number of
---------------------
Equivalent Subscribers in the CATV System shall be equal to the quotient of (a)
the aggregate billings by the CATV System for basic and expanded basic service
provided by the CATV System based on billing reports prepared in the ordinary
course of business, during the last full month ending on or prior to such date,
to residential multiple dwelling units, commercial accounts, other subscribers
that are billed for such service on a bulk basis and single family households
(including senior citizen subscribers that do not pay the regular monthly rate
in respect of the service provided) which pay less than the CATV System's
regular monthly rate for basic and expanded basic service and are not included
in clause (a) of the definition of "Basic Subscriber" above, divided by (b) the
CATV System's regular monthly subscriber rate for basic and expanded basic
service. For purposes of the foregoing, there shall be excluded (A) all billings
from premium services, installation or other non-recurring charges, converter
rental or from any outlet or connection other than the first or from any pass-
through charge for sales taxes, line-itemized franchise fees, fees charged by
the FCC and the like, and (B) all billings to a commercial or bulk account or
discounted family household (i) which has not paid in full at least one (1)
monthly bill generated in the ordinary course of business, (ii) which is
delinquent in payment for services for more than sixty (60) days measured from
the first day of the month in which the service with respect to which an unpaid
billing statement relates was provided (exclusive of account balances of $8.00
or less attributed to late fees) based on billing reports prepared in the
ordinary course of business, (iii) which is
-7-
<PAGE>
pending disconnection for any reason or (iv) which was obtained through offers
made, promotions conducted or discounts given which, in each case, were designed
to temporarily increase the number of Basic Subscribers.
ERISA: The Employee Retirement Income Security Act of 1974, as the same
-----
has been and may be amended from time to time.
ERISA Affiliate: As defined in Section 3.09(c).
---------------
Estimated Working Capital Amount: Means (i) if Current Liabilities exceed
--------------------------------
Current Assets as reflected on the Estimated Working Capital Statement, such
excess, expressed as a negative number, or (ii) if Current Assets exceed Current
Liabilities as reflected on the Estimated Working Capital Statements, such
excess, expressed as a positive number.
Estimated Working Capital Statement: As defined in Section 2.03.
-----------------------------------
Excluded Assets: Means (i) the corporate and financial books, records and
---------------
documents of Seller (including tax records), (ii) all cash and cash equivalents,
(iii) all current assets (other than Inventory) of Seller (determined in
accordance with GAAP) as of the Closing Date that are not included in Current
Assets, (iv) all agreements of Seller other than those relating to the CATV
Business and including any agreements in respect of borrowings of Seller, (v)
all claims (other than such as are included in Current Assets) with respect to
tax abatements and refunds relating to periods prior to the Closing Date, (vi)
programming agreements (other than assignable retransmission consents, must
carry elections and lease access agreements applicable to the CATV Business),
(vii) Benefit Plans and interests in multi-employer plans, (viii) insurance
policies, (ix) bonds, (x) the name "Cablevision" or "Cablevision Systems" and
all logos, trademarks and intellectual property associated with such names and
(xi) the assets and properties of Seller listed on Schedule 1.01(d).
Excluded Liabilities: Means all liabilities, obligations and commitments
--------------------
of Seller, other than the Assumed Liabilities, including, but not limited to,
all liabilities, obligations
-8-
<PAGE>
and commitments arising out of or relating to Seller's ownership of the Acquired
Assets and operations of the CATV Business attributable to periods prior to the
Closing Date, any taxes not in respect of the Acquired Assets, indebtedness for
money borrowed, obligations to Seller's officers, directors and advisors,
obligations relating to Excluded Assets, and the liabilities, obligations and
commitments of Seller identified on Schedule 1.01(e) in each case other than any
Current Liabilities taken into account in determining the Final Working Capital
Amount.
FCC: The Federal Communications Commission.
---
Final Basic Subscriber Statement: As defined in Section 2.04(b).
--------------------------------
Final Subscriber Adjustment: An amount equal to (i) if the number of
---------------------------
actual Basic Subscribers as determined by the Final Basic Subscriber Statement
is less than 3,679, then $1,289 times the difference between 3,679 and such
number of actual Basic Subscribers, presented as a negative amount or (ii) if
the number of actual Basic Subscribers as determined by the Final Basic
Subscriber Statement is more than 4,079, then $1,289 times the difference
between such number of actual Basic Subscribers (but not exceeding 4,260) and
4,079, presented as a positive amount.
Final Working Capital Amount: Means (i) if Current Liabilities exceed
----------------------------
Current Assets as reflected on the Final Working Capital Statement, such excess,
expressed as a negative number, or (ii) if Current Assets exceed Current
Liabilities as reflected on the Final Working Capital Statements, such excess,
expressed as a positive number.
Final Working Capital Statement: As defined in Section 2.04(a).
-------------------------------
FTC: The Federal Trade Commission.
---
GAAP: Means U.S. generally accepted accounting principles consistently
----
applied.
Governmental Authority: Means the Federal Government, any state, county,
----------------------
municipal, local or foreign government and
-9-
<PAGE>
any governmental agency, bureau, court, tribunal, department, board, commission,
authority or body or any arbitrators or panel of arbitrators having jurisdiction
with respect to a particular matter.
Hazardous Substance: Means any substance listed, defined, designated or
-------------------
classified as hazardous, toxic or radioactive under any applicable Environmental
Law, including petroleum and petroleum related products.
HSR Act and Rules: The Hart-Scott-Rodino Antitrust Improvements Act of
-----------------
1976 and the rules and regulations promulgated thereunder, as from time to time
in effect prior to the Closing.
HSR Report: The Notification and Report Form for certain mergers and
----------
acquisitions mandated by the HSR Act and Rules.
Indemnitee: As defined in Section 10.04.
----------
Indemnitor: As defined in Section 10.04.
----------
Indemnity Escrow: As defined in Section 2.07.
----------------
Indemnity Escrow Agent: As defined in Section 2.07.
----------------------
Intangible Property: The copyrights, patents, trademarks, service marks
-------------------
and trade names used in the CATV Business and all applications for, or licenses,
permits or other rights to use any thereof, and the value associated therewith,
which are owned, used or held for use by Seller and used in the CATV Business.
Inventory: Means all inventory as defined under GAAP, plus, without
---------
limitation, all supplies, all maintenance equipment, all uninstalled converters
and other uninstalled subscriber devices, all cables and all amplifiers owned by
Seller on the Closing Date as determined by Seller's inventory control systems
and used in the CATV Business.
Judgment: Any judgment, writ, order, injunction, award or decree of or by
--------
any court, or judge, justice or magistrate, including any bankruptcy court or
judge, and any order of or by any Governmental Authority.
-10-
<PAGE>
Law: The common law and any statute, ordinance, code or other law, rule,
---
regulation, order, technical or other standard, requirement or procedure
enacted, adopted, promulgated, applied or followed by any Governmental Authority
or court, including, without limitation, Judgments and the CATV Licenses.
LMDS: As defined in Section 5.06(a).
----
Losses: As defined in Section 10.02(a).
------
Material Adverse Effect: Means a material adverse effect on the assets,
-----------------------
financial condition or results of operations of the CATV System taken as a whole
other than any such effect resulting from changes in general economic or
political conditions or legal, governmental, regulatory or competitive factors
affecting CATV systems operators generally.
Material CATV Instruments: Means all franchises, FCC Licenses and pole
-------------------------
attachment agreements that are used in the CATV Business as presently conducted
and any other CATV Instruments that are used in the CATV Business as presently
conducted, the loss of which would materially and adversely affect or interfere
with the operation of the CATV System as presently conducted.
Material Contracts: Means the leases in respect of Real Property on
------------------
Schedule 3.06(b) (or any replacements thereof) and any other Contracts requiring
in any calendar year payments or receipts exceeding $10,000 individually and
that cannot be terminated on thirty (30) days' notice without liability.
MMDS: As defined in Section 5.06(a).
----
Organizational Documents: As defined in Section 3.02(b).
------------------------
Outside Date: As defined in Section 12.01.
------------
Overdue Receivables: The Accounts Receivable for which Buyer is paying
-------------------
Seller zero percent (0%) of face value under Section 2.02 and the definition of
Current Assets.
Permitted Encumbrances: Means those Encumbrances set forth in Schedule
----------------------
1.01(f) hereto and all other Encumbrances,
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<PAGE>
if any, which do not materially detract from the value of the tangible property
subject thereto and which do not materially interfere with the present and
continued use of such property in the operation of the CATV Business.
Person: Any natural person, Governmental Authority, corporation, general
------
or limited partner, partnership, joint venture, trust, association, limited
liability company or unincorporated entity of any kind.
Preliminary Working Capital Statement: As defined in 2.04(a).
-------------------------------------
Purchase Price: As defined in Section 2.02.
--------------
Real Property: All realty, fixtures, easements, rights-of-way, leasehold
-------------
and other interests in real property, buildings and improvements owned, used or
held for use in the CATV Business.
Required Consents: The Consents designated as Buyer Required Consents and
-----------------
Seller Required Consents on Schedules 3.02 and 4.05.
Seller: As defined in the Preamble to this Agreement.
------
Seller Required Consents: The Consents designated by Seller by the letter
------------------------
"S" on Schedules 3.02 and 4.05.
Seller Indemnified Party: As defined in Section 10.02(a).
------------------------
Seller's Basket: As defined in Section 10.03(c).
---------------
Seller's FCC Counsel: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
--------------------
Seller's Massachusetts Counsel: Mintz, Levin, Cohn, Ferris, Glovsky and
------------------------------
Popeo, P.C.
Seller's Missouri Counsel: Stinson, Mag & Fizzell, P.C.
-------------------------
Side: As defined in Section 9.02(c).
----
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<PAGE>
SMATV: As defined in Section 5.06(a).
-----
Subscriber Adjustment: An amount equal to (i) if the number of Basic
---------------------
Subscribers actually delivered on the Closing Date is less than 3,679, then
$1,289 times the difference between 3,679 and such number of Basic Subscribers
actually delivered, presented as a negative amount or (ii) if the number of
Basic Subscribers actually delivered on the Closing Date is more than 4,079,
then $1,289 times the difference between such number of Basic Subscribers
actually delivered on the Closing Date (but not exceeding 4,260) and 4,079,
presented as a positive amount.
System Area: The geographical area covered by the cable television
-----------
franchises in Schedule 1.01(a).
Tax Returns: As defined in Section 3.05.
-----------
Trial Balance: As defined in Section 3.03.
-------------
1.02 Other Definitional Provisions. Terms defined in the singular shall
-----------------------------
have a comparable meaning when used in plural, and vice versa.
2. Purchase and Sale.
-----------------
2.01 Transfer of Assets. At the Closing, upon the terms and conditions
------------------
set forth in this Agreement, Seller shall sell, convey, transfer, assign and
deliver to Buyer, and Buyer shall purchase, accept and receive, all of Seller's
right, title and interest in and to the Acquired Assets, such transaction to be
effective as of 12:01 a.m. on the Closing Date.
2.02 Purchase Price. In consideration for the transfer of the Acquired
--------------
Assets pursuant to Section 2.01 and the other covenants, agreements,
representations and warranties con tained herein, Buyer shall at Closing (i)
pay to Seller a purchase price of Five Million Dollars ($5,000,000) (A) plus, if
----
a positive number, or minus, if a negative number, the Estimated Working Capital
-----
Amount to or from Seller as provided in Section 2.03 and (B) plus, if a positive
----
number or minus, if a negative number, the Subscriber Adjustment, if any, (such
-----
price, together with (A) and (B) the "Purchase Price"), by federal funds wire
--------------
transfer of immediately available funds to
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<PAGE>
such account at a United States bank as shall be designated by Seller, and (ii)
assume and agree to pay, discharge and perform the Assumed Liabilities as and
when due in accordance with the Bill of Sale, General Assignment and Instrument
of Assumption of Liabilities attached as Exhibit B hereto.
2.03 Estimated Statements. At least fifteen (15) business days prior to
--------------------
the Closing Date, Seller shall deliver to Buyer (i) a working capital statement
of Seller's CATV Business as of the Closing Date, which statement shall be
prepared in accordance with GAAP, except as otherwise provided in this
Agreement, and shall set forth Seller's good faith estimate of the Current
Assets and Current Liabilities of Seller's CATV Business as of the Closing Date
(the "Estimated Working Capital Statement"), (ii) an estimate of the number of
-----------------------------------
Basic Subscribers to be transferred on the Closing Date (the "Basic Subscriber
----------------
Estimate") and (iii) an estimate of the Subscriber Adjustment, if any, to be
- --------
made at Closing. Prior to Closing, Seller shall provide Buyer or Buyer's
representatives with copies of all books and records as Buyer may reasonably
request for purposes of verifying the Estimated Working Capital Statement and
the Basic Subscriber Estimate, and shall meet at Buyer's reasonable request on
reasonable notice with Buyer's accountants and other representatives; provided,
--------
however, that if Seller determines in good faith that providing copies of any
- -------
books and records requested by Buyer pursuant to this Section 2.03 would be
unduly burdensome to Seller, then Seller shall make available, on reasonable
notice, any such books and records that it has not copied for Buyer, at the
offices of Seller at One Media Crossways, Woodbury, New York.
2.04 Post Closing Adjustments.
------------------------
(a)(i) Working Capital Statement. Within ninety (90) days after the
-------------------------
Closing Date, Seller shall prepare, or cause to be prepared, and deliver to
Buyer a working capital statement of Seller's CATV Business as of the
Closing Date, which statement shall be prepared in accordance with GAAP,
except as otherwise required by this Agreement, and shall set forth the
Current Assets and Current Liabilities of Seller's CATV Business as of the
Closing Date (the "Preliminary Working Capital Statement"). Buyer shall
-------------------------------------
cooperate in providing to
-14-
<PAGE>
Seller access, on reasonable notice, to all relevant books, records and
personnel of the CATV Business in order to facilitate the preparation of
the Preliminary Working Capital Statement.
(ii) Right to Examine. During the succeeding thirty (30) day period,
----------------
Buyer shall have the right to examine the Preliminary Working Capital
Statement and all records used to prepare the Preliminary Working Capital
Statement. Seller shall provide Buyer or Buyer's representatives with
copies of all books and records that Buyer may reasonably request for
purposes of Buyer's review of the Preliminary Working Capital Statement;
provided, however, that if Seller determines in good faith that providing
-------- -------
copies of any books and records requested by Buyer pursuant to this Section
2.04(a) would be unduly burdensome to Seller, then Seller shall make
available, on reasonable notice, any such books and records that it has not
copied for Buyer, at the offices of Seller at One Media Crossways,
Woodbury, New York.
(iii) Buyer Objection. In the event Buyer determines that the
---------------
Preliminary Working Capital Statement has not been prepared on the basis
set forth in Section 2.04(a)(i) hereof, Buyer shall so inform Seller in
writing (the "Buyer's Working Capital Objection"), setting forth a
---------------------------------
reasonably specific description of the basis of the Buyer's Working Capital
Objection on or before the last day of the thirty (30) day period referred
to in Section 2.04(a)(ii) hereof. If Buyer delivers a Buyer's Working
Capital Objection, Buyer and Seller shall attempt to resolve the
differences underlying the Buyer's Working Capital Objection within twenty
(20) days of Seller's receipt thereof. If Seller and Buyer are unable to
resolve all their differences within such twenty (20) day period, they
shall refer their remaining differences to Ernst & Young LLP, or such other
nationally recognized firm of independent public accountants as to which
Buyer and Seller may mutually agree (the "CPA Firm"), who shall, acting as
--------
experts and not as arbitrators, determine on the basis of the standard set
forth in Section 2.04(a)(i) hereof and only with respect to the remaining
differences so submitted, whether and to what extent, if any, the
Preliminary
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<PAGE>
Working Capital Statement requires adjustment. The CPA Firm will base its
determination only on evidence brought to it by the parties and shall not
conduct an audit. The CPA Firm shall deliver its written determination to
Buyer and Seller no later than the twentieth (20th) business day after the
remaining differences underlying the Buyer's Working Capital Objection are
referred to the CPA Firm. The CPA Firm's determination shall be conclusive
and binding upon the parties. The fees and disbursements of the CPA Firm
shall be allocated between Buyer and Seller in the same proportion that the
aggregate amount of any disputed items submitted to the CPA Firm that are
unsuccessfully disputed by each (as finally determined by the CPA Firm)
bears to the total amount of any disputed items so submitted. Buyer and
Seller shall make readily available to the CPA Firm all relevant books and
records and any work papers relating to the Preliminary Working Capital
Statement and all other items reasonably requested by the CPA Firm. A
"Final Working Capital Statement" shall be (x) the Preliminary Working
-------------------------------
Capital Statement in the event that (A) a Buyer's Working Capital Objection
is not delivered to Seller in the period set forth in Section 2.04(a)(iii)
hereof, or (B) the Seller and Buyer so agree; or (y) the Preliminary
Working Capital Statement as adjusted by either (A) the agreement of Seller
and Buyer or (B) the CPA Firm.
(iv) Final Working Capital Statement. On the fifth (5th) business day
-------------------------------
following the determination of Seller's Final Working Capital Statement
pursuant to Section 2.04(a)(iii) hereof, (w) if both the Estimated and
Final Working Capital Amounts of Seller are positive, then (A) if the Final
Working Capital Amount exceeds the Estimated Working Capital Amount, then
Buyer shall pay to Seller an amount equal to such excess; and (B) if the
Estimated Working Capital Amount exceeds the Final Working Capital Amount,
then Seller shall pay to Buyer an amount equal to such excess; (x) if both
the Estimated and Final Working Capital Amounts of Seller are negative,
then (A) if the absolute value of the Final Working Capital Amount exceeds
the absolute value of the Estimated Working Capital Amount, then Seller
shall pay to Buyer an amount equal to such excess; and (B) if the absolute
value of the Estimated Working Capital Amount
-16-
<PAGE>
exceeds the absolute value of the Final Working Capital Amount, then Buyer
shall pay to Seller an amount equal to such excess; (y) if the Estimated
Working Capital Amount is negative and the Final Working Capital Amount is
positive, then Buyer shall pay to Seller an amount equal to the sum of the
absolute values thereof; and (z) if the Estimated Working Capital Amount is
positive and the Final Working Capital Amount is negative, then Seller
shall pay to Buyer an amount equal to the sum of the absolute values
thereof.
(v) Payment. Any amount payable pursuant to Section 2.04(a)(iv)
-------
hereof shall be paid by wire transfer of immediately available funds to a
bank account designated by Buyer or Seller, as the case may be.
(b)(i) Basic Subscriber Statement. Within thirty (30) days after the
--------------------------
Closing Date, Seller shall prepare, or cause to be prepared, and deliver to
Buyer (x) a statement setting forth the number of Basic Subscribers as of
the Closing Date, which statement shall be prepared in conformity with the
definition of Basic Subscriber contained herein (the "Basic Subscriber
----------------
Statement")and (y) the amount of the Final Subscriber Adjustment. Buyer
---------
shall cooperate in providing Seller access, upon reasonable notice, to all
relevant books, records and personnel of the CATV Business in order to
facilitate the preparation of the Basic Subscriber Statement.
(ii) Right to Examine. During the succeeding thirty (30) day period,
----------------
Buyer shall have the right to examine the Basic Subscriber Statement and
all records used to prepare the Basic Subscriber Statement. Seller shall
provide Buyer or Buyer's representatives with copies of all books and
records that Buyer may reasonably request for purposes of Buyer's review of
the Basic Subscriber Statement; provided, however, that if Seller
-------- -------
determines in good faith that providing copies of any books and records
requested by Buyer pursuant to this Section 2.04(b)(ii) would be unduly
burdensome to Seller, then Seller shall make available, on reasonable
notice, any such books and records that it has not theretofore provided to
Buyer, at the offices of Seller at One Media Crossways, Woodbury, New York.
-17-
<PAGE>
(iii) Objections. In the event Buyer determines that the Basic
----------
Subscriber Statement has not been prepared on the basis set forth in
Section 2.04(b)(i) hereof, Buyer shall so inform Seller in writing (the
"Buyer's Objection"), setting forth a reasonably specific description of
------------------
the basis of the Buyer's Objection on or before the last day of the thirty
(30) day period referred to in Section 2.04(b)(ii) hereof. If Buyer
delivers a Buyer's Objection, Buyer and Seller shall attempt to resolve the
differences underlying the Buyer's Objection within twenty (20) days of
Seller's receipt thereof. If Seller and Buyer are unable to resolve all of
their differences within such twenty (20) day period, they shall refer
their remaining differences to the CPA Firm, who, acting as arbitrators and
not as experts, shall determine on the basis of the standard set forth in
Section 2.04(b)(i) hereof and only with respect to the remaining
differences so submitted, whether and to what extent, if any, the Basic
Subscriber Statement requires adjustment. The CPA Firm will base its
determination only on evidence brought to it by the parties and shall not
conduct an audit. The CPA Firm shall deliver its written determination to
Buyer and Seller no later than the twentieth (20th) business day after the
remaining differences underlying the Buyer's Objection are referred to the
CPA Firm. The CPA Firm's determination shall be conclusive and binding
upon the parties. The fees and disbursements of the CPA Firm shall be
allocated between Buyer and Seller in the same proportion that the
aggregate amount of any disputed Basic Subscribers submitted to the CPA
Firm that are unsuccessfully disputed by each (as finally determined by the
CPA Firm) bears to the total amount of any Basic Subscribers so submitted.
Buyer and Seller shall make readily available to the CPA Firm all relevant
books and records and any work papers relating to the Basic Subscriber
Statement and all other items reasonably requested by the CPA Firm. A
"Final Basic Subscriber Statement" shall be (x) the Basic Subscriber
---------------------------------
Statement in the event that a Buyer's Objection is not delivered to the
Seller in the period set forth in Section 2.04(b)(ii) hereof, or Seller and
Buyer so agree; or (y) the Basic Subscriber Statement, as adjusted by
either (A) the agreement of the Seller and Buyer or (B) the CPA Firm.
-18-
<PAGE>
(iv) Final Basic Subscriber Statement. On the fifth (5th) business
--------------------------------
day following the determination of the Final Basic Subscriber Statement
pursuant to Section 2.04(b)(iii) hereof, if there is no Final Subscriber
Adjustment then any party that received a Subscriber Adjustment shall
immediately repay that amount to the other party. If the Final Subscriber
Adjustment is a positive amount (i.e. the number of actual Basic
- -
Subscribers exceeds 4,079), then Buyer shall pay such amount to Seller
after deduction of any amount paid by Buyer to Seller in respect of the
Subscriber Adjustment or increase for any amount paid by Seller to Buyer in
respect of the Subscriber Adjustment. If the Final Subscriber Adjustment
is a negative number (i.e. the number of actual Basic Subscribers is below
- -
3,679), then Seller shall pay such amount to Buyer after deduction of any
amount paid by Seller to Buyer in respect of the Subscriber Adjustment or
increase for any amount paid by Buyer to Seller in respect of the
Subscriber Adjustment.
(v) Payment. Any amount payable pursuant to Section 2.04(b)(iv)
-------
hereof shall be paid by wire transfer of immediately available funds to a
bank account designated by Buyer or Seller, as the case may be.
2.05 Earnest Money Deposit. Concurrently herewith, Buyer has deposited
---------------------
with The Chase Manhattan Bank as escrow agent ("Earnest Money Escrow Agent"), an
--------------------------
irrevocable letter of credit in the amount of Five Hundred Thousand Dollars
($500,000), in substantially the form attached hereto as Exhibit H, for the
Earnest Money Escrow ("Earnest Money Escrow") to be held pursuant to an escrow
--------------------
agreement (the "Earnest Money Escrow Agreement") substantially in the form of
------------------------------
Exhibit C hereto. Such letter of credit shall be held and administered under
the Earnest Money Escrow as provided in the Earnest Money Escrow Agreement. The
Earnest Money Escrow shall be distributed as provided in the Earnest Money
Escrow Agreement and Article 12 hereof.
2.06 Sales and Transfer Taxes. All sales and use taxes and transfer
------------------------
taxes, if any, arising from the transfer of the Acquired Assets shall be shared
equally between Buyer and Seller.
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2.07 Indemnity Escrow. At the Closing, Seller shall deposit, an
----------------
irrevocable letter of credit, dated the Closing Date, in substantially the form
attached hereto as Exhibit I in an amount equal to Five Hundred Thousand Dollars
($500,000) ("Indemnity Escrow") with The Chase Manhattan Bank, as Escrow Agent
----------------
(the "Indemnity Escrow Agent"), pursuant to the Indemnity Escrow Agreement in
----------------------
the form annexed hereto as Exhibit F, to secure Buyer's rights with respect to
claims to indemnification under Section 10.02. On the 366th day following the
Closing Date, or, if such date is not a business day in New York, New York, the
following business day, any amounts (including amounts under a letter of credit)
then in the custody of the Indemnity Escrow Agent under the Indemnity Escrow
Agreement less the amount of any claims made by Buyer prior thereto and not
resolved in accordance with the terms thereof, shall be released to Seller
pursuant to its written instructions and in conformity with the Indemnity Escrow
Agreement.
2.08 Determination and Allocation of Purchase Price. For federal income
----------------------------------------------
and other applicable tax purposes, the allocation of the Purchase Price shall be
determined within ninety (90) days after Closing Date by an appraisal to be
obtained after the Closing Date. The appraiser performing the appraisal shall be
expert in the appraisal of cable television systems and shall be mutually
selected and engaged by Seller and Buyer. The parties shall cause the appraiser
to consult with Buyer and Seller during the preparation of such appraisal, and
the appraiser shall deliver drafts and the final appraisal to Buyer and Seller
simultaneously. Buyer and Seller agree to be bound by such allocation and to
file all returns and reports in respect of the transactions contemplated herein
on the basis of such allocation. The cost of the appraisal shall be borne
equally by Buyer, on one hand, and Seller, on the other hand. Seller and Buyer
agree to prepare and file an IRS Form 8594 in a timely fashion in accordance
with the rules under Section 1060 of the Code. To the extent that the Purchase
Price is adjusted after the Closing Date, the parties agree to revise and amend
IRS Form 8594 in the same manner and according to the same procedure. The
determination and allocation of the Purchase Price derived pursuant to this
Section shall be binding on Seller and Buyer for all tax reporting purposes.
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<PAGE>
3. Representations and Warranties of Seller.
----------------------------------------
To induce Buyer to enter into this Agreement, Seller represents and
warrants to Buyer as follows:
3.01 Organization and Authority of Seller. Seller is a corporation, duly
------------------------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and Seller is duly qualified and licensed to do
business and is in good standing under the laws of the states in which it does
business except where such failures to be so qualified, licensed or in good
standing in a jurisdiction, individually or in the aggregate, do not have, has
not had and would not reasonably be expected to have, a Material Adverse Effect
or do not or would not materially adversely affect Seller's ability to perform
its obligations hereunder. Seller has all requisite corporate power and
authority to own, lease and use the Acquired Assets as they are currently owned,
leased or used and to conduct the CATV Business as it is currently conducted.
3.02 Legal Capacity; Approvals and Consents.
--------------------------------------
(a) Authority and Binding Effect. Subject to Section 9.02 hereof and
----------------------------
the receipt of Consents set forth on Schedule 3.02, Seller has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement and the performance of Seller's obligations hereunder have been
duly and validly authorized by all necessary action on the part of Seller.
This Agreement has been duly executed and delivered by Seller and is the
valid and binding obligation of Seller enforceable in accordance with its
terms, except as such enforceability may be affected by the laws of
bankruptcy, insolvency, reorganization and creditors' rights generally and
by the availability of equitable remedies.
(b) No Breach or Violation. Subject only to obtaining the Consents
----------------------
set forth on Schedule 3.02, the execution, delivery and performance of this
Agreement do not, and will not, contravene the organizational documents of
Seller (the "Organizational Documents"), and do not, and will not: (i)
------------------------
conflict with or result in a
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<PAGE>
breach or violation by Seller of, or (ii) constitute a default (without
regard to any requirement of notice, passage of time or elections by any
Person) by Seller under, or (iii) permit or result in the termination,
suspension, modification or impairment of, or adversely affect Seller's
ability to perform its obligations under, any CATV Instrument, Law,
Judgment, or Contract to which Seller is a party or by which Seller, the
CATV Business or any of the Acquired Assets is subject or bound or may be
affected, or (iv) create or impose, or result in the creation or imposition
of, any Encumbrance (other than Permitted Encumbrances) upon any of the
Acquired Assets, in each case under clause (i) through (iv) above, except
such conflicts, breaches, violations, defaults, terminations, suspensions,
modifications or impairments which, individually or in the aggregate, has
not had, do not have or would not reasonably be expected to have, a
Material Adverse Effect or does not or would not materially adversely
affect Seller's ability to perform its obligations hereunder.
(c) Required Consents. Except for the parties listed in Schedules
-----------------
3.02 and 4.05, there are no parties whose Consent, or with whom the filing
of any certificate, notice, application, report or other document, is
legally or contractually required or otherwise is necessary in connection
with the execution, delivery or performance of this Agreement by Seller,
except where failure to obtain such Consent or approval or failure to make
such filing, individually or in the aggregate, has not had, does not have
or would not reasonably be expected to have, a Material Adverse Effect or
does not or would not materially adversely affect Seller's ability to
perform its obligations hereunder.
3.03 Financial Statements. Seller has delivered to Buyer true and
--------------------
complete copies of the trial balance of the CATV Business as of December 31,
1997 (the "Trial Balance") and December 31, 1996. The Trial Balance and the
-------------
trial balance of the CATV Business as of December 31, 1996 were prepared in
accordance with GAAP to the extent applicable thereto.
3.04 Changes in Operation. Since the date of the Trial Balance, there has
--------------------
not been any event or circumstance which,
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<PAGE>
individually or in the aggregate, has had, does have or would reasonably be
expected to have, a Material Adverse Effect.
3.05 Tax Returns. Seller has, and will have as of the Closing Date, duly
-----------
filed all federal, state, local and foreign income, information, franchise,
sales, use, property, excise and payroll and other tax returns or reports
(herein "Tax Returns") required to be filed by Seller on or prior to the date
-----------
hereof or which are required to be filed on or prior to the Closing Date, and
all such Tax Returns were prepared in good faith and are accurate and complete
in all material respects. All taxes, fees and assessments that are shown on
such Tax Returns as due or payable by Seller on or before the date hereof or the
Closing Date, as the case may be, and that might result in an Encumbrance upon
any of the Acquired Assets have been or will be duly paid. Except as set forth
in Schedule 3.05, Seller has not received any notice or assessment to the effect
that there is any unpaid tax, interest, penalty or addition to tax due or
claimed to be due from Seller in respect of such Tax Returns; Seller has not
received any notice of the assertion or threatened assertion of any Encumbrances
with respect to any Acquired Assets on account of any unpaid taxes; and no
audits of such Tax Returns by any Governmental Authority are pending or, so far
as Seller knows, threatened. Except as set forth in Schedule 3.05, Seller has
no outstanding requests for extension of time within which to pay taxes; there
has been no waiver or extension by Seller of any applicable statute of
limitations for the collection or assessment of taxes; and Seller has withheld
and paid in a timely manner all payments for withholding taxes, unemployment
insurance and other amounts required to be withheld and paid.
3.06 Acquired Assets.
---------------
(a) Title; Encumbrances. Seller has (i) good title to all of its
-------------------
Equipment, Inventory and other personal property and good and marketable
title to all of its Real Property owned in fee, and (ii) the right and
authority (subject to the receipt of the Consents specified herein) to
transfer to Buyer all of Seller's right, title and interest in and to the
other property or rights included in the Acquired Assets, in each instance
in (i) and (ii) above free and clear of any Encumbrances except Permitted
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<PAGE>
Encumbrances, except for any instance in which the failure to have such
title, right or authority, individually or in the aggregate with such other
instances, has not had, does not have, and would not reasonably be expected
to have, a Material Adverse Effect.
(b) Real Property. Schedule 3.06(b) sets forth a list, complete and
-------------
correct in all material respects, of all Real Property owned, leased,
occupied or used by Seller in connection with the operation of the CATV
Business as presently conducted. The Real Property comprises all real
property interests necessary to conduct the CATV Business as currently
conducted. Except for any instances where the failure to be true of the
below items (i) through (ix), individually or in the aggregate, has not
had, does not have, or would not reasonably be expected to have, a Material
Adverse Effect: (i) except for routine repairs, all of the improvements,
leasehold improvements and the premises of the Real Property are in good
condition and repair and suitable for the purposes used, (ii) each parcel
of Real Property (w) has access to and over public streets, or private
streets for which Seller has a valid right of ingress and egress, (x)
conforms in its current use to all zoning requirements without reliance on
a variance or a classification of the parcel in question as a nonconforming
use, (y) conforms in its use to all restrictive covenants, if any, or other
Encumbrances affecting all or part of such parcel, and (z) has access
(directly or by easement, right of way, or similar right included in the
Acquired Assets) to all utilities and services to the extent necessary for
the operation of the current operations of the CATV System with respect to
such parcel, (iii) Seller has all easements, and all leases, fee interests,
access agreements, and other rights required by Law for the use of all Real
Property used in the CATV Business, including all Real Property over,
under, or on which the CATV Business is conducted, (iv) there are not
pending or, to the best of Seller's knowledge, threatened, any condemnation
actions, increases in tax assessments or adverse zoning changes, with
respect to, in each case, such Real Property or any part thereof, (v)
Seller has received no written notice
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<PAGE>
of the desire of any public authority or other entity to take or use any
Real Property or any part thereof, (vi) all leases and subleases pursuant
to which any of the Real Property is occupied or used are set forth on
Schedule 3.06(b) and are valid and binding and in full force and effect,
(vii) Seller has not and, to the best of Seller's knowledge after
reasonable inquiry, no other party to any Contract, lease or sublease
relating to any Real Property has given or received notice of breach or
termination except any which may have been waived or withdrawn, (viii) all
easements, rights-of-way and other similar rights which are necessary for
Seller's current use of any Real Property are valid and in full force and
effect, and (ix) Seller has not received any notice with respect to the
termination or breach of any such easements, rights-of-way or other similar
rights except any which may have been waived or withdrawn or which are no
longer relevant.
(c) Acquired Assets. The Acquired Assets include all assets owned,
---------------
used or held for use by Seller and that are necessary to conduct the CATV
Business as it is presently being conducted except where the failure to
own, use or hold such assets, individually or in the aggregate, has not
had, does not have or would not reasonably be expected to have, a Material
Adverse Effect.
(d) Environmental Matters. Except as disclosed in Schedule 3.06(d):
---------------------
(i) the Acquired Assets and the operation of the CATV Business comply in
all material respects with applicable Environmental Laws; (ii) Seller has
not received any written notice from any Governmental Authority alleging
that, and Seller has no knowledge, after reasonable inquiry, that, the
Acquired Assets and the operation of the CATV Business are in violation in
any material respect of any applicable Environmental Law; (iii) the
Acquired Assets and the operation of the CATV Business are not the subject
of any written notice actually received by Seller, or any Judgment arising
under any Environmental Law; and (iv) during the period of Seller's
ownership and, to Seller's knowledge, prior to the period of Seller's
ownership, the Acquired Assets have not been used for the generation,
storage, discharge
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<PAGE>
or disposal of any Hazardous Substances except as permitted by applicable
Environmental Laws.
3.07 The CATV Business. With respect to the CATV Business, Seller makes
-----------------
the following warranties and representations:
(a) Since the date of the Trial Balance, (i) the CATV Business has
been operated only in the ordinary course; (ii) there has been no sale,
assignment or transfer of any assets or properties related to the CATV
Business other than on an arms' length basis in the ordinary course of
business; (iii) there has been no amendment or termination of any Contract
or CATV Instrument; (iv) there has been no waiver or release of any right
or claim of Seller against any third party; (v) there has been no agreement
by Seller to take any of the actions described in the preceding clauses (i)
through (iv), except as contemplated by this Agreement and except for any
instances that, individually or in the aggregate, have not had, do not have
or would not reasonably be expected to have, a Material Adverse Effect.
(b) As of December 31, 1997, the CATV Business included approximately
Three Thousand Eight Hundred Seventy-Nine (3,879) Basic Subscribers.
(c) Except for such instances where the failure to be true of the
below items (i) through (iv), individually or in the aggregate, have not
had, does not have, or would not reasonably be expected to have, a Material
Adverse Effect and except as set forth in Schedule 3.07(c): (i) Seller
holds all of the franchises, licenses, permits and other CATV Instruments
reasonably necessary to enable it to operate the CATV Business as presently
conducted, (ii) Seller is in compliance with the terms and conditions of
all such CATV Instruments and Contracts, (iii) Seller has not given or
received any notice of any claimed or purported default in, or termination
of, any Contracts or CATV Instruments and there are no proceedings pending,
or, to the knowledge of Seller, threatened, to cancel, modify or change any
such Contracts or CATV Instruments, and (iv) exclusive of any
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<PAGE>
change in a CATV License subsequent to the date hereof that Buyer has
otherwise requested or agreed to, none of the CATV Licenses contain any
commitments requiring rebuilds, upgrades, increase in franchise fees
payable or local origination commitments.
(d) Except in each case where the failure to be true of any of the
below items, individually or in the aggregate, has not had, does not have,
or would not reasonably be expected to have, a Material Adverse Effect, the
CATV Business is conducted by Seller in compliance with all applicable Laws
and CATV Instruments, including without limitation, the Communications Act
of 1934, as amended (the "Communications Act"), and the rules and
------------------
regulations of the FCC, and, without limiting the generality of the
foregoing, except as set forth in Schedule 3.07(d) hereto:
(i) Each of the system areas has been registered with the FCC;
(ii) All of the semi-annual performance tests on the CATV System
required under the rules and regulations of the FCC have been
performed and the results of such tests demonstrate satisfactory
compliance with the applicable technical requirements being tested in
all material respects;
(ii) The CATV System is being operated in compliance with the
provisions of 47 C.F.R. Sections 76.610 through 76.619 (mid-band and
super-band signal carriage), including the filing of all required
notifications and the receipt of all necessary authorizations and
compliance with the cumulative signal leakage index;
(iv) A valid request for renewal has been duly and timely filed
under Section 626 of the Communications Act with the proper
Governmental Authority with respect to all franchises to operate the
CATV System that have expired or will expire within 36 months after
the date of this Agreement;
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<PAGE>
(v) Seller has all of the CATV Licenses necessary to operate
the CATV System as the CATV Business is currently conducted, all of
which licenses are listed in Schedule 1.01(a), and Seller operates the
CATV Business in conformance with the terms and conditions of such
licenses;
(vi) Seller has made all annual filings required to be made with
the FCC;
(vii) The carriage of all televison station signals is in
compliance with the must-carry and retransmission consent provisions
of the Communications Act, as applicable;
(viii) The employment units covered by the CATV System and
operated by Seller have been certified by the FCC for compliance with
equal opportunity requirements in each of calendar years 1993 through
1997; and
(ix) All necessary FAA approvals have been obtained with respect
to the height and location of towers used in connection with the
operation of the CATV Business, and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules,
including antenna structure registrations with the FCC.
(e) Except in each case where the failure to be true of the items (i)
through (iv) below, individually or in the aggregate, has not had, does not
have or would not reasonably be expected to have, a Material Adverse
Effect: (i) Seller is in compliance with Title 17 of the United States
Code, as amended, and the rules and regulations promulgated thereunder (the
"Copyright Act") and the rules and regulations of the United States
-------------
Copyright Office with respect to the operation of the CATV Business, (ii)
without limiting the generality of the foregoing, for each relevant semi-
annual reporting period, Seller has timely filed with the United States
Copyright Office all required statements of account in true and correct
form, and has paid when due all required copyright royalty fee payments in
correct amount,
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<PAGE>
relating to the CATV Business's carriage of television broadcast signals,
and Seller is otherwise in compliance with all applicable rules and
regulations of the Copyright Office, (iii) Seller does not possess any
patent, patent right, trademark, or copyright and is not party to any
license or royalty agreement with respect to any patent, trademark or
copyright, except for licenses respecting program material and obligations
under the Copyright Act applicable to cable television systems generally,
and (iv) the CATV Business is free of any rightful claim of any third party
by way of copyright infringement or the like (except for claims involving
music performance rights).
3.08 Labor Contracts and Actions.
---------------------------
(a) Seller is not a party to any Contract with any labor organization,
nor has Seller agreed to recognize any union or other collective bargaining
unit, nor has any union or other collective bargaining unit been certified
as representing any of the employees of Seller with respect to the
operation of the CATV Business;
(b) Except for such instances where the failure to be true of items
(i) through (iii) below, individually or in the aggregate, has not had,
does not have or would not reasonably be expected to have, a Material
Adverse Effect: (i) Seller has complied with all Laws relating to the
employment of labor, including any provisions thereof relating to wages,
hours, collective bargaining and the payment of social security and other
taxes, (ii) Seller is not subject to any liability for any arrearages of
wages or any taxes or penalties for failure to comply with any of the
foregoing, and (iii) Seller has delivered to Buyer a list of the names, job
title, and present annual rates of compensation, including the date of hire
of Employees and whether such Employee is full-time or part-time, of all
personnel whose work is performed wholly or substantially for the CATV
Business, and any employment agreements, commitments, arrangements or
understandings, written or oral, affecting such personnel; and
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<PAGE>
(c) Seller is not currently experiencing any strikes, work stoppages,
significant grievance proceedings or claims of unfair labor practices.
3.09 Employee Benefit Plans.
----------------------
(a) All "employee benefit plans" within the meaning of Section 3(3)
of ERISA covering Employees, other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA, and other benefit plans, contracts or
arrangements covering Employees (collectively, the "Benefit Plans") are
-------------
listed on Schedule 3.09. True and complete copies of all Benefit Plans and
all amendments thereto have been provided or made available to Buyer.
Schedule 3.09 also lists all multiemployer plans covering Employees.
(b) All Benefit Plans, to the extent subject to ERISA, are in
compliance with ERISA except where the failure to be in compliance would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, or subject Buyer to any liability with respect
thereto after Closing. There is no pending or, to the knowledge of Seller,
threatened litigation relating to the Benefit Plans. Seller has not
engaged in a transaction with respect to any Benefit Plan that, assuming
the taxable period of such transaction expired as of the date hereof or as
of the Closing Date (as the case may be), would reasonably be expected to
subject Seller to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA.
(c) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Seller with respect to any ongoing, frozen
or terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by it, or the
single-employer plan of any entity which is considered one employer with
Seller under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
-----
Affiliate"). Seller has not incurred and does not expect to incur any
---------
material withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA and in no event shall Buyer have any
withdrawal liability
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<PAGE>
or obligation with respect to any multi-employer plan in which Seller
participates. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived, has been required to be filed for any Benefit Plan subject to
Title IV of ERISA or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(d) Neither any Benefit Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA and
no ERISA Affiliate has an outstanding funding waiver. Seller has not
provided, nor is it required to provide, security to any Benefit Plan or to
any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
3.10 Contracts and CATV Instruments.
------------------------------
(a) Except for such instances where the failure to be true of items
(i) through (v) below, individually or in the aggregate, has not had, does
not have or would not reasonably be expected to have, a Material Adverse
Effect: (i) except as set forth in Schedule 3.10(a), there are no defaults
by Seller under the Contracts or CATV Instruments (nor has Seller received
written notice of a threatened default or notice of default), and to the
best of Seller's knowledge, after reasonable inquiry, there is no default
by any other party to a Contract or a CATV Instrument, (ii) each Contract
and CATV Instrument, including those that are entered into after the date
hereof, is or will be in full force and effect, binding and enforceable in
accordance with its terms, and is or will be valid under and in compliance
in all respects with all applicable Laws, (iii) Seller is the authorized
legal holder of the CATV Licences applicable to its CATV Business, (iv)
neither Seller nor, to the best of Seller's knowledge after reasonable
inquiry, any other party to any Contract or CATV Instrument is in default
thereunder or has given or received notice of termination, cancellation,
dispute or default or, to the best of Seller's knowledge after reasonable
inquiry, has
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<PAGE>
taken any action inconsistent with the continuance of any Contract or CATV
Instrument, and (v) except for the Consents, no approval, application,
filing, registration, consent or other action of any Governmental Authority
is required to enable Seller to take advantage of the rights and privileges
intended to be conferred by any Contract or CATV Instrument.
(b) Schedule 3.10(b) contains a complete list of all Material
Contracts and Material CATV Instruments that Buyer is assuming or
acquiring, as the case may be. True, correct and complete copies of each
Contract and CATV Instrument that Buyer is assuming or acquiring, as the
case may be, have been delivered to Buyer and with respect to those
executed after the date hereof, copies will be delivered to Buyer promptly
following such execution and in any event prior to the Closing Date.
3.11 Legal and Governmental Proceedings and Judgments. Except for such
------------------------------------------------
instances where the failure to be true of items (a) and (b) below, individually
or in the aggregate, has not had, does not have or would not reasonably be
expected to have, a Material Adverse Effect: (a) except as may affect the cable
television industry generally in the United States, or as set forth in Schedule
3.11, there is no legal action or proceeding pending or, to the knowledge of
Seller, threatened against Seller, the CATV Business or the Acquired Assets, nor
is there any Judgment outstanding against Seller or to or by which Seller, any
of the Acquired Assets or the CATV Business is subject or bound, which (i)
results or is reasonably likely to result in any modification, termination,
suspension, impairment or reformation of any Contract or CATV Instrument or any
right or privilege thereunder, or (ii) adversely affects the ability of Seller
to consummate any of the transactions contemplated hereby, and (b) Seller is not
in default or violation, and no event or condition exists which, with notice or
lapse of time or both, could become or result in a default or violation, of any
Judgment.
3.12 Finders and Brokers. Seller has employed Daniels & Associates as its
-------------------
broker in the sale provided herein and will pay and discharge the claim thereof
for commission or expense reimbursement in connection therewith. Seller has not
entered into any other contract, arrangement or understanding
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<PAGE>
with any Person or firm, nor are they aware of any claim or basis for any claim
based upon any act or omission of Seller or any of its affiliates, which may
result in the obligation of Buyer to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
3.13 Miscellaneous Assets. Schedule 3.13 contains a list, true and
--------------------
complete in all material respects, of converters owned and motor vehicles owned
or leased by Seller. Except as set forth in Schedule 3.13, the Equipment and
Inventory are and will be at Closing in good operating condition and repair and
fit for the purpose for which they are being used except where the failure to be
in good operating condition or repair or fit for such purpose, individually or
in the aggregate with such other failures, has not had, does not have or would
not reasonably be expected to have, a Material Adverse Effect.
3.14 Characteristics of the CATV Systems.
-----------------------------------
(a) To the best of Seller's knowledge, after reasonable inquiry,
Schedule 3.14(a) sets forth accurately and completely in all material
respects the following information as of December 31, 1997 (unless
otherwise noted in such Schedule):
(i) a listing of each head-end and microwave site and the
related channel capacity for the CATV System;
(ii) a listing of the services provided by the CATV System
(designating the respective tiers of service) and the rates charged for
each level of service offered. Schedule 3.14(a) also lists the stations
and signals carried by the CATV System and the channel position of each
such signal and station;
(iii) a listing of the retransmission agreements and must-carry
requests required and currently used in the operation of the CATV
Business; and
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<PAGE>
(iv) a listing of all Seller's FCC licenses.
(b) Schedule 3.14(b) sets forth accurately and completely in all
material respects with respect to the CATV System the following information
as of December 31, 1997 (unless otherwise noted in such Schedule):
(i) the approximate number of homes passed; and
(ii) the approximate number of plant miles (aerial and
underground).
(c) Schedule 1.01(a) sets forth accurately and completely in all
material respects the cable televison franchises of the CATV System and
their respective expiration dates and community unit identification
numbers.
3.15 Insurance. Schedule 3.15 is a list, accurate and complete in all
---------
material respects, of insurance policies and bonds in full force and effect with
respect to Seller as of December 31, 1997, and Seller has not received any
notice of non-renewal or cancellation of such insurance policies or bonds.
Except as Seller may determine, in the exercise of its business judgment, Seller
will maintain such insurance policies and bonds in full force and effect up to
and including the Closing Date.
3.16 Accounts Receivable. The Accounts Receivable on the Closing Date
-------------------
have not been assigned to or for the benefit of any other Person. The Accounts
Receivable (to the extent not collected prior to the Closing), other than the
Overdue Receivables, arose and will arise from bona fide transactions in the
ordinary course of business.
3.17 Overbuilds. Except as set forth in Schedule 3.17, to the best of
----------
Seller's knowledge after reasonable inquiry, no construction programs have been
commenced by any municipality or other cable television provider or operator in
any area served by the CATV System.
3.18 Intangible Property. Except as set forth on Schedule 3.18 and except
-------------------
for such instances where the failure
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<PAGE>
to be true of items (a) and (b) below, individually or in the aggregate, has not
had, does not have or would not reasonably be expected to have, a Material
Adverse Effect, (a) Seller owns or possesses licenses or other rights to use all
Intangible Property reasonably necessary to the operation of the CATV Business
as presently conducted without any conflict with, or infringement of, the rights
of others, and (b) there is no claim pending or, to the best of Seller's
knowledge, threatened with respect to any such Intangible Property.
3.19 Retransmission Agreements. Buyer will not have any obligations under
-------------------------
the retransmission agreements applicable to the CATV System to make any payments
or carry additional programming.
3.20 Representation of Cablevision. Cablevision represents and warrants
-----------------------------
that Seller is an indirect wholly-owned subsidiary of Cablevision.
4. Representations and Warranties of Buyer.
---------------------------------------
To induce Seller to enter into this Agreement, Buyer represents and
warrants to Seller as follows:
4.01 Organization and Authority of Buyer. Buyer is a limited liability
-----------------------------------
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with all requisite power and authority to
conduct its business and operations as presently conducted.
4.02 Legal Capacity; Approvals and Consents.
---------------------------------------
(a) Authority and Binding Effect. The execution and delivery of this
----------------------------
Agreement and the performance of Buyer's obligations hereunder have been
duly and validly authorized by all requisite limited liability company
action on the part of Buyer. Subject to Section 9.02 hereof and the
receipt of Consents set forth on Schedule 4.05, Buyer has all requisite
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement has been duly executed and
delivered by Buyer and is the valid and binding obligation of Buyer
enforceable in accordance with its terms, except as such enforceability may
be
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affected by laws of bankruptcy, insolvency, reorganization and creditors'
rights generally and by the availability of equitable remedies.
(b) No Breach or Violation. Subject only to obtaining the Consents
----------------------
set forth in Schedule 4.05, the execution, delivery and performance of this
Agreement do not, and will not, contravene the articles of organization or
the operating agreement of Buyer, and do not and will not: (i) conflict
with or result in a breach or violation by Buyer of, or (ii) constitute a
default by Buyer under, any Law, Judgment, contract, arrangement or
understanding to which Buyer is a party or by which Buyer is subject or
bound or may be affected except for any instances under (i) or (ii) which,
individually or in the aggregate, have not, do not and would not reasonably
be expected to materially adversely affect Buyer's ability to perform its
obligations hereunder.
4.03 Legal and Governmental Proceedings and Judgments. Except as may
------------------------------------------------
affect the cable television industry generally, there is no legal action,
proceeding or investigation pending or, to the knowledge of Buyer, threatened
against Buyer, nor is there any Judgment outstanding against Buyer or to or by
which Buyer is subject or bound which materially adversely affects the ability
of Buyer to consummate any of the transactions contemplated hereby.
4.04 Finders and Brokers. Buyer has not entered into any contract,
-------------------
arrangement or understanding with any Person, and is not aware of any claim or
basis for any claim based upon any act or omission of Buyer or any of its
affiliates, which may result in the obligation of Seller to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
4.05 Buyer Consents. Except for the parties listed in Schedules 3.02 and
--------------
4.05, there are no parties whose approval or Consent, or with whom the filing of
any certificate notice, application, report or other document, is legally or
contractually required or otherwise is necessary in connection with the
execution, delivery or performance of this Agreement
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<PAGE>
by Buyer, except where failure to obtain such Consent or approval or failure to
make such filing has not had, does not have and would not reasonably be expected
to have a Material Adverse Effect on Buyer's ability to perform its obligations
hereunder.
4.06 Acquisition of Rights. As of the date hereof, Buyer has no actual
---------------------
knowledge of any reason relating to Buyer that any Governmental Authority or
other party whose consent is required or contemplated hereunder, would refuse to
consent to the transfer of CATV Instruments or any rights to Buyer hereunder or
would condition granting of any such consent on the performance by Seller or
Buyer of any material obligation not expressly set forth herein.
4.07 Representation of Mediacom. Mediacom represents and warrants that
--------------------------
Buyer is a direct wholly-owned subsidiary of Mediacom.
5. Covenants.
---------
5.01 Business of Seller. From the date hereof to the Closing Date, and
------------------
except as otherwise consented to or approved by Buyer in writing (which consent
shall not be unreasonably withheld), Seller covenants and agrees as follows:
(a) Business in Ordinary Course. Except as otherwise provided herein,
---------------------------
Seller shall conduct the CATV Business in the ordinary course, consistent
with past practices. Seller shall use reasonable commercial efforts to
preserve the CATV Business intact, to retain the services of its Employees
(including, in the sole discretion of Seller, the payment of bonuses or
other incentives to retain such Employees) and agents, and to preserve its
business relationships with, and the goodwill of, its customers, suppliers
and others. Seller shall pay before delinquent all taxes and other charges
upon or against Seller or any of its properties or income, file when due
all tax returns and other reports required by Governmental Authorities and
pay when due all liabilities except those which it chooses to contest in
good faith and by appropriate proceedings.
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(b) Books and Records. Seller shall maintain its books, accounts and
-----------------
records in the usual, regular and ordinary manner.
(c) Litigation During Interim Period. Seller will advise Buyer in
--------------------------------
writing promptly of the assertion, commencement or threat of any material
claim, litigation, labor dispute, proceeding or investigation in which
Seller is a party or the Acquired Assets or CATV Business may be affected.
(d) Material Contracts and Material CATV Instruments. Seller shall
------------------------------------------------
deliver to Buyer copies of all Material Contracts and Material CATV
Instruments that are entered into after the date hereof and prior to the
Closing.
(e) Maintenance of Acquired Assets. Seller shall maintain the
------------------------------
Acquired Assets, including the plant and Equipment and Inventory related
thereto, in good operating condition, except where the failure to so
maintain would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(f) Disconnection. Seller shall continue in all material respects its
-------------
policies for disconnection and discontinuance of service to Basic
Subscribers whose accounts are delinquent in accordance with those policies
in effect on the date of this Agreement.
(g) Disposal of Acquired Assets. Seller shall not sell, transfer or
---------------------------
assign any Acquired Assets other than in the ordinary course of business
consistent with past practices.
(h) New Contracts. Seller, without consent of Buyer, shall not enter
-------------
into any contract or commitment not on an arm's-length basis for the
acquisition of goods or services relating to the CATV System or the CATV
Business, exclusive of contracts or commitments with respect to capital
expenditures, the performance of which will not be completed by the Closing
Date and which involve an annual expenditure in excess of $25,000;
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provided, however, that if such contract or commitment is being entered
-------- -------
into in the ordinary course of the CATV Business, then Buyer shall not
unreasonably withhold consent.
(i) Increased Compensation. Subject to Section 5.01(a), Seller shall
----------------------
not increase in any material respect the compensation or benefits available
to Employees of Seller who work in the CATV Business except as required
pursuant to existing written agreements or except in the ordinary course of
business consistent with past practice.
(j) Accounts Receivable Write-Offs. Seller shall report and write off
------------------------------
accounts receivable in accordance with past practices.
(k) Amendments. Seller shall not permit the amendment or cancellation
----------
of any Contract or CATV Instrument (other than those constituting Excluded
Assets) which would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(l) Inventories. Seller shall maintain Inventories at normal levels
-----------
consistent with past practice.
(m) Marketing Programs. Seller agrees not to implement any new
------------------
marketing program, policy or practice, or implement any rate change,
retiering or repackaging (i) outside the ordinary course of business
consistent with past practices or (ii) designed to temporarily increase the
number of Basic Subscribers.
5.02 Access to Information.
---------------------
(a) Access by Buyer. Between the date of this Agreement and the
---------------
Closing, Buyer shall have reasonable access upon reasonable notice during
normal business hours to (i) all of the properties, books, reports,
records, CATV Instruments and Contracts of Seller, and Seller shall furnish
Buyer with all information it may reasonably request, (ii) executive
officers of Cablevision in connection with matters relating to or arising
out of this Agreement and (iii) the general
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<PAGE>
manager of the CATV System, provided that reasonable advance notice is
given to an executive officer of Cablevision. All information obtained by
Buyer pursuant to this Agreement and in connection with the negotiation
hereof shall be used by Buyer solely for purposes related to this Agreement
and the acquisition of the Acquired Assets and, in the case of non-public
information, shall, except as may be required for the performance of this
Agreement or by Law, or as may be required to secure any financing needed
to consummate the transactions contemplated hereby be kept in strict
confidence by Buyer.
(b) Access by Seller. Subsequent to the Closing, Buyer shall preserve
----------------
and give to Seller reasonable access upon reasonable notice during normal
business hours to all of the books, reports, records, CATV Instruments and
Contracts from files and records transferred to Buyer at the time of
Closing, for the purposes of the preparation of tax returns, the defense of
any claims asserted or which may be asserted with respect to which Seller
is the Indemnitor as contemplated by this Agreement, or other proper
purposes.
5.03 Notification of Certain Matters. Each party will promptly notify the
-------------------------------
other party of any fact, event, circumstance or action the existence or
occurrence of which would cause any of such party's representations or
warranties under this Agreement not to be true and correct in any material
respect.
5.04 Forms 394. If required, promptly after the date of this Agreement,
---------
Seller and Buyer shall, at their own expense, prepare and file properly prepared
Applications for Franchise Authority Consent to Assignment or Transfer of
Control or Cable Television Franchise FCC 394 with the local Government
Authorities that have issued franchises to Seller, and shall file all additional
information required by such franchises or applicable local Laws or that the
Governmental Authorities deem necessary or appropriate in connection with their
consideration of the request of Seller or Buyer that such authority approve of
the transfer of the franchises included in the CATV System to Buyer.
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<PAGE>
5.05 Monthly Financial Statements. Between the date of execution and
----------------------------
delivery of this Agreement and the Closing Date, Seller shall deliver to Buyer
within thirty-five (35) days after the end of each calendar month, unaudited
financial information in the form customarily prepared by Seller with respect to
the CATV Business and other reports with respect to the CATV Business
(including, without limitation, capital expenditures to the CATV Business,
reports setting forth the revenue and cash flow of the CATV Business for each
month and year-to-date, subscriber information for basic subscribers and premium
service units, disconnect requests, and such other information as Buyer may
reasonably request which is in the form customarily prepared by Seller,
beginning as soon as practicable after the date of this Agreement). Such
financial information and monthly operating statements shall present fairly and
accurately in all material respects the financial condition and results of
operations of Seller and the CATV Business for the period then ended and as of
such dates and be prepared in accordance with GAAP consistently applied through
the periods specified subject to normal recurring adjustments.
5.06 Covenant Not to Compete. The term "Covenantors" as used in this
-----------------------
Section 5.06 shall be defined to mean Seller and Cablevision.
(a) Each Covenantor covenants and agrees that for a period of three
years after Closing (or such period as allowed by law if less than three
years), no Covenantor nor any corporation, firm or other entity controlled
by such Covenantor (alone or in combination with any other Covenantor) will
acquire, manage, operate or control, any cable television system,
multichannel multipoint distribution system ("MMDS"), satellite master
----
antenna system ("SMATV") or local multipoint distribution system ("LMDS")
----- ----
within the System Area. Notwithstanding anything contained herein, the
ownership of securities of any company which is "publicly held" and which
do not constitute more than five percent (5%) of the voting rights or
equity interests of such entity shall not constitute a violation of this
covenant.
(b) Each Covenantor agrees that in the event that any Covenantor
commits a breach or threatens to commit a
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<PAGE>
breach of any of the provisions of this Section 5.06 as a result of actions
by such Covenantor or any corporation, firm or other entity controlled by
such Covenantor, Buyer shall have the right and remedy to have the
provisions of this Section 5.06 specifically enforced by any court having
jurisdiction, it being acknowledged and agreed that any such breach could
cause immediate irreparable injury to Buyer and that money damages would
not provide an adequate remedy at law for any such breach or threatened
breach. Such right and remedy shall be in addition to, and not in lieu of,
any other rights and remedies including damages available to Buyer at law
or in equity.
(c) If any of the provisions of, or covenants contained in, this
Section 5.06 are hereafter construed to be wholly or to any extent invalid
or unenforceable in any jurisdiction, the same shall be deemed
automatically modified to the minimum extent necessary to make such
provision or covenant enforceable, and the same shall not affect the
remainder of the provisions to the extent not invalid or unenforceable in
such jurisdiction or the enforceability thereof without limitation in any
other jurisdiction.
5.07 No Solicitation. Between the date of this Agreement and the Closing
---------------
Date, Seller shall not, and shall cause its partners, officers, directors,
employees, agents and representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposal with respect
to the CATV Business, engage in any negotiations concerning, or provide to any
other Person any information or data relating to the CATV Business, the CATV
System, the Acquired Assets, or Seller for the purposes of, or have any
discussions with any Person relating to, or otherwise cooperate in any way with
or assist or participate in, facilitate or encourage, any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, any effort or attempt by any other Person to seek or effect a sale of all or
substantially all of Seller, the Acquired Assets, the CATV System or the CATV
Business.
6. Deliveries at Closing.
---------------------
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<PAGE>
6.01 Deliveries by Seller. At the Closing, Seller will deliver or cause
--------------------
to be delivered to Buyer:
(a) Such deeds (consisting of special warranty deeds unless Seller
received a lesser deed in connection with its acquisition of such property,
then a quitclaim deed or such other form of deed as Seller determine is
appropriate based on advice of its counsel), certificates or title
policies, bills of sale, endorsements, and other good and sufficient
instruments of conveyance, transfer and assignment as are necessary to vest
in Buyer the right, title and interest of Seller in accordance herewith in
and to the Acquired Assets in a form reasonably satisfactory to Buyer.
(b) A certificate signed by a principal officer of Seller, dated as
of the Closing, representing and certifying to Buyer as to the matters set
forth in Sections 7.02, 7.03, 7.04 and 7.05.
(c) A Bill of Sale, General Assignment and Instrument of Assumption
of Liabilities in substantially the form of Exhibit B hereto.
(d) An opinion of Seller's Massachusetts Counsel, substantially in
the form of Exhibit D-1 hereto, an opinion of Seller's Missouri Counsel,
substantially in the form of Exhibit D-2 hereto, and an opinion of CSC
Holdings, Inc.'s General Counsel in the form of Exhibit D-3 hereto.
(e) An opinion of Seller's FCC Counsel, substantially in the form of
Exhibit G hereto.
(f) Evidence that the waiting period under the HSR Act and Rules, if
applicable, has expired.
(g) Evidence in a form and substance reasonably satisfactory to Buyer
of receipt of the Buyer Required Consents and approvals listed on Schedule
3.02 as required as conditions to the transactions contemplated hereunder
have been obtained.
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<PAGE>
(h) The Indemnity Escrow Agreement, in substantially the form attached
hereto as Exhibit F, executed by Seller.
6.02 Deliveries by Buyer. At the Closing, Buyer will deliver or cause to
-------------------
be delivered to Seller:
(a) The Purchase Price as provided in Section 2.02.
(b) A Bill of Sale, General Assignment and Instrument of Assumption of
Liabilities in the form of Exhibit B hereto.
(c) A certificate signed by a member or manager of Buyer dated as of
the Closing, representing and certifying to Seller as to matters set forth
in Sections 8.02, 8.03, 8.04 and 8.05.
(d) An opinion of Buyer's Counsel, substantially in the form of
Exhibit E hereto.
(e) Evidence in a form and substance reasonably satisfactory to Seller
that the Seller Required Consents listed on Schedule 4.05 have been
obtained.
(f) Evidence that the waiting period under the HSR Act and Rules, if
applicable, has expired.
(g) The Indemnity Escrow Agreement, in substantially the form attached
hereto as Exhibit F, executed by Buyer.
7. Conditions to the Obligations of Buyer.
--------------------------------------
The obligations of Buyer to complete the transactions provided for herein
are subject to the fulfillment, of all of the following conditions any of which
may be waived in writing by Buyer:
7.01 Receipt of Consents. The conditions specified in Section 9.02 shall
-------------------
have been satisfied and the Buyer Required Consents described in Schedules 3.02
and 4.05, shall have been obtained and be in full force and effect. In the
event that Buyer waives the obtaining of a Buyer Required Consent, Buyer
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<PAGE>
agrees that the failure to obtain such Buyer Required Consent shall in no event
constitute the breach of any representation or warranty of Seller or a default
by Seller hereunder.
7.02 Seller's Authority. All actions under the documents governing
------------------
Seller that are necessary to authorize (i) the execution and delivery of this
Agreement by Seller and the performance by Seller of its obligations under this
Agreement and (ii) the consummation of the transactions contemplated hereby,
shall have been duly and validly taken by Seller and shall be in full force and
effect on the Closing Date.
7.03 Performance by Seller. Seller shall have performed all of its
---------------------
agreements and covenants hereunder (including, without limitation, its covenants
in Articles 5, 6 and 9) to the extent such are required to be performed at or
prior to the Closing except (and other than with respect to covenants and
agreements set forth in Section 6.01) where the failure to perform, individually
or in the aggregate, has not had, does not have or would not reasonably be
expected to have, a Material Adverse Effect or which does not have a material
adverse affect on the ability of Seller to consummate the transactions
contemplated hereby.
7.04 Absence of Breach of Warranties and Representations. The
---------------------------------------------------
representations and warranties of Seller contained in this Agreement shall be
true and correct on and as of the Closing Date with the same force and effect as
if made on and as of such date, except (i) to the extent that such
representations and warranties describe a condition on a specified time or date
or are affected by the conclusion of the transactions permitted or contemplated
hereby or the conduct of the CATV Business in accordance with Article 5 hereof
between the date hereof and the Closing Date, or (ii) where the failure of such
representations and warranties to be true and correct, individually or in the
aggregate, does not have, has not had and would not reasonably be expected to
have, a Material Adverse Effect.
7.05 Absence of Proceedings. No Judgment shall have been issued enjoining
----------------------
or preventing the consummation of the transactions contemplated hereby.
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7.06 Maximum Negative Subscriber Adjustment. The Basic Subscriber
--------------------------------------
Estimate shall not be less than 3,500 Basic Subscribers; provided, however, that
if the Basic Subscriber Estimate is less than 3,500 Basic Subscribers, Buyer may
in its sole discretion elect to proceed to a Closing in which case (i) the
maximum Subscriber Adjustment at Closing will be a negative $230,731, (ii) Buyer
and Seller agree that neither of them shall be entitled to a Final Subscriber
Adjustment and that after the Closing Date the provisions of Section 2.04(b)
shall be of no force and effect (except for purposes of determining the meaning
of certain defined terms under this Agreement) and (iii) this condition shall be
deemed waived in writing by Buyer.
8. Conditions to the Obligations of Seller.
---------------------------------------
The obligations of Seller to complete the transactions provided for herein
are subject to the fulfillment of all of the following conditions, any of which
may be waived in writing by Seller.
8.01 Receipt of Consents. The conditions specified in Section 9.02 shall
-------------------
have been satisfied and the Seller Required Consents described in Schedules 3.02
and 4.05 shall have been obtained and shall be in full force and effect. In the
event that Seller waives the obtaining of a Seller Required Consent, Seller
agrees that the failure to obtain such Seller Required Consent shall in no event
constitute the breach of any representation or warranty of Buyer or a default by
Buyer hereunder.
8.02 Buyer's Authority. All member or manager and other actions
-----------------
necessary to authorize (i) the execution, delivery and performance by Buyer of
this Agreement, and (ii) the consummation of the transactions contemplated
hereby, shall have been duly and validly taken by Buyer and shall be in full
force and effect on the Closing Date.
8.03 Performance by Buyer. Buyer shall have performed in all material
--------------------
respects all covenants (including, without limitation, its covenants and
agreements set forth in Article 5, 6, or 9) and agreements to be performed by it
hereunder to the extent such are required to be performed at or prior to the
Closing except (and other than with respect to covenants
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<PAGE>
and agreements set forth in Section 6.02) where the failure to perform does not
have a Material Adverse Effect on the ability of Buyer and Seller to consummate
the transactions contemplated hereby.
8.04 Absence of Breach of Representations and Warranties. All
---------------------------------------------------
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if then made, except to the extent that such representations and
warranties describe a condition on a specified time or date or are affected by
the conclusion of the transactions permitted or contemplated hereby or the
conduct of the CATV Business in accordance with Article 5 hereof between the
date hereof and the Closing Date.
8.05 Absence of Proceedings. No Judgment shall have been issued enjoining
----------------------
or preventing the consummation of the transactions contemplated hereby.
8.06 Maximum Negative Subscriber Adjustment. The Basic Subscriber
--------------------------------------
Estimate shall not be less than 3,500 Basic Subscribers; provided, however, that
-------- -------
if the Basic Subscriber Estimate is less than 3,500 Basic Subscribers, Buyer may
in its sole discretion elect to proceed to a Closing in which case (i) the
maximum Subscriber Adjustment at Closing will be a negative $230,731, (ii) Buyer
and Seller agree that after the Closing Date neither of them shall be entitled
to a Final Subscriber Adjustment and that the provisions of Section 2.04(b)
shall be of no force and effect (except for purposes of determining the meaning
of certain defined terms under this Agreement) and (iii) this condition shall be
deemed waived in writing by Seller.
9. Covenants.
---------
9.01 Compliance with Conditions. Each of the parties hereto covenants and
--------------------------
agrees with the other to exercise reasonable commercial efforts to perform,
comply with and otherwise satisfy each and every one of the conditions to be
satisfied by such party hereunder and each party shall use reasonable commercial
efforts to notify promptly the other if it shall learn that any conditions to
performance of either party will not be fulfilled.
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9.02 Compliance with HSR Act and Rules.
---------------------------------
(a) The performance of the obligations of all parties under this
Agreement is subject to the condition that, if the HSR Act and Rules are
applicable to the transactions contemplated hereby, the waiting period
specified therein, as the same may be extended, shall have expired without
action taken to prevent the consummation of the transactions contemplated
hereby.
(b) Each of the parties hereto will use its reasonable commercial
efforts to comply promptly with any applicable requirements under the HSR
Act and Rules relating to filing and furnishing of information to the FTC
and the Antitrust Division of the DOJ, the parties' actions to include,
without limitation, (i) filing or causing to be filed the HSR Report
required to be filed by them, or by any other Person that is part of the
same "person" (as defined in the HSR Act and Rules) or any of them, and
taking all other action required by the HSR Act or Rules; (ii) coordinating
the filing of such HSR Reports (and exchanging drafts thereof) so as to
present both HSR Reports to the FTC and the DOJ at the time selected by the
mutual agreement of Seller and Buyer, and to avoid substantial errors or
inconsistencies between the two in the description of the transaction; and
(iii) using their reasonable commercial efforts to comply with any
additional request for documents or information made by the FTC or the DOJ
or by a court and assisting the other parties to so comply.
(c) Notwithstanding anything herein to the contrary, in the event that
the consummation of the transactions contemplated hereby is challenged by
the FTC or the DOJ or any agency or instrumentality of the Federal
Government by an action to stay or enjoin such consummation, then Buyer and
Seller (each, a "Side") shall cooperate with each other, as reasonably
----
requested, but not beyond the Outside Date, to contest such action until
such Side does not reasonably believe that there are reasonable grounds to
contest such action, at which time such Side shall have the right to
terminate this Agreement unless the other of such Sides, at its sole
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<PAGE>
cost and expense, elects to contest such action, in which case the
noncontesting Side shall cooperate with the contesting Side and assist the
contesting Side, as reasonably requested, to contest such action until such
time as any party terminates this Agreement under this Section or Article
12. In the event that such a stay or injunction is granted (preliminary or
otherwise), then either Buyer or Seller may terminate this Agreement by
prompt written notice to the other(s). If any other form of equitable
relief affecting any party is granted to the FTC, the DOJ or other such
agency or instrumentality, then such party may terminate this Agreement by
prompt written notice to the other parties. Upon any termination pursuant
to this Section 9.02(c) other than as a result of a breach of this
Agreement, no party shall have any further obligation or liability to the
other parties under this Agreement. To effectuate the intent of the
foregoing provisions of this Section 9.02, the parties agree to exchange
requested or required information in making the filings and in complying as
above provided, and the parties agree to take all necessary steps to
preserve the confidentiality of the information set forth in any filings
including, without limitation, limiting disclosure of exchanged information
to counsel for the nondisclosing party or parties.
9.03 Applications for Consent to Transfer the Acquired Assets.
--------------------------------------------------------
(a) Subject to Section 5.04 and Section 9.02, in order to secure
requisite Consents to the transfer to Buyer of the Acquired Assets, Buyer
with respect to the Consents listed on Schedule 4.05 and Seller with
respect to the Consents listed in Schedule 3.02 shall proceed as promptly
as practicable and in good faith and using reasonable commercial efforts,
to prepare, file and prosecute such application or applications as may be
necessary to obtain each such consent or approval. Buyer and Seller shall
use reasonable commercial efforts to promptly assist each other and shall
take such prompt and affirmative actions as may be reasonably necessary in
obtaining such Consents required to be obtained hereunder and shall
cooperate with each other in the preparation, filing and prosecution of
such applications as may be
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<PAGE>
reasonably necessary, and agree to furnish all information required by the
approving entity, and to be represented at such meetings or hearings as may
be scheduled to consider such applications. Buyer agrees to negotiate in
good faith with any applicable Governmental Authority with respect to any
reasonable request made by such Governmental Authority in connection with
obtaining any Consents, renewals or extensions. Without limiting in any
respect the foregoing, each party agrees to file applications acceptable to
all parties with all appropriate Governmental Authorities for all consents
or approvals required to consummate the transactions hereunder within
forty-five (45) days after the date of this Agreement.
(b) Buyer agrees that, except as provided in the following sentence,
it will not, without the prior written consent of Seller, take any action
to amend or that would amend or modify any application filed as provided in
this Section 9.03 after the date that such application is accepted as
complete. Buyer and Seller agree that Buyer may amend or modify one time
any such application or applications previously filed without the consent
of Seller so long as such amendments or modifications are required by
applicable Law; provided, that if, as a result of such amendments or
--------
modifications, the conditions precedent to Closing cannot be satisfied by
the Outside Date, then Buyer and Seller agree that the Outside Date shall
automatically be extended to the first date on which the approval period
with respect to such amendments or modifications shall have expired, but in
no event beyond twelve months from the date of this Agreement. In the
event that Buyer breaches the provisions of this Section 9.03(b) and as a
direct result thereof the conditions precedent to Closing cannot be
satisfied by the Outside Date, as extended, then Seller may (if it so
elects) (i) extend the Outside Date in Section 12.01 to a date that will
give effect to any resulting delay; or (ii) terminate this Agreement under
Section 12.02 hereof.
9.04 Records, Taxes and Related Matters. Seller and Buyer shall each make
----------------------------------
their respective books and records (including work papers in the possession of
their respective
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accountants) available for inspection by the other party, or by its duly
authorized representatives, for reasonable business purposes at all reasonable
times during normal business hours, on reasonable notice, for a seven (7) year
period after the Closing Date with respect to all transactions of the CATV
Business occurring prior to or relating to the Closing, and the historical
financial condition, assets, liabilities, results of operation and cash flows of
the CATV Business for any period prior to the Closing. In the case of records
owned by Seller, such records shall be made available at Seller's executive
office, and in the case of records owned by Buyer, such records shall be made
available at the office at which such records are maintained. As used in this
Section 9.04, the right of inspection includes the right to make copies for
reasonable business purposes. In all cases where Buyer, pursuant to the terms
hereof, has assumed Seller's liability for the payment of taxes (including,
without limitation, deposits), Buyer shall (unless and to the extent otherwise
requested by Seller) prepare and file all returns, reports, information
statements, forms or other documents required to be filed with respect to such
taxes, all in a timely and proper fashion and as may be reasonably necessary or
appropriate to assure that Seller shall be in material compliance with law, and
Buyer shall pay or cause to be paid all such taxes when due.
9.05 Non-Assignment. Notwithstanding any provision to the contrary
--------------
contained herein (but not in limitation of Seller's obligations under Section
9.03 or the conditions set forth in Section 7.01), Seller shall not be obligated
to assign to Buyer any Contract or CATV Instrument which provides that it may
not be assigned without the consent of the other party thereto and for which
such consent is not obtained, but in any such event, Seller shall, to the extent
reasonably necessary, cooperate with Buyer in any commercially reasonable
arrangement designed to provide the benefits thereof to Buyer. Without limiting
the generality of any provision elsewhere herein contained, the non-assignment
of any of the foregoing shall not, to the extent that it is otherwise an Assumed
Liability hereunder, alter its status as such or relieve Buyer of its
obligations or liabilities with respect thereto so long as and only to the
extent Buyer obtains the benefit of the Acquired Asset relating to such Assumed
Liability.
-51-
<PAGE>
9.06 Use of Names and Logos. For a period of one hundred and twenty (120)
----------------------
days after the Closing Date, Buyer shall be entitled to use trademarks, trade
names, service marks, service names, logos, and similar proprietary rights of
Seller to the extent incorporated in the Acquired Assets transferred to it at
Closing; provided that Buyer shall use commercially reasonable efforts to remove
all names, marks, logos and other rights of Seller from the Acquired Assets as
soon as reasonably practicable after Closing.
10. Survival of Representations, Warranties, Covenants and Other Agreements;
------------------------------------------------------------------------
Indemnification.
---------------
10.01 Survival of Representations, Warranties, Covenants and Other
------------------------------------------------------------
Agreements. All representations, warranties, covenants and other agreements
- ----------
made by the parties to this Agreement (other than representations and warranties
set forth in (i) Section 3.06(d) which shall survive the Closing for a period of
two (2) years and (ii) Section 3.05, Section 3.06(a) or relating to claims by
third parties with respect to Excluded Liabilities which shall each survive the
Closing for the period ending 60 days after the expiration of the relevant
statute of limitations applicable to such claims) shall survive the Closing for
a period of one year, and shall thereafter terminate.
10.02 Indemnification by Seller.
-------------------------
(a) Indemnity. Subject to Section 10.01 and Section 10.05, Seller
---------
agrees to indemnify, defend and hold harmless Buyer, its affiliates and its
respective shareholders, directors, officers, partners, employees, agents,
successors and assigns (a "Seller Indemnified Party"), from and against all
------------------------
losses, damages, liabilities, deficiencies or obligations, including,
without limitation, all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs and expenses
(including, without limitation, settlement costs and reasonable legal fees)
(collectively, "Losses") to which they may become subject as a direct
------
result of (x) the Excluded Liabilities, (y) any and all misrepresentations
or breaches of a representation herein or warranty (other than that
contained in Section 3.06(d), which is provided
-52-
<PAGE>
for in Section 10.05) or the nonperformance or breach of any covenants or
agreements of Seller contained herein and (z) solely in the event that the
Basic Subscriber Estimate is less than 3,500 Basic Subscribers and Buyer
and Seller waive the conditions set forth in Sections 7.06 and 8.06 hereof,
a misrepresentation of the number of Basic Subscribers in the Basic
Subscriber Estimate such that the actual number of Basic Subscribers
delivered on the Closing Date is less than the number of Basic Subscribers
included in the Basic Subscriber Estimate.
(b) Payment. Any obligations of Seller under the provisions of this
-------
Article (including, for the avoidance of doubt, Section 10.05) shall be
paid promptly to Seller Indemnified Party by Seller and shall represent a
retrospective adjustment to Purchase Price. The amount of such payment
(and adjustment) shall be equal to the amount of the Loss incurred by the
Seller Indemnified Party on account of the matter for which indemnification
is required hereunder less any payments made or to be made to the Seller
Indemnified Party under any insurance, indemnity or similar policy or
arrangement.
(c) Buyer's Basket. Notwithstanding anything contained herein to the
--------------
contrary, the indemnification provided above shall apply only to the extent
that, and not until, the aggregate of all amounts subject to
indemnification under this Section 10.02 exceeds Sixty Thousand Dollars
($60,000) (the "Buyer's Basket"). In any event, the maximum amount that
--------------
Seller will be required to pay under this Section 10.02 and Section 10.05
in respect of all claims by all parties is Five Hundred Thousand Dollars
($500,000); provided, however, that the Buyer's Basket and Five Hundred
-------- -------
Thousand ($500,000) maximum shall not apply to claims relating to Excluded
Liabilities and as to which Seller has been given a complete opportunity to
contest, dispute, defend against and appeal by appropriate proceedings.
For avoidance of doubt, amounts paid by Buyer under Section 10.05 shall not
apply toward Buyer's Basket.
10.03 Indemnification by Buyer.
------------------------
-53-
<PAGE>
(a) Indemnity. Subject to Section 10.01, Buyer agrees to indemnify,
---------
defend and hold harmless Seller and its respective shareholders, partners,
directors, officers, employees, agents, successors and assigns (a "Buyer
-----
Indemnified Party"), from and against all Losses to which they may become
-----------------
subject as a direct result of: (i) any and all misrepresentations or
breaches of a representation or warranty or the nonperformance or breach of
any covenant or agreement of Buyer contained herein; (ii) the Assumed
Liabilities; or (iii) the ownership and operation of the Acquired Assets
and the CATV Business after the Closing.
(b) Payments. Any obligations of Buyer under the provisions of this
--------
Article shall be paid promptly to the Buyer Indemnified Party by Buyer.
The amount of such payment shall be equal to the amount of the Loss
incurred by the Buyer Indemnified Party on account of the matter for which
indemnification is required hereunder less any payments made or to be made
to the Buyer Indemnified Party under any insurance, indemnity or similar
policy or arrangement.
(c) Seller's Basket. Notwithstanding anything contained herein to the
---------------
contrary, the indemnification provided above shall apply only to the extent
that, and not until, the aggregate of all amounts subject to
indemnification under this Section 10.03 exceeds Sixty Thousand Dollars
($60,000)(the "Seller's Basket"). In any event, the maximum amount that
---------------
Buyer will be required to pay under this Section 10.03 in respect of all
claims by all parties is Five Hundred Thousand Dollars ($500,000);
provided, however, that the Seller's Basket and Five Hundred Thousand
-------- -------
($500,000) maximum shall not apply to claims relating to Assumed
Liabilities.
10.04 Third Party Claims. If any claim ("Asserted Claim") covered by the
------------------ --------------
foregoing indemnities is asserted against any indemnified party ("Indemnitee"),
----------
it shall be a condition to the obligations under this Article that the
Indemnitee shall promptly give the indemnifying party ("Indemnitor") notice
----------
thereof in accordance with Section 13.05. The Indemnitee shall give Indemnitor
an opportunity to control negotiations toward resolution of such claim without
-54-
<PAGE>
the necessity of litigation, and, if litigation ensues, to defend the same with
counsel reasonably acceptable to Indemnitee, at Indemnitor's expense, and
Indemnitee shall extend reasonable cooperation in connection with such defense.
If the Indemnitor fails to assume control of the negotiations prior to
litigation or to defend such action within a reasonable time, Indemnitee shall
be entitled, but not obligated, to assume control of such negotiations or
defense of such action, and Indemnitor shall be liable to the Indemnitee for its
expenses reasonably incurred in connection therewith which Indemnitor shall
promptly pay. Neither Indemnitor nor Indemnitee shall settle, compromise, or
make any other disposition of any Asserted Claims, which would or might result
in any liability to Indemnitee or Indemnitor, respectively, under this Article
10 without the written consent of Indemnitee or Indemnitor, respectively, which
shall not be unreasonably withheld; provided, that the Indemnitor may settle,
--------
compromise or make any other disposition of Asserted Claims if the same includes
a complete discharge of the Indemnitees.
10.05 Environmental Matters. Buyer may perform, at its option and at its
---------------------
own expense, Phase I environmental site assessments and asbestos studies (the
"Environmental Reports") of the Real Property performed by one or more reputable
- ----------------------
environmental firms designated by Buyer and reasonably acceptable to Seller.
Buyer covenants to notify Seller of any adverse environmental conditions
affecting the Real Property of which it has knowledge prior to Closing. If
environmental conditions are uncovered as a result of obtaining such
Environmental Reports or as a result of subsequent investigations conducted by
Buyer after Closing pursuant to such Environmental Reports and (i) remediation
of such conditions is required by Environmental Law or such conditions, if not
remediated, would in their then existing state reasonably be expected to subject
Buyer to fines or penalties as a result of such conditions violating
Environmental Law or (ii) Seller's representations and warranties in Section
3.06(d) are breached, then (a) Buyer will pay the first Seventeen Thousand
Dollars ($17,000) of actual out-of-pocket remediation expense associated with
such environmental conditions, (b) Buyer and Seller will share equally the next
One Hundred and Ten Thousand Dollars ($110,000) of actual out-of-pocket
remediation expense
-55-
<PAGE>
associated with such environmental conditions, and (c) Seller will pay all of
the remainder of such actual out-of-pocket remediation expense associated with
the environmental conditions; provided, however, in no event will Seller pay in
-------- -------
excess of Five Hundred Thousand Dollars ($500,000) in the aggregate as a result
of payments made under this Section 10.05 and Section 10.02 and, provided
further, that Buyer shall have no obligation to pay or incur any remediation
expense unless and until the Closing shall have occurred. Any environmental
conditions uncovered as a result of performing the Environmental Reports will
not affect the Closing, unless as a result thereof, a condition precedent to
Closing cannot be satisfied. Seller and Buyer agree that Buyer shall not be
entitled to make any claims against Seller pursuant to this Section 10.05
subsequent to the date that is two (2) years after the Closing.
10.06 Sole Remedy Upon Closing. Seller and Buyer agree (a) that the
------------------------
indemnification under Sections 10.02 and 10.05 of this Agreement is the sole
remedy of Buyer for a breach of this Agreement by Seller in the event the
transactions contemplated by this Agreement are consummated and (b) that the
indemnification under Section 10.03 of this Agreement is the sole remedy of
Seller for a breach of this Agreement by Buyer in the event the transactions
contemplated by this Agreement are consummated.
11. Further Assurances.
------------------
From time to time after the Closing, each party will execute and deliver
such other instruments of conveyance and transfer, fully cooperate with the
other parties and take such other actions as the other parties reasonably may
request to effect the purposes and intent of this Agreement; provided, however,
that nothing in this Agreement shall be deemed to require or permit Seller or
Buyer to take any action that would otherwise require approval of any CATV
Licenses by any Governmental Authority prior to the time such approval is
obtained.
12. Closing.
-------
12.01 Closing. The Closing shall take place at the offices of Buyer's
-------
counsel at 10:00 A.M., local time, on the
-56-
<PAGE>
fifth (5th) business day after all consents required as conditions to the sale
as provided in Section 7.01 have been received (the "Closing Date"); and
------------
provided further that if the Closing shall not have occurred prior to the
expiration of nine months from the date of this Agreement or as extended
pursuant to Section 9.03 (the "Outside Date"), this Agreement shall terminate
------------
unless otherwise provided by the mutual written agreement of Buyer and Seller.
If, as of the Outside Date, the Closing cannot be effected, all parties hereto
shall be released from all obligations hereunder other than obligations arising
from a breach or default hereunder, and each party hereto will bear expenses as
provided in Section 13.06 hereof. At the Closing, the parties hereto shall
execute and deliver all instruments and documents as shall be necessary in the
reasonable opinion of counsel for the respective parties to consummate the
transactions contemplated herein.
12.02 Termination. In addition to the termination provided for in Section
-----------
12.01, this Agreement may be terminated and the transactions contemplated hereby
may be abandoned:
(a) At any time, by the mutual written agreement of Buyer and Seller;
(b) By Buyer, upon and effective as of the date of written notice to
Seller, if any of the conditions to the obligations of Buyer set forth in
Article 7 shall not have been waived or satisfied at the time of the
Closing;
(c) By Buyer, if there has been a breach by Seller of any of their
representations, warranties, covenants or agreements contained in this
Agreement, and such breach shall not have been cured within a reasonable
time after notice thereof to Seller, or cannot reasonably be cured, in
either case, such that the provisions of Sections 7.01, 7.02, 7.03 or 7.04
of this Agreement are incapable of being satisfied by the Outside Date;
(d) By Seller, upon and effective as of the date of written notice to
Buyer, if any of the conditions to the obligations of Seller set forth in
Article 8 shall not have been waived or satisfied at the time of the
Closing;
-57-
<PAGE>
(e) By Seller, if there has been a breach by Buyer of any of its
representations, warranties, covenants or agreements contained in this
Agreement, and such breach shall not have been cured within a reasonable
time after notice thereof to Buyer or cannot reasonably be cured, in either
case, such that the provisions of Sections 8.01, 8.02, 8.03 or 8.04 of this
Agreement are incapable of being satisfied by the Outside Date;
(f) By Seller or Buyer, upon and effective as of the date of written
notice to the other parties, pursuant to the termination provisions of
Section 9.02(c);
(g) By Seller, upon and effective as of the date of written notice to
Buyer, pursuant to the termination provisions of Section 9.03(b);
(h) By Buyer, if Seller refuses to proceed or tender performance at
Closing; or
(i) By Seller, if Buyer refuses to proceed or tender performance at
Closing.
12.03 Remedies Upon Default.
---------------------
(a) Buyer's Default. Subject to the last sentence of this Section
---------------
12.03(a), if (i) Seller terminates this Agreement pursuant to Section
12.02(d) as a result of any of the conditions set forth in Sections 8.01,
8.02, 8.03 or 8.04 not having been satisfied at the time the Closing should
have otherwise occurred and such failure to have any such condition
satisfied is due to Buyer's breach of any material term, condition,
covenant or agreement of this Agreement, or (ii) this Agreement shall
terminate pursuant to Section 12.01 or Section 12.02(g) and such failure of
the Closing to occur on or prior to the Outside Date is due to Buyer's
breach of any material term, condition, covenant or agreement of this
Agreement, or (iii) Seller terminates this Agreement pursuant to Section
12.02(i) because Buyer refuses to proceed or tender performance at the
Closing, or (iv) Seller terminates this Agreement pursuant to Section
12.02(e), then, unless, in the case of clause (iii), at the Closing there
is a nonfulfillment of any of the conditions
-58-
<PAGE>
precedent specified in Article 7 hereof (other than as a result of Buyer's
breach of its obligations hereunder) or unless in the case of clause (i),
(ii), (iii) or (iv) Seller is in material breach under this Agreement,
Seller shall be entitled to receive the deposit in the Earnest Money
Escrow, pursuant to the Earnest Money Escrow Agreement. The parties agree
that such payment to Seller shall constitute liquidated damages and not a
penalty and that the amount of such liquidated damages are reasonable in
light of the nature of the harm to Seller and the difficulty in assessing
actual damages.
(b) Seller's Default. If (i) Buyer terminates this Agreement
----------------
pursuant to Section 12.02(b) as a result of any of the conditions set forth
in Sections 7.01, 7.02, 7.03 or 7.04 not having been satisfied at the time
the Closing should have otherwise occurred and such failure to have any
such condition satisfied is due to Seller's breach of any material term
condition, covenant or agreement of this Agreement, or (ii) this Agreement
shall terminate pursuant to Section 12.01 and such failure of the Closing
to occur on or prior to the Outside Date is due to Seller's breach of any
material term, condition, covenant or agreement of this Agreement, or (iii)
Buyer terminates this Agreement pursuant to Section 12.02(h) because Seller
refuses to proceed or tender performance at the Closing, or (iv) Buyer
terminates this Agreement pursuant to Section 12.02(c) then, unless in the
case of clause (iii), at the Closing there is a nonfulfillment of any of
the conditions precedent specified in Article 8 hereof (other than as a
result of Seller's breach of its obligations hereunder) or unless in the
case of clause (i), (ii), (iii) or (iv) Buyer is in material breach under
this Agreement, Buyer shall be entitled to recover Damages from Seller
suffered by Buyer as a result of such breach but in no event shall Buyer be
entitled to recover in excess of $500,000 as a result of damages suffered
hereunder. Alternatively, if at any time on or prior to the Closing Date,
Seller shall be in material breach or be in material default of its
obligations under this Agreement, including if the Closing does not occur
due to the refusal by Seller to proceed or tender performance at Closing in
violation of their obligations under this Agreement, and, with respect to
any such breach or
-59-
<PAGE>
default by Seller occurring prior to the time the conditions set forth in
Section 7 and 8 hereof have been waived or satisfied, provided that Buyer
--------
is not then in material breach or in material default of its obligations
under this Agreement, Buyer shall be entitled to require Seller to
specifically perform and consummate the transactions in accordance with
this Agreement, if necessary, through injunction, court order or other
process, and to recover from Seller any costs and expenses incurred by
Buyer in connection therewith. The remedy of specific performance is in
addition to, and Buyer shall be entitled to, any and all other rights and
remedies at law, including damages, available to Buyer in accordance with
the terms of this Agreement, provided that in no event shall Buyer be
entitled to recover in excess of $500,000 as a result of damages suffered
hereunder, and provided further that the remedy of specific performance is
only available if Buyer does not terminate this Agreement and does not
proceed at law for damages from Seller.
12.04 Return of Earnest Money Escrow. Subject to Section 12.03(a) of this
------------------------------
Agreement and the terms of the Earnest Money Escrow Agreement, upon the
termination of this Agreement, the Earnest Money Escrow, together with any
income thereon, shall be returned, paid or delivered to Buyer, as the case may
be.
13. Miscellaneous.
-------------
13.01 Amendments; Waivers. This Agreement cannot be changed or terminated
-------------------
orally and no waiver of compliance with any provision or condition hereof and no
consent provided for herein shall be effective unless evidenced by an instrument
in writing duly executed by the party hereto sought to be charged with such
waiver or consent. No waiver of any term or provision hereof shall be construed
as a further or continuing waiver of such term or provision or any other term or
provision. Any condition to the performance of any party hereto which may
legally be waived at or prior to the Closing may be waived in writing at any
time by the party or parties entitled to the benefit thereof.
-60-
<PAGE>
13.02 Entire Agreement. This Agreement sets forth the entire understanding
----------------
and agreement of the parties and supersedes any and all prior agreements,
memoranda, arrangements and understandings relating to the subject matter hereof
other than any letter or agreement that specifically refers to this Section
13.02. No representation, warranty, promise, inducement or statement of
intention has been made by any party which is not contained in this Agreement,
and no party shall be bound by, or be liable for, any alleged representation,
promise, inducement or statement of intention not contained herein or therein.
13.03 Binding Effect; Assignment. This Agreement shall be binding upon and
--------------------------
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto; provided, however, that Buyer
-------- -------
may assign its rights under this Agreement to one or more entities that are
subsidiaries of Buyer so long as such entity or entities assume the obligations
of Buyer under this Agreement, including the obligation to assume the Assumed
Liabilities at Closing.
13.04 Construction; Counterparts. The Article and Section headings of this
--------------------------
Agreement are for convenience of reference only and do not form a part hereof
and do not in any way modify, interpret or construe the intentions of the
parties. This Agreement may be executed in one or more counterparts, and all
such counterparts shall constitute one and the same instrument.
13.05 Notices. All notices and communications hereunder shall be in writing
-------
and shall be deemed to have been duly given to a party when delivered in person
or by facsimile, or three business days after such notice is enclosed in a
properly sealed envelope, certified or registered, and deposited (postage and
certification or registration prepaid) in a post office or collection facility
regularly maintained by the United States Postal Service, or one business day
after delivery to a nationally recognized overnight courier service, and
addressed as follows:
If to Seller: Bootheel Video, Inc.
One Media Crossways
-61-
<PAGE>
Woodbury, New York 11797
Attention: General Counsel
Telephone: (516) 364-8450
Facsimile: (516) 396-8768
With a copy to:
CSC Holdings, Inc.
One Media Crossways
Woodbury, New York 11797
Attention: General Counsel
Telephone: (516) 364-8450
Facsimile: (516) 396-8768
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: John P. Mead
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
If to Buyer: Mediacom Southeast LLC
100 Crystal Run Road
Middletown, New York 10941
Attention: Rocco B. Commisso
Telephone: (914) 695-2600
Facsimile: (914) 695-2699
With a copy to:
Mediacom LLC
100 Crystal Run Road
Middletown, New York 10941
Attention: Rocco B. Commisso
Telephone: (914) 695-2600
Facsimile: (914) 695-2699
With a copy to:
Cooperman Levitt Winikoff Lester & Newman, P.C.
800 Third Avenue
New York, New York 10022
-62-
<PAGE>
Attention: Robert L. Winikoff, Esq.
Telephone: (212) 688-7000
Facsimile: (212) 755-2839
Any party may change its address for the purpose of notice by giving notice in
accordance with the provisions of this Section 13.05.
13.06 Expenses of the Parties. Except as otherwise provided herein, all
-----------------------
expenses incurred by or on behalf of the parties hereto in connection with the
authorization, preparation and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants employed by the parties hereto in connection with the
authorization, preparation, execution and consummation of this Agreement shall
be borne solely by the party who shall have incurred the same.
13.07 Non-Recourse. No partner, officer, director, shareholder or other
------------
holder of an ownership interest of or in any party to this Agreement shall have
any personal liability in respect of any such party's obligations under this
Agreement by reason of his or its status as such partner, officer, director,
shareholder or other holder.
13.08 Third Party Beneficiary. This Agreement is entered into only for the
-----------------------
benefit of the parties and their respective successors and assigns, and nothing
hereunder shall be deemed to constitute any person a third party beneficiary to
this Agreement.
13.09 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
NEW YORK.
13.10 Press Releases. No press release or other public information
--------------
relating to the purchase and sale contemplated in this Agreement shall be made
or disclosed by any party hereto without the consent of the other parties;
provided however, that any party may disclose such information if reasonably
deemed to be required by law by the legal counsel for such party.
-63-
<PAGE>
13.11 Severability. If any provision of this Agreement is finally
------------
determined to be illegal, void or unenforceable, such determination shall not,
of itself, nullify this Agreement which shall continue in full force and effect
subject to the conditions and provisions hereof.
(SIGNATURE PAGE FOLLOWS)
-64-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLER:
BOOTHEEL VIDEO, INC.
By: ______________________________
Name:
Title:
BUYER: MEDIACOM SOUTHEAST LLC
By: Mediacom LLC, a Member
By: ______________________________
Name: Rocco B. Commisso
Title: Manager
CSC HOLDINGS, INC.
By: ______________________________
Name:
Title:
(only as to Section 3.20 and Section 5.06)
MEDIACOM LLC
By: ______________________________
Name: Rocco B. Commisso
Title: Manager
(only as to Section 4.07)
<PAGE>
Exhibit 4.2(a)
EXECUTION COPY
- --------------------------------------------------------------------------------
MEDIACOM LLC
and
MEDIACOM CAPITAL CORPORATION
as Issuers
and
BANK OF MONTREAL TRUST COMPANY,
as Trustee
_____________________
Indenture
______________________
Dated as of February 26, 1999
7 7/8% Senior Notes due 2011
- --------------------------------------------------------------------------------
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of February 26, 1999/1/
Trust Indenture
Act Section Indenture Section
(S) 310(a)(1)...............................................................608
(S) 310(a)(2)...............................................................608
(S) 310(b)..................................................................609
(S) 312(a)..................................................................701
(S) 312(c)..................................................................702
(S) 313(a)..................................................................703
(S) 313(c)..................................................................703
(S) 314(a)(4)...........................................................1010(a)
(S) 314(c)(1)...............................................................102
(S) 314(c)(2)...............................................................102
(S) 314(e)..................................................................102
(S) 315(a)..............................................................601 (a)
(S) 315(b)..................................................................602
(S) 315(c)..............................................................601 (b)
(S) 315(d).........................................................601 (c), 603
(S) 316(a)(last sentence....................................101 ("outstanding")
(S) 316(a)(a)(1)(A)....................................................502, 512
(S) 316(a)(a)(1)(B).........................................................513
(S) 316(a)(b)...............................................................508
(S) 316(a)(c)............................................................104(d)
(S) 317(a)(1)...............................................................503
(S) 317(a)(2)...............................................................504
(S) 317(b).................................................................1003
(S) 318(a)..................................................................111
- --------------------
/1/ This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS:
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE ONE. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1
SECTION 101. Definitions........................................................................................ 1
-----------
SECTION 102. Compliance Certificates and Opinions............................................................... 17
------------------------------------
SECTION 103. Form of Documents Delivered to Trustee............................................................. 18
--------------------------------------
SECTION 104. Acts of Holders.................................................................................... 18
---------------
SECTION 105. Notices, Etc., to Trustee and the Issuers.......................................................... 19
-----------------------------------------
SECTION 106. Notice to Holders; Waiver.......................................................................... 19
------------------------
SECTION 107. Effect of Headings and Table of Contents........................................................... 20
----------------------------------------
SECTION 108. Successors and Assigns............................................................................. 20
----------------------
SECTION 109. Separability Clause................................................................................ 20
-------------------
SECTION 110. Benefits of Indenture.............................................................................. 20
---------------------
SECTION 111. Governing Law...................................................................................... 20
-------------
SECTION 112. Legal Holidays..................................................................................... 21
--------------
SECTION 113. No Personal Liability of Directors, Officers, Employees, Stockholders or Incorporators............. 21
--------------------------------------------------------------------------------------
SECTION 114. Counterparts....................................................................................... 21
------------
SECTION 115. Communications by Holders with Other Holders....................................................... 21
--------------------------------------------
ARTICLE TWO. NOTE FORMS......................................................................................................... 21
SECTION 201. Forms Generally.................................................................................... 21
---------------
SECTION 202. Restrictive Legends................................................................................ 22
-------------------
SECTION 203. Form of Note....................................................................................... 26
------------
SECTION 204. Form of Trustee's Certificate of Authentication.................................................... 39
-----------------------------------------------
ARTICLE THREE. THE NOTES........................................................................................................ 40
SECTION 301. Title and Terms.................................................................................... 40
---------------
SECTION 302. Denominations...................................................................................... 40
-------------
SECTION 303. Execution, Authentication, Delivery and Dating..................................................... 41
----------------------------------------------
SECTION 304. Temporary Notes.................................................................................... 42
---------------
SECTION 305. Registration, Registration of Transfer and Exchange................................................ 42
---------------------------------------------------
SECTION 306. Book-Entry Provisions for Global Notes............................................................. 43
--------------------------------------
SECTION 307. Special Transfer Provisions........................................................................ 44
---------------------------
SECTION 308. Form of Certificate to Be Delivered in Connection with Transfers to Institutional Accredited 47
Investors..........................................................................................
---------
SECTION 309. Form of Certificate to Be Delivered in Connection with Transfers Pursuant to Regulation S.......... 49
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SECTION 310. Mutilated, Destroyed, Lost and Stolen Notes........................................................ 50
-------------------------------------------
SECTION 311. Payment of Interest; Interest Rights Preserved..................................................... 50
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SECTION 312. Persons Deemed Owners.............................................................................. 51
---------------------
SECTION 313. Cancellation....................................................................................... 52
------------
SECTION 314. Computation of Interest............................................................................ 52
-----------------------
SECTION 315. CUSIP Numbers...................................................................................... 52
-------------
ARTICLE FOUR. SATISFACTION AND DISCHARGE........................................................................................ 52
SECTION 401. Satisfaction and Discharge of Indenture............................................................ 52
---------------------------------------
SECTION 402. Application of Trust Money......................................................................... 53
--------------------------
ARTICLE FIVE. REMEDIES.......................................................................................................... 54
SECTION 501. Events of Default.................................................................................. 54
-----------------
SECTION 502. Acceleration of Maturity; Rescission and Annulment................................................. 56
--------------------------------------------------
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.................................... 56
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</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 504. Trustee May File Proofs of Claim................................................................... 56
--------------------------------
SECTION 505. Trustee May Enforce Claims Without Possession of Notes............................................. 57
------------------------------------------------------
SECTION 506. Application of Money Collected..................................................................... 57
------------------------------
SECTION 507. Limitation on Suits................................................................................ 58
-------------------
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest.......................... 58
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SECTION 509. Restoration of Rights and Remedies................................................................. 58
----------------------------------
SECTION 510. Rights and Remedies Cumulative..................................................................... 59
------------------------------
SECTION 511. Delay or Omission Not Waiver....................................................................... 59
----------------------------
SECTION 512. Control by Holders................................................................................. 59
------------------
SECTION 513. Waiver of Past Defaults............................................................................ 59
-----------------------
SECTION 514. Undertaking for Costs.............................................................................. 60
---------------------
ARTICLE SIX. THE TRUSTEE........................................................................................................ 60
SECTION 601. Certain Duties and Responsibilities................................................................ 60
-----------------------------------
SECTION 602. Notice of Defaults................................................................................. 61
------------------
SECTION 603. Certain Rights of Trustee.......................................................................... 61
-------------------------
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes.......................................... 63
---------------------------------------------------------
SECTION 605. May Hold Notes..................................................................................... 63
--------------
SECTION 606. Money Held in Trust................................................................................ 63
-------------------
SECTION 607. Compensation and Reimbursement..................................................................... 63
------------------------------
SECTION 608. Corporate Trustee Required; Eligibility............................................................ 64
---------------------------------------
SECTION 609. Resignation and Removal; Appointment of Successor.................................................. 64
-------------------------------------------------
SECTION 610. Acceptance of Appointment by Successor............................................................. 65
--------------------------------------
SECTION 611. Merger, Conversion, Consolidation or Succession to Business........................................ 66
-----------------------------------------------------------
SECTION 612. Trustee's Application for Instructions from the Issuers............................................ 66
-------------------------------------------------------
ARTICLE SEVEN. HOLDERS LISTS AND REPORTS BY TRUSTEE AND THE ISSUERS............................................................. 67
SECTION 701. The Issuers to Furnish Trustee Names and Addresses................................................. 67
--------------------------------------------------
SECTION 702. Disclosure of Names and Addresses of Holders....................................................... 67
--------------------------------------------
SECTION 703. Reports by Trustee................................................................................. 67
------------------
ARTICLE EIGHT. MERGER, CONSOLIDATION, OR SALE OF ASSETS......................................................................... 68
SECTION 801. The Issuers and Guarantors May Consolidate Etc. Only on Certain Terms.............................. 68
---------------------------------------------------------------------
SECTION 802. Successor Substituted.............................................................................. 69
---------------------
ARTICLE NINE. SUPPLEMENTS, AMENDMENTS AND MODIFICATIONS TO INDENTURE............................................................ 69
SECTION 901. Supplemental Indentures Without Consent of Holders................................................. 69
--------------------------------------------------
SECTION 902. Supplemental Indentures with Consent of Holders.................................................... 70
-----------------------------------------------
SECTION 903. Execution of Supplemental Indentures............................................................... 70
------------------------------------
SECTION 904. Effect of Supplemental Indentures.................................................................. 71
---------------------------------
SECTION 905. Conformity with Trust Indenture Act................................................................ 71
-----------------------------------
SECTION 906. Reference in Notes to Supplemental Indentures...................................................... 71
---------------------------------------------
SECTION 907. Notice of Supplemental Indentures.................................................................. 71
---------------------------------
ARTICLE TEN. COVENANTS.......................................................................................................... 71
SECTION 1001. Payment of Principal, Premium, if any, and Interest................................................ 71
---------------------------------------------------
SECTION 1002. Maintenance of Office or Agency.................................................................... 71
-------------------------------
SECTION 1003. Money for Note Payments to Be Held in Trust........................................................ 72
-------------------------------------------
SECTION 1004. Corporate Existence................................................................................ 73
-------------------
SECTION 1005. Payment of Taxes and Other Claims.................................................................. 73
---------------------------------
SECTION 1006. Compliance with Laws............................................................................... 73
--------------------
SECTION 1007. Limitation on Restricted Payments.................................................................. 74
---------------------------------
SECTION 1008. Limitation on Indebtedness......................................................................... 75
--------------------------
SECTION 1009. Limitation on Affiliate Transactions............................................................... 78
------------------------------------
SECTION 1010. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries...................... 79
-----------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1011. Limitation on Liens................................................................................ 79
-------------------
SECTION 1012. Change of Control.................................................................................. 80
-----------------
SECTION 1013. Limitation on Sales of Assets...................................................................... 81
-----------------------------
SECTION 1014. Reports............................................................................................ 82
-------
SECTION 1015. Limitation on Business Activities of Mediacom Capital.............................................. 82
-----------------------------------------------------
SECTION 1016. Statement by Officers as to Default................................................................ 83
-----------------------------------
SECTION 1017. Limitation on Guarantees of Certain Indebtedness................................................... 83
------------------------------------------------
SECTION 1018. Designation of Unrestricted Subsidiaries........................................................... 84
----------------------------------------
ARTICLE ELEVEN. REDEMPTION OF NOTES............................................................................................. 85
SECTION 1101. Optional Redemption................................................................................ 85
-------------------
SECTION 1102. Applicability of Article........................................................................... 85
------------------------
SECTION 1103. Election to Redeem; Notice to Trustee.............................................................. 85
-------------------------------------
SECTION 1104. Selection by Trustee of Notes to Be Redeemed....................................................... 85
--------------------------------------------
SECTION 1105. Notice of Redemption............................................................................... 85
--------------------
SECTION 1106. Deposit of Redemption Price........................................................................ 86
---------------------------
SECTION 1107. Notes Payable on Redemption Date................................................................... 87
--------------------------------
SECTION 1108. Notes Redeemed in Part............................................................................. 87
----------------------
ARTICLE TWELVE. DEFEASANCE AND COVENANT DEFEASANCE................................................................. 87
SECTION 1201. The Issuers' Option to Effect Defeasance or Covenant Defeasance.................................... 87
---------------------------------------------------------------
SECTION 1202. Defeasance and Discharge........................................................................... 87
------------------------
SECTION 1203. Covenant Defeasance................................................................................ 88
-------------------
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.................................................... 88
-----------------------------------------------
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous 90
Provisions.........................................................................................
----------
SECTION 1206. Reinstatement...................................................................................... 90
-------------
ARTICLE THIRTEEN. RESTRICTED SUBSIDIARY GUARANTEE 90
SECTION 1301. Unconditional Guarantee............................................................................ 90
-----------------------
SECTION 1302. Severability....................................................................................... 91
------------
SECTION 1303. Limitation of Guarantor's Liability................................................................ 91
-----------------------------------
SECTION 1304. Contribution....................................................................................... 91
------------
SECTION 1305. Additional Guarantors.............................................................................. 92
---------------------
SECTION 1306. Subordination of Subrogation and Other Rights...................................................... 92
---------------------------------------------
</TABLE>
<PAGE>
INDENTURE, dated as of February 26, 1999 between MEDIACOM LLC, a New
York limited liability company ("Mediacom"), MEDIACOM CAPITAL CORPORATION, a New
York corporation ("Mediacom Capital" and together with Mediacom, the "Issuers"),
as joint and several obligors, each having its principal office at 100 Crystal
Run Road, Middletown, New York 10941, and BANK OF MONTREAL TRUST COMPANY, a New
York trust company, as trustee (the "Trustee"), having its principal corporate
trust office at 88 Pine Street, New York, NY 10005.
RECITALS OF THE ISSUERS
The Issuers have duly authorized the creation of and issuance of (i)
7 7/8% Senior Notes due 2011 (the "Initial Notes") and (ii) if and when issued
in exchange for notes as provided in the Registration Rights Agreement (as
defined herein), 7 7/8% Senior Notes due 2011 (the "Exchange Notes") (the
Initial Notes, the Exchange Notes, the Private Exchange Notes (as defined
herein) and the Additional Notes (as defined herein) are referred to herein
collectively as the "Notes"), of substantially the tenor and amount hereinafter
set forth, and to provide therefor the Issuers have duly authorized the
execution and delivery of this Indenture. "Exchange Notes" and "Private Exchange
Notes" shall include notes issued in exchange for Additional Notes having
substantially the same tenor and amount as the Additional Notes.
Upon the issuance of the Exchange Notes, if any, or the effectiveness
of the Shelf Registration Statement (as defined herein), this Indenture will be
subject to, and shall be governed by, the provisions of the Trust Indenture Act
of 1939, as amended, that are required or deemed to be part of and to govern
indentures qualified thereunder.
All things necessary have been done to make the Notes, when executed
and duly issued by the Issuers and authenticated and delivered hereunder by the
Trustee or the Authenticating Agent, the valid obligations of the Issuers and to
make this Indenture a valid agreement of the Issuers in accordance with their
and its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and words in the singular include the plural as well
as the singular, and words in the plural include the singular as well as
the plural;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, or defined by SEC
rule and not otherwise defined herein have the meanings assigned to them
therein;
<PAGE>
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP (as defined herein);
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) the word "or" is not exclusive; and
(f) provisions of this Indenture apply to successive events and
transactions.
Certain terms, used principally in Articles Two, Ten and Twelve, are
defined in those Articles.
"8 1/2% Notes" means the Issuers' $200,000,000 8 1/2% Senior Notes due
2008.
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition from such Person and not Incurred in connection with, or in
anticipation of, such Person becoming a Restricted Subsidiary or such Asset
Acquisition.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, Mediacom; (ii) any spouse, immediate family member or other
relative who has the same principal residence as any Person described in clause
(i) above; (iii) any trust in which any such Persons described in clauses (i)
and (ii) above has a beneficial interest; and (iv) any corporation or other
organization of which any such Persons described above collectively owns 5% or
more of the equity of such entity. For purposes of this definition, "control"
(including, with correlative meaning, the terms "controlling," "controlled by"
and "under common control with") when used with respect to any specified Person
includes the direct or indirect beneficial ownership of more than 5% of the
voting securities of such Person or the power to direct or cause the direction
of the management and policies of such Person whether by contract or otherwise.
"Asset Acquisition" means (i) an Investment by Mediacom or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be consolidated or merged with or into
Mediacom or any Restricted Subsidiary, or (ii) any acquisition by Mediacom or
any Restricted Subsidiary of the assets of any Person which constitute
substantially all of an operating unit, a division or a line of business of such
Person or which is otherwise outside of the ordinary course of business.
"Asset Sale" means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition) or other disposition (including,
without limitation, any merger, consolidation or sale-leaseback transaction) to
any Person other than Mediacom or any Wholly Owned Restricted Subsidiary or any
Controlled Subsidiary, in one transaction or a series of related transactions,
of (i) any Equity Interest of any Restricted Subsidiary, (ii) any material
license, franchise or other authorization of Mediacom or any Restricted
Subsidiary, (iii) any assets of Mediacom or any Restricted Subsidiary which
constitute substantially all of an operating unit, a division or a line of
business of Mediacom or any Restricted Subsidiary or (iv) any other property or
asset of Mediacom or any Restricted Subsidiary outside of the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" shall not
include (i) any transaction consummated in compliance with Sections 801 and
1012, and the creation of any Lien not prohibited under Section 1011, (ii) the
sale of property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of Mediacom or any
Restricted Subsidiary, as the case may be, (iii) any transaction consummated in
2
<PAGE>
compliance with Section 1007, and (iv) Asset Swaps permitted pursuant to clause
(d) of Section 1013. In addition, solely for purposes of Section 1013, any
sale, conveyance, transfer, lease or other disposition, whether in one
transaction or a series of related transactions, involving assets with a fair
market value not in excess of $2,000,000 in any fiscal year shall be deemed not
to be an Asset Sale.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by Mediacom or any of its Restricted Subsidiaries from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting, legal, accounting
and other fees and expenses related to such Asset Sale, and any relocation
expenses incurred as a result thereof, (c) provision for minority interest
holders in any Restricted Subsidiary as a result of such Asset Sale by such
Restricted Subsidiary, (d) payment of amounts required to be applied to the
repayment of Indebtedness secured by a Lien on the asset or assets that were the
subject of such Asset Sale (including payments made to obtain or avoid the need
for the consent of any holder of such Indebtedness), and (e) deduction of
appropriate amounts to be provided by Mediacom or such Restricted Subsidiary as
a reserve, in accordance with generally accepted accounting principles
consistently applied, against any liabilities associated with the assets sold or
disposed of in such Asset Sale and retained by Mediacom or such Restricted
Subsidiary after such Asset Sale, including, without limitation, pension and
other post employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
the assets sold or disposed of in such Asset Sale; and (ii) promissory notes and
other non-cash consideration received by Mediacom or any Restricted Subsidiary
from such Asset Sale or other disposition upon the liquidation or conversion of
such notes or non-cash consideration into cash.
"Asset Swap" means the substantially concurrent purchase and sale, or
exchange, of Productive Assets between Mediacom or any of the Restricted
Subsidiaries and another Person or group of affiliated Persons (which Person or
group of affiliated Persons is not affiliated with Mediacom and the Restricted
Subsidiaries) pursuant to an Asset Swap Agreement; it being understood that an
Asset Swap may include a cash equalization payment made in connection therewith,
provided that such cash payment, if received by Mediacom or any of the
Restricted Subsidiaries, shall be deemed to be proceeds received from an Asset
Sale and shall be applied in accordance with Section 1013.
"Asset Swap Agreement" means a definitive agreement, subject only to
customary closing conditions that Mediacom in good faith believes will be
satisfied, providing for an Asset Swap; provided, however, that any amendment
to, or waiver of, any closing condition that individually or in the aggregate is
material to such Asset Swap shall be deemed to be a new Asset Swap.
"Available Asset Sale Proceeds" means, with respect to any Asset Sale,
the aggregate Asset Sale Proceeds from such Asset Sale that have not been
applied in accordance with clause (iii)(a) and that have not yet been the basis
for application in accordance with clause (iii)(b) of clause (a) of Section
1013.
"Bankruptcy Law" means Title II, U.S. Code or any similar federal or
state law for relief of debtors.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banking institutions are authorized or required by law to
close in New York City.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles
and the amount of such Indebtedness shall be the capitalized amount of
3
<PAGE>
such obligations determined in accordance with generally accepted accounting
principles consistently applied.
"Cash Equivalents" means (i) United States dollars; (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition; (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any lender party to any
Subsidiary Credit Facility or any Future Subsidiary Credit Facility or with any
domestic commercial bank having capital and surplus in excess of $500,000,000;
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above; (v) commercial paper having a rating of at least P-1 from
Moody's or a rating of at least A-1 from S&P; and (vi) money market mutual or
similar funds having assets in excess of $100,000,000, at least 95% of the
assets of which are comprised of assets specified in clauses (i) through (v)
above.
"Change of Control" means the occurrence of any of the following
events: (i) any Person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, including any group acting for the purpose of acquiring, holding
or disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of all
shares that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening of
an event or otherwise), directly or indirectly, of more than 50% of the total
voting power of the then outstanding Voting Equity Interests of Mediacom; (ii)
Mediacom consolidates with, or merges with or into, another Person (other than a
Wholly Owned Restricted Subsidiary) or Mediacom or any its Subsidiaries sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets of Mediacom and its Subsidiaries (determined on
a consolidated basis) to any Person (other than Mediacom or any Wholly Owned
Restricted Subsidiary), other than any such transaction where immediately after
such transaction the Person or Persons that "beneficially owned" (as defined in
Rule 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time, upon the happening of an event or otherwise) immediately
prior to such transaction, directly or indirectly, a majority of the total
voting power of the then outstanding Voting Equity Interests of Mediacom,
"beneficially own" (as so determined), directly or indirectly, more than 50% of
the total voting power of the then outstanding Voting Equity Interests of the
surviving or transferee Person; (iii) Mediacom is liquidated or dissolved or
adopts a plan of liquidation or dissolution (whether or not otherwise in
compliance with the provisions of this Indenture); (iv) a majority of the
members of the Executive Committee of Mediacom shall consist of Persons who are
not Continuing Members; or (v) Mediacom ceases to own 100% of the issued and
outstanding Equity Interests of Mediacom Capital, other than by reason of a
merger of Mediacom Capital into and with a corporate successor to Mediacom;
provided, however, that a Change of Control will be deemed not to have occurred
in any of the circumstances described in clauses (i) through (iv) above if after
the occurrence of any such circumstance (A) Rocco B. Commisso continues to be
the manager of Mediacom pursuant to the Operating Agreement and/or the chief
executive officer of Mediacom (or the surviving or transferee Person in the case
of clause (ii) above), or (B) Rocco B. Commisso and the other Permitted Holders
together with their respective designees constitute the majority of the members
of the Executive Committee.
"Change of Control Offer" shall have the meaning ascribed thereto in
Section 1012.
4
<PAGE>
"Change of Control Payment" shall have the meaning ascribed thereto in
Section1012.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee Resolution" means with respect to Mediacom, a duly adopted
resolution of the Executive Committee of Mediacom.
"Comparable Restriction Provisions" shall have the meaning ascribed
thereto in Section 1010.
"Consolidated Income Tax Expense" means, with respect to Mediacom for
any period, the provision for federal, state, local and foreign income taxes
payable by Mediacom and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied.
"Consolidated Interest Expense" means, with respect to Mediacom and
the Restricted Subsidiaries for any period, without duplication, the sum of (i)
the interest expense of Mediacom and the Restricted Subsidiaries for such period
as determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied, including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation and after taking into account the
effect of elections made under any Hedging Agreements, however denominated, with
respect to such Indebtedness; (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by Mediacom and
the Restricted Subsidiaries during such period as determined on a consolidated
basis in accordance with generally accepted accounting principles consistently
applied; and (iii) dividends and distributions in respect of Disqualified Equity
Interests actually paid in cash by Mediacom and the Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied. For purposes of
this definition, interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by Mediacom to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with
generally accepted accounting principles consistently applied.
"Consolidated Net Income" means, with respect to any period, the net
income (loss) of Mediacom and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied, adjusted, to the extent included in
calculating such net income (loss), by excluding, without duplication, (i) all
extraordinary, unusual or nonrecurring items of income or expense and of gains
or losses and all gains and losses from the sale or other disposition of assets
out of the ordinary course of business (net of taxes, fees and expenses relating
to the transaction giving rise thereto) for such period; (ii) that portion of
such net income (loss) derived from or in respect of Investments in Persons
other than any Restricted Subsidiary, except to the extent actually received in
cash by Mediacom or any Restricted Subsidiary; (iii) the portion of such net
income (loss) allocable to minority interests in unconsolidated Persons for such
period, except to the extent actually received in cash by Mediacom or any
Restricted Subsidiary; (iv) net income (loss) of any other Person combined with
Mediacom or any Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination; (v) net income
(loss) of any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that net income (loss) is not at the date of determination permitted without any
prior governmental approval (which has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or the holders of its Equity Interests;
(vi) the cumulative effect of a change in accounting principles after the date
of this Indenture; (vii) net income
5
<PAGE>
(loss) attributable to discontinued operations; (viii) management fees payable
to the "manager" as defined in the Operating Agreement and to Mediacom
Management and its Affiliates pursuant to management agreements with
Subsidiaries of Mediacom accrued for such period that have not been paid during
such period; and (ix) any other item of expense, other than "interest expense,"
which appears on Mediacom's consolidated statement of income (loss) below the
line item "Operating Income," determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied.
"Consolidated Total Indebtedness" means, as at any date of
determination, an amount equal to the aggregate amount of all outstanding
Indebtedness and the aggregate liquidation preference or redemption payment
value of all Disqualified Equity Interests of Mediacom and the Restricted
Subsidiaries outstanding as of such date of determination, less the obligations
of Mediacom or any Restricted Subsidiary under any Hedging Agreement as of such
date of determination that would appear as a liability on the balance sheet of
such Person, in each case determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied.
"Continuing Member" means, as of the date of determination, any Person
who (i) was a member of the Executive Committee of Mediacom on the date of this
Indenture, (ii) was nominated for election or elected to the Executive Committee
of Mediacom with the affirmative vote of a majority of the Continuing Members
who were members of the Executive Committee at the time of such nomination or
election or (iii) is a representative of, or was approved by, a Permitted
Holder.
"Controlled Subsidiary" means a Restricted Subsidiary which is engaged
in a Related Business (i) 80% or more of the outstanding Equity Interests of
which (other than Equity Interests constituting directors' qualifying shares to
the extent mandated by applicable law) are owned by Mediacom or by one or more
Wholly Owned Restricted Subsidiaries or Controlled Subsidiaries or by Mediacom
and one or more Wholly Owned Restricted Subsidiaries or Controlled Subsidiaries,
(ii) of which Mediacom possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies, whether through the ownership
of Voting Equity Interests, by agreement or otherwise, and (iii) all of whose
Indebtedness is Non-Recourse Indebtedness.
"Corporate Trust Office" means the office of the Trustee which
initially is located at 88 Pine Street, New York, New York.
"Cumulative Credit" means the sum of (i) $10,000,000, plus (ii) the
aggregate Net Cash Proceeds received by Mediacom or a Restricted Subsidiary from
the issue or sale (other than to a Restricted Subsidiary) of Equity Interests of
Mediacom or a Restricted Subsidiary (other than Disqualified Equity Interests)
on or after April 1, 1998, plus (iii) the principal amount (or accreted amount
(determined in accordance with generally accepted accounting principles), if
less) of any Indebtedness, or the liquidation preference or redemption payment
value of any Disqualified Equity Interests, of Mediacom or any Restricted
Subsidiary which has been converted into or exchanged for Equity Interests of
Mediacom or a Restricted Subsidiary (other than Disqualified Equity Interests)
on or after April 1, 1998, plus (iv) cumulative Operating Cash Flow on or after
April 1, 1998, to the end of the fiscal quarter immediately preceding the date
of the proposed Restricted Payment, or, if cumulative Operating Cash Flow for
such period is negative, minus the amount by which cumulative Operating Cash
Flow is less than zero, plus (v) to the extent not already included in Operating
Cash Flow, if any Investment constituting a Restricted Payment that was made
after the date of this Indenture is sold or otherwise liquidated or repaid or
any Unrestricted Subsidiary which was designated as an Unrestricted Subsidiary
after the date of this Indenture is sold or otherwise liquidated, the fair
market value of such Restricted Payment (less the cost of disposition, if any)
on the date of such sale, liquidation or repayment, as determined in good faith
by the Executive Committee, whose determination shall be conclusive and
evidenced by a Committee Resolution, plus (vi) if any Unrestricted Subsidiary is
redesignated as a
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Restricted Subsidiary, the value of the Restricted Payment that would result if
such Subsidiary were redesignated as an Unrestricted Subsidiary at such time,
determined in accordance with Section 1018.
"Cumulative Interest Expense" means the aggregate amount of
Consolidated Interest Expense paid or accrued of the Issuers and the Restricted
Subsidiaries on or after April 1, 1998, to the end of the fiscal quarter
immediately preceding the proposed Restricted Payment.
"Debt to Operating Cash Flow Ratio" means the ratio of (i) the
Consolidated Total Indebtedness as of the date of calculation (the
"Determination Date") to (ii) four times the Operating Cash Flow for the latest
three months for which financial information is available immediately preceding
such Determination Date (the "Measurement Period"). For purposes of calculating
Operating Cash Flow for the Measurement Period immediately prior to the relevant
Determination Date, (I) any Person that is a Restricted Subsidiary on the
Determination Date (or would become a Restricted Subsidiary on such
Determination Date in connection with the transaction that requires the
determination of such Operating Cash Flow) will be deemed to have been a
Restricted Subsidiary at all times during such Measurement Period; (II) any
Person that is not a Restricted Subsidiary on such Determination Date (or would
cease to be a Restricted Subsidiary on such Determination Date in connection
with the transaction that requires the determination of such Operating Cash
Flow) will be deemed not have been a Restricted Subsidiary at any time during
such Measurement Period; and (III) if Mediacom or any Restricted Subsidiary
shall have in any manner (x) acquired (including through an Asset Acquisition or
the commencement of activities constituting such operating business) or (y)
disposed of (including by way of an Asset Sale or the termination or
discontinuance of activities constituting such operating business) any operating
business during such Measurement Period or after the end of such period and on
or prior to such Determination Date, such calculation will be made on a pro
forma basis in accordance with generally accepted accounting principles
consistently applied, as if, in the case of an Asset Acquisition or the
commencement of activities constituting such operating business, all such
transactions had been consummated on the first day of such Measurement Period,
and, in the case of an Asset Sale or termination or discontinuance of activities
constituting such operating business, all such transactions had been consummated
prior to the first day of such Measurement Period.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors and assigns, or such other depository institution
hereinafter appointed by Mediacom.
"Designation" shall have the meaning ascribed thereto in Section 1018.
"Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S under the Securities Act.
"Disqualified Equity Interest" means (i) any Equity Interest issued by
Mediacom which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof (except, in each such case, upon the
occurrence of a Change of Control or a Regulatory Equity Interest Repurchase),
in whole or in part, or is exchangeable into Indebtedness, on or prior to the
earlier of the maturity date of the Notes or the date on which no Notes remain
outstanding; and (ii) any Equity Interest issued by any Restricted Subsidiary
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or
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otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, or is exchangeable into Indebtedness.
"Equity Interest" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, and
membership interests in such Person, including any Preferred Equity Interests.
"Equity Offering" means a public or private offering by Mediacom or a
Restricted Subsidiary for cash of its respective Equity Interests (other than
Disqualified Equity Interests) or options, warrants or rights with respect to
such Equity Interests.
"Excess Proceeds" means, with respect to any Asset Sale, the then
Available Asset Sale Proceeds less any such Available Asset Sale Proceeds that
are required to be applied and are applied in accordance with clause (iii)(b)(1)
of clause (a) of Section 1013.
"Excess Proceeds Offer" shall have the meaning ascribed thereto in
Section 1013.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer by the Issuers to exchange all of the
Initial Notes for a like aggregate principal amount of Exchange Notes, as
provided in the Registration Rights Agreement, and the offer by the Issuers to
exchange all of the Additional Notes for a like aggregate principal amount of
Exchange Notes, in each case as provided in this Indenture.
"Exchange Offer Registration Statement" has the meaning ascribed
thereto in the Registration Rights Agreement.
"Executive Committee" means (i) so long as Mediacom is a limited
liability company, (x) while the Operating Agreement is in effect, the Executive
Committee authorized thereunder, and (y) at any other time, the manager or board
of managers of Mediacom, or management committee or similar governing body
responsible for the management of the business and affairs of Mediacom; (ii) if
Mediacom were to be reorganized as a corporation, the board of directors of
Mediacom; and (iii) if Mediacom were to be reorganized as a partnership, the
board of directors of the corporate general partner of such partnership (or if
such general partner is itself a partnership, the board of directors of such
general partner's corporate general partner).
"Future Subsidiary Credit Facilities" means one or more debt
facilities (other than the Subsidiary Credit Facilities) entered into from time
to time after the date of this Indenture by one or more Restricted Subsidiaries
or groups of Restricted Subsidiaries with banks or other institutional lenders,
together with all loan documents and instruments thereunder (including, without
limitation, any guarantee agreements and security documents), including any
amendment (including any amendment and restatement), modification or supplement
thereto or any refinancing, refunding, deferral, renewal, extension or
replacement thereof (including, in any such case and without limitation, adding
or removing Subsidiaries of Mediacom as borrowers or guarantors thereunder),
whether by the same or any other lender or group of lenders.
"GAAP" or "generally accepted accounting principles" means generally
accepted accounting principles in the United States of America as in effect as
of the date of this Indenture, including those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
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Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantor" means any Subsidiary of Mediacom that guarantees the
Issuers' obligations under this Indenture and the Notes issued after the date of
this Indenture pursuant to Section 1017.
"Hedging Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement
providing for the transfer or mitigation of interest rate risks either generally
or under specific contingencies.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to
generally accepted accounting principles or otherwise, of any such Indebtedness
or other obligation on the balance sheet of such Person (and "Incurrence",
"Incurred" and "Incurring" shall have meanings correlative to the foregoing).
Indebtedness of any Person or any of its Subsidiaries existing at the time such
Person becomes a Restricted Subsidiary (or is merged into or consolidates with
Mediacom or any Restricted Subsidiary), whether or not such Indebtedness was
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary (or being merged into or consolidated with Mediacom or any
Restricted Subsidiary), shall be deemed Incurred at the time any such Person
becomes a Restricted Subsidiary or merges into or consolidates with Mediacom or
any Restricted Subsidiary.
"Indebtedness" means, with respect to any Person, without duplication,
any indebtedness, secured or unsecured, contingent or otherwise, in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or letters of credit or representing
the deferred and unpaid balance of the purchase price of property or services
(but excluding trade payables incurred in the ordinary course of business and
non-interest bearing installment obligations and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with generally accepted accounting principles, and
shall also include, to the extent not otherwise included (but without
duplication), (i) any Capitalized Lease Obligations, (ii) obligations secured by
a lien to which any property or assets owned or held by such Person is subject,
whether or not the obligation or obligations secured thereby shall have been
assumed, (iii) guarantees of items of other Persons which would be included
within this definition for such other Persons (whether or not such items would
appear upon the balance sheet of the guarantor), and (iv) obligations of
Mediacom or any Restricted Subsidiary under any Hedging Agreement applicable to
any of the foregoing (if and only to the extent any amount due in respect of
such Hedging Agreement would appear as a liability upon a balance sheet of such
Person prepared in accordance with generally accepted accounting principles).
Indebtedness (i) shall not include obligations under performance bonds,
performance guarantees, surety bonds and appeal bonds, letters of credit or
similar obligations, Incurred in the ordinary course of business, including in
connection with pole rental or conduit attachments and the like or the
requirements of cable television franchising authorities, and otherwise
consistent with industry practice; (ii) shall not include obligations of any
Person (x) arising from the honoring by a bank or other financial institution of
a check, draft or other similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business, provided such obligations
are extinguished within five business days of their Incurrence, (y) resulting
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from the endorsement of negotiable instruments for collection in the ordinary
course of business and consistent with past practice and (z) under stand-by
letters of credit to the extent collateralized by cash or Cash Equivalents; and
(iii) which provides that an amount less than the principal amount thereof shall
be due upon any declaration of acceleration thereof shall be deemed to be
Incurred or outstanding in an amount equal to the accreted value thereof at the
date of determination.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Investment" means, directly or indirectly, any advance, loan or other
extension of credit (including by means of a guarantee) or capital contribution
to (by means of transfers of property to others, payments for property or
services for the account or use of others or otherwise), the acquisition, by
purchase or otherwise, of any stock, bonds, notes, debentures, partnership,
membership or joint venture interests or other securities or other evidence of
beneficial interest of any Person, provided that the term "Investment" shall not
include any such advance, loan or extension of credit having a term not
exceeding 90 days arising in the ordinary course of business or any pledge of
Equity Interests pursuant to the Subsidiary Credit Facilities or any Future
Subsidiary Credit Facilities. If Mediacom or any Restricted Subsidiary sells or
otherwise disposes of any Voting Equity Interest of any direct or indirect
Restricted Subsidiary such that, after giving effect to such sale or
disposition, Mediacom no longer owns, directly or indirectly, greater than 50%
of the outstanding Voting Equity Interests of such Restricted Subsidiary,
Mediacom shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Voting Equity Interests of
such former Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date on which the Initial Notes are originally
issued.
"Issuers' Request" shall have the meaning ascribed thereto in Section
102.
"Lien" means any mortgage, pledge, lien, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including any
conditional sale or capital lease or other title retention agreement, any lease
in the nature thereof or any agreement to give a security interest).
"Liquidated Damages" means the "liquidated damages" specified in
Section three of the Registration Rights Agreement or in such other registration
rights agreement to be executed in connection with the issuance of Additional
Notes.
"Mediacom" means Mediacom LLC, a New York limited liability company.
"Mediacom Arizona" means Mediacom Arizona LLC, a Delaware limited
liability company, and a wholly owned Subsidiary of Mediacom.
"Mediacom California" means Mediacom California LLC, a Delaware
limited liability company, and a Subsidiary of Mediacom.
"Mediacom Capital" means Mediacom Capital Corporation, a New York
corporation, and a wholly owned Subsidiary of Mediacom.
"Mediacom Delaware" means Mediacom Delaware LLC, a Delaware limited
liability company, and a wholly owned Subsidiary of Mediacom.
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"Mediacom Management" means Mediacom Management Corporation, a
Delaware corporation.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means, with respect to any issuance or sale of
Equity Interests, the proceeds in the form of cash or Cash Equivalents received
by Mediacom or any Restricted Subsidiary of such issuance or sale net of
attorneys' fees, accountants fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Recourse Indebtedness" means Indebtedness of a Person (i) as to
which neither of the Issuers nor any of the Restricted Subsidiaries (other than
such Person or any Subsidiaries of such Person) (a) provides any guarantee or
credit support of any kind (including any undertaking, guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or (b) is directly
or indirectly liable (as a guarantor or otherwise); and (ii) the incurrence of
which will not result in any recourse against any of the assets of either of the
Issuers or the Restricted Subsidiaries (other than to such Person or to any
Subsidiaries of such Person and other than to the Equity Interests in such
Person or in another Restricted Subsidiary or an Unrestricted Subsidiary pledged
by Mediacom, a Restricted Subsidiary or an Unrestricted Subsidiary); provided,
however, that Mediacom or any Restricted Subsidiary may make a loan to a
Controlled Subsidiary or an Unrestricted Subsidiary, or guarantee a loan made to
a Controlled Subsidiary or an Unrestricted Subsidiary, if such loan or guarantee
is permitted under Section 1007 at the time of the making of such loan or
guarantee, and such loan or guarantee shall not constitute Indebtedness which is
not Non-Recourse Indebtedness.
"Note Register" shall have the meaning ascribed thereto in Section
305.
"Note Registrar" shall have the meaning ascribed thereto in Section
305.
"Officer" means the Chairman, the Chief Executive Officer, any Senior
Vice President, the Treasurer or the Secretary of Mediacom.
"Officers' Certificate" means a certificate signed by two Officers.
"Operating Agreement" means the Third Amended and Restated Operating
Agreement of Mediacom dated as of January 20, 1998, as the same may be amended,
supplemented or modified from time to time.
"Operating Cash Flow" means, with respect to Mediacom and the
Restricted Subsidiaries on a consolidated basis, for any period, an amount equal
to Consolidated Net Income for such period increased (without duplication) by
the sum of (i) Consolidated Income Tax Expense accrued for such period to the
extent deducted in determining Consolidated Net Income for such period; (ii)
Consolidated Interest Expense for such period to the extent deducted in
determining Consolidated Net Income for such period; and (iii) depreciation,
amortization and any other non-cash items for such period to the extent deducted
in determining Consolidated Net Income for such period (other than any non-cash
item (other than the management fees referred to in clause (viii) of the
definition of "Consolidated Net Income") which requires the accrual of, or a
reserve for, cash charges for any future period) of Mediacom and the Restricted
Subsidiaries, including, without limitation, amortization of capitalized debt
issuance costs for such period, all of the foregoing determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied, and decreased by non-cash items to the extent they
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increase Consolidated Net Income (including the partial or entire reversal of
reserves taken in prior periods) for such period.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to
Mediacom or the Trustee.
"Other Pari Passu Debt" means Indebtedness of Mediacom or any
Restricted Subsidiary that does not constitute Subordinated Obligations that is
not senior in right of payment to the Notes.
"Other Pari Passu Debt Pro Rata Share" means the amount of the
applicable Available Asset Sale Proceeds obtained by multiplying the amount of
such Available Asset Sale Proceeds by a fraction, (i) the numerator of which is
the aggregate principal amount and/or accreted value, as the case may be, of all
Other Pari Passu Debt outstanding at the time of the applicable Asset Sale with
respect to which Mediacom or any Restricted Subsidiary is required to use
Available Asset Sale Proceeds to repay or make an offer to purchase or repay and
(ii) the denominator of which is the sum of (a) the aggregate principal amount
of all Notes outstanding at the time of the applicable Asset Sale and (b) the
aggregate principal amount and/or accreted value, as the case may be, of all
Other Pari Passu Debt outstanding at the time of the applicable Asset Sale Offer
with respect to which Mediacom or any Restricted Subsidiary is required to use
the applicable Available Asset Sale Proceeds to offer to repay or make an offer
to purchase or repay.
"Other Permitted Liens" means (i) Liens imposed by law, such as
carriers', warehousemen's and mechanics' liens and other similar liens arising
in the ordinary course of business which secure payment of obligations that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and for which an
appropriate reserve or provision shall have been made in accordance with
generally accepted accounting principles consistently applied; (ii) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and for which an appropriate reserve or
provision shall have been made in accordance with generally accepted accounting
principles consistently applied; (iii) easements, rights of way, and other
restrictions on use of property or minor imperfections of title that in the
aggregate are not material in amount and do not in any case materially detract
from the property subject thereto or interfere with the ordinary conduct of the
business of Mediacom or its Subsidiaries; (iv) Liens related to Capitalized
Lease Obligations, mortgage financings or purchase money obligations (including
refinancings thereof), in each case Incurred for the purpose of financing all or
any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of Mediacom or any Restricted
Subsidiary or a Related Business, provided that any such Lien encumbers only the
asset or assets so financed, purchased, constructed or improved; (v) Liens
resulting from the pledge by Mediacom of Equity Interests in a Restricted
Subsidiary in connection with a Subsidiary Credit Facility or a Future
Subsidiary Credit Facility or in an Unrestricted Subsidiary in any circumstance,
in each such case where recourse to Mediacom is limited to the value of the
Equity Interests so pledged; (vi) Liens resulting from the pledge by Mediacom of
intercompany indebtedness owed to Mediacom in connection with a Subsidiary
Credit Facility or a Future Subsidiary Credit Facility; (vii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (viii)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds, deposits to secure the performance of bids, trade
contracts, government contracts, leases or licenses or other obligations of a
like nature incurred in the ordinary course of business (including without
limitation, landlord Liens on leased properties); (ix) leases or subleases
granted to third Persons not interfering with the ordinary course of business of
Mediacom; (x) deposits made in the ordinary course of business to secure
liability to insurance carriers; (xi) Liens securing reimbursement obligations
with respect to letters of credit which encumber documents
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and other property relating to such letters of credit and the products and
proceeds thereof; (xii) Liens on the assets of Mediacom to secure hedging
agreements with respect to Indebtedness permitted by this Indenture to be
Incurred; (xiii) attachment or judgment Liens not giving rise to a Default or an
Event of Default; (xiv) any interest or title of a lessor under any capital
lease or operating lease; and (xv) Liens resulting from the pledge of "Unfunded
Capital Commitments" (as defined in the Operating Agreement) securing the
repayment of Indebtedness in respect of reimbursement obligations for letters of
credit given in connection with or in contemplation of the acquisition of a
Related Business.
"Paying Agent" means an office or agency maintained by the Issuers
within the City and State of New York where Notes may be presented for payment.
"Permitted Holder" means (i) Rocco B. Commisso or his spouse or
siblings, any of their lineal descendants and their spouses, (ii) any controlled
Affiliate of any individual described in clause (i) above, (iii) in the event of
the death or incompetence of any individual described in clause (i) above, such
Person's estate, executor, administrator, committee or other personal
representative, in each case who at any particular date will beneficially own or
have the right to acquire, directly or indirectly, Equity Interests of Mediacom,
(iv) any trust or trusts created for the benefit of each Person described in
this definition, including any trust for the benefit of the parents or siblings
of any individual described in clause (i) above, (v) any trust for the benefit
of any such trust, (vi) any of the holders of Equity Interests in Mediacom on
the date of this Indenture, or (vii) any of the Affiliates of any Person
described in clause (vi) above.
"Permitted Investments" means (i) Cash Equivalents; (ii) Investments
in prepaid expenses, negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar deposits; (iii)
the extension of credit to vendors, suppliers and customers in the ordinary
course of business; (iv) Investments existing as of the date of this Indenture,
and any amendment, modification, extension or renewal thereof to the extent such
amendment, modification, extension or renewal does not require Mediacom or any
Restricted Subsidiary to make any additional cash or non-cash payments or
provide additional services in connection therewith; (v) Hedging Agreements;
(vi) any Investment for which the sole consideration provided is Equity
Interests (other than Disqualified Equity Interests) of Mediacom; (vii) any
Investment consisting of a guarantee permitted under clause (e) of the second
paragraph of Section 1008; (viii) Investments in Mediacom, in any Wholly Owned
Restricted Subsidiary or in any Controlled Subsidiary or any Person that, as a
result of or in connection with such Investment, becomes a Wholly Owned
Restricted Subsidiary or a Controlled Subsidiary or is merged with or into or
consolidated with Mediacom or a Wholly Owned Restricted Subsidiary or a
Controlled Subsidiary; (ix) loans and advances to officers, directors and
employees of Mediacom and the Restricted Subsidiaries for business-related
travel expenses, moving expenses and other similar expenses in each case
incurred in the ordinary course of business; (x) any acquisition of assets
solely in exchange for the issuance of Equity Interests (other than Disqualified
Equity Interests) of Mediacom; (xi) Related Business Investments; and (xii)
other Investments made pursuant to this clause (xii) at any time, and from time
to time, after the date of this Indenture, in addition to any Permitted
Investments described in clauses (i) through (xi) above, in an aggregate amount
at any one time outstanding not to exceed $10,000,000.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Preferred Equity Interest" means, in any Person, an Equity Interest
of any class or classes, however designated, which is preferred as to the
payment of dividends or distributions, or as to
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the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Equity Interests of any other class in such
Person.
"Private Exchange" means the issuance by the Issuers of a like amount
of Private Exchange Notes in exchange for Initial Notes or Additional Notes held
by a Holder which holds Initial Notes or Additional Notes acquired by it that
have, or that are reasonably likely to have, the status of an unsold allotment
in an initial distribution, or which is not entitled to participate in the
Exchange Offer, pursuant to the Registration Rights Agreement or similar
agreement with respect to the Additional Notes.
"Private Exchange Notes" means the Issuers' 7 7/8% Senior Notes due
2011, if and when issued pursuant to a Private Exchange for Initial Notes or
Additional Notes.
"Productive Assets" means assets of a kind used or useable by Mediacom
and the Restricted Subsidiaries in any Related Business and specifically
includes assets acquired through Asset Acquisitions (it being understood that
"assets" may include Equity Interests of a Person that owns such Productive
Assets, provided that after giving effect to such transaction, such Person would
be a Restricted Subsidiary).
"QIB" shall have the meaning ascribed thereto under Rule 144A of the
Securities Act.
"Redemption Date" shall have the meaning ascribed thereto in Section
1103.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated as of February 26, 1999 among Mediacom, Mediacom Capital
and Chase Securities Inc.
"Regular Record Date" means, with respect to any Interest Payment
Date, the February 1 or August 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulatory Equity Interest Repurchase" shall have the meaning
ascribed thereto in Section 1007.
"Reinvestment Date" shall have the meaning ascribed thereto in Section
1013.
"Related Business" means a cable television, media and communications,
telecommunications or data transmission business, and businesses ancillary,
complementary or reasonably related thereto, and reasonable extensions thereof.
"Related Business Investment" means (i) any capital expenditure or
Investment, in each case related to the business of Mediacom and its Restricted
Subsidiaries as conducted on the date of this Indenture and as such business may
thereafter evolve in the fields of Related Businesses, (ii) any Investment in
any other Person primarily engaged in a Related Business and (iii) any customary
deposits or earnest money payments made by Mediacom or any Restricted Subsidiary
in connection with or in contemplation of the acquisition of a Related Business.
"Required Filing Dates" shall have the meaning ascribed thereto in
Section 1014.
"Restricted Payment" means (i) any dividend (whether made in cash,
property or securities) on or with respect to any Equity Interests of Mediacom
or of any Restricted Subsidiary (other than with respect to Disqualified Equity
Interests and other than any dividend made to Mediacom or another Restricted
Subsidiary or any dividend payable in Equity Interests of Mediacom or any
Restricted
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Subsidiary); or (ii) any distribution (whether made in cash, property or
securities) on or with respect to any Equity Interests of Mediacom or of any
Restricted Subsidiary (other than with respect to Disqualified Equity Interests
and other than any distribution made to Mediacom or another Restricted
Subsidiary or any distribution payable in Equity Interests of Mediacom or any
Restricted Subsidiary); or (iii) any redemption, repurchase, retirement or other
direct or indirect acquisition of any Equity Interests of Mediacom (other than
Disqualified Equity Interests), or any warrants, rights or options to purchase
or acquire any such Equity Interests or any securities exchangeable for or
convertible into any such Equity Interests; or (iv) any redemption, repurchase,
retirement or other direct or indirect acquisition for value or other payment of
principal, prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, of any Subordinated Obligations; or (v) any
Investment (other than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of Mediacom that has not
been designated by the Executive Committee of Mediacom by a Committee Resolution
delivered to the Trustee as an Unrestricted Subsidiary pursuant to Section 1018.
Any such designation may be revoked by a Committee Resolution delivered to the
Trustee, subject to the provisions of such covenant.
"Restricted Subsidiary Guarantee" shall have the meaning ascribed
thereto in Section 1017.
"Revocation" shall have the meaning ascribed thereto in Section 1018.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" has the meaning ascribed thereto in the
Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary which at the
time of determination had (A) total assets which, as of the date of Mediacom's
most recent quarterly consolidated balance sheet, constituted at least 10% of
Mediacom's total assets on a consolidated basis as of such date, or (B) revenues
for the three-month period ending on the date of Mediacom's most recent
quarterly consolidated statement of income which constituted at least 10% of
Mediacom's total revenues on a consolidated basis for such period, or (C)
Subsidiary Operating Cash Flow for the three-month period ending on the date of
Mediacom's most recent quarterly consolidated statement of income which
constituted at least 10% of Mediacom's total Operating Cash Flow on a
consolidated basis for such period.
"Southeast Credit Facility" means the $225,000,000 senior credit
facility dated as of January 23, 1998 among Mediacom Southeast, the lenders
party thereto and The Chase Manhattan Bank, as administrative agent, as amended
and restated through the date of this Indenture.
"Specified Action" shall have the meaning ascribed thereto in Section
1010.
"Specified Affilate Transaction" shall have the meaning ascribed
thereto in Section 1009.
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"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision.
"Subordinated Obligations" means, with respect to either of the
Issuers, any Indebtedness of either of the Issuers which is expressly
subordinated in right of payment to the Notes.
"Subsidiary" means a Person the majority of whose voting stock,
membership interests or other Voting Equity Interests is or are owned by
Mediacom or a Subsidiary. Voting stock in a corporation is Equity Interests
having voting power under ordinary circumstances to elect directors.
"Subsidiary Credit Facilities" means the Southeast Credit Facility and
the Western Credit Facility, together with all loan documents and instruments
thereunder (including, without limitation, any guarantee agreements and security
documents), including any amendment (including any amendment and restatement),
modification or supplement thereto or any refinancing, refunding, deferral,
renewal, extension or replacement thereof (including, in any such case and
without limitation, adding or removing Subsidiaries of Mediacom as borrowers or
guarantors thereunder), whether by the same or any other lender or group of
lenders, pursuant to which (i) an aggregate amount of Indebtedness up to
$325,000,000 may be Incurred pursuant to clause (c)(i) of the second paragraph
of Section 1008 and (ii) any additional amount of Indebtedness in excess of
$325,000,000 may be Incurred pursuant to the first paragraph or pursuant to
clause (c)(ii) or any other applicable clause (other than clause (c)(i)) of the
second paragraph of Section 1008.
"Subsidiary Operating Cash Flow" means, with respect to any Subsidiary
for any period, the "Operating Cash Flow" of such Subsidiary and its
Subsidiaries for such period determined by utilizing all of the elements of the
definition of "Operating Cash Flow" in this Indenture, including the defined
terms used in such definition, consistently applied only to such Subsidiary and
its Subsidiaries on a consolidated basis for such period.
"Successor Company" shall have the meaning ascribed thereto in Section
801.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date of this Indenture.
"Trust Officer" means an officer of the Trustee assigned by the
Trustee to administer its corporate trust matters or to any other officer of the
Trustee to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Unrestricted Subsidiary" means any Subsidiary of Mediacom designated
as such pursuant to the provisions of Section 1018, and any Subsidiary of an
Unrestricted Subsidiary. Any such designation may be revoked by a Committee
Resolution delivered to the Trustee, subject to the provisions of such covenant.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
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"Voting Equity Interests" means Equity Interests in any Person with
voting power under ordinary circumstances entitling the holders thereof to elect
the Executive Committee, the board of managers, board of directors or other
governing body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding aggregate
principal amount of such Indebtedness.
"Western Credit Facility" means the $100,000,000 senior credit
facility dated as of June 24, 1997 among Mediacom California, Mediacom Arizona
and Mediacom Delaware, the lenders party thereto, and The Chase Manhattan Bank,
as administrative agent, as amended and restated through the date of this
Indenture.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary 99%
or more of the outstanding Equity Interests of which (other than Equity
Interests constituting directors' qualifying shares to the extent mandated by
applicable law) are owned by Mediacom or by one or more Wholly Owned Restricted
Subsidiaries or by Mediacom and one or more Wholly Owned Restricted
Subsidiaries.
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Issuers (an "Issuers' Request")
to the Trustee to take any action under any provision of this Indenture, the
Issuers and any other obligor on the Notes shall furnish to the Trustee an
Officers' Certificate in form and substance reasonably acceptable to the Trustee
stating that all conditions precedent, if any, provided for in this Indenture
(including any covenant compliance with which constitutes a condition precedent)
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided pursuant to Section 1016(a)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual or such
firm, he or it has made such examination or investigation as is necessary
to enable him or it to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
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SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuers or any other
obligor on the Notes may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Issuers or any other obligor on the Notes stating that the information with
respect to such factual matters is in the possession of the Issuers or any other
obligor on the Notes unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
---------------
(i) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Issuers. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Issuers, if made in the
manner provided in this Section 104.
(ii) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(iii) The principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Note Register.
(iv) If the Issuers shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Issuers may, at their option, by or pursuant to a
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Committee Resolution, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Issuers shall have no obligation to do so.
Notwithstanding TIA (S) 316(c), such record date shall be the record date
specified in or pursuant to such Committee Resolution, which shall be a date not
earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of outstanding Notes
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
outstanding Notes shall be computed as of such record date; provided that no
such authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
(v) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof (including in
accordance with Section 310) in respect of anything done, omitted or suffered to
be done by the Trustee, any Paying Agent or the Issuers in reliance thereon,
whether or not notation of such action is made upon such Note.
SECTION 105. Notices, Etc., to Trustee and the Issuers.
-----------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Issuers or any other obligor
on the Notes shall be sufficient for every purpose hereunder if made,
given, furnished or delivered in writing and mailed, first-class postage
prepaid, or delivered by recognized overnight courier, to or with the
Trustee and received at its Corporate Trust Office, Attention: Corporate
Trust Administration, or
(2) the Issuers by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or delivered, in writing, or mailed, first-class
postage prepaid, or delivered by recognized overnight courier, to the
Issuers addressed to it and received at the address of its principal office
specified in the first paragraph of this Indenture, or at any other address
previously furnished in writing to the Trustee by the Issuers.
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice of any event to Holders by
the Issuers or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder, at his address as it appears in the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. Neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to receive such
notice, either before
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or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
If the Issuers mail any notice or communication to any Holder, they
shall mail a copy to the Trustee at the same time.
SECTION 107. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Issuers shall
bind each of their successors and assigns, whether so expressed or not.
SECTION 109. Separability Clause.
-------------------
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 110. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, (other than the parties hereto, any agent and their
successors hereunder and each of the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCLUDING (TO THE GREATEST
EXTENT PERMISSIBLE BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. UPON THE ISSUANCE
OF THE EXCHANGE NOTES OR THE EFFECTIVENESS OF THE SHELF REGISTRATION STATEMENT,
THIS INDENTURE SHALL BE SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT
THAT ARE REQUIRED TO BE PART OF THIS INDENTURE AND SHALL, TO THE EXTENT
APPLICABLE, BE GOVERNED BY SUCH PROVISIONS. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE U.S.
FEDERAL COURTS, IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN, AND WAIVES ANY
OBJECTION AS TO VENUE OR FORUM NON CONVENIENS.
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SECTION 112. Legal Holidays.
--------------
In any case where any interest payment date, any date established for
payment of Defaulted Interest pursuant to Section 311 or redemption date or
Stated Maturity of any Note shall not be a Business Day, then (notwithstanding
any other provision of this Indenture or of the Notes) payment of principal (or
premium, if any) or interest need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the interest payment date or date established for payment of Defaulted Interest
pursuant to Section 311, Redemption Date, or at the Stated Maturity or maturity;
provided that no interest shall accrue for the period from and after such
interest payment date, redemption date or date established for payment of
Defaulted Interest pursuant to Section 311, Stated Maturity or maturity, as the
case may be, to the next succeeding Business Day.
SECTION 113. No Personal Liability of Directors, Officers, Employees,
--------------------------------------------------------
Stockholders or Incorporators.
- -----------------------------
No manager, director, officer, employee, member, shareholder, partner
or incorporator of either Issuer or any Subsidiary, as such, shall have any
liability for any obligations of the Issuers under the Notes, this Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
SECTION 114. Counterparts.
------------
This Indenture may be signed in any number of counterparts each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture.
SECTION 115. Communications by Holders with Other Holders.
--------------------------------------------
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Note Registrar and anyone else shall have the protection of TIA (S)
312(c).
ARTICLE TWO.
NOTE FORMS
SECTION 201. Forms Generally.
---------------
The Notes and the Trustee's certificate of authentication shall be in
substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with applicable laws or the rules of any securities exchange
or Depositary or as may, consistently herewith, be determined by the officers
executing such Notes, as evidenced by their execution of the Notes. Any portion
of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note. Each Note shall be dated
the date of its authentication.
Initial Notes offered and sold to qualified institutional buyers (as
defined in Rule 144A under the Securities Act) in the United States of America
("Rule 144A Note") shall be issued on the Issue
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Date, and Additional Notes offered and sold to qualified institutional buyers in
the United States of America shall be issued, in the form of a permanent global
Note, without interest coupons, substantially in the form set forth in Sections
203 and 204 (the "Rule 144A Global Note") deposited with the Trustee, as
custodian for the Depositary, duly executed by the Issuers and authenticated by
the Trustee as hereinafter provided. The Rule 144A Global Note may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Rule 144A Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Initial Notes offered and sold in offshore transactions to Non-U.S.
Persons ("Regulation S Note") in reliance on Regulation S shall be issued on the
Issue Date, and Additional Notes offered and sold in offshore transactions to
Non-U.S. Persons in reliance on Regulation S shall be issued, in the form of a
global Note, without interest coupons, substantially in the form set forth in
Sections 203 and 204 (the "Regulation S Global Note"). The Regulation S Global
Note will be deposited with the Trustee, as custodian for the Depositary, duly
executed by the Issuers and authenticated by the Trustee as hereinafter
provided. The Regulation S Global Note may be represented by more than one
certificate, if so required by the Depositary's rules regarding the maximum
principal amount to be represented by a single certificate. The aggregate
principal amount of the Regulation S Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Initial Notes offered and sold to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) in the
United States of America ("Institutional Accredited Investor Note") shall be
issued, and Additional Notes offered and sold to institutional accredited
investors in the United States of America shall be issued, in the form of a
permanent global Note substantially in the form set forth in Sections 203 and
204 (a "Institutional Accredited Investor Global Note") deposited with the
Trustee, as custodian for the Depositary, duly executed by the Issuers and
authenticated by the Trustee as hereinafter provided. The Institutional
Accredited Investor Global Note may be represented by more than one certificate,
if so required by the Depositary's rules regarding the maximum principal amount
to be represented by a single certificate. The aggregate principal amount of the
Institutional Accredited Investor Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
The Rule 144A Global Note, the Regulation S Global Note and the
Institutional Accredited Investor Global Note are sometimes collectively herein
referred to as the "Global Notes."
The definitive Notes shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers of the Issuers executing such Notes, as evidenced by their
execution of such Notes.
SECTION 202. Restrictive Legends.
-------------------
Unless and until (i) an Initial Note or Additional Note is sold under
an effective Registration Statement or (ii) an Initial Note or Additional Note
is exchanged for an Exchange Note in connection with an effective Registration
Statement, in each case pursuant to the Registration Rights Agreement, such Rule
144A Global Note and the Institutional Accredited Investor Global Note shall
bear the following legend (the "Private Placement Legend") on the face thereof:
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SECTION
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF $250,000
OF SUCH SECURITIES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS'
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT
TO CLAUSE (D), (E) OR (F) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND IN THE CASE OF ANY OF THE FOREGOING CLAUSES (A) THROUGH (F), A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUERS AND
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
The Regulation S Global Note shall bear the following legend on the
face thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
23
<PAGE>
STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN
AN OFFSHORE TRANSACTION, (2) BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SECTION
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR", IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
$250,000 OF SUCH SECURITIES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS'
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT
TO CLAUSE (D), (E) OR (F) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND IN THE CASE ANY OF THE FOREGOING CLAUSES (A) THROUGH (F), A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUERS AND
THE TRUSTEE. THIS LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE DAYS
BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH THE SECURITIES
ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S)
AND (B) THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
24
<PAGE>
The Global Notes, whether or not an Initial Note or Additional Note,
shall also bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.
25
<PAGE>
SECTION 203. Form of Note.
------------
7 7/8% Senior Notes due 2011
No. ___ Principal Amount at Maturity $__________________
CUSIP NO.__________
Mediacom LLC, a New York limited liability company, and Mediacom Capital
Corporation, a New York corporation, as joint and several obligors promise to
pay to ______________, or registered assigns, the principal sum of ____________
Dollars on February 15, 2011.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
This Note shall bear interest from February 26, 1999 through February 15,
2011.
Additional provisions of this Note are set forth on the other side of this
Note.
26
<PAGE>
IN WITNESS WHEREOF, the Issuers have caused this Note to be signed manually
or by facsimile by its authorized Officers.
Dated: ________, ____
MEDIACOM LLC
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
MEDIACOM CAPITAL CORPORATION
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
27
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
BANK OF MONTREAL TRUST COMPANY,
as Trustee
By:
--------------------------------
Authorized Signature
28
<PAGE>
[FORM OF REVERSE SIDE OF SENIOR NOTE]
7 7/8% Senior Notes due 2011
1. Interest
--------
Mediacom LLC, a New York limited liability company, and Mediacom Capital
Corporation, a New York corporation (such entities, and their successors and
assigns under the Indenture hereinafter referred to, being herein called the
"Issuers"), jointly and severally promise to pay interest on the principal
amount of this Note as described below.
Interest on the Senior Notes due 2011 (the "Notes") will accrue at a rate
of 7 7/8% per annum, payable semiannually, to Holders of record on each February
1 or August 1 immediately preceding the interest payment date on February 15 and
August 15 of each year, commencing August 15, 1999. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on the Notes is due and payable, the Issuers shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Issuers will pay interest
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the February 1 or August 1 next preceding the
interest payment date even if the Notes are cancelled, repurchased or redeemed
after the record date and on or before the interest payment date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Issuers
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. However, the
Issuers may pay interest by check payable in such money. The Issuers may mail an
interest check to a Holder's registered address; provided that all payments with
respect to global Notes and certificated Notes the Holders of which have given
written wire transfer instructions to the Trustee by no later than five business
days prior to the relevant payment date shall be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof.
3. Trustee, Paying Agent and Registrar
-----------------------------------
Initially, Bank of Montreal Trust Company, a New York trust company
("Trustee"), will act as Trustee, Paying Agent and Note Registrar. The Issuers
may appoint and change any Paying Agent, Note Registrar or co-registrar without
notice to any Noteholder.
4. Indenture
---------
The Issuers issued the Notes under an Indenture dated as of February 26,
1999 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Issuers and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) (the "TIA"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Notes are subject to
all such terms, and Noteholders are referred to the Indenture and the TIA for a
statement of those terms.
The Notes are unsecured senior obligations of the Issuers limited to
$125,000,000 aggregate principal amount at maturity, except for Notes
authenticated and delivered upon registration of transfer of,
29
<PAGE>
or in exchange for, or in lieu of, other Notes pursuant to Section 304, 305,
306, 307, 310, 906, 1012, 1013 or 1108 or pursuant to an Exchange Offer or
Private Exchange Offer, and, subject to compliance with the covenants contained
in this Indenture, including Section 1008 as a new Incurrence of Indebtedness by
the Issuers, up to $250,000,000 aggregate principal amount of Additional Notes
having substantially identical terms and conditions as the Initial Notes. This
Note is one of the [Initial]/1/ Notes referred to in the Indenture. The Notes
include the Notes and any Exchange Notes or Private Exchange Notes issued in
exchange for the Initial Notes or Additional Notes pursuant to the Indenture.
The Initial Notes, the Additional Notes, the Exchange Notes and the Private
Exchange Notes are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Issuers, and the Issuers' Restricted Subsidiaries, the payment of dividends
on, and the purchase or redemption of Equity Interests of Mediacom and its
Restricted Subsidiaries, the sale or transfer of assets, investments of Mediacom
and its Restricted Subsidiaries and transactions with Affiliates. In addition,
the Indenture limits the ability of Mediacom and its Restricted Subsidiaries to
restrict distributions and dividends from Restricted Subsidiaries.
5. Optional Redemption
-------------------
Except as set forth below, the Notes are not redeemable prior to February
15, 2006. Thereafter, the Notes will be redeemable, in whole or in part, from
time to time at the option of the Issuers, on not less than 30 and not more than
60 days' notice prior to the redemption date by first class mail to each holder
of Notes to be redeemed at such holder's address appearing in the Note Register
maintained by the Note Registrar at the following redemption prices (expressed
as percentages of principal amount) if redeemed during the twelve-month period
beginning with February 15 in the year indicated below, in each case together
with accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of redemption:
<TABLE>
<CAPTION>
Period Redemption Price
- ------ ----------------
<S> <C>
2006................................. 103.938%
2007................................. 101.969%
2008 and thereafter.................. 100.000%
</TABLE>
In addition, at any time and from time to time, on or prior to February 15,
2002, the Issuers may redeem up to 35% of the original principal amount of Notes
(calculated to give effect to any issuance of Additional Notes) with the Net
Cash Proceeds of one or more Equity Offerings of Mediacom, at a redemption price
in cash equal to 107.875% of the principal to be redeemed plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of redemption;
provided that at least 65% of the original principal amount of the Notes (as so
calculated) remains outstanding after each such redemption. Any such redemption
will be required to occur within 90 days following the closing of any such
Equity Offering.
6. Selection
---------
If fewer than all the Notes are to be redeemed, the Trustee will select the
Notes to be redeemed, if the Notes are listed on a national securities exchange,
in accordance with the rules of such exchange or, if the Notes are not so
listed, on a pro rata basis or by lot or by such other method that the Trustee
deems to be fair and equitable to holders. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed and a new Note
- -----------------------
/1/ Include only for the Initial Notes or Additional Notes.
30
<PAGE>
or Notes in principal amount equal to the unredeemed principal portion thereof
will be issued; provided, that no Notes of a principal amount of $1,000 or less
shall be redeemed in part. On and after the redemption date, interest will cease
to accrue on Notes or portions thereof called for redemption as long as the
Issuers have deposited with the Paying Agent for the Notes funds in satisfaction
of the applicable redemption price pursuant to the Indenture.
7. Change of Control
-----------------
Upon the occurrence of a Change Control, each holder of Notes shall have
the right to require the Issuers to repurchase all or any part of such Holder's
Notes pursuant to a Change of Control Offer at a purchase price equal to 101% of
the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
8. Denominations; Transfer; Exchange
---------------------------------
The Notes are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Notes in accordance with the Indenture. The Note Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Note Registrar need not register the transfer of or exchange
of (i) any Note selected for redemption (except, in the case of a Note to be
redeemed in part, the portion of the Note not to be redeemed) for a period
beginning 15 days before a selection of Notes to be redeemed and ending on the
date of such selection or (ii) any Notes for a period beginning 15 days before
an interest payment date and ending on such interest payment date.
9. Persons Deemed Owners
---------------------
The registered holder of this Note may be treated as the owner of it for
all purposes.
10. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Issuers at
their request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Issuers
and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions set forth in the Indenture, the Issuers at
any time may terminate some or all of their obligations under the Notes and the
Indenture if the Issuers deposit with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Notes to redemption
or maturity, as the case may be. The Issuers in their sole discretion can
defease the Notes.
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Notes or the Restricted Subsidiary Guarantees may be amended with
the written consent of the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes and (ii) any default or noncompliance with
any provision may be waived with the consent of the Holders of a majority in
principal amount of the outstanding Notes. Without the consent of any
Noteholder, the Issuers and the
31
<PAGE>
Trustee may amend the Indenture or the Notes to cure any ambiguity, omission,
defect or inconsistency, or to comply with Article 8 of the Indenture, or to
provide for uncertificated Notes in addition to or in place of certificated
Notes or to add guarantees with respect to the Notes or to secure the Notes, or
to add additional covenants or surrender rights and powers conferred on the
Issuers, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make any change that does not adversely
affect the rights of any Noteholder.
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) a default in the payment
of principal of, or premium, if any, on the Notes when due at their Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (ii) a default in any payment of interest or Liquidated Damages,
if any, on the Notes when due, continued for 30 days, (iii) the failure by
either of the Issuers or the Guarantors to comply for 60 days after written
notice by holders of not less than 25% in principal amount of the Notes then
outstanding with any other covenant, representation, warranty or other agreement
contained in the Indenture or the Notes, (iv) default in the payment at maturity
(continued for the longer of any applicable grace period or 30 days) of any
Indebtedness aggregating $15,000,000 or more of the Issuers or any Significant
Subsidiary or any group of Restricted Subsidiaries of Mediacom which, if merged
into each other, would constitute a Significant Subsidiary, or the acceleration
of any such Indebtedness which default shall not be cured or waived, or such
acceleration shall not be rescinded or annulled, within 30 days after written
notice by the holders of not less than 25% in principal amount of the Notes then
outstanding or (v) any final judgment or judgments for the payment of money in
excess of $15,000,000 (net of amounts covered by insurance) is rendered against
the Issuers or a Significant Subsidiary or any group of Restricted Subsidiaries
of Mediacom, which, if merged into each other, would constitute a Significant
Subsidiary, and such judgment or judgments remain undischarged for any period of
60 consecutive days, during which a stay of enforcement of such judgment shall
not be in effect. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Notes being due and payable immediately upon
the occurrence of such Events of Default. The failure by any Restricted
Subsidiary Guarantee to be in full force and effect (except as contemplated by
the terms thereof) or any Guarantor to deny or disaffirm its obligations under
the Indenture or any Restricted Subsidiary Guarantee shall also be an Event of
Default.
If an Event of Default occurs and is continuing (other than an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization), the Trustee or the Holders of not less than 25% in principal
amount of the outstanding Notes may declare the principal of and accrued and
unpaid interest, if any, on all the Notes to be due and payable immediately.
Upon such a declaration, such principal and accrued and unpaid interest shall be
due and payable immediately. Under certain circumstances, the holders of a
majority in principal amount of the outstanding Notes may rescind any such
acceleration with respect to the Notes and its consequences. Notwithstanding
the foregoing, in the case of an Event of Default resulting from certain events
of bankruptcy, insolvency or reorganization, all outstanding Notes shall be due
and payable immediately without further action or notice.
Noteholders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes
unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in principal amount of the Notes may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment of principal interest) if it determines
that withholding notice is in their interest.
32
<PAGE>
14. Trustee Dealings with the Issuers
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with and collect obligations
owed to it by the Issuers or their affiliates and may otherwise deal with the
Issuers or their affiliates with the same rights it would have if it were not
Trustee.
15. No Recourse Against Others
--------------------------
A manager, director, officer, employee, member, shareholder, partner or
incorporator of either Issuer or any Subsidiary, as such, shall not have any
liability for any obligations of the Issuers under the Notes or the Indenture or
for any claim based on, in respect of or by reason of, such obligations or their
creation. By accepting a Note, each Noteholder waives and releases all such
liability.
16. Authentication
--------------
This Note shall not be valid until an authorized signatory of the Trustee
(or an authenticating agent acting on its behalf) manually signs the certificate
of authentication on the other side of this Note.
[17. Registration Rights
-------------------
The Holder of this Initial Note is entitled to the benefits of the Exchange
and Registration Rights Agreement, dated as of February 26, 1999 (the
"Registration Rights Agreement"), among the Issuers and the initial purchaser
named therein.]/2/
18. Abbreviations
-------------
Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
19. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Notes and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Noteholders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Governing Law
-------------
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW)
ANY RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
- ----------------------
/2/ Include only for the Initial Notes.
33
<PAGE>
21. Restricted Subsidiary Guarantees.
--------------------------------
This Note may after the date hereof be entitled to certain Restricted
Subsidiary Guarantees made for the benefit of the Holders. Reference is hereby
made to the Indenture for the terms of any Restricted Subsidiary Guarantee.
Mediacom will furnish to any Noteholder upon written request and without
charge to the Noteholder a copy of the Indenture. Requests may be made to:
Mediacom LLC
100 Crystal Run Road
Middletown, New York 10941
Attention: Rocco B. Commisso
34
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on the books of the Issuers.
The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: ______________________ Your Signature: ________________________________
Signature Guarantee: ________________________________________________________
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in the Securities Transfer Agents Medallion Program ("STAMP") or such
other signature guarantee medallion program as may be approved by the Note
Registrar in addition to or substitution for, STAMP), pursuant to SEC Rule 17Ad-
15.
[In connection with any transfer or exchange of any of the Notes evidenced by
this certificate occurring prior to the date that is two years after the later
of the date of original issuance of such Notes and the last date, if any, on
which such Notes were owned by the Issuers or any Affiliate of the Issuers, the
undersigned confirms that such Notes are being:
CHECK ONE BOX BELOW:
1[ ] acquired for the undersigned's own account, without transfer; or
2[ ] transferred to the Issuers; or
3[ ] transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
4[ ] transferred pursuant to an effective registration statement under the
Securities Act of 1933; or
5[ ] transferred pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
35
<PAGE>
6[ ] transferred to an institutional "accredited investor" (as defined in
Rule 501 (a)(1), (2), (3) or (7) under the Securities Act of 1933),
that has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter appears as
Section 308 of the Indenture); or
7[ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee may refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (5), (6) or (7) is
checked, the Trustee or the Issuers may require, prior to registering any such
transfer of the Notes, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Issuers may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
_____________________________
Signature
Signature Guarantee:
_______________________________
(Signature must be guaranteed)
_______________________________
Signature
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions) with
membership in the Securities Transfer Agents Medallion Program ("STAMP") or such
other signature guarantee medallion program as may be approved by the Note
Registrar in addition to or substitution for STAMP, pursuant to SEC Rule 17Ad-
15.]/3/
- --------------------------
/3/ Include only for the Initial Notes, Additional Notes and Private Exchange
Notes.
36
<PAGE>
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Amount of this Global Signature of authorized
Date of Amount of decrease in Principal Amount of increase in Principal Note following such decrease signatory of Trustee or
Exchange Amount of this Global Note Amount of this Global Note or increase Notes custodian
- -------- ------------------------------- ------------------------------- ------------------------------- -----------------------
</TABLE>
37
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 1012 or 1013 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Note purchased by the
Issuers pursuant to Section 1012 or 1013 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $_______________.
Date: ___________________ Your Signature ____________________________________
(Sign exactly as your name appears
on the other side of the Note)
Signature Guarantee: ______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions) with
membership in the Securities Transfer Agents Medallion Program ("STAMP") or such
other signature guarantee medallion program as may be approved by the Note
Registrar in addition to or substitution for STAMP, pursuant to SEC Rule 17Ad-
15.
38
<PAGE>
SECTION 204. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The Trustee's certificate of authentication shall be in substantially
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
Bank of Montreal Trust Company, as Trustee
By_______________________
Authorized Signature
39
<PAGE>
ARTICLE THREE.
THE NOTES
SECTION 301. Title and Terms.
---------------
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $125,000,000 aggregate principal
amount at maturity of Initial Notes, except for Notes authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Notes pursuant to Section 304, 305, 306, 307, 310, 906, 1012, 1013 or
1108, pursuant to an Exchange Offer or pursuant to a Private Exchange Offer,
and, subject to compliance with the covenants contained in this Indenture,
including Section 1008 as a new Incurrence of Indebtedness by the Issuers, up to
$250,000,000 aggregate principal amount of additional Notes (the "Additional
Notes") having substantially identical terms and conditions to the Initial
Notes. Any Additional Notes shall constitute part of the same issue as the
Initial Notes offered on the date of this Indenture.
The Initial Notes and the Additional Notes shall be known and
designated as the "7 7/8% Senior Notes due 2011," and the Exchange Notes shall
be known and designated as the "7 7/8% Senior Notes due 2011," in each case, of
the Issuers. The Notes will initially be issued in an aggregate principal amount
of $125,000,000 with a Stated Maturity of February 15, 2011. Interest on the
Notes will accrue at a rate per annum of 7 7/8% and will be payable semiannually
in cash and in arrears to the Holders of record on each February 1 or August 1
immediately preceding the interest payment date on February 15 and August 15 of
each year, commencing August 15, 1999. Interest on the Notes will accrue from
the most recent interest payment date to which interest has been paid or, if no
interest has been paid, from February 26, 1999. All references to the principal
amount of the Notes herein are references to the principal amount at final
maturity. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months, until the principal thereof is paid or duly provided for
Interest on any overdue principal, interest (to the extent lawful) or premium,
if any, shall be payable on demand.
The principal of (and premium, if any) and interest on the Notes shall
be payable at the office or agency of the Issuers maintained for such purpose in
the Borough of Manhattan, The City of New York, or at such other office or
agency of the Issuers as may be maintained for such purpose; provided, however,
that, at the option of the Issuers, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall appear on the
Note Register.
Holders shall have the right to require the Issuers to purchase their
Notes, in whole or in part, in the event of a Change of Control pursuant to
Section 1012.
The Notes shall be subject to repurchase by the Issuers pursuant to an
Excess Proceeds Offer as provided in Section 1013.
The Notes shall be redeemable as provided in Article Eleven and in the
Notes.
SECTION 302. Denominations.
-------------
The Notes shall be issuable only in fully registered form, without
coupons, and only in denominations of $1,000 and any integral multiple thereof.
40
<PAGE>
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Notes shall be executed by each of the Issuers by two Officers.
The signature of any Officer on the Notes may be manual or facsimile signatures
of the present or any future such authorized officer and may be imprinted or
otherwise reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Issuers shall bind the Issuers,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuers may deliver Initial Notes or Additional Notes
executed by the Issuers to the Trustee for authentication, together with an
order for the authentication and delivery of such Notes (the "Authentication
Order"), and the Trustee in accordance with such Authentication Order shall
authenticate and deliver such Initial Notes or Additional Notes directing the
Trustee to authenticate the Notes and certifying that all conditions precedent
to the issuance of Notes contained herein have been fully complied with, and the
Trustee in accordance with such Authentication Order shall authenticate and
deliver such Initial Notes or Additional Notes. Upon receipt of the
Authentication Order, the Trustee shall authenticate for original issue Exchange
Notes and Private Exchange Notes; provided that such Exchange Notes and Private
Exchange Notes shall be issuable only upon the valid surrender for cancellation
of Initial Notes or Additional Notes of a like aggregate principal amount. The
Trustee shall be entitled to receive an Officers' Certificate and an Opinion of
Counsel of the Issuers that it may reasonably request in connection with such
authentication of Notes. Such order shall specify the amount of Notes to be
authenticated and the date on which the original issue of Initial Notes,
Additional Notes, Exchange Notes or Private Exchange Notes is to be
authenticated.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case either of the Issuers, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of substantially all of its assets to any Person, and
the successor Person resulting from such consolidation, or surviving such
merger, or into which such Issuer shall have been merged, or the Person which
shall have received a conveyance, transfer, lease or other disposition as
aforesaid, shall have executed an indenture supplemental hereto with the Trustee
pursuant to Article Eight, any of the Notes authenticated or delivered prior to
such consolidation, merger, conveyance, transfer, lease or other disposition
may, from time to time, at the request of the successor Person, be exchanged for
other Notes executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like
tenor as the Notes surrendered for such exchange and of like principal amount;
and the Trustee, upon the Issuers' Request of the successor Person, shall
authenticate and deliver Notes as specified in such request for the purpose of
such exchange. If Notes shall at any time be authenticated and delivered in any
new name of a successor Person pursuant to this Section 303 in exchange or
substitution for or upon registration of transfer of any Notes, such successor
Person, at the option of the Holders but without expense to them, shall provide
for the exchange of all Notes at the time outstanding for Notes authenticated
and delivered in such new name.
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The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Notes on behalf of the Trustee. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Note Registrar or Paying Agent
to deal with the Issuers and their Affiliates hereunder.
SECTION 304. Temporary Notes.
---------------
Pending the preparation of definitive Notes, the Issuers may execute,
and upon Authentication Order the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination. Temporary Notes shall be
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Notes may determine, as conclusively
evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuers will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuers
designated for such purpose pursuant to Section 1002, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Issuers shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Issuers shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency designated pursuant to Section 1002 being herein sometimes referred to as
the "Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuers shall provide for the registration of Notes and of
transfers of Notes. The Note Register shall be in written form or any other form
capable of being converted into written form within a reasonable time. At all
reasonable times, the Note Register shall be open to inspection by the Trustee.
The Trustee is hereby initially appointed as security registrar (the Trustee in
such capacity, together with any successor of the Trustee in such capacity, the
"Note Registrar") for the purpose of registering Notes and transfers of Notes as
herein provided.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuers designated pursuant to Section 1002, the Issuers shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of a Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Note may
be effected only through a book-entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denomination (not less than $1,000) and of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange (including an
exchange of Initial Notes or Additional Notes for Exchange Notes or Private
Exchange Notes), the Issuers shall execute, and the Trustee shall authenticate
and deliver, the Notes which the
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Holder making the exchange is entitled to receive; provided that (i) no exchange
of Initial Notes for Exchange Notes shall occur until an Exchange Offer
Registration Statement shall have been declared effective by the SEC, the
Trustee shall have received an Officers' Certificate confirming that the
Exchange Offer Registration Statement has been declared effective by the SEC and
the Initial Notes to be exchanged for the Exchange Notes shall be cancelled by
the Trustee and (ii) no exchange of Additional Notes for Exchange Notes shall
occur until a registration statement shall have been declared effective by the
SEC, the Trustee shall have received an Officers' Certificate confirming that
the registration statement has been declared effective by the SEC and the
Additional Notes to be exchanged for the Exchange Notes shall be cancelled by
the Trustee.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuers, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Issuers or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Issuers and the Note Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Issuers may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 304, 906, 1012, or 1108, not involving any
transfer.
The Note Register shall be in written form in the English language or
in any other form including computerized records, capable of being converted
into such form within a reasonable time.
SECTION 306. Book-Entry Provisions for Global Notes.
--------------------------------------
(a) Each Global Note initially shall (i) be registered in the name of
the Depositary for such global Note or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for such Depositary and (iii) bear legends
as set forth in Section 202.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Note, and the Depositary may be treated by the Issuers, the Trustee and
any agent of the Issuers or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Issuers, the Trustee or any agent of the Issuers or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in a Global Note may
be transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 307. If required to do so pursuant to any applicable
law or regulation, beneficial owners may obtain Notes in definitive form
("Certificated Notes") in exchange for their beneficial interests in a Global
Note upon written request in accordance with the Depositary's and the Note
Registrar's procedures. In addition, Certificated Notes shall be transferred to
all beneficial owners in exchange for their beneficial interests in a Global
Note if (i) the Depositary notifies the Issuers
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that it is unwilling or unable to continue as Depositary for such Global Note or
the Depositary ceases to be a clearing agency registered under the Exchange Act,
at a time when the Depositary is required to be so registered in order to act as
Depositary, and in each case a successor depositary is not appointed by the
Issuers within 90 days of such notice or, (ii) the Issuers execute and deliver
to the Trustee and Note Registrar an Officers' Certificate stating that such
Global Note shall be so exchangeable or (iii) an Event of Default has occurred
and is continuing and the Note Registrar has received a request from the
Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in a Global Note pursuant to subsection (b) of this Section to
beneficial owners who are required to hold Certificated Notes, the Note
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of such Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Issuers
shall execute, and the Trustee shall authenticate and deliver, one or more
Certificated Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to subsection (b) of this Section, such Global Note
shall be deemed to be surrendered to the Trustee for cancellation, and the
Issuers shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in such Global Note, an equal aggregate principal amount of
Certificated Notes of authorized denominations.
(e) Any Certificated Note delivered in exchange for an interest in a
Global Note pursuant to subsection (c) or subsection (d) of this Section shall,
except as otherwise provided by paragraph (c) of Section 307, bear the
applicable legend regarding transfer restrictions applicable to the Certificated
Note set forth in Section 202.
(f) The registered holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 307. Special Transfer Provisions.
---------------------------
(a) The following provisions shall apply with respect to any proposed
transfer of a Rule 144A Note or an Institutional Accredited Investor Note prior
to the expiration of the Resale Restriction Termination Date (as defined in
Section 202):
(i) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Note or a beneficial interest therein to a QIB (as defined herein)
shall be made upon the representation of the transferee that it is
purchasing the Note for its own account or an account with respect to which
it exercises sole investment discretion and that it and any such account is
a "qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information
regarding the Issuers as the undersigned has requested pursuant to Rule
144A or has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A;
(ii) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Note or a beneficial interest therein to an institutional
accredited investor shall be made upon receipt by the Trustee or its agent
of a certificate substantially in the form set forth in Section 308 from
the
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proposed transferee and, if requested by the Issuers or the Trustee, the
delivery of an opinion of counsel, certification and/or other information
satisfactory to each of them; and
(iii) a transfer of a Rule 144A Note or an Institutional Accredited
Investor Note or a beneficial interest therein to a Non-U.S. Person shall
be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 309 from the transferor and,
if requested by the Issuers or the Trustee, the delivery of an opinion of
counsel, certification and/or other information satisfactory to each of
them.
(b) The following provisions shall apply with respect to any proposed
transfer of a Regulation S Note prior to the expiration of the Distribution
Compliance Period:
(i) a transfer of a Regulation S Note or a beneficial interest
therein to a QIB shall be made upon the representation of the transferee
that it is purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion and that it and
any such account is a "qualified institutional buyer", within the meaning
of Rule 144A under the Securities Act and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Issuers as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and
that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided
by Rule 144A;
(ii) a transfer of a Regulation S Note or a beneficial interest
therein to an institutional accredited investor shall be made upon receipt
by the Trustee or its agent of a certificate substantially in the form set
forth in Section 308 from the proposed transferee and, if requested by the
Issuers or the Trustee, the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them; and
(iii) a transfer of a Regulation S Note or a beneficial interest
therein to a Non-U.S. Person shall be made upon receipt by the Trustee or
its agent of a certificate substantially in the form set forth in Section
309 from the transferor and, if requested by the Issuers or the Trustee,
receipt by the Trustee or its agent of an opinion of counsel, certification
and/or other information satisfactory to each of them.
Prior to or on the expiration of the Distribution Compliance Period,
beneficial interests in a Regulation S Global Note may only be held through
Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear") or Cedel Bank, societe anonyme ("Cedel") (as
indirect participants in DTC) or another agent member of Euroclear and Cedel
acting for and on behalf of them, unless exchanged for interests in the Rule
144A Global Note or the Institutional Accredited Investor Global Note in
accordance with the certification requirements hereof. During the Distribution
Compliance Period, interests in the Regulation S Global Note, if any, may be
exchanged for interests in the Rule 144A Global Note, the Institutional
Accredited Investor Global Note or for Certificated Notes only in accordance
with the requirements described in Section 201.
After the expiration of the Distribution Compliance Period, interests
in the Regulation S Note may be transferred without requiring certification set
forth in Section 308 or 309 or any additional certification.
(c) Private Placement Legend. Upon the transfer, exchange or
-------------------------
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
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<PAGE>
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless there is delivered to the Note Registrar an
Opinion of Counsel reasonably satisfactory to the Issuers and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(d) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
(e) The Issuers shall deliver to the Trustee an Officers' Certificate
setting forth the dates on which the Distribution Compliance Period terminates.
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 306 or this Section
307. The Issuers shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Note Registrar.
(f) No Obligation of the Trustee. (i) The Trustee shall have no
----------------------------
responsibility or obligation to any beneficial owner of a Global Note, a member
of, or a participant in the Depository or other Person with respect to any
ownership interest in the Notes, with respect to the accuracy of the records of
the Depository or its nominee or of any participant or member thereof or with
respect to the delivery to any participant, member, beneficial owner or other
Person (other than the Depository) of any notice (including any notice of
redemption) or the payment of any amount, under or with respect to such Notes.
All notices and communications to be given to the Holders and all payments to be
made to Holders under the Notes shall be given or made only to the registered
Holders (which shall be the Depository or its nominee in the case of a Global
Note). The rights of beneficial owners in any Global Note in global form shall
be exercised only through the Depository subject to the applicable rules and
procedures of the Depository. The Trustee may rely and shall be fully protected
and indemnified pursuant to Section 607 in relying upon information furnished by
the Depository with respect to any beneficial owners, its members and
participants.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including without limitation any transfers between or
among Depository participants, members or beneficial owners in any Global Note)
other than to require delivery of such certificates and other documentation of
evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
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SECTION 308. Form of Certificate to Be Delivered in Connection with
------------------------------------------------------
Transfers to Institutional Accredited Investors.
-----------------------------------------------
[date]
MEDIACOM LLC
MEDICACOM CAPITAL CORPORATION
c/o Bank of Montreal Trust Company, as Trustee
88 Pine Street, 19th Floor
New York, New York 10005
Attention: Corporate Trust Administration
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $_______
principal amount of the 7 7/8% Senior Notes due 2011 (the "Notes") of Mediacom
LLC and Mediacom Capital Corporation (the "Issuers").
Upon transfer, the Notes would be registered in the name of the new
beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
The undersigned represents and warrants to you that:
(1) We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes and invest in
or purchase securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
(2) We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes prior to the date which is two years after the later of the date of
original issue and the last date on which the Issuers or any affiliate of the
Issuers was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Issuers, (b) pursuant to a
registration statement that has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act ("Rule 144A"), to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that purchases for its own account
or for the account of a QIB and to whom notice is given that the transfer is
being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur
outside the United States within the meaning of
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Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of Rule 501 (a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of such
an institutional "accredited investor", in each case in a minimum principal
amount of Notes of $250,000 or (f) pursuant to any other available exemption
from the registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and in compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Notes is
proposed to be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Issuers and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501 (a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Issuers and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Termination Date of the
Notes pursuant to clause (d), (e) or (f) above to require the delivery of an
opinion of counsel, certifications and/or other information satisfactory to the
Issuers and the Trustee.
TRANSFEREE:
-------------------------
BY:
---------------------------------
Upon transfer the Notes would be registered in the name of the new beneficial
owner as follows:
Name Address Taxpayer ID
---- ------- -----------
Number:
-------
Very truly yours,
[Name of Transferor]
By:____________________ _______________________________
Name: Signature Medallion Guaranteed
Title:
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<PAGE>
SECTION 309. Form of Certificate to Be Delivered in Connection with
------------------------------------------------------
Transfers Pursuant to Regulation S.
----------------------------------
[date]
Bank of Montreal Trust Company, as Trustee
88 Pine Street, 19th Floor
New York, New York 10005
Attention: Corporate Trust Administration
Re: Mediacom LLC and Mediacom Capital Corporation (the
"Issuers" 7 7/8% Senior Notes due 2011 (the "Notes")
-----------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $__________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(a) the offer of the Notes was not made to a person in the United
States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States or (ii) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(c) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a distribution compliance
period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S
are applicable thereto, we confirm that such sale has been made in accordance
with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case
may be.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:____________________ ____________________________
Authorized Signature Signature Medallion Guaranteed
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SECTION 310. Mutilated, Destroyed, Lost and Stolen Notes.
-------------------------------------------
If (i) any mutilated Note is surrendered to the Trustee, or (ii) the
Issuers and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Issuers
and the Trustee such security or indemnity, in each case, as may be required by
them to save each of them harmless, then, in the absence of notice to the
Issuers or the Trustee that such Note has been acquired by a bona fide
purchaser, the Issuers shall execute and upon Authentication Order the Trustee
shall authenticate and deliver, in exchange for any such mutilated Note or in
lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Issuers in their discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Issuers may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuers and any other obligor upon the
Notes, whether or not the mutilated, destroyed, lost or stolen Note shall be at
any time enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 311. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any interest payment date shall be paid to the Person in whose
name such Note (or one or more predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Issuers maintained for such purpose pursuant to Section 1002; provided,
however, that each installment of interest may at the Issuers' option be paid by
(i) mailing a check for such interest, payable to or upon the written order of
the Person entitled thereto pursuant to Section 312, to the address of such
Person as it appears in the Note Register or (ii) wire transfer to an account
located in the United States maintained by the payee.
Any interest on any Note which is payable, but is not paid when the
same becomes due and payable and such nonpayment continues for a period of 30
days shall forthwith cease to be payable to the Holder on the Regular Record
Date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Notes (such defaulted interest and interest thereon herein collectively called
"Defaulted Interest") shall be paid by the Issuers, at their election in each
case, as provided in clause (a) or (b) below:
(a) The Issuers may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be
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fixed in the following manner. The Issuers shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date (not less than 30 days after such notice) of the proposed
payment (the "Special Interest Payment Date"), and at the same time the
Issuers shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
record date (the "Special Record Date") for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the Special Interest Payment Date and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Issuers of such Special Record Date, and
in the name and at the expense of the Issuers, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date and
Special Interest Payment Date therefor to be given in the manner provided
for in Section 106, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date and Special Interest Payment Date therefor having been
so given, such Defaulted Interest shall be paid on the Special Interest
Payment Date to the Persons in whose names the Notes (or their respective
predecessor Notes) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause
(b).
(b) The Issuers may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Issuers
to the Trustee of the proposed payment pursuant to this clause, such manner
of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
SECTION 312. Persons Deemed Owners.
---------------------
Prior to the due presentment of a Note for registration of transfer,
the Issuers, the Trustee and any agent of the Issuers or the Trustee may treat
the Person in whose name such Note is registered as the owner of such Note for
the purpose of receiving payment of principal of (and premium, if any) and
(subject to Sections 305 and 311 ) interest on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Issuers, the Trustee nor any agent of the Issuers or the Trustee shall be
affected by notice to the contrary.
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SECTION 313. Cancellation.
------------
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. If the
Issuers shall acquire any of the Notes other than as set forth in the preceding
sentence, the acquisition shall not operate as a redemption or satisfaction of
the Indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 313. No
Notes shall be authenticated in lieu of or in exchange for any Notes cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled Notes held by the Trustee shall be destroyed by the Trustee and
the Trustee shall send a certificate of such destruction to the Issuers.
SECTION 314. Computation of Interest.
-----------------------
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
SECTION 315. CUSIP Numbers.
-------------
The Issuers in issuing Notes may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such "CUSIP" numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers,
either as printed on the Notes or as contained in any notice of a redemption or
repurchase and that reliance may be placed only on the serial or other
identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such CUSIP
numbers. The Issuers will promptly notify the Trustee of any change in the CUSIP
numbers.
ARTICLE FOUR.
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall upon the Issuers' Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes expressly provided for herein or pursuant hereto) and the Trustee, at the
expense of the Issuers, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when
(i) either
(A) all Notes theretofore authenticated and delivered (other than
(1) Notes which have been lost, stolen or destroyed and which have
been replaced or paid as provided in Section 310 and (2) Notes for
whose payment money has theretofore been deposited in trust with the
Trustee or any Paying Agent or segregated and held in trust by the
Issuers and thereafter repaid to the Issuers or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee
for cancellation; or
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(B) all Notes not theretofore delivered to the Trustee for
cancellation
(1) have become due and payable by reason of the making of a
notice of redemption or otherwise; or
(2) will become due and payable at their Stated Maturity
within one year; or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Issuers,
and the Issuers in the case of (1), (2) or (3) above, have irrevocably
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose an amount in cash or U.S. Government Obligations
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal of
(and premium, if any) and interest to the date of such deposit (in the case
of Notes which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(ii) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument or agreement to which the Issuers is a party or by which it is
bound;
(iii) the Issuers have paid or caused to be paid all sums payable
hereunder by the Issuers in connection with all the Notes including all
fees and expenses of the Trustee;
(iv) the Issuers have delivered irrevocable instructions to the
Trustee to apply the deposited money toward the payment of such Notes at
maturity or the Redemption Date, as the case may be; and
(v) the Issuers have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture and the termination of the Issuers' obligation hereunder
have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuers to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (i) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive any such satisfaction and discharge.
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuers acting as their own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
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If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Issuers' obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 401; provided
that if the Issuers have made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Issuers shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or Government Obligations held by the
Trustee or Paying Agent.
ARTICLE FIVE.
REMEDIES
SECTION 501. Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) a default in the payment of principal of or premium, if any, on
any Note when due at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise;
(ii) a default in any payment of interest or Liquidated Damages, if
any, on any Note when due, continued for 30 days;
(iii) the failure by either of the Issuers or any Guarantor to comply
for 60 days after written notice by holders of not less than 25% in
principal amount of the Notes then outstanding with any other covenant,
representation, warranty or other agreement contained in this Indenture or
the Notes;
(iv) default in the payment at maturity (continued for the longer of
any applicable grace period or 30 days) of any Indebtedness aggregating
$15,000,000 or more of the Issuers or any Significant Subsidiary or any
group of Restricted Subsidiaries of Mediacom which, if merged into each
other, would constitute a Significant Subsidiary, or the acceleration of
any such Indebtedness which default shall not be cured or waived, or such
acceleration shall not be rescinded or annulled, within 30 days after the
written notice by the holders of not less than 25% in principal amount of
the Notes then outstanding;
(v) any final judgment or judgments for the payment of money in
excess of $15,000,000 (net of amounts covered by insurance) is rendered
against the Issuers or any Significant Subsidiary or any group of
Restricted Subsidiaries of Mediacom, which, if merged into each other,
would constitute a Significant Subsidiary, and such judgment or judgements
remain undischarged for any period of 60 consecutive days, during which a
stay of enforcement of such judgment shall not be in effect;
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(vi) either of the Issuers or a Significant Subsidiary or any group
of Restricted Subsidiaries of Mediacom which, if merged into each other,
would constitute a Significant Subsidiary, pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a custodian of it or for all
or substantially all of its property;
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency; or
(vii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against either of the Issuers or any
Significant Subsidiary or any group of Restricted Subsidiaries of
Mediacom which, if merged into each other, would constitute a
Significant Subsidiary, in an involuntary case;
(B) appoints a custodian of either of the Issuers or any
Significant Subsidiary or any group of Restricted Subsidiaries of
Mediacom which, if merged into each other, would constitute a
Significant Subsidiary, for all or substantially all of its property;
or
(C) orders the winding up or liquidation of either of the Issuers
or any Significant Subsidiary or any group of Restricted Subsidiaries
of Mediacom which, if merged into each other, would constitute a
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 90 consecutive days; or
(viii) any Restricted Subsidiary Guarantee ceases to be in full force
and effect (except as contemplated by the terms of this Indenture) or any
Guarantor denies or disaffirms its obligations under this Indenture or any
Restricted Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The Issuers are required to deliver to the Trustee, within 120 days
after the end of each fiscal year of Mediacom, in accordance with Section 1016,
an Officers' Certificate stating whether or not the signers know of any Event of
Default, a description of the Event of Default and its status and what action
the Issuers are taking or propose to take in respect thereof.
If a Default occurs and is continuing and is known to the Trustee, the
Trustee must mail to each holder, in accordance with Section 6.02, notice of the
Default within 90 days after it occurs. Except in the case of a Default in the
payment of principal of, premium, if any, or interest on any Note,
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the Trustee may withhold notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interests of
the Holders of the Notes.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than by reason of an Event of Default
specified in clause (vi) or (vii) of the first paragraph of Section 501) occurs
and is continuing, the Trustee by notice to the Issuers or the Holders of not
less than 25% in principal amount of the Notes then outstanding may declare the
principal and accrued and unpaid interest on all the Notes to be due and payable
immediately, by a notice in writing to the Issuers (and to the Trustee if given
by Holders). Upon the effectiveness of such declaration, such principal will be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default specified in clause (vi) or (vii) of the first paragraph of
Section 501 occurs and is continuing, then the principal amount of all the Notes
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the outstanding Notes
by notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived (except nonpayment of principal,
interest and premium, if any, that has become due solely because of
acceleration). The Trustee may rely upon such notice of rescission without any
independent investigation as to the satisfaction of the conditions in the
preceding sentence. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
- -------
If an Event of Default specified in clause (i) or (ii) of the first
paragraph of Section 501 occurs and is continuing, the Trustee, in its own name
as trustee of an express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree and may enforce the same against the Issuers or any
other obligor upon the Notes and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Issuers or any
other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy, subject however to Section 513. No recovery of any such
judgment upon any property of the Issuers shall affect or impair any rights,
powers or remedies of the Trustee or the Holders.
SECTION 504. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Issuers or any other obligor, upon the Notes
or the property of the Issuers or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Issuers for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
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(i) to file and prove a claim for the whole amount of principal (and
premium, if any), interest and Liquidated Damages, if any, owing and unpaid
in respect of the Notes, to take such other actions (including
participating as a member, voting or otherwise, of any official committee
of creditors appointed in such matter) and to file such other papers or
documents and take such other actions as the Trustee (including,
participation as a member of any creditors committee) may deem necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided, however, that the
Trustee may, on behalf of such Holders, vote for the election of a trustee in
bankruptcy or other similar official.
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium and Liquidated Damages, if any) and interest on
the Notes in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Notes for principal (and
premium and Liquidated Damages, if any), and interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Issuers or any other obligor on the Notes, as their
interests may appear or as a court of competent
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jurisdiction may direct, provided that all sums due and owing to the
Holders and the Trustee have been paid in full as required by this
Indenture.
SECTION 507. Limitation on Suits.
-------------------
Except to enforce the right to receive payment of principal, premium,
if any, or interest when due, no holder may pursue any remedy with respect to
this Indenture or the Notes unless:
(i) such holder has previously given the Trustee notice that an
Event of Default is continuing;
(ii) holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy;
(iii) such holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
(iv) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity;
and
(v) the holders of a majority in principal amount of the outstanding
Notes have not given the Trustee a direction that, in the opinion of the
Trustee, is inconsistent with such request within such 60-day period.
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture or any Note to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture or any Note, except
in the manner herein provided and for the equal and ratable benefit of all the
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest.
- --------------------
Notwithstanding any other provision in this Indenture the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Eleven) and in
such Note of the principal of (and premium, if any) and (subject to Section 311)
interest and Liquidated Damages, if any, on such Note on the respective Stated
Maturities expressed in such Note (or, in the case of redemption or repurchase,
on the Redemption Date or repurchase) and to institute suit for the enforcement
of any such payment, and such rights shall not be impaired without the consent
of such Holder.
SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Issuers, any other obligor on the Notes,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
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SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of
Section 310, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
------------------
Subject to certain restrictions, the holders of a majority in
principal amount of the outstanding Notes are given the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee,
provided that
(i) such direction shall not be in conflict with any rule of law or
this Indenture;
(ii) the Trustee need not take any action which might be unduly
prejudicial to the rights of any other Holder or would involve the Trustee
in personal liability; and
(iii) subject to the provisions of Section 315 of the Trust Indenture
Act, the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Prior to taking any action under this Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
SECTION 513. Waiver of Past Defaults.
-----------------------
Subject to Sections 508 and 902, the Holders of a majority in
aggregate principal amount of the outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for the Notes) may on behalf
of the Holders of all the Notes, by written notice to the Trustee, waive any
existing Default or Event of Default and its consequences under this Indenture
except a continuing Default or Event of Default in the payment of interest or
Liquidated Damages, if any, on or the principal of, any such Note held by a non-
consenting Holder, or in respect of a covenant or a provision which cannot be
amended or modified without the consent of the Holders of each outstanding Note
affected thereby.
In the event that any Event of Default specified in clause (iv) of the
first paragraph of Section 501 shall have occurred and be continuing, such Event
of Default and all consequences thereof (including without limitation any
acceleration or resulting payment default) shall be annulled, waived and
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rescinded, automatically and without any action by the Trustee or the Holders of
the Notes, if within 30 days after such Event of Default arose (i) the
Indebtedness that is the basis for such Event of Default has been discharged, or
(ii) the holders thereof have rescinded or waived the acceleration, notice or
action (as the case may be) giving rise to such Event of Default, or (iii) if
the Default that is the basis for such Event of Default has been cured.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of Holders, holding in
the aggregate more than 10% in principal amount of the outstanding Notes, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of or interest or Liquidated Damages, if any, on any Note on or after
the respective Stated Maturities expressed in such Note (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX.
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of a Default or an Event of Default,
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and the Trustee
should not be liable except for the performance of such duties as
specifically set forth in this Indenture and no others; and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith or willful misconduct on its
part, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but not to verify
the contents thereof.
(b) In case a Default or an Event of Default has occurred and is
continuing of which a Trust Officer of the Trustee has actual knowledge or
of which written notice of such Default or Event of Default shall have been
given to the Trustee of the Issuers, any other obligor of the Notes or by
any Holder, the Trustee shall exercise such of the rights and powers vested
in it
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by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(i) this paragraph (c) shall not be construed to limit the
effect of paragraph (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in aggregate principal amount of the
outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture, and
(iv) the Trustee shall not be required to examine any of the
reports, information or documents filed with it pursuant to Section 1014 to
determine whether there has been any breach of the covenants of the Issuers
set forth in Sections 1004 through 1013.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section and to the TIA.
SECTION 602. Notice of Defaults.
------------------
Within 90 days after the occurrence of any Default hereunder, the
Trustee shall transmit in the manner and to the extent provided in TIA (S)
313(c), notice of such Default hereunder actually known to a Trust Officer of
the Trustee, unless such Default shall have been cured or waived; provided,
however, that, except in the case of a Default in the payment of the principal
of (or premium, if any) or interest on any Note, the Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Trust Officers of
the Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders. Notwithstanding anything to the contrary expressed
in this Indenture, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default hereunder unless and until the Trustee shall have
received written notice thereof from the Issuers at its principal Corporate
Trust Office as specified in Section 105, except in the case of an Event of
Default under clause (i) or (ii) of the first paragraph of Section 501 (provided
that the Trustee is the Paying Agent).
SECTION 603. Certain Rights of Trustee.
-------------------------
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
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(b) Subject to the provisions of TIA (S)(S) 315(a) through 315(d):
(i) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon (whether in its original or facsimile
form) any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties
and the Trustee need not investigate any fact or matter stated in the
documents;
(ii) any request or direction of the Issuers mentioned herein
shall be sufficiently evidenced by a Issuers' Request or Authentication
Order and any resolution of the Executive Committee may be sufficiently
evidenced by a Committee Resolution;
(iii) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith or willful misconduct on its part, request and rely
upon an Officers' Certificate or an Opinion of Counsel and shall not liable
for any action it takes or omits to take in good faith reliance on such
Officers' Certificate or Opinion of Counsel;
(iv) the Trustee may consult with counsel of its selection and
any advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(v) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
satisfactory to the Trustee against the costs, expenses, losses and
liabilities which might be incurred by it in compliance with such request
or direction;
(vi) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Issuers, personally or by agent or attorney;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder; and
(viii) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Indenture; provided, however, that the Trustee's conduct does not
constitute willful misconduct or negligence.
(c) The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of
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its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
SECTION 604. Trustee Not Responsible for Recitals or Issuance of
---------------------------------------------------
Notes.
- -----
The recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Issuers, and the Trustee assumes no responsibility for their correctness and
it shall not be responsible for the Mediacom's use of the proceeds from the
Notes. The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Notes, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the Notes
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Issuers are true and
accurate, subject to the qualifications set forth therein. The Trustee shall not
be accountable for the use or application by the Issuers of the proceeds of the
Notes.
SECTION 605. May Hold Notes.
--------------
The Trustee, any Paying Agent, any Note Registrar, any Authenticating
Agent or any other agent of the Issuers or of the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Notes and, subject to TIA
(S)(S) 310(b) and 311, may otherwise deal with the Issuers with the same rights
it would have if it were not Trustee, Paying Agent, Note Registrar,
Authenticating Agent or such other agent.
SECTION 606. Money Held in Trust.
-------------------
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust hereunder for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Issuers.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Issuers agree:
(i) to pay to the Trustee from time to time such compensation as
shall be agreed to in writing between the Issuers and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(ii) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents, consultants and counsel and costs and
expenses of collection), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(iii) to indemnify each of the Trustee or any predecessor Trustee
(and their respective directors, officers, stockholders, employees and
agents) for, and to hold them harmless against, any and all loss, damage,
claim, liability or expense, including taxes (other than taxes based on the
income of the Trustee) incurred without negligence, willful misconduct or
bad faith on their part, arising out of or in connection with the
acceptance or administration of this trust, including
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the costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of the
Trustee's powers or duties hereunder.
The obligations of the Issuers under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Issuers, the Trustee shall have a lien prior to the Holders of the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (and premium, if any) or
interest on particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in clause (vi) or (vii) of Section 501, the
expenses (including the reasonable charges and expenses of its counsel) of and
the compensation for such services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall be at all times a Trustee hereunder which shall be
eligible to act as Trustee under TIA (S) 310(a)(1), and which may have an office
in The City of New York and shall have individually, or on a consolidated basis
with a bank holding company of which it is a direct or indirect wholly owned
subsidiary, a combined capital and surplus of at least $50,000,000. If the
Trustee does not have an office in The City of New York, the Trustee may appoint
an agent in The City of New York reasonably acceptable to the Issuers to conduct
any activities which the Trustee may be required under this Indenture to conduct
in The City of New York. If such corporation or its parent holding company
publishes reports of condition at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 608, the combined
capital and surplus of such corporation or its parent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 608, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
SECTION 609. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuers. Upon receiving such notice of resignation, the Issuers
shall promptly appoint a successor trustee by written instrument executed by
authority of the Executive Committee, a copy of which shall be delivered to the
resigning Trustee and a copy to the successor trustee. If an instrument of
acceptance required by this Section shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition, at the expense of the Issuers, any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the outstanding Notes, delivered
to the Trustee and to the Issuers. The
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Trustee so removed may, at the expense of the Issuers, petition any court of
competent jurisdiction for the appointment of a successor Trustee if no
successor Trustee is appointed within 30 days of such removal.
(d) If at any time:
(i) the Trustee shall fail to comply with the provisions of TIA
(S) 310(b) after written request therefor by the Issuers or by any Holder
who has been a bona fide Holder of a Note for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 608
and shall fail to resign after written request therefor by the Issuers or
by any Holder who has been a bona fide Holder of a Note for at least six
months, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a custodian of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Issuers, by a Committee Resolution, may remove
the Trustee, or (B) subject to TIA (S) 315(e), any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Issuers, by a Committee Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the outstanding Notes delivered to
the Issuers and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Issuers. If no successor
Trustee shall have been so appointed by the Issuers or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Note for at least six months may, at the expense of the Issuers
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Issuers shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to the Holders of
Notes in the manner provided for in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 610. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuers and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Issuers or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Notwithstanding the replacement of the Trustee
pursuant to this Section 610, the Issuers' obligations under Section 607 shall
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continue for the benefit of the retiring Trustee with regard to expenses and
liabilities incurred by it and compensation earned by it prior to such
replacement or otherwise under this Indenture. Upon request of any such
successor Trustee, the Issuers shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 611. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
- --------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes. In case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee. In all such cases such
certificates shall have the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 612. Trustee's Application for Instructions from the Issuers.
-------------------------------------------------------
Any application by the Trustee for written instructions from the
Issuers may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. Subject to Section 610, the Trustee shall not be liable for any
action taken by, or omission of, the Trustee in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Issuers actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Trustee shall have received written instructions in response to such application
specifying the action to be taken or omitted.
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ARTICLE SEVEN.
HOLDERS LISTS AND REPORTS BY
TRUSTEE AND THE ISSUERS
SECTION 701. The Issuers to Furnish Trustee Names and Addresses.
--------------------------------------------------
The Issuers will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Issuers of any such request, a
list of similar form and content to that in Subsection (a) hereof as of a
date not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished.
SECTION 702. Disclosure of Names and Addresses of Holders.
--------------------------------------------
Every Holder of Notes, by receiving and holding the same, agrees with
the Issuers and the Trustee that none of the Issuers or the Trustee or any agent
of either of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
TIA (S) 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA (S) 312(b).
SECTION 703. Reports by Trustee.
------------------
Within 60 days after August 15 of each year commencing with the first
August after the first issuance of Notes, the Trustee shall transmit to the
Holders, in the manner and to the extent provided in TIA (S) 313(c), a brief
report dated as of such August 15 if required by TIA (S) 313(a). Delivery of
such reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Issuers' compliance with any of its
covenants hereunder (as to which the Trustee is entitled to conclusively rely
exclusively on Officers' Certificates).
The Trustee also shall comply with TIA (S) 313(b). A copy of each
report at the time of its mailing to Holders shall be filed by the Trustee with
the SEC and each stock exchange (if any) on which the Notes are listed. The
Issuers agrees to notify promptly the Trustee whenever the Notes become listed
on any stock exchange and of any delisting thereof.
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ARTICLE EIGHT.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. The Issuers and Guarantors May Consolidate Etc. Only on
-------------------------------------------------------
Certain Terms.
- -------------
Neither of the Issuers shall in a single transaction or series of
related transactions consolidate with or merge with or into, or convey all or
substantially all its assets to, another Person, unless:
(i) either (A) such Issuer shall be the continuing Person, or (B)
the Person formed by or surviving any such consolidation or merger (if
other than such Issuer), or to which any such transfer shall have been made
(the "Successor Company"), shall be a corporation, limited liability
company or limited partnership organized and existing under the laws of the
United States, any State thereof or the District of Columbia;
(ii) the Successor Company shall expressly assume, by supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of such Issuer under the Notes and this
Indenture;
(iii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iv) immediately after giving effect to such transaction, the
surviving Person would be able to Incur $1.00 of additional Indebtedness
under the Debt to Operating Cash Flow Ratio contained in the first
paragraph of Section 1008; and
(v) Mediacom shall have delivered to the Trustee prior to the
proposed transaction an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such supplemental
indenture comply with this Indenture, both in the form required by this
Indenture; provided that in giving such opinion such counsel may rely on such
Officers' Certificate as to any matters of fact (including without limitation as
to compliance with the foregoing clauses (iii) and (iv)).
No Guarantor will in a single transaction or series of related
consolidate or merge with or into, or transfer all or substantially all of its
assets to, another Person unless:
(i) either (A) such Guarantor shall be the continuing Person, or (B)
the Person formed by or surviving any such consolidation or merger (if
other than such Guarantor) or to which any such transfer shall have been
made (a "Successor Guarantor"), is a corporation, limited liability company
or limited partnership organized and existing under the laws of the United
States, any State thereof or the District of Columbia;
(ii) the Successor Guarantor shall expressly assume by supplemental
indenture executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of such Guarantor under its guarantee of
the Notes and this Indenture;
(iii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and
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(iv) Mediacom shall have delivered to the Trustee prior to the
proposed transaction an Officers' Certificate, and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such
supplemental indenture comply with this Indenture, both in the form
required by this Indenture; provided that in giving such opinion such
counsel may rely on such Officers' Certificate as to any matters of fact
(including without limitation as to compliance with the foregoing clauses
(iii) and (iv)).
SECTION 802. Successor Substituted.
---------------------
Upon any consolidation of the Issuers or the Guarantors with or merger
of the Issuers or the Guarantors with or into any other corporation or any
conveyance, transfer or other disposition of all or substantially all of the
assets of the Issuers or the Guarantors to any Person in accordance with Section
801, the Successor Company or Successor Guarantor will succeed to, and be
substituted for, and may exercise every right and power of, the Issuers or the
Guarantors hereunder and thereafter the predecessor shall be released from all
obligations and covenants hereunder, or under the guarantee of the Notes, as
applicable, but, in the case of conveyance or transfer of all or substantially
all its assets, the predecessor, as applicable, will not be released from the
obligation to pay the principal of and interest on the Notes.
ARTICLE NINE.
SUPPLEMENTS, AMENDMENTS AND MODIFICATIONS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Issuers, the Guarantors and
the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(i) to cure any ambiguity, omission, defect or inconsistency; or
(ii) to provide for uncertificated Notes in addition to or in place
of certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of
the Code); or
(iii) to add Restricted Subsidiary Guarantees with respect to the
Notes; or
(iv) to release Guarantors pursuant to Section 1017; or
(v) to provide for the assumption by a successor corporation,
limited liability company or limited partnership of the obligations of the
Issuers or any Guarantor hereunder; or
(vi) to secure the Notes; or
(vii) to add to the covenants of the Issuers for the benefit of the
Holders or to surrender any right or power conferred upon the Issuers; or
(viii) to make any other change that does not adversely affect the
rights of any Holder; or
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(ix) to comply with any requirement of the SEC in connection with
the qualification of this Indenture under the Trust Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes), the Issuers,
the Guarantors and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each outstanding Note affected thereby (with respect to
any Notes held by a nonconsenting Holder of the Notes):
(i) change or extend the fixed maturity of any Notes, reduce the
rate or extend the time of payment of interest or Liquidated Damages thereon,
reduce the principal amount thereof or premium, if any, thereon or change the
currency in which the Notes are payable; or
(ii) reduce the premium payable upon any redemption of Notes in
accordance with the optional redemption provisions of the Notes and Section 1101
or change the time before which the Notes may be redeemed; or
(iii) waive a default in the payment of principal or interest or
Liquidated Damages on the Notes (except that holders of a majority in aggregate
principal amount of the Notes at the time outstanding may (a) rescind an
acceleration of the Notes that resulted from a non-payment default and (b) waive
the payment default that resulted from such acceleration) or alter the rights of
Noteholders to waive defaults; or
(iv) reduce the aforesaid percentage of Notes, the consent of the
holders of which is required for any such modification; or
(v) modify the Restricted Subsidiary Guarantees or Article Thirteen
(except as contemplated by the terms of this Indenture) in any manner adverse to
the Holders.
Any existing Event of Default, other than a default in the payment of
principal or interest or Liquidated Damages on the Notes, or compliance with any
provision of the Notes or this Indenture, other than any provision related to
the payment of principal or interest or Liquidated Damages on the Notes, may be
waived with the consent of holders of at least a majority in aggregate principal
amount of the Notes at the time outstanding. The consent of the Holders is not
necessary under this Indenture to approve the particular form of any proposed
amendment or supplemental indenture. It is sufficient if such consent approves
the substance of the proposed amendment or supplemental indenture.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities, as determined by the Trustee in its sole discretion under this
Indenture or otherwise. In signing or refusing to sign any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture.
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SECTION 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby (except as provided in Section 902).
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to the Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Notes to Supplemental Indentures.
---------------------------------------------
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuers or the Trustee shall
so determine, new Notes so modified as to conform to any such supplemental
indenture may be prepared and executed by the Issuers, and the Issuers shall
issue and the Trustee shall authenticate a new Note that reflects the changed
terms, the cost and expense of which will be borne by the Issuers in exchange
for outstanding Notes.
SECTION 907. Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Issuers and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Issuers
shall give notice thereof to the Holders of each outstanding Note affected, in
the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture. The failure to give such notice to all
the Holders, or any defect therein, will not impair or affect the validity of
the supplemental indenture.
ARTICLE TEN.
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest.
---------------------------------------------------
The Issuers, as joint and several obligors, covenant and agree for the
benefit of the Holders that they will duly and punctually pay the principal of
(and premium, if any) and interest and Liquidated Damages, if any, on the Notes
in accordance with the terms of the Notes and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Issuers will maintain in the Borough of Manhattan, The City of New
York, an office or agency where the Notes may be presented or surrendered for
payment, where, if applicable, the Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Issuers in
respect of the Notes and this Indenture may be served. The corporate trust
office of the Trustee at 88 Pine Street, New York, New York 10005 shall be such
office or agency of the Issuers, unless the Issuers shall designate and maintain
some other office or agency for one or more of such purposes. The Issuers will
give prompt written notice to the Trustee of any change in the location of any
such office or agency. If at any time the Issuers shall fail to maintain any
such required office or agency or shall fail to
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furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Issuers hereby appoint the Trustee as their agent to receive all such
presentations, surrenders, notices and demands.
The Issuers may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes may
be presented or surrendered for any or all such purposes and may from time to
time rescind any such designation; provided, however, that no such designation
or rescission shall in any manner relieve the Issuers of its obligation to
maintain an office or agency in The City of New York for such purposes. The
Issuers will give prompt written notice to the Trustee of any such designation
or rescission and any change in the location of any such other office or agency.
SECTION 1003. Money for Note Payments to Be Held in Trust.
-------------------------------------------
If the Issuers shall at any time act as their own Paying Agent, they
will, on or before each due date of the principal of (or premium, if any) or
interest on any of the Notes, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal of (or premium,
if any) or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure to so act.
Whenever the Issuers shall have one or more Paying Agents for the
Notes, they will, on or before each due date of the principal of (or premium, if
any) or interest on any Notes, deposit with a Paying Agent a sum in same day
funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) that shall be available to
the Trustee by 10:00 a.m. Eastern Standard Time on such due date sufficient to
pay the principal (and premium and Liquidated Damages, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Issuers will promptly notify the Trustee of such action or
any failure to so act.
The Issuers will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(i) hold all sums held by it for the payment of the principal of
(and premium or Liquidated Damages, if any) or interest on Notes in trust
for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(ii) give the Trustee notice of any default by the Issuers (or any
other obligor upon the Notes) in the making of any payment of principal
(and premium or Liquidated Damages, if any) or interest; and
(iii) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Issuers may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Authentication Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Issuers or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Issuers or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
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Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuers, in trust for the payment of the principal of (or premium or
Liquidated Damages, if any) or interest on any Note and remaining unclaimed for
two years after such principal, premium, Liquidated Damages or interest has
become due and payable shall be paid to the Issuers on the Issuers' Request, or
(if then held by the Issuers) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuers for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Issuers as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment
to the Issuers, may at the expense of the Issuers cause to be published once, in
a leading daily newspaper (if practicable, The Wall Street Journal (Eastern
Edition)) printed in the English language and of general circulation in New York
City, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Issuers.
SECTION 1004. Corporate Existence.
-------------------
Subject to Article Eight, the Issuers will do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence and that of each Restricted Subsidiary and the corporate rights
(charter and statutory) licenses and franchises of the Issuers and each
Restricted Subsidiary; provided, however, that the Issuers shall not be required
to preserve any such existence (except the Issuers) right, license or franchise
if the Executive Committee of Mediacom shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Issuers and
each of Mediacom's Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not, and will not be, disadvantageous in any material respect to the
Holders.
SECTION 1005. Payment of Taxes and Other Claims.
---------------------------------
The Issuers will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Issuers or any Subsidiary or
upon the income, profits or property of the Issuers or any Subsidiary and (ii)
all lawful claims for labor, materials and supplies, which, if unpaid, might by
law become a material liability or lien upon the property of the Issuers or any
Restricted Subsidiary; provided, however, that the Issuers shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which appropriate reserves, if
necessary (in the good faith judgment of management of the Issuers) are being
maintained in accordance with GAAP.
SECTION 1006. Compliance with Laws.
--------------------
The Issuers shall comply, and shall cause each of its Restricted
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, all states and municipalities
thereof, and of any governmental regulatory authority, in respect of the conduct
of their respective businesses and the ownership of their respective properties,
except for such noncompliances as would not in the aggregate have a material
adverse effect on the financial condition or results of operations of the
Issuers and its Restricted Subsidiaries, taken as a whole.
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SECTION 1007. Limitation on Restricted Payments.
---------------------------------
(a) So long as any of the Notes remain outstanding, Mediacom shall
not, and shall not permit any Restricted Subsidiary to, make any Restricted
Payment if (i) at the time of such proposed Restricted Payment, a Default or
Event of Default shall have occurred and be continuing or shall occur as a
consequence of such Restricted Payment; (ii) immediately after giving effect to
such proposed Restricted Payment, Mediacom would not be able to Incur $1.00 of
additional Indebtedness under the Debt to Operating Cash Flow Ratio of the first
paragraph of Section 1008, or (iii) immediately after giving effect to any such
Restricted Payment, the aggregate of all Restricted Payments which shall have
been made on or after the date hereof (the amount of any Restricted Payment, if
other than cash, to be based upon the fair market value thereof on the date of
such Restricted Payment (without giving effect to subsequent changes in value)
as determined in good faith by the Executive Committee, whose determination
shall be conclusive and evidenced by a Committee Resolution) would exceed an
amount equal to the difference between (a) the Cumulative Credit and (b) 1.4
times Cumulative Interest Expense.
(b) The provisions of paragraph (a) of this Section 1007 shall not
prevent (i) the retirement of any of Mediacom's Equity Interests in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
a Subsidiary of Mediacom or an employee stock ownership plan or to a trust
established by Mediacom or any Subsidiary of Mediacom for the benefit of its
employees) of Equity Interests of Mediacom; (ii) the payment of any dividend or
distribution on, or redemption of Equity Interests within 60 days after the date
of declaration of such dividend or distribution or the giving of formal notice
of such redemption, if at the date of such declaration or giving of such formal
notice such payment or redemption would comply with the provisions of this
Indenture; (iii) Investments constituting Restricted Payments made as a result
of the receipt of non-cash consideration from any Asset Sale made pursuant to
and in compliance with the provisions described under Section 1013; (iv)
payments of compensation to officers, directors and employees of Mediacom or any
Restricted Subsidiary so long as the Executive Committee or the manager of
Mediacom in good faith shall have approved the terms thereof; (v) the payment of
dividends on any Equity Interests of any Restricted Subsidiary following the
issuance thereof in an amount per annum of up to 6% of the net proceeds received
by Mediacom or such Restricted Subsidiary from an Equity Offering of such Equity
Interests; (vi) the payment of management, consulting and advisory fees, and any
related reimbursement of expenses or indemnity, to Mediacom Management or any
Affiliate thereof and other amounts payable pursuant to the Operating Agreement,
other than any dividend or distribution (whether made in cash, property or
securities) on or with respect to any Equity Interests of Mediacom or any
redemption, repurchase, retirement or other direct or indirect acquisition of
any Equity Interests of Mediacom, or any warrants, rights or options to purchase
or acquire any such Equity Interests or any securities exchangeable for or
convertible into any such Equity Interests; (vii) the payment of amounts in
connection with any merger, consolidation, or sale of assets effected in
accordance with Article Eight, provided that no such payment may be made
pursuant to this clause (vii) unless, after giving effect to such transaction
(and the Incurrence of any Indebtedness in connection therewith and the use of
the proceeds thereof), Mediacom would be able to Incur $1.00 of additional
Indebtedness in compliance with the first paragraph of Section 1008 such that
after incurring that $1.00 of additional Indebtedness, the Debt to Operating
Cash Flow Ratio would be less than or equal to 6.0 to 1.0; (viii) the
retirement, redemption or repurchase (a "Regulatory Equity Interest Repurchase")
of any of Mediacom's Equity Interests pursuant to Article 11 of the Operating
Agreement as a result of the occurrence of a Triggering Event (as defined in the
Operating Agreement and which relates to certain small business investment
company, Federal Communications Commission and other regulatory violations
described therein); (ix) the redemption, repurchase, retirement, defeasance or
other acquisition of any Subordinated Obligations in exchange for, or out of net
cash proceeds of the substantially concurrent sale (other than to a Subsidiary
of Mediacom or an employee stock ownership plan or to a trust established by
Mediacom or any Subsidiary of Mediacom (for the benefit of its employees) of
Equity Interests of Mediacom or Subordinated Obligations of
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Mediacom; (x) the payment of any dividend or distribution on or with respect to
any Equity Interests of any Restricted Subsidiary to the holders of its Equity
Interests on a pro rata basis; (xi) the making and consummation of (A) an Excess
Proceeds Offer in accordance with the provisions of this Indenture with any
Excess Proceeds or (B) a Change of Control Offer with respect to the Notes in
accordance with the provisions of this Indenture or (C) any offer similar to the
offer described in clause (A) or (B) set forth in any other indenture governing
debt securities; (xii) during the period Mediacom is treated as a partnership
for U.S. federal income tax purposes and after such period to the extent
relating to the liability for such period, the payment of distributions in
respect of members' or partners' income tax liability with respect to Mediacom
in an amount not to exceed the aggregate amount of tax distributions, if any,
permitted to be made by Mediacom to its members under the Operating Agreement
(such amount not to include amounts in respect of taxes resulting from
Mediacom's reorganization as or change in the status to a corporation); (xiii)
the payment by any Restricted Subsidiary to Mediacom or another Restricted
Subsidiary of principal and interest due in respect of intercompany Indebtedness
and dividends and other distributions in respect of Preferred Equity Interests
in such Restricted Subsidiary; (xiv) the payment by Mediacom California of all
amounts due in respect of the promissory note in the original principal amount
of $2,800,000 issued to Booth American Company; and (xv) the distribution of any
Investment originally made by Mediacom or any Restricted Subsidiary pursuant to
the first paragraph of this covenant to holders of Equity Interests of Mediacom
or such Restricted Subsidiary, as the case may be; provided, however, that in
the case of clauses (ii), (v), (vii), (x), (xi) and (xv) of this paragraph, no
Default or Event of Default shall have occurred and be continuing at the time of
such Restricted Payment or as a result thereof. In determining the aggregate
amount of Restricted Payments made on or after the date of this Indenture,
Restricted Payments made pursuant to clauses (ii) and (v) and any Restricted
Payment deemed to have been made pursuant to Section 1009 shall be included in
such calculation.
(c) Not later than the date of making any Restricted Payment, Mediacom
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 1007 were computed, which calculations may
be based upon Mediacom's latest available financial statements. The Trustee
shall have no duty to recompute or recalculate or verify the accuracy of the
information set forth in such Officers' Certificate.
SECTION 1008. Limitation on Indebtedness.
--------------------------
Mediacom shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness)
or issue any Disqualified Equity Interests except for Permitted Indebtedness;
provided, however, that Mediacom or any Restricted Subsidiary may Incur
Indebtedness or issue Disqualified Equity Interests if, at the time of and
immediately after giving pro forma effect to such Incurrence of Indebtedness or
issuance of Disqualified Equity Interests and the application of the proceeds
therefrom, the Debt to Operating Cash Flow Ratio would be less than or equal to
7.0 to 1.0.
The limitations contained in the foregoing paragraph shall not apply
to the Incurrence of any of the following (collectively, "Permitted
Indebtedness"), each of which shall be given independent effect:
(a) Indebtedness under the Initial Notes issued on the date of this
Indenture, the Exchange Notes issued in exchange for the Initial Notes, the
Private Exchange Notes issued in exchange for the Initial Notes and this
Indenture;
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(b) Indebtedness and Disqualified Equity Interests of Mediacom and
the Restricted Subsidiaries outstanding on the Issue Date other than
Indebtedness described in clause (a), (c), (d) or (f) of this paragraph;
(c) (i) Indebtedness of the Restricted Subsidiaries under the
Subsidiary Credit Facilities (including any refinancing thereof), and (ii)
Indebtedness of the Restricted Subsidiaries (including any refinancing
thereof) if, at the time of and immediately after giving pro forma effect
to the Incurrence of such Indebtedness and the application of the proceeds
therefrom, the Debt to Operating Cash Flow Ratio would be less than or
equal to 6.0 to 1.0; provided, however, that for purposes of the
calculation of such Ratio, the term "Consolidated Total Indebtedness" shall
refer only to the Consolidated Total Indebtedness of the Restricted
Subsidiaries (including Indebtedness Incurred under the Subsidiary Credit
Facilities and the Future Subsidiary Credit Facilities) outstanding as of
the Determination Date (as defined hereafter in the term "Debt to Operating
Cash Flow Ratio") and the term "Operating Cash Flow" shall refer only to
the Subsidiary Operating Cash Flow of the Restricted Subsidiaries for the
related Measurement Period (as defined in the term "Debt to Operating Cash
Flow Ratio");
(d) Indebtedness and Disqualified Equity Interests of (x) any
Restricted Subsidiary owed to or issued to and held by Mediacom or any
Restricted Subsidiary and (y) Mediacom owed to and held by any Restricted
Subsidiary which is unsecured and subordinated in right of payment to the
payment and performance of the Issuers' obligations under this Indenture
and the Notes; provided, however, that an Incurrence of Indebtedness and
Disqualified Equity Interests that is not permitted by this clause (d)
shall be deemed to have occurred upon (i) any sale or other disposition of
any Indebtedness or Disqualified Equity Interests of Mediacom or a
Restricted Subsidiary referred to in this clause (d) to any Person (other
than Mediacom or a Restricted Subsidiary), (ii) any sale or other
disposition of Equity Interests of a Restricted Subsidiary which holds
Indebtedness or Disqualified Equity Interests of Mediacom or another
Restricted Subsidiary such that such Restricted Subsidiary ceases to be a
Restricted Subsidiary or (iii) any designation of a Restricted Subsidiary
which holds Indebtedness or Disqualified Equity Interests of Mediacom as an
Unrestricted Subsidiary;
(e) guarantees by any Restricted Subsidiary of Indebtedness of
Mediacom or any other Restricted Subsidiary Incurred in accordance with the
provisions of this Indenture;
(f) Hedging Agreements of Mediacom or any Restricted Subsidiary
relating to any Indebtedness of Mediacom or such Restricted Subsidiary, as
the case may be, Incurred in accordance with the provisions of this
Indenture; provided that such Hedging Agreements have been entered into for
bona fide business purposes and not for speculation;
(g) Indebtedness or Disqualified Equity Interests of Mediacom or any
Restricted Subsidiary to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "refinancing") of outstanding
Indebtedness or Disqualified Equity Interests of Mediacom or any Restricted
Subsidiary, as the case may be, Incurred in compliance with the Debt to
Operating Cash Flow Ratio of the first paragraph of this covenant or clause
(a) or (b) of this paragraph of this covenant; provided, however, that (i)
Indebtedness or Disqualified Equity Interests of Mediacom may not be
refinanced under this clause (g) with Indebtedness or Disqualified Equity
Interests of any Restricted Subsidiary, (ii) any such refinancing shall not
exceed the sum of the principal amount or liquidation preference or
redemption payment value (or, if such Indebtedness or Disqualified Equity
Interests provides for a lesser amount to be due and payable upon a
declaration of acceleration thereof at the time of such refinancing, an
amount no greater than such lesser amount) of the Indebtedness or
Disqualified Equity Interests being
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refinanced plus the amount of accrued interest or dividends thereon and the
amount of any reasonably determined prepayment premium necessary to
accomplish such refinancing and such reasonable fees and expenses incurred
in connection therewith, (iii) Indebtedness representing a refinancing of
Indebtedness of Mediacom shall have a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of the
Indebtedness being refinanced, (iv) Subordinated Obligations of Mediacom or
Disqualified Equity Interests of Mediacom may only be refinanced with
Subordinated Obligations of Mediacom or Disqualified Equity Interests of
Mediacom, and (v) Other Pari Passu Debt which is unsecured may only be
refinanced with unsecured Indebtedness, which is either Other Pari Passu
Debt or Subordinated Obligations, or with Disqualified Equity Interests;
(h) Indebtedness of Mediacom or a Restricted Subsidiary Incurred as a
result of the pledge by Mediacom or such Restricted Subsidiary of
intercompany indebtedness or Equity Interests in another Restricted
Subsidiary or Equity Interests in an Unrestricted Subsidiary in the
circumstance where recourse to Mediacom or such Restricted Subsidiary is
limited to the value of the intercompany Indebtedness or the Equity
Interests so pledged;
(i) Indebtedness of Mediacom or a Restricted Subsidiary represented
by Capitalized Lease Obligations, mortgage financings, purchase money
obligations or letters of credit, in each case Incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of
Mediacom or such Restricted Subsidiary or a Related Business in an
aggregate principal amount not to exceed $15,000,000 at any time
outstanding;
(j) Indebtedness of Mediacom Incurred to finance (including any
refinancing thereof) one or more Regulatory Equity Interest Repurchases
occurring in accordance with and pursuant to the Operating Agreement; and
(k) Indebtedness of Mediacom or a Restricted Subsidiary in an
aggregate amount not to exceed two times the sum of (i) the aggregate Net
Cash Proceeds to Mediacom from (x) the issuance (other than to a Subsidiary
of Mediacom or an employee stock ownership plan or a trust established by
Mediacom or any Subsidiary of Mediacom (for the benefit of its employees))
of any class of Equity Interests of Mediacom (other than Disqualified
Equity Interests) on or after the date of this Indenture or (y)
contributions to the equity capital of Mediacom on or after the date of
this Indenture which do not themselves constitute Disqualified Equity
Interests and (ii) the fair market value, as determined by an independent
nationally recognized accounting, appraisal or investment banking firm
experienced in similar types of transactions, of any assets (other than
cash or Cash Equivalents) that are used or useful in a Related Business or
Equity Interests of a Person engaged in a Related Business that is or
becomes a Restricted Subsidiary of Mediacom, in each case received by
Mediacom after the date of this Indenture in exchange for the issuance
(other than to a Subsidiary of Mediacom) of its Equity Interests (other
than Disqualified Equity Interests); provided, that (A) the amount of such
Net Cash Proceeds with respect to which Indebtedness is incurred pursuant
to this clause (k) shall not be deemed Net Cash Proceeds from the issue or
sale of Equity Interests for purposes of clause (ii) of the definition of
"Cumulative Credit" and (B) the issuance of Equity Interests with respect
to which Indebtedness is incurred pursuant to this clause (k) shall not
also be used to effect a Restricted Payment pursuant to clauses (i) or (ix)
of Section 1007(b); and
(l) In addition to any Indebtedness described in clauses (a) through
(k) above, Indebtedness of Mediacom or any of the Restricted Subsidiaries
so long as the aggregate principal
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amount of all such Indebtedness incurred pursuant to this clause (l) does
not exceed $10,000,000 at any one time outstanding.
For purposes of determining compliance with this Section 1008, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (a) through (l) above
or is entitled to be incurred pursuant to the first paragraph of this Section
1008, Mediacom shall, in its sole discretion, classify such item of Indebtedness
in any manner that complies with this Section 1008 and such item of Indebtedness
shall be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof.
SECTION 1009. Limitation on Affiliate Transactions.
------------------------------------
Mediacom shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, engage in any transaction (or series of related
transactions) involving in the aggregate $5,000,000 or more with any Affiliate
unless such transaction (or series of related transactions) shall have been
approved pursuant to a Committee Resolution rendered in good faith by the
Executive Committee or, if applicable, a committee comprising the independent
members of the Executive Committee, which approval in each case shall be
conclusive, to the effect that such transaction (or series of related
transactions) is (a) in the best interest of Mediacom or such Restricted
Subsidiary and (b) upon terms which would be obtainable by Mediacom or a
Restricted Subsidiary in a comparable arm's-length transaction with a Person
which is not an Affiliate, except that the foregoing shall not apply in the case
of any of the following transactions (the "Specified Affiliate Transactions"):
(i) the making of any Restricted Payment (including the making of any Permitted
Investment that is permitted pursuant to Section 1007); (ii) any transaction or
series of transactions between Mediacom and one or more Restricted Subsidiaries
or between two or more Restricted Subsidiaries; (iii) the payment of
compensation (including, without limitation, amounts paid pursuant to employee
benefit plans) for the personal services of, and indemnity provided on behalf
of, officers, members, directors and employees of Mediacom or any Restricted
Subsidiary, and management, consulting or advisory fees and reimbursements of
expenses and indemnity in each case so long as the Executive Committee in good
faith shall have approved the terms thereof and deemed the services theretofore
or thereafter to be performed for such compensation or fees to be fair
consideration therefor; (iv) any payments for goods or services purchased in the
ordinary course of business, upon terms which would be obtainable by Mediacom or
a Restricted Subsidiary in a comparable arm's-length transaction with a Person
which is not an Affiliate; and (v) any transaction pursuant to any agreement
with any Affiliate in effect on the date of this Indenture (including, but not
limited to, the Operating Agreement and other agreements relating to the payment
of management fees, acquisition fees and expense reimbursements), including any
amendments thereto entered into after the date of this Indenture, provided, that
the terms of any such amendment are not less favorable to Mediacom than the
terms of the relevant agreement in effect prior to any such amendment, as
determined in good faith by the Executive Committee. Except in the case of a
Specified Affiliate Transaction, Mediacom shall not, and shall not permit any
Restricted Subsidiary, directly or indirectly, to engage in any transaction (or
series of related transactions) involving in the aggregate $25,000,000 or more
with any Affiliate unless (i) such transaction (or series of related
transactions) shall have been approved pursuant to a Committee Resolution
rendered in good faith by the Executive Committee or, if applicable, a committee
comprising the independent members of the Executive Committee to the effect set
forth in clauses (a) and (b) above; and (ii) Mediacom shall have received an
opinion from an independent nationally recognized accounting, appraisal or
investment banking firm experienced in the review of similar types of
transactions stating that the terms of such transaction (or series of related
transactions) are fair to Mediacom or such Restricted Subsidiary, as the case
may be, from a financial point of view. Notwithstanding the foregoing, any
transaction (or series of related transactions) entered into by Mediacom or any
Restricted Subsidiary with any Affiliate without complying with the foregoing
provisions of this Section 1009 shall not constitute a violation of the
provisions of this Section 1009 if Mediacom or such Restricted Subsidiary
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would be permitted to make a Restricted Payment pursuant to paragraph (a) of
Section 1007 at the time of the completion of such transaction (or series of
related transactions) in an amount equal to the fair market value of such
transaction (or series of related transactions), as determined in good faith by
the Executive Committee, whose determination shall be conclusive and evidenced
by a Committee Resolution. In such a case, Mediacom or such Restricted
Subsidiary, as the case may be, shall be deemed to have made a Restricted
Payment for purposes of the calculation of Restricted Payments pursuant to
clause (iii) of paragraph (a) of Section 1007.
SECTION 1010. Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Subsidiaries.
- ----------------------
Mediacom shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to Mediacom or any Restricted Subsidiary on its Equity Interests;
(b) pay any Indebtedness owed to Mediacom or any Restricted Subsidiary; (c) make
loans or advances, or guarantee any such loans or advances, to Mediacom or any
Restricted Subsidiary; (d) transfer any of its properties or assets to Mediacom
or any Restricted Subsidiary; (e) grant Liens on the assets of Mediacom or any
Restricted Subsidiary in favor of the holders of the Notes; or (f) guarantee the
Notes or any renewals or refinancings thereof (any of the actions described in
clauses (a) through (f) above is referred to herein as a "Specified Action"),
except for (i) such encumbrances or restrictions arising by reason of Acquired
Indebtedness of any Restricted Subsidiary existing at the time such Person
became a Restricted Subsidiary, provided that such encumbrances or restrictions
were not created in anticipation of such Person becoming a Restricted Subsidiary
and are not applicable to Mediacom or any other Restricted Subsidiary, (ii) such
encumbrances or restrictions arising under refinancing Indebtedness permitted by
clause (g) of the second paragraph under Section 1008; provided that the terms
and conditions of any such restrictions are no less favorable to the holders of
Notes than those under the Indebtedness being refinanced, (iii) customary
provisions restricting the assignment of any contract or interest of Mediacom or
any Restricted Subsidiary, (iv) restrictions contained in this Indenture or any
other indenture governing debt securities that are no more restrictive than
those contained in this Indenture, and (v) restrictions under the Subsidiary
Credit Facilities and under the Future Subsidiary Credit Facilities, provided
that, in the case of any Future Subsidiary Credit Facility Mediacom shall have
used commercially reasonable efforts to include in the agreements relating to
such Future Subsidiary Credit Facility provisions concerning the encumbrance or
restriction on the ability of any Restricted Subsidiary to take any Specified
Action that are no more restrictive than those in effect in the Subsidiary
Credit Facilities on the date of the creation of the applicable restriction in
such Future Subsidiary Credit Facility ("Comparable Restriction Provisions"),
and provided further that if Mediacom shall conclude in its sole discretion
based on then prevailing market conditions that it is not in the best interest
of Mediacom and the Restricted Subsidiaries to comply with the foregoing
proviso, the failure to include Comparable Restriction Provisions in the
agreements relating to such Future Subsidiary Credit Facility shall not
constitute a violation of the provisions of this Section 1010.
SECTION 1011. Limitation on Liens.
-------------------
Mediacom shall not Incur any Indebtedness secured by a Lien against or
on any of its property or assets now owned or hereafter acquired by Mediacom
unless contemporaneously therewith effective provision is made to secure the
Notes equally and ratably with such secured Indebtedness. This restriction does
not, however, apply to Indebtedness secured by (i) Liens, if any, in effect on
the date of this Indenture; (ii) Liens in favor of governmental bodies to secure
progress or advance payments; (iii) Liens on Equity Interests or Indebtedness
existing at the time of the acquisition thereof (including acquisition through
merger or consolidation), provided that such Liens were not Incurred in
anticipation
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of such acquisition; (iv) Liens securing industrial revenue or pollution control
bonds; (v) Liens securing the Notes; (vi) Liens securing Indebtedness of
Mediacom in an amount not to exceed $10,000,000 at any time outstanding; (vii)
Other Permitted Liens; and (viii) any extension, renewal or replacement of any
Lien referred to in the foregoing clauses (i) through (vii), inclusive.
SECTION 1012. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, each holder of Notes
shall have the right to require the Issuers to repurchase all or any part of
such holder's Notes pursuant to an offer described in this Section 1012 (the
"Change of Control Offer") at a purchase price equal to 101% of the principal
amount thereof plus any accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of repurchase (the "Change of Control Payment").
(b) Within 30 days of the occurrence of a Change of Control, the
Issuers shall send by first-class mail, postage prepaid, to the Trustee and to
each holder of the Notes, at the address appearing in the Note Register, a
notice stating: (1) that the Change of Control Offer is being made pursuant to
this Section 1012 and that all Notes tendered will be accepted for payment; (2)
the purchase price and the purchase date, which shall be a business day no
earlier than 30 days nor later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"); (3) that any Note not tendered will
continue to accrue interest; (4) that, unless the Issuers default in the payment
of the Change of Control Payment, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date; (5) that holders accepting the offer to have their Notes
purchased pursuant to a Change of Control Offer will be required to surrender
the Notes to the Paying Agent at the address specified in the notice prior to
the close of business on the business day preceding the Change of Control
Payment Date; (6) that holders will be entitled to withdraw their acceptance if
the Paying Agent receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of the Notes delivered for purchase, and a statement that such
holder is withdrawing its election to have such Notes purchased; (7) that
holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
provided that each Note purchased and each such new Note issued shall be in an
original principal amount in denominations of $1,000 and integral multiples
thereof; (8) any other procedures that a holder must follow to accept a Change
of Control Offer or effect withdrawal of such acceptance; and (9) the name and
address of the Paying Agent.
(c) On the Change of Control Payment Date, the Issuers shall, to the
extent lawful (i) accept for payment Notes or portions thereof tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Issuers. The Paying Agent shall promptly mail to each
holder of Notes so accepted payment in an amount equal to the purchase price for
such Notes, and the Issuers shall execute and issue, and the Trustee shall
promptly authenticate and mail to such holder, a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered; provided that each
such new Note shall be issued in an original principal amount in denominations
of $1,000 and integral multiples thereof. The Issuers shall send to the Trustee
and the holders of Notes on or as soon as practicable after the Change of
Control Payment Date a notice setting forth the results of the Change of Control
Offer.
(d) The Issuers shall not be required to make a Change of Control
Offer if a third party makes the Change of Control Offer in the manner, at the
time and otherwise in compliance with the
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requirements set forth herein applicable to a Change of Control Offer made by
the Issuers and purchases all Notes or portions thereof validly tendered and not
withdrawn under such Change of Control Offer.
(e) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant.
SECTION 1013. Limitation on Sales of Assets.
-----------------------------
(a) Mediacom shall not, and shall not permit any Restricted Subsidiary
to, consummate an Asset Sale unless (i) Mediacom or such Restricted Subsidiary,
as the case may be, receives consideration at the time of such sale or other
disposition at least equal to the fair market value thereof (as determined in
good faith by the Executive Committee, whose determination shall be conclusive
and evidenced by a Committee Resolution); (ii) not less than 75% of the
consideration received by Mediacom or such Restricted Subsidiary, as the case
may be, is in the form of cash or Cash Equivalents; and (iii) the Asset Sale
Proceeds received by Mediacom or such Restricted Subsidiary are applied (a)
first, to the extent Mediacom elects, or is required, to prepay, repay or
purchase debt under any then existing Indebtedness of Mediacom or any Restricted
Subsidiary within 360 days following the receipt of the Asset Sale Proceeds from
any Asset Sale or, to the extent Mediacom elects, to make an investment in
assets (including Equity Interests or other securities purchased in connection
with the acquisition of Equity Interests or property of another Person) used or
useful in a Related Business, provided that such investment occurs and such
Asset Sale Proceeds are so applied within 360 days following the receipt of such
Asset Sale Proceeds (the "Reinvestment Date"), and (b) second, on a pro rata
basis (1) to the repayment of an amount of Other Pari Passu Debt not exceeding
the Other Pari Passu Debt Pro Rata Share (provided that any such repayment shall
result in a permanent reduction of any commitment in respect thereof in an
amount equal to the principal amount so repaid) and (2) if on the Reinvestment
Date with respect to any Asset Sale the Excess Proceeds exceed $10,000,000, the
Issuers shall apply an amount equal to such Excess Proceeds to an offer to
repurchase the Notes, at a purchase price in cash equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages, if any,
to the date of repurchase (an "Excess Proceeds Offer"); provided, that so long
as any of the 8 1/2% Notes are outstanding, the Issuers shall make such an
Excess Proceeds Offer, together with a similar pro rata offer to the holders of
the 8 1/2% Notes, and purchase any Notes and 8 1/2% Notes tendered in such
offers within 359 days following the receipt of the Asset Sales Proceeds. If an
Excess Proceeds Offer is not fully subscribed, the Issuers may retain the
portion of the Excess Proceeds not required to repurchase Notes. For purposes of
determining in clause (ii) above the percentage of cash consideration received
by Mediacom or any Restricted Subsidiary, the amount of any (x) liabilities (as
shown on Mediacom's or such Restricted Subsidiary's most recent balance sheet)
of Mediacom or any Restricted Subsidiary that are actually assumed by the
transferee in such Asset Sale and from which Mediacom and the Restricted
Subsidiaries are fully released shall be deemed to be cash, and (y) securities,
notes or other similar obligations received by Mediacom or such Restricted
Subsidiary from such transferee that are immediately converted (or are converted
within 30 days of the related Asset Sale) by Mediacom or such Restricted
Subsidiary into cash shall be deemed to be cash in an amount equal to the net
cash proceeds realized upon such conversion.
(b) If the Issuers are required to make an Excess Proceeds Offer, the
Issuers shall mail, within 30 days following the Reinvestment Date, a notice to
the holders of Notes stating, among other things: (1) that such holders have the
right to require the Issuers to apply the Excess Proceeds to repurchase such
Notes at a purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase; (2) the purchase date, which shall be no earlier than 30 days and not
later than 60 days from the date such notice is mailed; (3) the instructions,
determined by the Issuers, that each holder must follow in order to have such
Notes
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repurchased; and (4) the calculations used in determining the amount of Excess
Proceeds to be applied to the repurchase of such Notes. If the aggregate
principal amount of Notes surrendered by holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis or by lot or by such other method that the Trustee deems to be fair
and equitable to holders. Upon completion of the Excess Proceeds Offer, the
amount of Excess Proceeds shall be reset to zero.
(c) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant.
(d) Notwithstanding the foregoing, Mediacom or any Restricted
Subsidiary shall be permitted to consummate an Asset Swap if (i) at the time of
entering into the related Asset Swap Agreement or immediately after giving
effect to such Asset Swap no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof and (ii) such Asset Swap
shall have been approved in good faith by the Executive Committee, whose
approval shall be conclusive and evidenced by a Committee Resolution, which
states that such Asset Swap is fair to Mediacom or such Restricted Subsidiary,
as the case may be, from a financial point of view.
SECTION 1014. Reports.
-------
Whether or not the Issuers are subject to Section 13(a) or 15(d) of
the Exchange Act or any successor provision thereto, the Issuers shall file with
the SEC (if permitted by SEC practice and applicable law and regulations) so
long as the Notes are outstanding the annual reports, quarterly reports and
other periodic reports which the Issuers would have been required to file with
the SEC pursuant to Section 13(a) or 15(d) or any successor provision thereto if
the Issuers were so subject on or prior to the respective dates (the "Required
Filing Dates") by which the Issuers would have been required to file such
documents if the Issuers were so subject. The Issuers shall also in any event
(a) within 15 days of each Required Filing Date (whether or not permitted or
required to be filed with the SEC) (i) transmit or cause to be transmitted by
mail to all holders of Notes, at such holder's address appearing in the register
maintained by the Note Registrar, without cost to such holders, and (ii) file
with the Trustee, copies of the annual reports, quarterly reports and other
documents which the Issuers are required to file with the SEC pursuant to the
preceding sentence, or if such filing is not so permitted, information and data
of a similar nature, and (b) if, notwithstanding the preceding sentence, filing
such documents by the Issuers with the SEC is not permitted by SEC practice or
applicable law or regulations, promptly upon written request supply copies of
such documents to any holder of Notes. In addition, for so long as any Notes
remain outstanding and prior to the later of the consummation of the Exchange
Offer and the effectiveness of the Shelf Registration Statement, if required,
the Issuers shall furnish to holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 1015. Limitation on Business Activities of Mediacom Capital.
-----------------------------------------------------
Mediacom Capital shall not hold any material assets, become liable for
any material obligations, engage in any trade or business, or conduct any
business activity, other than the issuance of Equity Interests to Mediacom or
any Wholly Owned Restricted Subsidiary, the Incurrence of Indebtedness as a co-
obligor or guarantor of Indebtedness Incurred by Mediacom, including the Notes,
that is permitted to be Incurred by Mediacom under Section 1008 (provided that
the net proceeds of such Indebtedness are retained by Mediacom or loaned to or
contributed as capital to one or more of the Restricted Subsidiaries other than
Mediacom Capital), and activities incidental thereto. Neither Mediacom nor any
Restricted Subsidiary shall engage in any transactions with Mediacom Capital in
violation of the immediately preceding sentence.
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SECTION 1016. Statement by Officers as to Default.
-----------------------------------
(a) The Issuers will deliver to the Trustee, within 120 days after the
end of each fiscal year, an Officers' Certificate meeting the requirements of
Section 103 stating that a review of the activities of the Issuers and its
Restricted Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing officers with a view to determining whether it has
kept, observed, performed and fulfilled, and has caused each of its Restricted
Subsidiaries to keep, observe, perform and fulfill its obligations under this
Indenture and further stating, as to each such officer signing such certificate,
that, to the best of his or her knowledge, the Issuers during such preceding
fiscal year has kept, observed, performed and fulfilled, and has caused each of
its Restricted Subsidiaries to keep, observe, perform and fulfill each and every
such covenant contained in this Indenture and no Event of Default occurred
during such year and at the date of such certificate there is no Event of
Default which has occurred and is continuing or, if such signers do know of such
Event of Default, the certificate shall describe its status with particularity
and shall state what action the Issuers are taking or propose to take in respect
thereof and that, to the best of his or her knowledge, no event has occurred and
remains by reason of which payments on the account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action each is taking or proposes to take with
respect thereto. The Officers' Certificate shall also notify the Trustee should
the Issuers elect to change the manner in which it fixes it fiscal year end.
For purposes of this Section 1016(a), such compliance shall be determined
without regard to any period of grace or requirement of notice under this
Indenture.
(b) When any Default has occurred and is continuing under this
Indenture, or if the trustee for or the holder of any other evidence of
Indebtedness of the Issuers or any Significant Subsidiary gives any notice or
takes any other action with respect to a claimed Default (other than with
respect to Indebtedness in the principal amount of less than $15,000,000), the
Issuers shall deliver to the Trustee by registered or certified mail or
facsimile transmission an Officers' Certificate specifying such event, notice or
other action within five Business Days of its occurrence.
SECTION 1017. Limitation on Guarantees of Certain Indebtedness.
------------------------------------------------
(a) Mediacom shall not (i) permit any Restricted Subsidiary to
guarantee any Indebtedness of either Issuer other than the Notes (the "Other
Indebtedness"), or (ii) pledge any intercompany Indebtedness representing
obligations of any of its Restricted Subsidiaries to secure the payment of Other
Indebtedness, in each case unless such Restricted Subsidiary, the Issuers and
the Trustee execute and deliver a supplemental indenture pursuant to Section 901
causing such Restricted Subsidiary to guarantee (the "Restricted Subsidiary
Guarantee") the Issuers' obligations under this Indenture and the Notes to the
same extent that such Restricted Subsidiary guaranteed the Issuers' obligations
under the Other Indebtedness (including waiver of subrogation, if any).
Thereafter, such Restricted Subsidiary shall be a Guarantor for all purposes of
this Indenture.
(b) The guarantee of a Restricted Subsidiary shall be released upon
(i) the sale of all of the Equity Interests, or all or substantially all of the
assets, of the applicable Guarantor (in each case other than to Mediacom or a
Subsidiary), (ii) the designation by Mediacom of the applicable Guarantor as an
Unrestricted Subsidiary pursuant to Section 1018, or (iii) the release of the
guarantee of such Guarantor with respect to the obligations which caused such
Guarantor to deliver the Restricted Subsidiary Guarantee in accordance with the
preceding paragraph, in each case in compliance with this Indenture (including,
in the event of a sale of Equity Interests or assets described in clause (i)
above, that the net cash proceeds are applied in accordance with the
requirements of Section 1013).
(c) The Trustee shall, at the sole cost and expense of the Issuers,
upon receipt of a request by the Issuers accompanied by an Officers' Certificate
certifying as to the compliance with
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paragraph (b) of this Section and, with respect to clause (i) or (ii) of
paragraph (b) of this Section, upon receipt at the reasonable request of the
Trustee of an Opinion of Counsel that the provisions of this Section have been
complied with, deliver an appropriate instrument evidencing such release. Any
Guarantor not so released remains liable for the full amount of principal of and
interest on the Notes and the other obligations of the Issuers provided herein.
SECTION 1018. Designation of Unrestricted Subsidiaries.
----------------------------------------
(a) Mediacom may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary or a Person becoming a Subsidiary through
merger or consolidation or Investment therein) as an "Unrestricted Subsidiary"
under this Indenture (a "Designation") only if (a) no Default or Event of
Default shall have occurred and be continuing at the time of or after giving
effect to such Designation; (b) at the time of and after giving effect to such
Designation, Mediacom would be able to Incur $1.00 of additional Indebtedness
under the Debt to Operating Cash Flow Ratio under the first paragraph of Section
1008; and (c) Mediacom would be permitted to make a Restricted Payment at the
time of Designation (assuming the effectiveness of such Designation) pursuant to
paragraph (a) of Section 1007 in an amount (the "Designation Amount") equal to
Mediacom's proportionate interest in the fair market value of such Subsidiary on
such date (as determined in good faith by the Executive Committee, whose
determination shall be conclusive and evidenced by a Committee Resolution).
Notwithstanding the foregoing, neither Mediacom Capital nor any of its
Subsidiaries may be designated as Unrestricted Subsidiaries.
(b) At the time of Designation all of the Indebtedness of such
Unrestricted Subsidiary shall consist of, and shall at all times thereafter
consist of, Non-Recourse Indebtedness, and neither Mediacom nor any Restricted
Subsidiary shall at any time have any direct or indirect obligation to (x) make
additional Investments (other than Permitted Investments) in any Unrestricted
Subsidiary or (y) maintain or preserve the financial condition of any
Unrestricted Subsidiary or cause any Unrestricted Subsidiary to achieve any
specified levels of operating results or (z) be party to any agreement,
contract, arrangement or understanding with any Unrestricted Subsidiary unless
the terms of any such agreement, contract, arrangement or understanding are no
less favorable to Mediacom or such Restricted Subsidiary than those that might
be obtained, in light of all the circumstances, at the time from Persons who are
not Affiliates of Mediacom. If, at any time, any Unrestricted Subsidiary would
violate the foregoing requirements, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be Incurred as of such date.
(c) Mediacom may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if (a) no Default or Event of Default
shall have occurred and be continuing at the time of or after giving effect to
such Revocation; (b) at the time of and after giving effect to such Revocation,
Mediacom would be able to Incur $1.00 of additional Indebtedness under the Debt
to Operating Cash Flow Ratio of the first paragraph of Section 1008; and (c) all
Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately
following such Revocation would, if Incurred at such time, have been permitted
to be Incurred for all purposes of this Indenture.
(d) All Designations and Revocations must be evidenced by Committee
Resolutions delivered to the Trustee certifying compliance with the foregoing
provisions.
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ARTICLE ELEVEN.
REDEMPTION OF NOTES
SECTION 1101. Optional Redemption.
-------------------
The Notes may or shall, as the case may be, be redeemed, as a whole or
from time to time in part, subject to the conditions and at the redemption
prices specified in the Form of Note (Section 203), together with accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
redemption.
SECTION 1102. Applicability of Article.
------------------------
Redemption of Notes at the election of the Issuers or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Issuers to redeem any Notes pursuant to Section
1101 shall be evidenced by a Committee Resolution. In case of any redemption at
the election of the Issuers, the Issuers shall, at least 90 days prior to the
date of redemption (the "Redemption Date") fixed by the Issuers (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Notes to be redeemed and shall
deliver to the Trustee such documentation and records as shall enable the
Trustee to select the Notes to be redeemed pursuant to Section 1104.
SECTION 1104. Selection by Trustee of Notes to Be Redeemed.
--------------------------------------------
If fewer than all the Notes are to be redeemed, the Trustee will
select the Notes to be redeemed, if the Notes are listed on a national
securities exchange, in accordance with the rules of such exchange or, if the
Notes are not so listed, on a pro rata basis or by lot or by such other method
that the Trustee deems to be fair and equitable to holders. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed and a new Note
or Notes in principal amount equal to the unredeemed principal portion thereof
will be issued; provided, that no Notes of a principal amount of $1,000 or less
shall be redeemed in part. On and after the Redemption Date, interest will cease
to accrue on Notes or portions thereof called for redemption as long as the
Issuers have deposited with the Paying Agent for the Notes funds in satisfaction
of the applicable redemption price pursuant to this Indenture.
The Trustee shall promptly notify the Issuers in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days' prior to the Redemption Date
by first class mail to each Holder of Notes to be redeemed at such Holder's
address appearing in the Note Register. The Trustee shall give notice of
redemption in the Issuers' name and at the Issuers' expense; provided, however,
that the Issuers shall
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deliver to the Trustee, at least 45 days prior to the Redemption Date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the following
items.
All notices of redemption shall state:
(i) the Redemption Date,
(ii) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(iii) if less than all outstanding Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption,
(iv) in case any Note is to be redeemed in part only, the notice
which relates to such Note shall state that on and after the Redemption
Date, upon surrender of such Note, the holder will receive, without charge,
a new Note or Notes of authorized denominations for the principal amount
thereof remaining unredeemed,
(v) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Note, or the portion
thereof, to be redeemed, and, unless the Issuers defaults in making the
redemption payment, that interest on Notes called for redemption (or the
portion thereof) will cease to accrue on and after said date,
(vi) the place or places where such Notes are to be surrendered for
payment of the Redemption Price and accrued interest, if any,
(vii) the name and address of the Paying Agent,
(viii) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(ix) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Notes, and
(x) the paragraph of the Notes or Section of this Indenture
pursuant to which the Notes are to be redeemed.
SECTION 1106. Deposit of Redemption Price.
---------------------------
Prior to any Redemption Date, the Issuers shall deposit with the
Trustee or with a Paying Agent (or, if the Issuers are acting as their own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and accrued interest on, all
the Notes which are to be redeemed on that date.
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SECTION 1107. Notes Payable on Redemption Date.
--------------------------------
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Issuers shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Issuers at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more predecessor Notes, registered as such at the close of
business on the relevant Regular Record Date or Special Record Date, as the case
may be, according to their terms and the provisions of Section 311.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Notes.
SECTION 1108. Notes Redeemed in Part.
----------------------
Any Note which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Issuers maintained for such purpose pursuant to Section 1002 (with, if the
Issuers or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Issuers and the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing),
and the Issuers shall execute, and the Trustee shall authenticate and deliver to
the Holder of such Note at the expense of the Issuers, a new Note or Notes, of
any authorized denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered, provided, that each such new Note will be
in a principal amount of $1,000 or integral multiple thereof.
ARTICLE TWELVE.
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. The Issuers' Option to Effect Defeasance or Covenant
----------------------------------------------------
Defeasance.
- ----------
The Issuers may, at their option, at any time, with respect to the
Notes, elect to have either Section 1202 or Section 1203 be applied to all
outstanding Notes upon compliance with the conditions set forth in this Article
Twelve. The Issuers in their sole discretion can defease the Notes.
SECTION 1202. Defeasance and Discharge.
------------------------
Upon the Issuers' exercise under Section 1201 of the option applicable
to this Section 1202, the Issuers shall be deemed to have been discharged from
any and all obligations with respect to all outstanding Notes on the date the
conditions set forth in Section 1204 are satisfied (hereinafter, "Defeasance").
For this purpose, such Defeasance means that the Issuers shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 1205 and the other Sections of this Indenture referred to in
(i) and (ii) below, and to have satisfied all its other obligations under such
Notes and this Indenture insofar as such Notes are concerned (and the Trustee,
at the expense of the Issuers, shall execute proper instruments acknowledging
the same), except for the following which shall survive until
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otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Notes to receive, solely from the trust fund described in Section
1204 and as more fully set forth in such Section, payments in respect of the
principal of (and premium, if any, on) and interest on such Notes when such
payments are due, (ii) the Issuers' obligations with respect to such Notes under
Sections 304, 305, 310, 1002 and 1003, (iii) the rights, powers, trusts, duties
and immunities of the Trustee hereunder, and the Issuers' obligations in
connection therewith and (iv) this Article Twelve.
If the Issuers exercise their Defeasance option, payment of the Notes
may not be accelerated because of an Event of Default.
Subject to compliance with this Article Twelve, the Issuers may
exercise their option under this Section 1202 notwithstanding the prior exercise
of their option under Section 1203 with respect to the Notes.
SECTION 1203. Covenant Defeasance.
-------------------
Upon the Issuers' exercise under Section 1201 of the option applicable
to this Section 1203, the Issuers may terminate (i) its obligations under any
covenant contained in Sections 1007 through 1015 and Section 1017, (ii) the
operation of Section 501(iv), Section 501(v), Section 501(vi) (with respect only
to Significant Subsidiaries), Section 501(vii) (with respect only to Significant
Subsidiaries) and Section 501(iii) and (iii) the limitations contained in
Sections 801(iii) and 801(iv) (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not to be "outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes will not be outstanding for accounting purposes). If
the Issuers exercise their covenant defeasance option, payment of the Notes may
not be accelerated because of an Event of Default specified under Section
501(iv), (v), (vi) (with respect only to Significant Subsidiaries), (vii) (with
respect only to Significant Subsidiaries) and Section 501(viii) or because of
the failure of the Issuers to comply with Section 801(iii) and 801(iv). For
this purpose, such Covenant Defeasance means that, with respect to the
outstanding Notes, the Issuers may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
501(iii), but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby.
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section
1202 or Section 1203 to the outstanding Notes:
(i) the Issuers shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of this Indenture who shall agree to comply with the provisions of this
Article Twelve applicable to it) as trust funds in trust money or U.S.
Government Obligations, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public accountants
selected by the Issuers, to pay the principal of, premium, if any, and
Liquidated Damages, if any, and interest due on the outstanding Notes on
the Stated Maturity or on the applicable Redemption Date as the case may
be, of such principal, premium, if any, or interest on the outstanding
Notes;
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<PAGE>
(ii) in the case of Defeasance, the Issuers shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee (which opinion may be subject to customary
assumptions and exclusions) confirming that (A) the Issuers have received
from, or there has been published by, the United States Internal Revenue
Service a ruling or (B) since the Issue Date, there has been a change in
the applicable U.S. federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel in the United States (which
opinion may be subject to customary assumptions and exclusions) shall
confirm that the Holders of the outstanding Notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of
such Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Defeasance had not occurred;
(iii) Mediacom shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that, subject to customary assumptions and exclusions, the
Holders of the outstanding Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Defeasance or
Covenant Defeasance and will be subject to such tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Defeasance or Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(v) such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Issuers is
a party or by which the Issuers is bound;
(vi) Mediacom shall have delivered to the Trustee an Opinion of
Counsel to the effect that, (A) as of the date of such opinion and subject
to customary assumptions and exclusions following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally under any applicable U.S. federal or state law, and that the
Trustee has a perfected security interest in such trust funds for the
ratable benefit of the Holders and (B) such Defeasance or Covenant
Defeasance, as the case may be, will not require registration of the
Issuers, the Trustee or the trust fund under the Investment Company Act of
1940, as amended or the Investment Advisors Act of 1940, as amended;
(vii) The Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the
intent of defeating, hindering, delaying or defrauding any creditors of the
Issuers or others;
(viii) The Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States (which Opinion
of Counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the
Defeasance or the Covenant Defeasance, as the case may be, have been
complied with; and
(ix) The Issuers shall have delivered to the Trustee the opinion of
a nationally recognized firm of independent public accountants stating the
matters set forth in paragraph (i) above.
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SECTION 1205. Deposited Money and U.S. Government Obligations to Be
-----------------------------------------------------
Held in Trust; Other Miscellaneous Provisions.
---------------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Issuers
acting as their own Paying Agent) as the Trustee may determine, to the Holders
of such Notes of all sums due and to become due thereon in respect of principal
(and premium, if any) and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Issuers shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the Issuers'
Request any money or U.S. Government Obligations held by it as provided in
Section 1204 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1206. Reinstatement.
-------------
If the Trustee or any Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 1205 by reason of any
legal proceeding or by any reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1202 or 1203, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1205; provided, however, that if the Issuers makes any payment of principal of
(or premium, if any) or interest on any Note following the reinstatement of its
obligations, the Issuers shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money and U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE THIRTEEN.
RESTRICTED SUBSIDIARY GUARANTEE
SECTION 1301. Unconditional Guarantee.
-----------------------
Each Guarantor hereby unconditionally, jointly and severally,
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns that: the principal of and
interest and Liquidated Damages, if any, on the Notes shall be promptly paid in
full when due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise, and interest and Liquidated Damages, if any, on the
overdue principal and interest on any overdue interest on the Notes and all
other obligations of the Issuers to the Holders or the Trustee hereunder or
under the Notes shall be promptly paid in full or performed, all in accordance
with the terms hereof and thereof; subject, however, to the limitations set
forth in Section 1303. Each Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of the any action to
enforce the same, any waiver or consent by
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any Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Issuers, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuers, any right to require a proceeding first
against the Issuers, protest, notice and all demands whatsoever and covenants
that the Restricted Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes, this Indenture,
and this Restricted Subsidiary Guarantee. If any Holder or the Trustee is
required by any court or otherwise to return to the Issuers, any Guarantor, or
any custodian, trustee, liquidator or other similar official acting in relation
to the Issuers or any Guarantor, any amount paid by the Issuers to any Guarantor
to the Trustee or such Holder, this Restricted Subsidiary Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between each Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five for
the purpose of this Restricted Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any acceleration in
respect of such obligations as provided in Article Five, such obligations
(whether or not due and payable) shall forthwith become due and payable by each
Guarantor for the purpose of this Restricted Subsidiary Guarantee.
SECTION 1302. Severability.
------------
In case any provision of this Restricted Subsidiary Guarantee shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1303. Limitation of Guarantor's Liability.
-----------------------------------
Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, hereby confirms that it is the intention of all such parties that the
guarantee by such Guarantor pursuant to its Restricted Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of title 11 of the
United States Code, as amended, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar U.S. Federal or state or other
applicable law or that the obligations of such Guarantor under Section 1301
would otherwise be held or determined to be void, invalid or unenforceable on
account of the amount of its liability under said Section 1301. To effectuate
the foregoing intention, the Holders and such Guarantor hereby irrevocably agree
that the obligations of such Guarantor under the Restricted Subsidiary Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Restricted
Subsidiary Guarantee or pursuant to Section 1304, result in the obligations of
such Guarantor under the Restricted Subsidiary Guarantee not constituting such
fraudulent transfer or conveyance and not being held or determined to be void,
invalid or unenforceable.
SECTION 1304. Contribution.
------------
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Restricted Subsidiary Guarantee, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount, based on the net
assets of each Guarantor (including the Funding Guarantor), determined in
accordance with GAAP, subject to Section 1303, for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the
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<PAGE>
Issuers' obligations with respect to the Notes or any other Guarantor's
obligations with respect to the Restricted Subsidiary Guarantee.
SECTION 1305. Additional Guarantors.
---------------------
Any Restricted Subsidiary which is required pursuant to Section 1017
to become a Guarantor shall (a) execute and deliver to the Trustee a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee which subjects such Restricted Subsidiary to the provisions of this
Indenture as a Guarantor and pursuant to which such Restricted Subsidiary agrees
to guarantee to each Holder of a Note the payment of allowances due in respect
of the Notes in accordance with the provisions of this Indenture, and (b) cause
to be delivered to the Trustee an Opinion of Counsel to the effect that such
supplemental indenture has been duly authorized and executed by such Restricted
Subsidiary and constitutes the legal, valid, binding and enforceable obligation
of such Restricted Subsidiary (subject to such customary exceptions concerning
fraudulent conveyance laws, creditors' rights and equitable principles).
SECTION 1306. Subordination of Subrogation and Other Rights.
---------------------------------------------
Each Guarantor hereby agrees that any claim against the Issuers that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Restricted Subsidiary Guarantee or this Indenture,
including, without limitation, any right of subrogation, shall be subject and
subordinate to, and no payment with respect to any such claim of such Guarantor
shall be made before, the payment in full in cash of all outstanding Notes in
accordance with the provisions provided therefor in this Indenture.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
MEDIACOM LLC
By /s/ MARK E. STEPHAN
----------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
MEDIACOM CAPITAL CORPORATION
By /s/ MARK E. STEPHAN
----------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
BANK OF MONTREAL TRUST COMPANY
By /s/ PETER MORSE
----------------------------------
Name: Peter Morse
Title: Vice President
93
<PAGE>
Exhibit 4.2(b)
EXECUTION COPY
MEDIACOM LLC
MEDIACOM CAPITAL CORPORATION
$125,000,000
7 7/8% Senior Notes due 2011
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
February 26, 1999
CHASE SECURITIES INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Mediacom LLC, a New York limited liability company ("Mediacom" and,
--------
together with its direct and indirect Subsidiaries (as defined herein) and
Mediacom Capital (as defined herein), the "Company"), and Mediacom Capital
Corporation, a New York corporation and a wholly-owned subsidiary of Mediacom
("Mediacom Capital" and, together with Mediacom, the "Issuers"), propose to
---------------- -------
issue and sell to Chase Securities Inc. (the "Initial Purchaser"), upon the
-----------------
terms and subject to the conditions set forth in a purchase agreement dated
February 19, 1999 (the "Purchase Agreement"), $125,000,000 aggregate principal
------------------
amount of their 7 7/8% Senior Notes due 2011 (the "Notes"). Capitalized terms
-----
used but not defined herein shall have the meanings given to such terms in the
Purchase Agreement.
As an inducement to the Initial Purchaser to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchaser thereunder, the Issuers agree with the Initial Purchaser, for the
benefit of the holders (including the Initial Purchaser) of the Notes, the
Exchange Notes (as defined herein) and the Private Exchange Notes (as defined
herein) (collectively, the "Holders"), as follows:
-------
1. Registered Exchange Offer. The Issuers shall (i) prepare and, not
-------------------------
later than 180 days following the date of original issuance of the Notes (the
"Issue Date"), file with the Commission a registration statement on Form S-1 or
----------
Form S-4, if the use of such form is then available (the "Exchange Offer
--------------
Registration Statement"), with respect to a proposed offer to the Holders of the
- ----------------------
Notes (the "Registered Exchange Offer") to issue and deliver to such Holders, in
-------------------------
exchange for the Notes, a like aggregate principal amount of debt securities of
the Issuers (the "Exchange Notes") that are identical in all material respects
--------------
to the Notes, except for the transfer restrictions relating to the Notes, (ii)
use their reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act no later than 300 days
after the Issue Date and the Registered Exchange Offer to be consummated no
later than 360 days after the Issue Date and (iii) keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
--------
Offer Registration Period"). The Exchange Notes will be issued under the
- -------------------------
Indenture or an indenture (the "Exchange Notes Indenture") between the Issuers
------------------------
and the Trustee or such other bank or trust company that is reasonably
satisfactory to the
<PAGE>
Initial Purchaser, as trustee (the "Exchange Notes Trustee"), such indenture
----------------------
to be identical in all material respects to the Indenture, except for the
transfer restrictions relating to the Notes (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Issuers shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Notes for Exchange Notes or Private Exchange Notes (assuming that such
Holder (a) is not an affiliate of the Issuers or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b) is
not an Initial Purchaser holding Notes that have, or that are reasonably likely
to have, the status of an unsold allotment in an initial distribution, (c)
acquires the Exchange Notes in the ordinary course of such Holder's business and
(d) has no arrangements or understandings with any person to participate in the
distribution of the Exchange Notes) and to trade such Exchange Notes from and
after their receipt without any limitations or restrictions under the Securities
Act and without material restrictions under the securities laws of the several
states of the United States. The Issuers, the Initial Purchaser and each
Exchanging Dealer acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, each Holder that is a
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer"), is required to deliver a prospectus containing
-----------------
substantially the information set forth in Exhibit A hereto on the cover, in
Exhibit B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and in Exhibit C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Notes received by such Exchanging Dealer pursuant to the Registered
Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Notes acquired by it that have, or that are reasonably likely
to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Issuers shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Notes in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the Notes
held by such Holder (the "Private Exchange"), a like aggregate principal amount
----------------
of debt securities of the Issuers (the "Private Exchange Notes") that are
----------------------
identical in all material respects to the Exchange Notes, except for the
transfer restrictions relating to such Private Exchange Notes. The Private
Exchange Notes will be issued under the same indenture as the Exchange Notes,
and the Issuers shall use their reasonable best efforts to cause the Private
Exchange Notes to bear the same CUSIP number as the Exchange Notes.
In connection with the Registered Exchange Offer, the Issuers shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date on which notice
of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
2
<PAGE>
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Issuers shall:
(a) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Registered Exchange Offer and the Private Exchange;
(b) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(c) cause the Trustee or the Exchange Notes Trustee, as the case may
be, promptly to authenticate and deliver to each Holder, Exchange Notes or
Private Exchange Notes, as the case may be, equal in principal amount to
the Notes of such Holder so accepted for exchange.
The Issuers shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Notes; provided that (i) in the case where such
--------
prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Notes held by them and (ii)
the Issuers shall make such prospectus and any amendment or supplement thereto
available to any broker-dealer for use in connection with any resale of any
Exchange Notes for a period of not less than 90 days after the consummation of
the Registered Exchange Offer.
The Indenture or the Exchange Notes Indenture, as the case may be,
shall provide that the Notes, the Exchange Notes and the Private Exchange Notes
shall vote and consent together on all matters as one class and that none of the
Notes, the Exchange Notes or the Private Exchange Notes will have the right to
vote or consent as a separate class on any matter.
Interest on each Exchange Note and Private Exchange Note issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Issuers that at the time of the consummation of the
Registered Exchange Offer, (i) any Exchange Notes received by such Holder will
be acquired in the ordinary course of business, (ii) such Holder will have no
arrangements or understanding with any person to participate in the distribution
of the Notes or the Exchange Notes within the meaning of the Securities Act, and
(iii) such Holder is not an affiliate of the Issuers or, if it is such an
affiliate, such Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Issuers will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain 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 not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
3
<PAGE>
2. Shelf Registration. If (i) because of any change in law or
------------------
applicable interpretations thereof by the Commission's staff the Issuers are not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Notes validly tendered pursuant to the Registered Exchange
Offer are not exchanged for Exchange Notes within 360 days after the Issue Date,
or (iii) the Initial Purchaser so requests with respect to Notes or Private
Exchange Notes not eligible to be exchanged for Exchange Notes in the Registered
Exchange Offer and held by it following the consummation of the Registered
Exchange Offer, or (iv) any applicable law or interpretations do not permit any
Holder to participate in the Registered Exchange Offer, or (v) any Holder that
participates in the Registered Exchange Offer does not receive freely
transferable Exchange Notes in exchange for tendered Notes, or (vi) the Issuers
so elect, then the following provisions shall apply:
(a) The Issuers shall use their reasonable best efforts to file as
promptly as practicable (but in no event more than 60 days after so
required or requested pursuant to this Section 2) with the Commission, and
thereafter shall use its reasonable best efforts to cause to be declared
effective, a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined below) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and, together with
----------------------------
any Exchange Offer Registration Statement, a "Registration Statement").
----------------------
(b) The Issuers shall use their reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Transfer
Restricted Securities for a period ending on the earlier of (i) two years
from the Issue Date or such shorter period that will terminate when all the
Transfer Restricted Securities covered by the Shelf Registration Statement
have been sold pursuant thereto and (ii) the date on which the Notes become
eligible for resale without volume restrictions pursuant to Rule 144 under
the Securities Act (in any such case, such period being called the "Shelf
-----
Registration Period"). The Issuers shall be deemed not to have used their
-------------------
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if they voluntarily take any action that would
result in Holders of Transfer Restricted Securities covered thereby not
being able to offer and sell such Transfer Restricted Securities during
that period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions hereof, the Issuers will
ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto complies
in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Shelf Registration
Statement and any amendment thereto (in either case, other than with
respect to information included therein in reliance upon or in conformity
with written information furnished to the Issuers by or on behalf of any
Holder specifically for use therein (the "Holders' Information")) does not
--------------------
contain 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 not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either
case, other than with respect to Holders' Information), does not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
------------------
of Transfer Restricted Securities will suffer damages if the Issuers fail to
fulfill their obligations under Section 1 or Section 2, as applicable, and that
it would not be feasible to ascertain the extent of such damages. Accordingly,
if (i) the applicable Registration Statement is not filed with the Commission on
or prior to 180 days after the Issue Date, (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is not
declared effective within 300 days after the Issue Date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of Commission's staff, if later, within 90
days after publication of the change in law or
4
<PAGE>
interpretation), (iii) the Registered Exchange Offer is not consummated on or
prior to 360 days after the Issue Date, or (iv) the Shelf Registration Statement
is filed and declared effective within 300 days after the Issue Date (or in the
case of a Shelf Registration Statement required to be filed in response to a
change in law or the applicable interpretations of Commission's staff, if later,
within 90 days after publication of the change in law or interpretation) but
shall thereafter cease to be effective (at any time that the Issuers are
obligated to maintain the effectiveness thereof) without being succeeded within
120 days by an additional Registration Statement filed and declared effective
(each such event referred to in clauses (i) through (iv), a "Registration
------------
Default"), the Issuers will be obligated to pay liquidated damages to each
- -------
Holder of Transfer Restricted Securities, during the period of one or more such
Registration Defaults, in an amount equal to $0.192 per week per $1,000
principal amount of Transfer Restricted Securities held by such Holder until (i)
the applicable Registration Statement is filed, (ii) the Exchange Offer
Registration Statement is declared effective and the Registered Exchange Offer
is consummated, (iii) the Shelf Registration Statement is declared effective or
(iv) the Shelf Registration Statement again becomes effective, as the case may
be. Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease. As used herein, the term "Transfer Restricted Securities"
------------------------------
means (i) each Note until the date on which such Note has been exchanged for a
freely transferable Exchange Note in the Registered Exchange Offer, (ii) each
Note or Private Exchange Note until the date on which it has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) each Note or Private Exchange Note until the
date on which it is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a), the Issuers shall
not be required to pay liquidated damages to a Holder of Transfer Restricted
Securities if such Holder failed to comply with its obligations to make the
representations set forth in the second to last paragraph of Section 1 or failed
to provide the information required to be provided by it, if any, pursuant to
Section 4(n).
(b) The Issuers shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Issuers shall pay the liquidated damages due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be
the Issuers for these purposes), in trust, for the benefit of the Holders
thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Notes, sums sufficient to
pay the liquidated damages then due. The liquidated damages due shall be
payable on each interest payment date specified by the Indenture and the
Notes to the record holder entitled to receive the interest payment to be
made on such date. Each obligation to pay liquidated damages shall be
deemed to accrue from and including the date of the applicable Registration
Default .
(c) The parties hereto agree that the liquidated damages provided for
in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement to be
filed, (ii) the Shelf Registration Statement to remain effective or (iii)
the Exchange Offer Registration Statement to be declared effective and the
Registered Exchange Offer to be consummated, in each case to the extent
required by this Agreement.
4. Registration Procedures. In connection with any Registration
-----------------------
Statement, the following provisions shall apply:
(a) The Issuers shall (i) furnish to the Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such
comments as the Initial Purchaser may reasonably propose; (ii) include the
information set forth in Exhibit A hereto on the cover, in Exhibit B hereto
in the "Exchange Offer Procedures" section and the "Purpose of the Exchange
Offer" section and in Exhibit C hereto in the "Plan of Distribution"
section of the prospectus forming a part of the Exchange Offer
5
<PAGE>
Registration Statement, and include the information set forth in Exhibit D
hereto in the Letter of Transmittal delivered pursuant to the Registered
Exchange Offer; and (iii) if requested by the Initial Purchaser, include
the information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement.
(b) The Issuers shall advise the Initial Purchaser, each Exchanging
Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Issuers of any notification with respect
to the suspension of the qualification of the Notes, the Exchange Notes or
the Private Exchange Notes for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein in
order that the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Issuers will make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Issuers will furnish to each Holder of Transfer Restricted
Notes included within the coverage of any Shelf Registration Statement,
without charge, at least one conformed copy of such Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any such Holder so requests in writing,
all exhibits thereto (including those, if any, incorporated by reference).
(e) The Issuers will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within
the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included
in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and the Issuers consent to
the use of such prospectus or any amendment or supplement thereto by each
of the selling Holders of Transfer Restricted Securities in connection with
the offer and sale of the Transfer Restricted Securities covered by such
prospectus or any amendment or supplement thereto.
(f) The Issuers will furnish to the Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without charge,
at least one conformed copy of the Exchange Offer Registration Statement
and any post-effective amendment thereto, including financial statements
and schedules and, if the Initial Purchaser or Exchanging Dealer or any
such Holder so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).
6
<PAGE>
(g) The Issuers will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to the
Initial Purchaser, each Exchanging Dealer and such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement or the Shelf Registration Statement
and any amendment or supplement thereto as the Initial Purchaser,
Exchanging Dealer or other persons may reasonably request; and the Issuers
consent to the use of such prospectus or any amendment or supplement
thereto by the Initial Purchaser, Exchanging Dealer or other persons, as
applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Issuers will use their reasonable best efforts to register or qualify, or
cooperate with the Holders of Notes, Exchange Notes or Private Exchange
Notes included therein and their respective counsel in connection with the
registration or qualification of, such Notes, Exchange Notes or Private
Exchange Notes for offer and sale under the securities or Blue Sky laws of
such jurisdictions as any such Holder reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the Notes, Exchange Notes or Private
Exchange Notes covered by such Registration Statement; provided that the
Issuers will not be required to qualify generally to do business in any
jurisdiction where they are not then so qualified or to take any action
which would subject them to general service of process or to taxation in
any such jurisdiction where they are not then so subject.
(i) The Issuers will cooperate with the Holders of Notes, Exchange
Notes or Private Exchange Notes to facilitate the timely preparation and
delivery of certificates representing Notes, Exchange Notes or Private
Exchange Notes to be sold pursuant to any Registration Statement free of
any restrictive legends and in such denominations and registered in such
names as the Holders thereof may request in writing prior to sales of
Notes, Exchange Notes or Private Exchange Notes pursuant to such
Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Issuers are required to maintain an
effective Registration Statement, the Issuers will promptly prepare and
file with the Commission 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
Notes, Exchange Notes or Private Exchange Notes from a Holder, the
prospectus will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Issuers will provide a CUSIP number for the Notes, the
Exchange Notes and the Private Exchange Notes, as the case may be, and
provide the applicable trustee with printed certificates for the Notes, the
Exchange Notes or the Private Exchange Notes, as the case may be, in a form
eligible for deposit with The Depository Trust Company.
(l) The Issuers will comply with all applicable rules and regulations
of the Commission and will make generally available to their security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of
Section 11(a) of the Securities Act; provided that in no event shall such
--------
earning statement be delivered later than 45 days after the end of a 12-
month period (or 90 days, if such period is a fiscal year) beginning with
the first month of the Issuers' first fiscal quarter commencing after the
effective date of the applicable Registration Statement, which statement
shall cover such 12-month period.
(m) The Issuers will cause the Indenture or the Exchange Notes
Indenture, as the case may be, to be qualified under the Trust Indenture
Act as required by applicable law in a timely manner.
7
<PAGE>
(n) The Issuers may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Issuers such information concerning the Holder and the
distribution of such Transfer Restricted Notes as the Issuers may from time
to time reasonably require for inclusion in such Shelf Registration
Statement, and the Issuers may exclude from such registration the Transfer
Restricted Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of
any notice from the Issuers pursuant to Section 4(b)(ii) through (v), such
Holder will discontinue disposition of such Transfer Restricted Securities
until such Holder's receipt of copies of the supplemental or amended
prospectus contemplated by Section 4(j) or until advised in writing (the
"Advice") by the Issuers that the use of the applicable prospectus may be
resumed. If the Issuers shall give any notice under Section 4(b)(ii)
through (v) during the period that the Issuers are required to maintain an
effective Registration Statement (the "Effectiveness Period"), such
--------------------
Effectiveness Period shall be extended by the number of days during such
period from and including the date of the giving of such notice to and
including the date when each seller of Transfer Restricted Securities
covered by such Registration Statement shall have received (x) the copies
of the supplemental or amended prospectus contemplated by Section 4(j) (if
an amended or supplemental prospectus is required) or (y) the Advice (if no
amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Issuers shall
enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action,
if any, as Holders of a majority in aggregate principal amount of the
Notes, Exchange Notes and Private Exchange Notes being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of Notes, Exchange Notes or Private Exchange Notes pursuant to
such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Issuers shall
(i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Notes, Exchange Notes and Private
Exchange Notes being sold and any underwriter participating in any
disposition of Notes, Exchange Notes or Private Exchange Notes pursuant to
such Shelf Registration Statement, all relevant financial and other
records, pertinent corporate documents and properties of the Issuers and
the Subsidiaries and (ii) use their reasonable best efforts to have its
officers, directors, employees, accountants and counsel supply all relevant
information reasonably requested by such representative, Special Counsel or
any such underwriter (an "Inspector") in connection with such Shelf
---------
Registration Statement.
(r) In the case of a Shelf Registration Statement, the Issuers shall,
if requested by Holders of a majority in aggregate principal amount of the
Notes, Exchange Notes and Private Exchange Notes being sold, their Special
Counsel or the managing underwriters (if any) in connection with such Shelf
Registration Statement, use their reasonable best efforts to cause (i)
their counsel to deliver an opinion relating to the Shelf Registration
Statement and the Notes, Exchange Notes or Private Exchange Notes, as
applicable, in customary form, (ii) their officers to execute and deliver
all customary documents and certificates requested by Holders of a majority
in aggregate principal amount of the Notes, Exchange Notes and Private
Exchange Notes being sold, their Special Counsel or the managing
underwriters (if any) and (iii) their independent public accountants to
provide a comfort letter or letters in customary form, subject to receipt
of appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72.
8
<PAGE>
5. Registration Expenses. The Issuers will bear all expenses
---------------------
incurred in connection with the performance of their obligations under Sections
1, 2, 3 and 4 and the Issuers will reimburse the Initial Purchaser and the
Holders for the reasonable fees and disbursements of one firm of attorneys (in
addition to any local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Notes, the Exchange Notes and the Private Exchange Notes
to be sold pursuant to each Registration Statement (the "Special Counsel")
---------------
acting for the Initial Purchaser or Holders in connection therewith (other than
reimbursement in connection with the Registered Exchange Offer).
6. Indemnification. (a) In the event of a Shelf Registration
---------------
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by the Initial Purchaser or Exchanging Dealer, as
applicable, the Issuers shall indemnify and hold harmless each Holder
(including, without limitation, the Initial Purchaser or Exchanging Dealer), its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls such Holder within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 6 and Section 7 as a Holder) from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, without limitation, any loss, claim, damage, liability or action
relating to purchases and sales of Notes, Exchange Notes or Private Exchange
Notes), to which that Holder may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
-------- -------
that the Issuers shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Holders' Information; and provided, further, that with respect to any such
-------- -------
untrue statement in or omission from any related preliminary prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Notes, Exchange Notes or Private Exchange
Notes to the extent that such loss, claim, damage, liability or action of or
with respect to such Holder results from the fact that both (A) a copy of the
final prospectus was not sent or given to such person at or prior to the written
confirmation of the sale of such Notes, Exchange Notes or Private Exchange Notes
to such person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in either
case, such failure to deliver the final prospectus was a result of non-
compliance by the Issuers with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder shall
indemnify and hold harmless the Issuers, their affiliates, their respective
officers, directors, employees, representatives and agents, and each
person, if any, who controls the Issuers within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes
of this Section 6(b) and Section 7 as the Issuers), from and against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Issuers may become subject, whether commenced
or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or
is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any such Registration Statement or any
prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of
9
<PAGE>
the circumstances under which they were made, not misleading, but in each
case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with any Holders' Information furnished to the Issuers by such
Holder, and shall reimburse the Issuers for any legal or other expenses
reasonably incurred by the Issuers in connection with investigating or
defending or preparing to defend against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that no such
-------- -------
Holder shall be liable for any indemnity claims hereunder in excess of the
amount of net proceeds received by such Holder from the sale of Notes,
Exchange Notes or Private Exchange Notes pursuant to such Shelf
Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
-------- -------
party shall not relieve it from any liability which it may have under this
Section 6 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure;
and provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an indemnified
party otherwise than under this Section 6. If any such claim or action
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than the reasonable costs of
investigation; provided, however, that an indemnified party shall have the
-------- -------
right to employ its own counsel in any such action, but the fees, expenses
and other charges of such counsel for the indemnified party will be at the
expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying
party, (2) the indemnified party has reasonably concluded (based upon
advice of counsel to the indemnified party) that there may be legal
defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a
conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory
to the indemnified party to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action,
in each of which cases the reasonable fees, disbursements and other charges
of counsel will be at the expense of the indemnifying party or parties. It
is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there
be a final judgment for the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
10
<PAGE>
7. Contribution. If the indemnification provided for in Section 6 is
------------
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Issuers from the offering and sale of the Notes, on the
one hand, and a Holder with respect to the sale by such Holder of Notes,
Exchange Notes or Private Exchange Notes, on the other, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers on
the one hand and such Holder on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Issuers on the one hand and a Holder on the
other with respect to such offering and such sale shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Notes (before
deducting expenses) received by or on behalf of the Issuers as set forth in the
table on the cover of the Offering Memorandum, on the one hand, bear to the
total proceeds received by such Holder with respect to its sale of Notes,
Exchange Notes or Private Exchange Notes, on the other. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to the Issuers or information supplied by the Issuers on
the one hand or to any Holders' Information supplied by such Holder on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 7 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7 shall be deemed
to include, for purposes of this Section 7, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 7, an indemnifying party that is a Holder of
Notes, Exchange Notes or Private Exchange Notes shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Notes, Exchange Notes or Private Exchange Notes sold by such indemnifying
party to any purchaser exceeds the amount of any damages which such indemnifying
party has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. 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.
8. Rules 144 and 144A. The Issuers shall use their reasonable best
------------------
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Issuers are not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. The Issuers covenant that they will take such further action as
any Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)). Upon the written request of
any Holder of Transfer Restricted Securities, the Issuers shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Issuers to register any of their securities pursuant to the Exchange
Act.
9. Underwritten Registrations. If any of the Transfer Restricted
--------------------------
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a
11
<PAGE>
majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Issuers (which shall
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of
------------- ----------------------
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Issuers have obtained the written consent of Holders of a majority in aggregate
principal amount of the Notes, the Exchange Notes and the Private Exchange
Notes, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Notes, Exchange Notes or
Private Exchange Notes are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of other Holders may be
given by Holders of a majority in aggregate principal amount of the Notes, the
Exchange Notes and the Private Exchange Notes being sold by such Holders
pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
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permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Issuers in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy in
like manner to Chase Securities Inc.;
(2) if to the Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
(3) if to the Issuers, initially at the address of the Issuers set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
----------------------
Issuers and their successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts (which may be delivered in original form or by telecopier) and
by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a) the term
-------------------
"business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary"
12
<PAGE>
has the meaning set forth in Rule 405 under the Securities Act and (c)
except where otherwise expressly provided, the term "affiliate" has the
meaning set forth in Rule 405 under the Securities Act.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Issuers or by any
--------
Holder of any of their obligations under this Agreement, each Holder or the
Issuers, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the
recovery of damages for a breach by the Issuers of their obligations under
Sections 1 or 2 hereof for which liquidated damages have been paid pursuant
to Section 3 hereof), will be entitled to specific performance of its
rights under this Agreement. The Issuers and each Holder agree that
monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by them of any of the provisions of this Agreement
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate.
(i) No Inconsistent Agreements. The Issuers represent, warrant and
--------------------------
agree that (i) they have not entered into, shall not, on or after the date
of this Agreement, enter into any agreement that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof, (ii) they have not previously entered into any
agreement which remains in effect granting any registration rights with
respect to any of their debt securities to any person and (iii) without
limiting the generality of the foregoing, without the written consent of
the Holders of a majority in aggregate principal amount of the then
outstanding Transfer Restricted Notes, they shall not grant to any person
the right to request the Issuers to register any debt securities of the
Issuers under the Securities Act unless the rights so granted are not in
conflict or inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Issuers nor any of
-----------------------------
their security holders (other than the Holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities
of the Issuers in any Shelf Registration or Registered Exchange Offer other
than Transfer Restricted Notes.
(k) Severability. The remedies provided herein are cumulative and not
------------
exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
13
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and the Initial Purchaser.
Very truly yours,
MEDIACOM LLC
By /s/ MARK E. STEPHAN
--------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
MEDIACOM CAPITAL CORPORATION
By /s/ MARK E. STEPHAN
--------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ JAMES P. CASEY
-----------------------------------
Authorized Signatory
14
<PAGE>
EXHIBIT A
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Notes where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Issuers have agreed that, for a period of 180 days
after the Expiration Date (as defined herein), they will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
A1
<PAGE>
EXHIBIT B
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Notes, where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
B1
<PAGE>
EXHIBIT C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Issuers have agreed that, for a
period of 180 days after the Expiration Date, they will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until _______________, 199_, all dealers
effecting transactions in the Exchange Notes may be required to deliver a
prospectus.
The Issuers will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Registered Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Registered Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commission or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Notes) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
C1
<PAGE>
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
C2
<PAGE>
Exhibit 4.2(c)
EXECUTION COPY
MEDIACOM LLC
MEDIACOM CAPITAL CORPORATION
$125,000,000
7 7/8% Senior Notes due 2011
PURCHASE AGREEMENT
------------------
February 19, 1999
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Mediacom LLC, a New York limited liability company ("Mediacom" and,
--------
together with its direct and indirect Subsidiaries (as defined herein), and
Mediacom Capital (as defined herein), the "Company"), and Mediacom Capital
-------
Corporation, a New York corporation and a wholly-owned subsidiary of Mediacom
("Mediacom Capital" and, together with Mediacom, the "Issuers"), propose to
---------------- -------
issue and sell $125,000,000 aggregate principal amount of their 7 7/8% Senior
Notes due 2011 (the "Notes"). The Notes will be issued pursuant to an Indenture
-----
to be dated as of February 26, 1999 (the "Indenture") between the Issuers and
---------
Bank of Montreal Trust Company, as trustee (the "Trustee"). The Issuers hereby
-------
confirm their agreement with Chase Securities Inc. (the "Initial Purchaser")
-----------------
concerning the purchase of the Notes from the Issuers by the Initial Purchaser.
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Securities
----------
Act"), in reliance upon an exemption therefrom. The Issuers will prepare an
- ---
offering memorandum dated the date hereof (including the annexes thereto, the
"Offering Memorandum") setting forth information concerning the Issuers and the
-------------------
Notes. Copies of the Offering Memorandum will be delivered by the Issuers to the
Initial Purchaser pursuant to the terms of this Agreement. Any references herein
to the Offering Memorandum shall be deemed to include all amendments and
supplements thereto, unless otherwise noted. The Issuers hereby confirm that
they have authorized the use of the Offering Memorandum in connection with the
offering and resale of the Notes by the Initial Purchaser in accordance with
Section 2.
Holders of the Notes (including the Initial Purchaser and its direct
and indirect transferees) will be entitled to the benefits of an Exchange and
Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Issuers
-----------------------------
will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
----------
"Exchange Offer Registration Statement") registering an issue of senior notes of
-------------------------------------
the Issuers (the "Exchange Notes") which are identical in all material respects
--------------
to the Notes (except that the Exchange Notes will not
<PAGE>
contain terms with respect to transfer restrictions) and (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement").
----------------------------
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Issuers. The
---------------------------------------------------------
Issuers represent and warrant to, and agree with, the Initial Purchaser on and
as of the date hereof and the Closing Date (as defined in Section 3) that:
(a) The Offering Memorandum, as of its date, did not, and on the
Closing Date the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
--------
Issuers make no representation or warranty as to information contained in or
omitted from the Offering Memorandum in reliance upon and in conformity with
written information relating to the Initial Purchaser furnished to the Issuers
by or on behalf of the Initial Purchaser specifically for use therein (the
"Initial Purchaser's Information").
-------------------------------
(b) The Offering Memorandum, as of its date, contains all of the
information that, if requested by a prospective purchaser of the Notes, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchaser contained in Section 2 and its compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Notes to the Initial Purchaser and the offer, resale
and delivery of the Notes by the Initial Purchaser in the manner contemplated by
this Agreement and the Offering Memorandum, to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
-------------------
(d) Each of Mediacom, Mediacom California LLC ("Mediacom
--------
California"), Mediacom Arizona LLC ("Mediacom Arizona"), Mediacom Delaware LLC
- ---------- ----------------
("Mediacom Delaware") and Mediacom Southeast LLC ("Mediacom Southeast" and
----------------- ------------------
together with Mediacom California, Mediacom Delaware and Mediacom Arizona, the
"Subsidiaries"), has been duly formed and is validly existing as a limited
------------
liability company in good standing under the laws of its respective jurisdiction
of formation, is duly qualified to do business and is in good standing as a
foreign limited liability company in each jurisdiction in which its respective
ownership or lease of property or the conduct of its businesses requires such
qualification, and has all power and authority necessary to own or hold its
properties and to conduct the businesses in which it is engaged, except where
the failure to so qualify or have such power or authority would not, singularly
or in the aggregate, have a material adverse effect on the condition (financial
or otherwise), or in the results of operations, business affairs, management or
business prospects of the Issuers and the Subsidiaries taken as a whole, whether
or not arising in the ordinary course of business (a "Material Adverse Effect").
-----------------------
Mediacom's only subsidiaries are Mediacom Capital and the Subsidiaries.
(e) Mediacom Capital has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of New
York, is duly qualified to do
-2-
<PAGE>
business and is in good standing as a foreign corporation in each jurisdicti on
in which its ownership or lease of property or the conduct of its businesses
requires such qualification, and has all power and authority necessary to own or
hold its properties and to conduct the businesses in which it is engaged, except
where the failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect. Mediacom Capital
has no subsidiaries.
(f) The Issuers and the Subsidiaries have an authorized
capitalization as set forth in the Offering Memorandum under the heading
"Capitalization;" all of the limited liability membership interests in Mediacom
have been duly and validly authorized and issued and are fully paid and non-
assessable and were not issued in violation of any preemptive or similar rights;
the limited liability membership interests in Mediacom conform in all material
respects to the description thereof contained in the Offering Memorandum. Except
as described in the Offering Memorandum, all of the limited liability membership
interests in Mediacom California, Mediacom Southeast, Mediacom Arizona and
Mediacom Delaware have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly by Mediacom, free and clear of
any lien, charge, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party. All of the outstanding shares of
capital stock of Mediacom Capital have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly by Mediacom,
free and clear of any lien, charge, encumbrance, security interest, restriction
upon voting or transfer or any other claim of any third party.
(g) The Issuers have full right, power and authority to execute and
deliver this Agreement, the Indenture, the Registration Rights Agreement, the
Notes and the Exchange Notes (collectively, the "Transaction Documents") and to
---------------------
perform their obligations hereunder and thereunder; and all corporate action
required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(h) This Agreement has been duly authorized, executed and delivered
by the Issuers.
(i) The Registration Rights Agreement has been duly authorized by the
Issuers and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally binding
agreement of the Issuers enforceable against the Issuers in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity or at
law); provided that no representation or warranty is made with respect to any
provision of such agreement purporting to require indemnification of, or
contribution to, the liability, losses, damages or claims of any person to the
extent that such provision may be limited by applicable law.
(j) The Indenture has been duly authorized by the Issuers and, when
duly executed and delivered in accordance with its terms by each of the parties
thereto, will constitute a valid and legally binding agreement of the Issuers
enforceable against the Issuers in accordance with its terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law). On the Closing Date,
the Indenture will conform in all material respects to the
-3-
<PAGE>
requirements of the Trust Indenture Act and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
(k) The Notes, the Private Exchange Notes (as defined in the
Registration Rights Agreement) and the Exchange Notes have been duly authorized
by the Issuers and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will be duly and
validly issued and outstanding and will constitute valid and legally binding
obligations of the Issuers entitled to the benefits of the Indenture and
enforceable against the Issuers in accordance with their terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(l) Each Transaction Document, the Operating Agreement, the
Management Agreements (as defined below), the agreements comprising the
Subsidiary Credit Facilities and the Seller Note conform in all material
respects to the descriptions thereof contained in the Offering Memorandum.
(m) The execution, delivery and performance by the Issuers of each of
the Transaction Documents, the issuance, authentication, sale and delivery of
the Notes, the Private Exchange Notes and the Exchange Notes and compliance by
the Issuers with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default or Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Issuers or the Subsidiaries pursuant to, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to which
the Issuers or the Subsidiaries is a party or by which the Issuers or the
Subsidiaries is bound or to which any of the property or assets of the Issuers
or the Subsidiaries is subject, nor will such actions result in any violation of
the provisions of the charter, memorandum of association, by-laws, operating
agreement, certificate of formation, articles of organization or limited
liability company agreement, as applicable, of the Issuers or the Subsidiaries
or any statute or any judgment, order, decree, rule or regulation of any court
or arbitrator or governmental agency or body having jurisdiction over the
Issuers or the Subsidiaries or any of their properties or assets including,
without limitation, any law, statute, rule or regulation or any judgement,
decree or order applicable to the cable television industry in general; and no
consent, approval, authorization or order of, or filing or registration with,
any such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation, including, without
limitation, under the Communications Act of 1934, as amended (the
"Communications Act"), the Cable Communications Policy Act of 1984 (the "1984
------------------ ----
Cable Act"), the Cable Television Consumer Protection and Competition Act of
- ---------
1992 (the "1992 Cable Act"), the Telecommunications Act of 1996 (the "1996
-------------- ----
Telecom Act" and, together with the Communications Act, the 1984 Cable Act and
- -----------
the 1992 Cable Act, the "Cable Acts") or any order, rule or regulation of the
----------
Federal Communications Commission ("FCC") is required for the execution,
---
delivery and performance by the Issuers of each of the Transaction Documents,
the issuance, authentication, sale and delivery of the Notes, the Private
Exchange Notes and the Exchange Notes and compliance by the Issuers with the
terms thereof and the consummation of the transactions contemplated by the
Transaction Documents, except for such consents, approvals, authorizations,
orders, licenses, filings, registrations or qualifications (i) as have been
obtained and are in full force and effect under the Cable Acts or any order,
rule or regulation of the FCC and such as may be required under state securities
or Blue Sky laws in connection with the purchase and resale of the Notes by the
Initial
-4-
<PAGE>
Purchaser and (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement. As used herein, a "Repayment Event" means any
---------------
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by any of the Issuers or the Subsidiaries.
(n) Arthur Andersen LLP are independent certified public accountants
with respect to the Issuers and the Subsidiaries within the meaning of the
Securities Act and Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants ("AICPA") and its interpretations and
-----
rulings thereunder. The historical financial statements (including the related
notes) of the Issuers and the Subsidiaries contained in the prospectus dated
September 1, 1998 which is part of the Offering Memorandum (the "Prospectus")
----------
comply in all material respects with the requirements applicable to a
registration statement on Form S-1 under the Securities Act (except that certain
supporting schedules are omitted) and the historical financial statements
(including the related notes) of the Issuers and the Subsidiaries contained in
the Form 10-Q for the quarter ended September 30, 1998 which is part of the
Offering Memorandum (the "Form 10-Q") comply in all material respects with the
---------
requirements applicable to Form 10-Q under the Exchange Act; such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby and
fairly present the financial position of the entities purported to be covered
thereby at the respective dates indicated and the results of their operations
and their cash flows for the respective periods indicated; and the financial
information contained in the Prospectus under the headings "Summary--Summary
Historical and Pro Forma Financial and Operating Data," "Capitalization,"
"Selected Historical and Pro Forma Consolidated Financial and Operating Data,"
"Unaudited Pro Forma Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Management--
Executive Compensation" and in the Form 10-Q under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
derived from the accounting records of the Company and the Cablevision Systems
and fairly present the information purported to be shown thereby. The pro forma
financial information contained in the Offering Memorandum has been prepared on
a basis consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified therein),
includes all material adjustments to the historical financial information
required by Rule 11-02 of Regulation S-X under the Securities Act and the
Exchange Act to reflect the transactions described in the Offering Memorandum,
gives effect to assumptions made on a reasonable basis and fairly presents the
historical and proposed transactions contemplated by the Offering Memorandum and
the Transaction Documents. The other historical financial and statistical
information and data included in the Offering Memorandum are, in all material
respects, fairly presented.
(o) There are no legal or governmental proceedings pending to which
the Issuers or the Subsidiaries is a party or of which any property or assets of
the Issuers or the Subsidiaries is the subject which, singularly or in the
aggregate, if determined adversely to the Issuers or the Subsidiaries, could
reasonably be expected to have a Material Adverse Effect; and to the best
knowledge of the Issuers, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(p) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Notes, the Private Exchange Notes or the
Exchange Notes or suspends the sale of the Notes, the
-5-
<PAGE>
Private Exchange Notes or the Exchange Notes in any jurisdiction; no injunction,
restraining order or order of any nature by any federal or state court of
competent jurisdiction has been issued with respect to the Issuers or the
Subsidiaries which would prevent or suspend the issuance or sale of the Notes,
the Private Exchange Notes or the Exchange Notes or the use of the Offering
Memorandum in any jurisdiction; no action, suit or proceeding is pending against
or, to the best knowledge of the Issuers, threatened against or affecting the
Issuers or the Subsidiaries before any court or arbitrator or any governmental
agency, body or official, domestic or foreign, which could reasonably be
expected to interfere with or adversely affect the issuance of the Notes, the
Private Exchange Notes or the Exchange Notes or in any manner draw into question
the validity or enforceability of any of the Transaction Documents or any action
taken or to be taken pursuant thereto; and the Issuers have complied with any
and all requests by any securities authority in any jurisdiction for additional
information to be included in the Offering Memorandum.
(q) None of the Issuers or the Subsidiaries is (i) in violation of
its charter, by-laws, memorandum of association, certificate of formation,
articles of organization, operating agreement or limited liability company
agreement, as applicable, (ii) in default in any material respect, and no event
has occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or
condition contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or (iii)
in violation in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be subject,
except in the case of clauses (ii) and (iii) above, such default or violation
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(r) The Issuers and each of the Subsidiaries possess all material
franchises, licenses, certificates, authorizations and permits issued by, and
have made all declarations and filings with, the appropriate federal, state or
local regulatory agencies, authorities or bodies, including the FCC, which are
necessary or desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering Memorandum,
except where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and, except as described in the
Offering Memorandum, none of the Issuers or the Subsidiaries has received
notification of any revocation or modification of any such franchise, license,
certificate, authorization or permit or has any reason to believe that any such
franchise, license, certificate, authorization or permit will not be renewed in
the ordinary course.
(s) The Issuers and each of the Subsidiaries have filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof and have paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Issuers or the Subsidiaries which has had (nor
do the Issuers or the Subsidiaries have any knowledge of any tax deficiency
which, if determined adversely to the Issuers or the Subsidiaries, could
reasonably be expected to have) a Material Adverse Effect.
(t) None of the Issuers or the Subsidiaries is (i) an "investment
company" or a company "controlled by" an investment company within the meaning
of the Investment Company Act of 1940, as amended (the "Investment Company
------------------
Act"), and the rules and regulations of the Commission thereunder or (ii) a
- ---
"holding company" or a "subsidiary company" of a holding company or an
"affiliate" thereof within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
-6-
<PAGE>
(u) The Issuers and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(v) The Issuers and each of the Subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as are
commercially reasonable in light of their respective business and properties.
None of the Issuers or the Subsidiaries has received notice from any insurer or
agent of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
(w) The Issuers and each of the Subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses, except
where such ownership or possession would not have a Material Adverse Effect; and
the conduct of their respective businesses will not conflict in any material
respect with, and the Issuers and the Subsidiaries have not received any notice
of any claim of conflict with, any such rights of others which would have a
Material Adverse Effect.
(x) The Issuers and the Subsidiaries have good and sufficient and
legal title in fee simple to, or have valid rights to lease or otherwise use,
all items of real and personal property which are material to the business of
the Issuers and the Subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except as described
in the Offering Memorandum and except such as (i) do not materially interfere
with the use made and proposed to be made of such property by the Issuers and
the Subsidiaries or (ii) could not reasonably be expected to have a Material
Adverse Effect; and all of the easements, rights-of-way, leases and subleases
material to the business of the Issuers and the Subsidiaries, and under which
the Issuers and the Subsidiaries hold properties described in the Offering
Memorandum, are in full force and effect, and none of the Issuers or the
Subsidiaries has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Issuers or the Subsidiaries
under any of the easements, rights-of-way, leases or subleases mentioned above,
or affecting or questioning the rights of the Issuers or the Subsidiaries to the
continued possession of the leased or subleased premises under any such lease or
sublease, or to the continued use of the property under any such easement or
right-of-way except such as could not reasonably be expected to have a Material
Adverse Effect.
(y) No labor disturbance by or dispute with the employees of the
Issuers or the Subsidiaries or, to the best knowledge of the Issuers is
contemplated or threatened.
(z) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section 4975
-----
of the Internal Revenue Code of 1986, as
-7-
<PAGE>
amended from time to time (the "Code")) or "accumulated funding deficiency" (as
----
defined in Section 302 of ERISA) or any of the events set forth in Section
4043(b) of ERISA (other than events with respect to which the 30-day notice
requirement under Section 4043 of ERISA has been waived) has occurred with
respect to any employee benefit plan of the Issuers or the Subsidiaries which
could reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with a pplicable
law, including ERISA and the Code; the Issuers and the Subsidiaries have not
incurred and do not expect to incur liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any pension plan for which
the Issuers or the Subsidiaries would have any liability; and each such pension
plan that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which could reasonably be expected to cause the loss of
such qualification.
(aa) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of toxic
or other wastes or other hazardous substances by, due to or caused by the
Issuers or the Subsidiaries (or, to the best knowledge of the Issuers, any other
entity (including any predecessor) for whose acts or omissions the Issuers or
the Subsidiaries is or could reasonably be expected to be liable) upon any of
the property now or previously owned or leased by the Issuers or the
Subsidiaries, or upon any other property, in violation of any statute or any
ordinance, rule, regulation, order, judgment, decree or permit or which would,
under any statute or any ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge, emission or
other release of any kind onto such property or into the environment surrounding
such property of any toxic or other wastes or other hazardous substances with
respect to which the Issuers have knowledge, except for any such disposal,
discharge, emission or other release of any kind which could not reasonably be
expected to have, singularly or in the aggregate with all such discharges and
other releases, a Material Adverse Effect.
(bb) None of the Issuers or, to the best knowledge of the Issuers, any
director, officer, agent, employee or other person associated with or acting on
behalf of the Issuers has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(cc) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Notes, the Private Exchange Notes and the
Exchange Notes and to the other transactions related thereto as described in the
Offering Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date (i) the
present fair market value (or present fair saleable value) of the assets of the
Company is not less than the total amount required to pay the probable
liabilities of the Company on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured, (ii) the
Company is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and commitments as they mature and become
due in the normal course of business, (iii) assuming the sale of the Notes, the
Private Exchange Notes and the Exchange Notes as contemplated by this Agreement
and the Offering Memorandum, the Company is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature and (iv) the
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<PAGE>
Company is not engaged in any business or transaction, and is not about to
engage in any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which the Company is engaged. In computing the
amount of such contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount t hat, in the light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(dd) Except as disclosed in the Offering Memorandum and except as
would not reasonably be expected to have a Material Adverse Effect, to the best
of the Issuers' knowledge, none of Mediacom, Mediacom Capital, Mediacom
Management or any of the Subsidiaries party (a "Principal Agreement Party") to
-------------------------
(i) the separate management agreements between Mediacom Management and each of
the Subsidiaries (the "Management Agreements"), (ii) the Operating Agreement,
---------------------
(iii) the agreements comprising the Western Credit Facility and (iv) the
agreements comprising the Southeast Credit Facility (collectively, the foregoing
are herein called the "Principal Agreements"), is in breach of, or in default in
--------------------
any material respect in the performance or observance of, any material
obligation, term, covenant or condition contained therein. Each of the Principal
Agreements that Mediacom has previously delivered to the Initial Purchaser is a
true and correct copy, and there have been no additional amendments,
alterations, modifications or waivers thereto or in the exhibits or schedules
thereto. Each Principal Agreement Party has duly and validly authorized,
executed and delivered each of the Principal Agreements to which it is a party
and, assuming due and valid authorization, execution and delivery by the other
parties thereto, each of the Principal Agreements is a valid and legally binding
agreement of such Principal Agreement Party.
(ee) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any membership interests
or shares of capital stock of or other equity or other ownership interest in the
Issuers or the Subsidiaries.
(ff) None of the Issuers or the Subsidiaries owns any "margin
securities" as that term is defined in Regulation U of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), and none of the
---------------------
proceeds of the sale of the Notes will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Notes to be considered a "purpose credit" within the meanings of Regulations
T, U or X of the Federal Reserve Board.
(gg) None of the Issuers or the Subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise to a
valid claim against the Issuers or the Initial Purchaser for a brokerage
commission, finder's fee or like payment in connection with the offering and
sale of the Notes, the Private Exchange Notes or the Exchange Notes.
(hh) The Notes satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act.
(ii) None of the Issuers, any of their affiliates or any person acting
on their behalf has engaged or will engage in any directed selling efforts (as
such term is defined in Regulation S under the Securities Act ("Regulation S"))
------------
with respect to the Notes, the Private Exchange Notes or
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<PAGE>
the Exchange Notes, and all such persons have complied and will comply with the
offering restrictions requirement of Regulation S to the extent applicable. No
representation is herein made with respect to the Initial Purchaser, any
affiliate thereof or any person acting on its behalf, or with respect to any
obligation thereof.
(jj) None of the Issuers or any of their affiliates has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in the
Securities Act), which is or will be integrated with the sale of the Notes, the
Private Exchange Notes or the Exchange Notes in a manner that would require
registration of the Notes under the Securities Act.
(kk) None of the Issuers or any of their affiliates or any other
person acting on their behalf has engaged, in connection with the offering of
the Notes, the Private Exchange Notes or the Exchange Notes, in any form of
general solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act.
(ll) Other than the $200,000,000 8 1/2% Senior Notes due 2008 of the
Issuers, there are no securities of the Issuers registered under the Exchange
Act, or listed on a national securities exchange or quoted in a U.S. automated
inter-dealer quotation system.
(mm) The Issuers have not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the Notes, the Private Exchange Notes or the
Exchange Notes.
(nn) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Offering Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(oo) None of the Issuers or the Subsidiaries does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Florida Statutes Section 517.075.
(pp) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no material
adverse change or any development involving a prospective material adverse
change in the condition (financial or otherwise) or in the results of
operations, business affairs, management or business prospects of the Issuers
and the Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, (ii) none of the Issuers and the Subsidiaries has incurred
any material liability or obligation, direct or contingent, other than in the
ordinary course of business, which would have a Material Adverse Effect, (iii)
none of the Issuers and the Subsidiaries has entered into any material
transaction other than in the ordinary course of business, which would have a
Material Adverse Effect and (iv) there has not been any change in the capital
stock, membership interests or long-term debt of the Issuers or any of the
Subsidiaries, or any dividend or distribution of any kind declared, paid or made
by the Issuers or the Subsidiaries on any class of its capital stock or
membership interests.
2. Purchase and Resale of the Notes.
--------------------------------
(a) On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions set forth herein, the
Issuers agree to issue and sell to the
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<PAGE>
Initial Purchaser, and the Initial Purchaser, agrees to purchase from the
Issuers, the principal amount of $125,000,000 of Notes at a purchase price equal
to 97.5% of the principal amount thereof. The Issuers shall not be obligated to
deliver any of the Notes except upon payment for all of the Notes to be
purchased as provided herein.
(b) The Initial Purchaser has advised the Issuers that it proposes to
offer the Notes for resale upon the terms and subject to the conditions set
forth herein and in the Offering Memorandum. The Initial Purchaser represents,
warrants and agrees that (i) it is purchasing the Notes pursuant to a private
sale exempt from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Notes by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a public offering
------------
within the meaning of Section 4(2) of the Securities Act and it has not engaged,
and will not engage, in any directed selling efforts within the meaning of Rule
902 under the Securities Act in connection with any of the Notes, and it will
comply with the offering restrictions and requirements of Regulation S, (iii) it
has solicited and will solicit offers for the Notes only from, and has offered
or sold and will offer, sell or deliver the Notes, as part of its initial
offering, only (A) within the United States to persons whom it reasonably
believes to be qualified institutional buyers ("Qualified Institutional Buyers")
------------------------------
as defined in Rule 144A under the Securities Act ("Rule 144A"), or if any such
---------
person is buying for one or more institutional accounts for which such person is
acting as fiduciary or agent, only when such person has represented to it that
each such account is a Qualified Institutional Buyer to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A and in
each case, in transactions in accordance with Rule 144A and (B) outside the
United States to persons other than U.S. persons (as defined in Rule 902 under
the Securities Act) and to whom the Initial Purchaser reasonably believes offers
and sales of the Notes may be made in reliance on Rule 903 under the Securities
Act in transactions meeting the requirements of Regulation S, and (iv) it is a
Qualified Institutional Buyer. The Initial Purchaser agrees that prior to or
simultaneously with the confirmation of sale by it to any purchaser of any of
the Notes purchased by the Initial Purchaser pursuant hereto, it shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Issuers shall have furnished to it prior to the date
of such confirmation of sale). In addition to the foregoing, the Initial
Purchaser acknowledges and agrees that the Issuers and, for the purposes of the
opinions to be delivered to the Initial Purchaser pursuant to Sections 5(d),
(e), (f) and (g), counsel for the Issuers and for the Initial Purchaser,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchaser and its compliance with the agreements contained in
this Section 2, and the Initial Purchaser hereby consents to such reliance. The
Initial Purchaser will advise the Issuers of the completion of the distribution
of Notes pursuant to Regulation S. The Initial Purchaser agrees that, at or
prior to confirmation of sale of Notes (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from it
during the restricted period a confirmation of notice to substantially the
following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering of the Notes and the date of original
issuance of the Notes, except in accordance with Regulation S or Rule
144A or any other available exemption from registration under
-11-
<PAGE>
the Securities Act. Terms used above have the meanings given to them
by Regulation S."
The Initial Purchaser represents that it has not entered into and
agrees that it will not enter into any contractual arrangement with respect to
the distribution or delivery of the Notes, except with the prior written consent
of the Issuers.
(c) The Initial Purchaser represents, warrants and agrees that (i) it
has not offered or sold and will not offer or sell, in the United Kingdom by
means of any document, any Notes offered hereby, other than to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 (the "Regulations"), (ii) it has complied
-----------
and will comply with all applicable provisions of the Financial Services Act
1986 and the Regulations with respect to anything done by it in relation to the
Notes in, from or otherwise involving the United Kingdom, and (iii) it has only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Notes to a person
who is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(d) The Issuers acknowledge and agree that the Initial Purchaser may
sell Notes to any affiliate of the Initial Purchaser and that any such affiliate
may sell Notes purchased by it to the Initial Purchaser.
3. Delivery of and Payment for the Notes.
-------------------------------------
(a) Delivery of and payment for the Notes shall be made at the
offices of Milbank, Tweed, Hadley & McCloy LLP, New York, New York, or at such
other place as shall be agreed upon by the Initial Purchaser and the Issuers, at
10:00 A.M., New York City time, on February 26, 1999, or at such other time or
date, not later than seven full business days thereafter, as shall be agreed
upon by the Initial Purchaser and the Issuers (such date and time of payment and
delivery being referred to herein as the "Closing Date").
------------
(b) On the Closing Date, payment of the purchase price for the Notes
shall be made to Mediacom by wire or book-entry transfer of same-day funds to
such account or accounts as Mediacom shall specify prior to the Closing Date or
by such other means as the parties hereto shall agree prior to the Closing Date
against delivery to the Initial Purchaser of the certificates evidencing the
Notes. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of the Initial Purchaser hereunder. Upon delivery, the Notes shall be in global
form, registered in such names and in such denominations as the Initial
Purchaser shall have requested in writing not less than two full business days
prior to the Closing Date. The Issuers agree to make one or more global
certificates evidencing the Notes available for inspection by the Initial
Purchaser in New York, New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Issuers. The Issuers agree with the
---------------------------------
Initial Purchaser:
(a) To advise the Initial Purchaser promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes any
statement of a material fact made in the
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<PAGE>
Offering Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from time to
time) in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; to advise the Initial Purchaser
promptly of any order preventing or suspending the use of the Offering
Memorandum, of any suspension of the qualification of the Notes for offering or
sale in any jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its best efforts to prevent the issuance of any
such order preventing or suspending the use of the Offering Memorandum or
suspending any such qualification and, if any such suspension is issued, to
obtain the lifting thereof at the earliest possible time.
(b) To furnish promptly to the Initial Purchaser and counsel for the
Initial Purchaser, without charge, as many copies of the Offering Memorandum
(and any amendments or supplements thereto) as may be reasonably requested.
(c) Prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to the Initial Purchaser and counsel for
the Initial Purchaser and not to effect any such amendment or supplement to
which the Initial Purchaser shall reasonably object by notice to the Issuers
after a reasonable period to review.
(d) If, at any time prior to completion of the resale of the Notes by
the Initial Purchaser, any event shall occur or condition exist as a result of
which it is necessary, in the opinion of counsel for the Initial Purchaser or
counsel for the Issuers, to amend or supplement the Offering Memorandum in order
that the Offering Memorandum will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading, or if it is necessary to amend or supplement the
Offering Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue statement or
omission or so that the Offering Memorandum, as so amended or supplemented, will
comply with applicable law.
(e) For so long as the Notes are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, to
furnish to holders of the Notes and prospective purchasers of the Notes
designated by such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act, unless the Issuers are then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act (the foregoing agreement
being for the benefit of the holders from time to time of the Notes and
prospective purchasers of the Notes designated by such holders).
(f) To promptly take from time to time such actions as the Initial
Purchaser may reasonably request to qualify the Notes for offering and sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may designate and to continue such qualifications in effect for so
long as required for the resale of the Notes, and to arrange for the
determination of the eligibility for investment of the Notes under the laws of
such jurisdictions as the Initial Purchaser may reasonably request; provided
--------
that the Issuers and the Subsidiaries shall not be obligated to qualify as
foreign corporations in any jurisdiction in which they are not so qualified or
to file a general consent to service of process in any jurisdiction.
(g) To assist the Initial Purchaser in arranging for the Notes to be
designated Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") Market securities in accordance with the rules and regulations
------
adopted by the National Association of
-13-
<PAGE>
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market and
----
for the Notes to be eligible for clearance and settlement through The Depository
Trust Company ("DTC"), the Euroclear System and Cedel Bank, societe anonyme.
---
(h) Not to, and to cause their affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated with
the sale of the Notes in a manner which would require registration of the Notes
under the Securities Act.
(i) Except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
not to, and to cause their affiliates not to, authorize or knowingly permit any
person acting on their behalf to, solicit any offer to buy or offer to sell the
Notes, the Private Exchange Notes or the Exchange Notes by means of any form of
general solicitation or general advertising within the meaning of Regulation D,
by means of any directed selling efforts (as defined in Regulation S under the
Securities Act) in connection with the Notes or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or indirectly,
any securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the Securities
Act to cease to be applicable to the offering and sale of the Notes to the
Initial Purchaser as contemplated by this Agreement and the Offering Memorandum.
(j) During the period from the Closing Date until two years after the
Closing Date or the effectiveness of the Exchange Offer Registration Statement
or Shelf Registration Statement, without the prior written consent of the
Initial Purchaser, not to, and not permit any of their affiliates (as defined in
Rule 144 under the Securities Act) which they control to, resell any of the
Notes, the Private Exchange Notes or Exchange Notes that have been reacquired by
them, except for Notes, the Private Exchange Notes or Exchange Notes purchased
by the Issuers or any of their affiliates and resold in a transaction registered
under the Securities Act.
(k) Not to, for so long as the Notes are outstanding, be or become,
or be or become owned by, an open-end investment company, unit investment trust
or face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act, and to not be or become, or be or
become owned by, a closed-end investment company required to be registered, but
not registered thereunder.
(l) In connection with the offering of the Notes, until the Initial
Purchaser shall have notified the Issuers of the completion of the resale of the
Notes, not to, and to cause their affiliated purchasers (as defined in
Regulation M under the Exchange Act) not to, either alone or with one or more
other persons, bid for or purchase, for any account in which they or any of
their affiliated purchasers has a beneficial interest, any Notes, or attempt to
induce any person to purchase any Notes; and not to, and to cause their
affiliated purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the Notes.
(m) In connection with the offering of the Notes, to make their
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchaser.
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<PAGE>
(n) To furnish to the Initial Purchaser on the date hereof a copy of
the independent accountants' report included in the Offering Memorandum signed
by the accountants rendering such report.
(o) To do and perform all things required to be done and performed by
them under this Agreement that are within their control prior to or after the
Closing Date, and to use their best efforts to satisfy all conditions precedent
on their part to the delivery of the Notes.
(p) To not take any action prior to the execution and delivery of the
Indenture that, if taken after such execution and delivery, would have violated
any of the covenants contained in the Indenture.
(q) Prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference with
respect to the Issuers, their condition (financial or otherwise) or results of
operations, business affairs, management or business prospects (except for
routine oral marketing communications in the ordinary course of business and
consistent with the past practices of the Issuers and of which the Initial
Purchaser is notified), without the prior written consent of the Initial
Purchaser, unless in the judgment of the Issuers and their counsel, and after
notification to the Initial Purchaser, such press release or communication is
required by law.
(r) To apply the net proceeds from the sale of the Notes as set forth
in the Offering Memorandum under the heading "Use of Proceeds."
5. Conditions of Initial Purchaser's Obligations. The obligations
---------------------------------------------
of the Initial Purchaser hereunder are subject to the accuracy, on and as of the
date hereof and the Closing Date, of the representations and warranties of the
Issuers contained herein, to the accuracy of the statements of the Issuers and
their officers made in any certificates delivered pursuant hereto, to the
performance by the Issuers of their obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial Purchaser
as promptly as practicable on or following the date of this Agreement or at such
other date and time as to which the Initial Purchaser may agree; and no stop
order suspending the sale of the Notes in any jurisdiction shall have been
issued and no proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) The Initial Purchaser shall not have discovered and disclosed to
the Issuers on or prior to the Closing Date that the Offering Memorandum or any
amendment or supplement thereto contains an untrue statement of a fact which, in
the opinion of counsel for the Initial Purchaser, is material or omits to state
any fact which, in the opinion of such counsel, is material and is required to
be stated therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and the
Offering Memorandum, and all other legal matters relating to the Transaction
Documents and the transactions contemplated thereby, shall be satisfactory in
all material respects to the Initial Purchaser, and the Issuers shall have
furnished to the Initial Purchaser all documents and information that it or its
counsel may reasonably request to enable them to pass upon such matters.
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<PAGE>
(d) Cooperman Levitt Winikoff Lester & Newman, P.C. shall have
furnished to the Initial Purchaser their written opinion, as counsel to the
Issuers, addressed to the Initial Purchaser and dated the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchaser, substantially to
the effect set forth in Annex B hereto.
(e) Fleischman & Walsh L.L.P. shall have furnished to the Initial
Purchaser their written opinion, as special regulatory counsel for the Issuers,
addressed to the Initial Purchaser and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser, substantially to the
effect set forth in Annex C hereto.
(f) Dow, Lohnes & Albertson, PLLC shall have furnished to the Initial
Purchaser their written opinion, as special regulatory counsel for the Initial
Purchaser, addressed to the Initial Purchaser and dated the Closing Date, in
form and substance satisfactory to the Initial Purchaser, substantially to the
effect set forth in Annex D hereto.
(g) The Initial Purchaser shall have received from Milbank, Tweed,
Hadley & McCloy LLP, counsel for the Initial Purchaser, such opinion or
opinions, dated the Closing Date, with respect to such matters as the Initial
Purchaser may reasonably require, and the Issuers shall have furnished to such
counsel such documents and information as they request for the purpose of
enabling them to pass upon such matters.
(h) The Issuers shall have furnished to the Initial Purchaser (i) a
letter (the "AA Initial Letter") of Arthur Andersen LLP, addressed to the
-----------------
Initial Purchaser and dated the date hereof, in form and substance satisfactory
to the Initial Purchaser, (ii) a letter (the "KPMG Initial Letter") of KPMG Peat
-------------------
Marwick LLP, addressed to the Initial Purchaser and dated the date hereof, in
form and substance satisfactory to the Initial Purchaser and (iii) a letter (the
"Keller Bruner Initial Letter") of Keller Bruner & Company, L.L.C., addressed to
----------------------------
the Initial Purchaser and dated the date hereof, in form and substance
satisfactory to the Initial Purchaser.
(i) The Issuers shall have furnished to the Initial Purchaser a
letter (the "AA Bring-Down Letter") of Arthur Andersen LLP, addressed to the
--------------------
Initial Purchaser and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Issuers and the Subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct of the AICPA
and its interpretations and rulings thereunder, (ii) stating, as of the date of
the AA Bring-Down Letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than
three business days prior to the date of the AA Bring-Down Letter), that the
conclusions and findings of such accountants with respect to the financial
information and other matters covered by the AA Initial Letter are accurate and
(iii) confirming in all material respects the conclusions and findings set forth
in the AA Initial Letter. The Issuers shall have furnished to the Initial
Purchaser a letter (the "KPMG Bring-Down Letter") of KPMG Peat Marwick LLP,
----------------------
addressed to the Initial Purchaser and dated the Closing Date (i) confirming
that they are independent public accountants with respect to the Cablevision
Systems within the meaning of Rule 101 of the Code of Professional Conduct of
the AICPA and its interpretations and rulings thereunder, (ii) stating, as of
the date of the KPMG Bring-Down Letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Offering Memorandum, as of a date not more
than three business days prior to the date of the KPMG Bring-Down Letter), that
the conclusions and findings of such accountants with respect to the financial
information and other matters covered by the KPMG
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<PAGE>
Initial Letter are accurate and (iii) confirming in all material respects the
conclusions and findings set forth in the KPMG Initial Letter. The Issuers shall
have furnished to the Initial Purchaser a letter (the "Keller Bruner Bring-Down
------------------------
Letter") of Keller Bruner & Company, L.L.C., addressed to the Initial Purchaser
- ------
and dated the Closing Date (i) confirming that they are independent public
accountants with respect to Benchmark Acquisition Fund II Limited Partnership
(the "Predecessor Company") within the meaning of Rule 101 of the Code of
-------------------
Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of the Keller Bruner Bring-Down Letter,
that the conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Keller Bruner Initial
Letter are accurate and (iii) confirming in all material respects the
conclusions and findings set forth in the Keller Bruner Initial Letter.
(j) The Issuers shall have furnished to the Initial Purchaser a
certificate, dated the Closing Date, of their respective chief executive
officers and chief financial officers stating that (A) such officers have
carefully examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and since the date of
the Offering Memorandum, no event has occurred which should have been set forth
in a supplement or amendment to the Offering Memorandum so that the Offering
Memorandum (as so amended or supplemented) would not include any untrue
statement of a material fact and would not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading and (C) as of the Closing Date, the representations and warranties of
the Issuers in this Agreement are true and correct in all material respects, the
Issuers have complied with all agreements, in all material respects, and
satisfied all conditions on their part to be performed or satisfied hereunder on
or prior to the Closing Date, and subsequent to the date of the most recent
financial statements contained in the Offering Memorandum, there has been no
material adverse change or any development involving a prospective material
adverse change in the condition (financial or otherwise), or in the results of
operations, business affairs, management or business prospects of the Issuers
and the Subsidiaries taken as a whole, except as set forth in the Offering
Memorandum.
(k) The Initial Purchaser shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered by a
duly authorized officer of each of the Issuers.
(l) The Indenture shall have been duly executed and delivered by the
Issuers and the Trustee, and the Notes shall have been duly executed and
delivered by the Issuers and duly authenticated by the Trustee.
(m) The Notes shall have been approved by the NASD for trading in the
PORTAL Market.
(n) If any event shall have occurred that requires the Issuers under
Section 4(d) to prepare an amendment or supplement to the Offering Memorandum,
such amendment or supplement shall have been prepared, the Initial Purchaser
shall have been given a reasonable opportunity to comment thereon, and copies
thereof shall have been delivered to the Initial Purchaser reasonably in advance
of the Closing Date.
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<PAGE>
(o) There shall not have occurred any invalidation of Rule 144A or
Regulation S under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the Exchange
Act by the Commission or any amendment or proposed amendment thereof by the
Commission which in the judgment of the Initial Purchaser would materially
impair the ability of the Initial Purchaser to purchase, hold or effect resales
of the Notes as contemplated hereby.
(p) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering Memorandum
(exclusive of any amendment or supplement thereto), there shall not have been
any change in the capital stock or membership interests, as applicable, or
long-term debt or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), results of operations,
business affairs, management, or business prospects of the Issuers and the
Subsidiaries taken as a whole, whether or not arising in the ordinary course of
business, the effect of which, in any such case described above, is, in the
judgment of the Initial Purchaser, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the Notes
on the terms and in the manner contemplated by this Agreement and the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(q) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
or body which would, as of the Closing Date, prevent the issuance or sale of the
Notes, the Private Exchange Notes or Exchange Notes; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Notes, the Private Exchange Notes or
Exchange Notes.
(r) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Notes by any
"nationally recognized statistical rating organization," as such term is defined
by the Commission for purposes of Rule 436(g)(2) of the rules and regulations of
the Commission under the Securities Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its rating of
the Notes.
(s) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or limited, or minimum prices
shall have been established on any such exchange or market by the Commission, by
any such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in any securities of the Issuers on any exchange
or in the over-the-counter market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared by federal
or New York state authorities or (iii) an outbreak or escalation of hostilities
or a declaration by the United States of a national emergency or war or (iv) a
material adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in the
United States shall be such) the effect of which, in the case of this clause
(iv), is, in the judgment of the Initial Purchaser, so material and adverse as
to make it impracticable or inadvisable to proceed with the sale or the delivery
of the Notes on the terms and in the manner contemplated by this Agreement and
in the Offering Memorandum (exclusive of any amendment or supplement thereto).
-18-
<PAGE>
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchaser.
6. Termination. The obligations of the Initial Purchaser hereunder
-----------
may be terminated by the Initial Purchaser, in its absolute discretion, by
notice given to and received by the Issuers prior to delivery of and payment for
the Notes if, prior to that time, any of the events described in Section 5(o),
(p), (q), (r) or (s) shall have occurred and be continuing.
7. Reimbursement of Initial Purchaser's Expenses. If (a) this
---------------------------------------------
Agreement shall have been terminated pursuant to Section 6, (b) the Issuers
shall fail to tender the Notes for delivery to the Initial Purchaser for any
reason permitted under this Agreement or shall fail to fulfill a condition
stated in Section 5, or (c) the Initial Purchaser shall decline to purchase the
Notes for any reason permitted under this Agreement, the Issuers shall reimburse
the Initial Purchaser for such out-of-pocket expenses (including reasonable fees
and disbursements of counsel) as shall have been reasonably incurred by the
Initial Purchaser in connection with this Agreement and the proposed purchase
and resale of the Notes.
8. Indemnification.
---------------
(a) The Issuers shall indemnify and hold harmless the Initial
Purchaser, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 8(a) and Section 9 as an
Initial Purchaser), from and against any loss, claim, damage or liability, joint
or several, or any action in respect thereof (including, without limitation, any
loss, claim, damage, liability or action relating to purchases and sales of the
Notes), to which the Initial Purchaser may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Offering Memorandum or in any amendment or supplement thereto or any
information provided by the Issuers to the holders of the Notes pursuant to
Section 4(e) in connection with the initial distribution of the Notes or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and shall
reimburse the Initial Purchaser promptly upon demand for any legal or other
expenses reasonably incurred by the Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Issuers
-------- -------
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with the Initial Purchaser's
Information.
(b) The Initial Purchaser shall indemnify and hold harmless the
Issuers, their affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Issuers
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 8(b) and Section 9 as the Issuers),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Issuers may become subject, whether
commenced or threatened, under the Securities
-19-
<PAGE>
Act, the Exchange Act, any other federal or state statutory law or regulation,
at common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Offering Memorandum or in
any amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with the Initial Purchaser's
Information, and shall reimburse the Issuers promptly upon demand for any legal
or other expenses reasonably incurred by the Issuers in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
- -------
from any liability which it may have under this Section 8 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
-------- -------
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
-------- -------
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 8(a) and 8(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without
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<PAGE>
its written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
The obligations of the Issuers and the Initial Purchaser in this
Section 8 and in Section 9 are in addition to any other liability that the
Issuers or the Initial Purchaser, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
9. Contribution. If the indemnification provided for in Section 8
------------
is unavailable or insufficient to hold harmless an indemnified party under
Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Issuers on the one hand and the
Initial Purchaser on the other from the offering of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers on
the one hand and the Initial Purchaser on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the one hand
and the Initial Purchaser on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Notes purchased under this Agreement (before deducting expenses) received
by or on behalf of the Issuers, on the one hand, and the total discounts and
commissions received by the Initial Purchaser with respect to the Notes
purchased under this Agreement, on the other, bear to the total gross proceeds
from the sale of the Notes under this Agreement, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to the Issuers or information supplied by the Issuers on
the one hand or to the Initial Purchaser's Information on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Issuers
and the Initial Purchaser agree that it would not be just and equitable if
contributions pursuant to this Section 9 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 9 shall be deemed
to include, for purposes of this Section 9, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 9, the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total discounts and
commissions received by the Initial Purchaser with respect to the Notes
purchased by it under this Agreement exceeds the amount of any damages which the
Initial Purchaser has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation
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<PAGE>
(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.
10. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Initial Purchaser, the Issuers
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 8 and 9 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Issuers and the Initial
Purchaser and in Section 4(e) with respect to holders and prospective purchasers
of the Notes during and at the end of the initial distribution of the Notes.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 10, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
11. Expenses. The Issuers agree with the Initial Purchaser to pay
--------
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Notes and any taxes payable in that connection; (b) the costs
incident to the preparation, printing and distribution of the Offering
Memorandum and any amendments or supplements thereto; (c) the costs of
reproducing and distributing each of the Transaction Documents; (d) the costs
incident to the preparation, printing and delivery of the certificates
evidencing the Notes, including stamp duties and transfer taxes, if any, payable
upon issuance of the Notes; (e) the fees and expenses of the Issuers' counsel
and independent accountants; (f) the fees and expenses of qualifying the Notes
under the securities laws of the several jurisdictions as provided in Section
4(f) and of preparing, printing and distributing Blue Sky Memoranda (including
related fees and expenses of counsel for the Initial Purchaser); (g) any fees
charged by rating agencies for rating the Notes; (h) the fees and expenses of
the Trustee and any paying agent (including related fees and expenses of any
counsel to such parties); (i) all expenses and application fees incurred in
connection with the application for the inclusion of the Notes on the PORTAL
Market and the approval of the Notes for book-entry transfer by DTC; and (j) all
other costs and expenses incident to the performance of the obligations of the
Issuers under this Agreement which are not otherwise specifically provided for
in this Section 11; provided, however, that except as provided in this Section
-------- -------
11 and Section 7, the Initial Purchaser shall pay its own costs and expenses.
12. Survival. The respective indemnities, rights of contribution,
--------
representations, warranties and agreements of the Issuers and the Initial
Purchaser contained in this Agreement or made by or on behalf of the Issuers or
the Initial Purchaser pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Notes and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, employees,
representatives, agents or controlling persons.
13. Notices, etc. All statements, requests, notices and agreements
-------------
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New York,
New York 10017, Attention: James P. Casey (telecopier no.: (212) 270-0994); or
(b) if to the Issuers, shall be delivered or sent by mail or telecopy
transmission to the address of Mediacom set forth in the Offering Memorandum,
Attention: Rocco B. Commisso (telecopier no.: (914) 695-2699);
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<PAGE>
provided that any notice to the Initial Purchaser pursuant to Section 8(c) shall
- --------
also be delivered or sent by mail to the Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Issuers shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchaser.
14. Definition of Terms. For purposes of this Agreement, (a) the
-------------------
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
15. Initial Purchaser's Information. The parties hereto acknowledge
-------------------------------
and agree that, for all purposes of this Agreement, the Initial Purchaser's
Information consists solely of the following information in the Offering
Memorandum: (i) the last paragraph on the front cover page concerning the terms
of the offering by the Initial Purchaser; (ii) the first paragraph on page (i)
of the Offering Memorandum concerning over-allotment and trading activities by
the Initial Purchaser; and (iii) the statements concerning the Initial Purchaser
contained in the third, fourth, fifth, sixth, seventh, ninth, eleventh and
twelfth paragraphs under the heading "Plan of Distribution."
16. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
17. Counterparts. This Agreement may be executed in one or more
------------
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
18. Amendments. No amendment or waiver of any provision of this
----------
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
19. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Issuers and the Initial
Purchaser in accordance with its terms.
Very truly yours,
MEDIACOM LLC
By /s/ MARK E. STEPHAN
---------------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
MEDIACOM CAPITAL CORPORATION
By /s/ MARK E. STEPHAN
---------------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ JAMES P. CASEY
--------------------------
Authorized Signatory
Address for notices pursuant to Section 8(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
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<PAGE>
ANNEX A
MEDIACOM LLC
MEDIACOM CAPITAL CORPORATION
$125,000,000
7 7/8% Senior Notes due 2011
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
February 26, 1999
CHASE SECURITIES INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Mediacom LLC, a New York limited liability company ("Mediacom" and,
--------
together with its direct and indirect Subsidiaries (as defined herein) and
Mediacom Capital (as defined herein), the "Company"), and Mediacom Capital
-------
Corporation, a New York corporation and a wholly-owned subsidiary of Mediacom
("Mediacom Capital" and, together with Mediacom, the "Issuers"), propose to
---------------- -------
issue and sell to Chase Securities Inc. (the "Initial Purchaser"), upon the
-----------------
terms and subject to the conditions set forth in a purchase agreement dated
February 19, 1999 (the "Purchase Agreement"), $125,000,000 aggregate principal
------------------
amount of their 7 7/8% Senior Notes due 2011 (the "Notes"). Capitalized terms
-----
used but not defined herein shall have the meanings given to such terms in the
Purchase Agreement.
As an inducement to the Initial Purchaser to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchaser thereunder, the Issuers agree with the Initial Purchaser, for the
benefit of the holders (including the Initial Purchaser) of the Notes, the
Exchange Notes (as defined herein) and the Private Exchange Notes (as defined
herein) (collectively, the "Holders"), as follows:
-------
1. Registered Exchange Offer. The Issuers shall (i) prepare and, not
-------------------------
later than 180 days following the date of original issuance of the Notes (the
"Issue Date"), file with the Commission a registration statement on Form S-1 or
----------
Form S-4, if the use of such form is then available (the "Exchange Offer
--------------
Registration Statement"), with respect to a proposed offer to the Holders of the
- ----------------------
Notes (the "Registered Exchange Offer") to issue and deliver to such Holders, in
-------------------------
exchange for the Notes, a like aggregate principal amount of debt securities of
the Issuers (the "Exchange Notes") that are identical in all material respects
--------------
to the Notes, except for the transfer restrictions relating to the Notes, (ii)
use their reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act no later than 300 days
after the Issue Date and the Registered Exchange Offer to be consummated no
later than 360 days after the Issue Date and (iii) keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
--------
Offer
- -----
<PAGE>
Registration Period"). The Exchange Notes will be issued under the Indenture or
- -------------------
an indenture (the "Exchange Notes Indenture") between the Issuers and the
------------------------
Trustee or such other bank or trust company that is reasonably satisfactory to
the Initial Purchaser, as trustee (the "Exchange Notes Trustee"), such indenture
----------------------
to be identical in all material respects to the Indenture, except for the
transfer restrictions relating to the Notes (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Issuers shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Notes for Exchange Notes or Private Exchange Notes (assuming that such
Holder (a) is not an affiliate of the Issuers or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b) is
not an Initial Purchaser holding Notes that have, or that are reasonably likely
to have, the status of an unsold allotment in an initial distribution, (c)
acquires the Exchange Notes in the ordinary course of such Holder's business and
(d) has no arrangements or understandings with any person to participate in the
distribution of the Exchange Notes) and to trade such Exchange Notes from and
after their receipt without any limitations or restrictions under the Securities
Act and without material restrictions under the securities laws of the several
states of the United States. The Issuers, the Initial Purchaser and each
Exchanging Dealer acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, each Holder that is a
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer"), is required to deliver a prospectus containing
-----------------
substantially the information set forth in Exhibit A hereto on the cover, in
Exhibit B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and in Exhibit C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Notes received by such Exchanging Dealer pursuant to the Registered
Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Notes acquired by it that have, or that are reasonably likely
to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Issuers shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Notes in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the Notes
held by such Holder (the "Private Exchange"), a like aggregate principal amount
----------------
of debt securities of the Issuers (the "Private Exchange Notes") that are
----------------------
identical in all material respects to the Exchange Notes, except for the
transfer restrictions relating to such Private Exchange Notes. The Private
Exchange Notes will be issued under the same indenture as the Exchange Notes,
and the Issuers shall use their reasonable best efforts to cause the Private
Exchange Notes to bear the same CUSIP number as the Exchange Notes.
In connection with the Registered Exchange Offer, the Issuers shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date on which notice
of the Registered Exchange Offer is mailed to the Holders;
-2-
<PAGE>
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Issuers shall:
(a) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Registered Exchange Offer and the Private Exchange;
(b) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(c) cause the Trustee or the Exchange Notes Trustee, as the case may
be, promptly to authenticate and deliver to each Holder, Exchange Notes or
Private Exchange Notes, as the case may be, equal in principal amount to
the Notes of such Holder so accepted for exchange.
The Issuers shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Notes; provided that (i) in the case where such
--------
prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Notes held by them and (ii)
the Issuers shall make such prospectus and any amendment or supplement thereto
available to any broker-dealer for use in connection with any resale of any
Exchange Notes for a period of not less than 90 days after the consummation of
the Registered Exchange Offer.
The Indenture or the Exchange Notes Indenture, as the case may be,
shall provide that the Notes, the Exchange Notes and the Private Exchange Notes
shall vote and consent together on all matters as one class and that none of the
Notes, the Exchange Notes or the Private Exchange Notes will have the right to
vote or consent as a separate class on any matter.
Interest on each Exchange Note and Private Exchange Note issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Issuers that at the time of the consummation of the
Registered Exchange Offer, (i) any Exchange Notes received by such Holder will
be acquired in the ordinary course of business, (ii) such Holder will have no
arrangements or understanding with any person to participate in the
-3-
<PAGE>
distribution of the Notes or the Exchange Notes within the meaning of the
Securities Act, and (iii) such Holder is not an affiliate of the Issuers or, if
it is such an affiliate, such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Issuers will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain 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 not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
------------------
applicable interpretations thereof by the Commission's staff the Issuers are not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Notes validly tendered pursuant to the Registered Exchange
Offer are not exchanged for Exchange Notes within 360 days after the Issue Date,
or (iii) the Initial Purchaser so requests with respect to Notes or Private
Exchange Notes not eligible to be exchanged for Exchange Notes in the Registered
Exchange Offer and held by it following the consummation of the Registered
Exchange Offer, or (iv) any applicable law or interpretations do not permit any
Holder to participate in the Registered Exchange Offer, or (v) any Holder that
participates in the Registered Exchange Offer does not receive freely
transferable Exchange Notes in exchange for tendered Notes, or (vi) the Issuers
so elect, then the following provisions shall apply:
(a) The Issuers shall use their reasonable best efforts to file as
promptly as practicable (but in no event more than 60 days after so required or
requested pursuant to this Section 2) with the Commission, and thereafter shall
use its reasonable best efforts to cause to be declared effective, a shelf
registration statement on an appropriate form under the Securities Act relating
to the offer and sale of the Transfer Restricted Securities (as defined below)
by the Holders thereof from time to time in accordance with the methods of
distribution set forth in such registration statement (hereafter, a "Shelf
-----
Registration Statement" and, together with any Exchange Offer Registration
- ----------------------
Statement, a "Registration Statement").
----------------------
(b) The Issuers shall use their reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Transfer Restricted
Securities for a period ending on the earlier of (i) two years from the Issue
Date or such shorter period that will terminate when all the Transfer Restricted
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto and (ii) the date on which the Notes become eligible for resale without
volume restrictions pursuant to Rule 144 under the Securities Act (in any such
case, such period being called the "Shelf Registration Period"). The Issuers
-------------------------
shall be deemed not to have used their reasonable best efforts to keep the Shelf
Registration Statement effective during the requisite period if they voluntarily
take any action that would result in Holders of Transfer Restricted Securities
covered thereby not being able to offer and sell such Transfer Restricted
Securities during that period, unless such action is required by applicable law.
-4-
<PAGE>
(c) Notwithstanding any other provisions hereof, the Issuers will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Shelf Registration Statement and any amendment
thereto (in either case, other than with respect to information included therein
in reliance upon or in conformity with written information furnished to the
Issuers by or on behalf of any Holder specifically for use therein (the
"Holders' Information")) does not contain 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 not misleading and (iii) any prospectus forming part
of any Shelf Registration Statement, and any supplement to such prospectus (in
either case, other than with respect to Holders' Information), does not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
------------------
of Transfer Restricted Securities will suffer damages if the Issuers fail to
fulfill their obligations under Section 1 or Section 2, as applicable, and that
it would not be feasible to ascertain the extent of such damages. Accordingly,
if (i) the applicable Registration Statement is not filed with the Commission on
or prior to 180 days after the Issue Date, (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is not
declared effective within 300 days after the Issue Date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of Commission's staff, if later, within 90
days after publication of the change in law or interpretation), (iii) the
Registered Exchange Offer is not consummated on or prior to 360 days after the
Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective within 300 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 90 days
after publication of the change in law or interpretation) but shall thereafter
cease to be effective (at any time that the Issuers are obligated to maintain
the effectiveness thereof) without being succeeded within 120 days by an
additional Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the Issuers
--------------------
will be obligated to pay liquidated damages to each Holder of Transfer
Restricted Securities, during the period of one or more such Registration
Defaults, in an amount equal to $0.192 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder until (i) the applicable
Registration Statement is filed, (ii) the Exchange Offer Registration Statement
is declared effective and the Registered Exchange Offer is consummated, (iii)
the Shelf Registration Statement is declared effective or (iv) the Shelf
Registration Statement again becomes effective, as the case may be. Following
the cure of all Registration Defaults, the accrual of liquidated damages will
cease. As used herein, the term "Transfer Restricted Securities" means (i) each
------------------------------
Note until the date on which such Note has been exchanged for a freely
transferable Exchange Note in the Registered Exchange Offer, (ii) each Note or
Private Exchange Note until the date on which it has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) each Note or Private Exchange Note until the
date on which it is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a), the Issuers shall
not be required to pay liquidated damages to a Holder of Transfer Restricted
Securities if such Holder failed to comply with its obligations to make the
representations set forth in the second to last paragraph of Section 1 or failed
to provide the information required to be provided by it, if any, pursuant to
Section 4(n).
-5-
<PAGE>
(b) The Issuers shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Issuers shall pay the liquidated damages due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be the
Issuers for these purposes), in trust, for the benefit of the Holders thereof,
prior to 10:00 a.m., New York City time, on the next interest payment date
specified by the Indenture and the Notes, sums sufficient to pay the liquidated
damages then due. The liquidated damages due shall be payable on each interest
payment date specified by the Indenture and the Notes to the record holder
entitled to receive the interest payment to be made on such date. Each
obligation to pay liquidated damages shall be deemed to accrue from and
including the date of the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
-----------------------
Statement, the following provisions shall apply:
(a) The Issuers shall (i) furnish to the Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and shall use its reasonable best efforts to reflect in each such
document, when so filed with the Commission, such comments as the Initial
Purchaser may reasonably propose; (ii) include the information set forth in
Exhibit A hereto on the cover, in Exhibit B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in
Exhibit C hereto in the "Plan of Distribution" section of the prospectus forming
a part of the Exchange Offer Registration Statement, and include the information
set forth in Exhibit D hereto in the Letter of Transmittal delivered pursuant to
the Registered Exchange Offer; and (iii) if requested by the Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement.
(b) The Issuers shall advise the Initial Purchaser, each Exchanging
Dealer and the Holders (if applicable) and, if requested by any such person,
confirm such advice in writing (which advice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any post-
effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose;
-6-
<PAGE>
(iv) of the receipt by the Issuers of any notification with respect
to the suspension of the qualification of the Notes, the Exchange Notes or the
Private Exchange Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein in
order that the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) The Issuers will make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Issuers will furnish to each Holder of Transfer Restricted
Notes included within the coverage of any Shelf Registration Statement, without
charge, at least one conformed copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if any such Holder so requests in writing, all exhibits thereto (including
those, if any, incorporated by reference).
(e) The Issuers will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Issuers consent to the use of such prospectus or
any amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities in connection with the offer and sale of the Transfer
Restricted Securities covered by such prospectus or any amendment or supplement
thereto.
(f) The Issuers will furnish to the Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without charge, at
least one conformed copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if the Initial Purchaser or Exchanging Dealer or any such Holder so
requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).
(g) The Issuers will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to the Initial
Purchaser, each Exchanging Dealer and such other persons that are required to
deliver a prospectus following the Registered Exchange Offer, without charge, as
many copies of the final prospectus included in the Exchange Offer Registration
Statement or the Shelf Registration Statement and any amendment or supplement
thereto as the Initial Purchaser, Exchanging Dealer or other persons may
reasonably request; and the Issuers consent to the use of such prospectus or any
amendment or supplement thereto by the Initial Purchaser, Exchanging Dealer or
other persons, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Issuers will use their reasonable best efforts to register or qualify, or
cooperate with the Holders of Notes, Exchange Notes or Private Exchange Notes
included therein and their respective counsel in connection with the
registration or qualification of, such Notes, Exchange Notes or Private Exchange
Notes for offer and sale under the securities or Blue Sky laws of such
jurisdictions as any such Holder reasonably requests in writing and do any and
all other acts or things necessary or
-7-
<PAGE>
advisable to enable the offer and sale in such jurisdictions of the Notes,
Exchange Notes or Private Exchange Notes covered by such Registration Statement;
provided that the Issuers will not be required to qualify generally to do
- --------
business in any jurisdiction where they are not then so qualified or to take any
action which would subject them to general service of process or to taxation in
any such jurisdiction where they are not then so subject.
(i) The Issuers will cooperate with the Holders of Notes, Exchange
Notes or Private Exchange Notes to facilitate the timely preparation and
delivery of certificates representing Notes, Exchange Notes or Private Exchange
Notes to be sold pursuant to any Registration Statement free of any restrictive
legends and in such denominations and registered in such names as the Holders
thereof may request in writing prior to sales of Notes, Exchange Notes or
Private Exchange Notes pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Issuers are required to maintain an effective
Registration Statement, the Issuers will promptly prepare and file with the
Commission 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 Notes, Exchange Notes or
Private Exchange Notes from a Holder, the prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Issuers will provide a CUSIP number for the Notes, the Exchange
Notes and the Private Exchange Notes, as the case may be, and provide the
applicable trustee with printed certificates for the Notes, the Exchange Notes
or the Private Exchange Notes, as the case may be, in a form eligible for
deposit with The Depository Trust Company.
(l) The Issuers will comply with all applicable rules and
regulations of the Commission and will make generally available to their
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earning statement satisfying the provisions
of Section 11(a) of the Securities Act; provided that in no event shall such
--------
earning statement be delivered later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Issuers' first fiscal quarter commencing after the effective date
of the applicable Registration Statement, which statement shall cover such 12-
month period.
(m) The Issuers will cause the Indenture or the Exchange Notes
Indenture, as the case may be, to be qualified under the Trust Indenture Act as
required by applicable law in a timely manner.
(n) The Issuers may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Issuers such information concerning the Holder and the
distribution of such Transfer Restricted Notes as the Issuers may from time to
time reasonably require for inclusion in such Shelf Registration Statement, and
the Issuers may exclude from such registration the Transfer Restricted
Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer
-8-
<PAGE>
Restricted Securities that, upon receipt of any notice from the Issuers pursuant
to Section 4(b)(ii) through (v), such Holder will discontinue disposition of
such Transfer Restricted Securities until such Holder's receipt of copies of the
supplemental or amended prospectus contemplated by Section 4(j) or until advised
in writing (the "Advice") by the Issuers that the use of the applicable
------
prospectus may be resumed. If the Issuers shall give any notice under Section
4(b)(ii) through (v) during the period that the Issuers are required to maintain
an effective Registration Statement (the "Effectiveness Period"), such
--------------------
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Transfer Restricted Securities covered by such
Registration Statement shall have received (x) the copies of the supplemental or
amended prospectus contemplated by Section 4(j) (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
(p) In the case of a Shelf Registration Statement, the Issuers shall
enter into such customary agreements (including, if requested, an underwriting
agreement in customary form) and take all such other action, if any, as Holders
of a majority in aggregate principal amount of the Notes, Exchange Notes and
Private Exchange Notes being sold or the managing underwriters (if any) shall
reasonably request in order to facilitate any disposition of Notes, Exchange
Notes or Private Exchange Notes pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Issuers shall
(i) make reasonably available for inspection by a representative of, and Special
Counsel (as defined below) acting for, Holders of a majority in aggregate
principal amount of the Notes, Exchange Notes and Private Exchange Notes being
sold and any underwriter participating in any disposition of Notes, Exchange
Notes or Private Exchange Notes pursuant to such Shelf Registration Statement,
all relevant financial and other records, pertinent corporate documents and
properties of the Issuers and the Subsidiaries and (ii) use their reasonable
best efforts to have its officers, directors, employees, accountants and counsel
supply all relevant information reasonably requested by such representative,
Special Counsel or any such underwriter (an "Inspector") in connection with such
---------
Shelf Registration Statement.
(r) In the case of a Shelf Registration Statement, the Issuers
shall, if Notes, Exchange Notes and Private Exchange Notes being sold, their
Special Counsel or the managing underwriters (if any) in connection with such
Shelf Registration Statement, use their reasonable best efforts to cause (i)
their counsel to deliver an opinion relating to the Shelf Registration Statement
and the Notes, Exchange Notes or Private Exchange Notes, as applicable, in
customary form, (ii) their officers to execute and deliver all customary
documents and certificates requested by Holders of a majority in aggregate
principal amount of the Notes, Exchange Notes and Private Exchange Notes being
sold, their Special Counsel or the managing underwriters (if any) and (iii)
their independent public accountants to provide a comfort letter or letters in
customary form, subject to receipt of appropriate documentation as contemplated,
and only if permitted, by Statement of Auditing Standards No. 72.
5. Registration Expenses. The Issuers will bear all expenses
---------------------
incurred in connection with the performance of their obligations under Sections
1, 2, 3 and 4 and the Issuers will reimburse the Initial Purchaser and the
Holders for the reasonable fees and disbursements of one firm of attorneys (in
addition to any local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Notes, the Exchange Notes and the Private Exchange Notes
to be sold pursuant to each Registration Statement (the "Special Counsel")
---------------
acting for the Initial
-9-
<PAGE>
Purchaser or Holders in connection therewith (other than reimbursement in
connection with the Registered Exchange Offer).
6. Indemnification. (a) In the event of a Shelf Registration
---------------
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by the Initial Purchaser or Exchanging Dealer, as
applicable, the Issuers shall indemnify and hold harmless each Holder
(including, without limitation, the Initial Purchaser or Exchanging Dealer), its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls such Holder within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 6 and Section 7 as a Holder) from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, without limitation, any loss, claim, damage, liability or action
relating to purchases and sales of Notes, Exchange Notes or Private Exchange
Notes), to which that Holder may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
-------- -------
that the Issuers shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Holders' Information; and provided, further, that with respect to any such
-------- -------
untrue statement in or omission from any related preliminary prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Notes, Exchange Notes or Private Exchange
Notes to the extent that such loss, claim, damage, liability or action of or
with respect to such Holder results from the fact that both (A) a copy of the
final prospectus was not sent or given to such person at or prior to the written
confirmation of the sale of such Notes, Exchange Notes or Private Exchange Notes
to such person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in either
case, such failure to deliver the final prospectus was a result of non-
compliance by the Issuers with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless the Issuers, their affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls the Issuers within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
6(b) and Section 7 as the Issuers), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Issuers may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein
-10-
<PAGE>
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holders' Information furnished to
the Issuers by such Holder, and shall reimburse the Issuers for any legal or
other expenses reasonably incurred by the Issuers in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that no such Holder
-------- -------
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Notes, Exchange Notes or
Private Exchange Notes pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
- -------
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
-------- -------
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
-------- -------
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its
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<PAGE>
written consent or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
7. Contribution. If the indemnification provided for in Section 6 is
------------
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Issuers from the offering and sale of the Notes, on the
one hand, and a Holder with respect to the sale by such Holder of Notes,
Exchange Notes or Private Exchange Notes, on the other, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers on
the one hand and such Holder on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Issuers on the one hand and a Holder on the
other with respect to such offering and such sale shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Notes (before
deducting expenses) received by or on behalf of the Issuers as set forth in the
table on the cover of the Offering Memorandum, on the one hand, bear to the
total proceeds received by such Holder with respect to its sale of Notes,
Exchange Notes or Private Exchange Notes, on the other. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to the Issuers or information supplied by the
Issuers on the one hand or to any Holders' Information supplied by such Holder
on the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 7 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7 shall be deemed
to include, for purposes of this Section 7, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 7, an indemnifying party that is a Holder of
Notes, Exchange Notes or Private Exchange Notes shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Notes, Exchange Notes or Private Exchange Notes sold by such indemnifying
party to any purchaser exceeds the amount of any damages which such indemnifying
party has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. 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.
8. Rules 144 and 144A. The Issuers shall use their reasonable best
------------------
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Issuers are not
required to file such reports, it will, upon the written
-12-
<PAGE>
request of any Holder of Transfer Restricted Securities, make publicly available
other information so long as necessary to permit sales of such Holder's
securities pursuant to Rules 144 and 144A. The Issuers covenant that they will
take such further action as any Holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon
the written request of any Holder of Transfer Restricted Securities, the Issuers
shall deliver to such Holder a written statement as to whether it has complied
with such requirements. Notwithstanding the foregoing, nothing in this Section 8
shall be deemed to require the Issuers to register any of their securities
pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
--------------------------
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Issuers (which shall
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of
------------- ----------------------
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Issuers have obtained the written consent of Holders of a majority in aggregate
principal amount of the Notes, the Exchange Notes and the Private Exchange
Notes, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Notes, Exchange Notes or
Private Exchange Notes are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of other Holders may be
given by Holders of a majority in aggregate principal amount of the Notes, the
Exchange Notes and the Private Exchange Notes being sold by such Holders
pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Issue in accordance with the provisions of this Section 10(b), which
address initially is, with respect to each Holder, the address of such Holder
maintained by the Registrar under the Indenture, with a copy in like manner to
Chase Securities Inc.;
(2) if to the Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
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<PAGE>
(3) if to the Issuers, initially at the address of the Issuers set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon
----------------------
the Issuers and their successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a) the
-------------------
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Issuers or by any
--------
Holder of any of their obligations under this Agreement, each Holder or the
Issuers, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery of
damages for a breach by the Issuers of their obligations under Sections 1 or 2
hereof for which liquidated damages have been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Issuers and each Holder agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by them of any
of the provisions of this Agreement and hereby further agree that, in the event
of any action for specific performance in respect of such breach, they shall
waive the defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. The Issuers represent, warrant and
--------------------------
agree that (i) they have not entered into, shall not, on or after the date of
this Agreement, enter into any agreement that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, (ii) they have not previously entered into any agreement
which remains in effect granting any registration rights with respect to any of
their debt securities to any person and (iii) without limiting the generality of
the foregoing, without the written consent of the Holders of a majority in
aggregate principal amount of the then outstanding Transfer Restricted Notes,
they shall not grant to any person the right to request the Issuers to register
any debt securities of the Issuers under the Securities Act unless the rights so
granted are not in conflict or inconsistent with the provisions of this
Agreement.
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<PAGE>
(j) No Piggyback on Registrations. Neither the Issuers nor any of
-----------------------------
their security holders (other than the Holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Issuers
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Notes.
(k) Severability. The remedies provided herein are cumulative and
------------
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Issuers and the Initial
Purchaser in accordance with its terms.
Very truly yours,
MEDIACOM LLC
By /s/ MARK E. STEPHAN
----------------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
MEDIACOM CAPITAL CORPORATION
By /s/ MARK E. STEPHAN
----------------------------------------
Name: Mark E. Stephan
Title: Chief Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ JAMES P. CASEY
-----------------------------
Authorized Signatory
Addresses for notices pursuant to Section 8(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
<PAGE>
EXHIBIT A
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Notes where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Issuers have agreed that, for a period of 180 days
after the Expiration Date (as defined herein), they will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
-A1-
<PAGE>
EXHIBIT B
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Notes, where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
-B1-
<PAGE>
EXHIBIT C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Issuers have agreed that, for a
period of 180 days after the Expiration Date, they will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until _______________, 199_, all dealers
effecting transactions in the Exchange Notes may be required to deliver a
prospectus.
The Issuers will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Registered Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Registered Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commission or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Notes) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
-C1-
<PAGE>
EXHIBIT D
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
-D1-
<PAGE>
ANNEX B
[Form of Opinion of Cooperman Levitt Winikoff Lester & Newman, P.C.]
Cooperman Levitt Winikoff Lester & Newman, P.C. shall have furnished
to the Initial Purchaser their written opinion, as counsel to the Issuers,
addressed to the Initial Purchaser and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser, substantially to the
effect set forth below:
(i) each of Mediacom and the Subsidiaries has been duly formed and
is validly existing as a limited liability company in good standing under
the laws of its respective jurisdiction of formation, has all power and
authority necessary to own or hold its properties and to conduct the
businesses in which it is engaged (except where the failure to so qualify
or have such power or authority would not, singularly or in the aggregate,
have a Material Adverse Effect) and perform its obligations under the
Purchase Agreement, and is duly qualified to do business and is in good
standing as a foreign limited liability company in the respective
jurisdictions indicated on Exhibit A hereto. Based solely upon a
---------
certificate of an officer of Mediacom as to where each of Mediacom and the
Subsidiaries presently owns or leases property or conducts business, we
know of no other jurisdiction where the failure to be so qualified or be in
good standing would, individually or in the aggregate, have a Material
Adverse Effect; and Mediacom's only subsidiaries are Mediacom Capital and
the Subsidiaries;
(ii) Mediacom Capital has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
New York, has the power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged, except where
the failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect, and perform
its obligations under the Purchase Agreement, and is duly qualified to do
business and is in good standing as a foreign corporation in the respective
jurisdictions indicated on Exhibit B hereto. Based solely upon a
---------
certificate of an officer of Mediacom Capital as to where Mediacom Capital
presently owns or leases property or conducts business, we know of no other
jurisdiction where the failure to be so qualified or be in good standing
would, individually or in the aggregate, have a Material Adverse Effect;
and Mediacom Capital has no subsidiaries;
(iii) the Issuers and the Subsidiaries have an authorized
capitalization as set forth in the Offering Memorandum under the "Pro
Forma" column below the caption "Capitalization," and all of the limited
liability membership interests of Mediacom have been duly and validly
authorized and issued and are fully paid and non-assessable and, to such
counsel's knowledge, were not issued in violation of any preemptive or
similar rights; the limited liability membership interests of Mediacom
conform in all material respects to the description thereof contained in
the Offering Memorandum; except as described in the Offering Memorandum,
all of the limited liability membership interests in Mediacom California,
Mediacom Southeast, Mediacom Arizona and Mediacom Delaware have been duly
and validly authorized and issued, are fully paid and non-assessable and,
to such counsel's knowledge, are owned directly or indirectly by Mediacom,
free and clear of any
<PAGE>
lien, charge, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party; and all of the outstanding
shares of capital stock of Mediacom Capital have been duly and validly
authorized and issued, are fully paid and non-assessable and, to such
counsel's knowledge, are owned directly or indirectly by Mediacom, free and
clear of any lien, charge, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party;
(iv) the statements in the Prospectus under the heading "Tax
Considerations," to the extent that they constitute summaries of matters of
law or regulation or legal conclusions, have been reviewed by such counsel
and fairly present the matters described therein in all material respects;
(v) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder;
(vi) each of the Issuers has all requisite limited liability
company or corporate, as the case may be, power and authority to execute
and deliver each of the Transaction Documents and to perform its
obligations thereunder; and all requisite limited liability company or
corporate, as the case may be, action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
have been duly and validly taken;
(vii) each of the Purchase Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by the Issuers;
and the Registration Rights Agreement, assuming due authorization,
execution and delivery by the Initial Purchaser, constitutes a valid and
legally binding agreement of the Issuers enforceable against the Issuers in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered in
a proceeding in equity or at law) and except to the extent that the
indemnification and contribution provisions thereof may be limited by
applicable law and public policy considerations;
(viii) the Indenture has been duly authorized, executed and delivered
by the Issuers and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and legally binding agreement
of the Issuers enforceable against the Issuers in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
by general equitable principles (whether considered in a proceeding in
equity or at law), and such counsel expresses no opinion as to the
enforceability of the waiver as to usury, extension or stay laws;
(ix) the Notes have been duly authorized and issued by the Issuers
and, assuming due authentication thereof by the Trustee and upon payment
and delivery in accordance with the Purchase Agreement and the Indenture,
will constitute valid and legally binding
-2-
<PAGE>
obligations of the Issuers entitled to the benefits of the Indenture and
enforceable against the Issuers in accordance with their terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law), and such counsel expresses no opinion as to the enforceability of the
waiver as to usury, extension or stay laws;
(x) each Transaction Document, the Operating Agreement, the
Management Agreements, the agreements comprising the Subsidiary Credit
Facilities and the Seller Note conform in all material respects to the
descriptions thereof contained in the Offering Memorandum;
(xi) the execution, delivery and performance by the Issuers of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Notes and compliance by the Issuers with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default or Repayment Event
under, or result in the creation or imposition of any lien, charge or other
encumbrance upon any property or assets of the Issuers or the Subsidiaries
pursuant to, any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument known to such counsel
to which the Issuers or the Subsidiaries is a party or by which the Issuers
or the Subsidiaries is bound or to which any of the property or assets of
the Issuers or the Subsidiaries is subject, nor will such actions result in
any violation of the provisions of the charter, memorandum of association,
by-laws, operating agreement, certificate of formation, articles of
organization or limited liability company agreement, as applicable, of the
Issuers or the Subsidiaries or (assuming compliance with all applicable
state securities or Blue Sky laws and assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 2 of the
Purchase Agreement) any statute or any judgment, order, decree, rule or
regulation known to such counsel of any court or arbitrator or governmental
agency or body having jurisdiction over the Issuers or the Subsidiaries or
any of their properties or assets except for any such conflict, default,
encumbrance or violation which would not, individually or in the aggregate,
have a Material Adverse Effect; and, to such counsel's knowledge, no
consent, approval, authorization or order of any such court or arbitrator
or governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Issuers of each of the Transaction Documents, the
issuance, authentication, sale and delivery of the Notes, the Private
Exchange Notes and the Exchange Notes and compliance by the Issuers with
the terms thereof and the consummation of the transactions contemplated by
the Transaction Documents, except for such consents, approvals or
authorizations (i) which have been obtained or made prior to the Closing
Date, (ii) as may be required under state securities laws in connection
with the purchase and resale of the Notes by the Initial Purchaser, and
(iii) as may be required to be obtained or made under the Securities Act
and applicable state securities laws as provided in the Registration Rights
Agreement;
-3-
<PAGE>
(xii) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which the Issuers or the Subsidiaries is a party or of
which any property or assets of the Issuers or the Subsidiaries is the
subject which (A) singularly or in the aggregate, if determined adversely
to the Issuers or the Subsidiaries, could reasonably be expected to have a
Material Adverse Effect or (B) could reasonably be expected to interfere
with or adversely affect the issuance of the Notes, the Private Exchange
Notes or the Exchange Notes or in any manner questions the validity or
enforceability of any of the Transaction Documents or any action taken or
to be taken pursuant thereto; and to the best knowledge of such counsel, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(xiii) to the best knowledge of such counsel, none of the Issuers or
the Subsidiaries is (A) in violation of its charter, by-laws, memorandum of
association, certificate of formation, articles of organization, operating
agreement or limited liability company agreement, as applicable, (B) in
default, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known to
such counsel to which it is a party or by which it is bound or to which any
of its property or assets is subject, except for any such default or event
which would not, individually or in the aggregate, have a Material Adverse
Effect or (C) in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject, except for any such violation which would not,
individually or in the aggregate, have a Material Adverse Effect;
(xiv) none of the Issuers or the Subsidiaries is (A) an "investment
company" or a company "controlled by" an investment company within the
meaning of the Investment Company Act and the rules and regulations of the
Commission thereunder, without taking account of any exemption under the
Investment Company Act arising out of the number of holders of the
Company's securities or (B) a "holding company" or a "subsidiary company"
of a holding company or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended;
(xv) neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the Notes
will violate Regulations T, U or X of the Federal Reserve Board; and
(xvi) assuming the accuracy of the representations, warranties and
agreements of the Issuers and of the Initial Purchaser contained in the
Purchase Agreement and their compliance with the agreements set forth
therein, no registration of the Notes under the Securities Act or (prior to
the commencement of the Registered Exchange Offer or the effectiveness of a
Shelf Registration Statement) qualification of the Indenture under the
Trust Indenture Act is required in connection with the issuance and sale of
the Notes by the Issuers and the initial offer, resale and delivery of the
Notes by the Initial Purchaser in the manner contemplated by the Purchase
Agreement and the Offering Memorandum.
-4-
<PAGE>
Such counsel shall also state that they have participated in conferences
with representatives of the Issuers, representatives of its independent
accountants and counsel and representatives of the Initial Purchaser at which
conferences the contents of the Offering Memorandum and related matters were
discussed and, although such counsel has not independently checked or verified
and are not passing upon or assuming responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
(except as expressly provided in paragraphs (iv) and (x) above), on the basis of
the foregoing, nothing has come to the attention of such counsel to cause such
counsel to believe that the Offering Memorandum (other than the financial
statements and related notes thereto and other financial information contained
therein, as to which such counsel need express no belief), as of the date
thereof and as of the Closing Date, contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Issuers and public officials which are furnished to the Initial Purchaser.
Such counsel may also state that in rendering such opinion, such counsel
expresses no opinion as to the Cable Acts, Section 111 of the Copyright of 1976,
as amended, or the published orders, rules and regulations of the FCC or the
U.S. Copyright Office.
-5-
<PAGE>
ANNEX C
[Form of Opinion of Fleischman & Walsh L.L.P.]
Fleischman & Walsh L.L.P. shall have furnished to the Initial
Purchaser their written opinion, as special regulatory counsel to the Issuers,
addressed to the Initial Purchaser and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser, substantially to the
effect set forth below.
(i) The communities listed in Attachment 1 to such counsel's
opinion have been registered with the FCC in connection with the operation
of the Systems. The filing of a registration statement constitutes initial
FCC authorization for the commencement of cable television operations in
the community registered.
(ii) The Subsidiaries hold certain FCC licenses, as that term is
defined below ("FCC Licenses"). All FCC Licenses and receive-only earth
station registrations held by the Subsidiaries in connection with the
operation of the Systems are listed on such Attachment 1. To the best of
such counsel's knowledge, all such FCC Licenses have been validly issued or
assigned to the present licensee and are currently in full force and
effect. Such counsel has no knowledge of any event which would allow, or
after notice or lapse of time which would allow, revocation or termination
of any FCC License held by the Subsidiaries or would result in any other
material impairment of the rights of the holder of such license. To the
best of such counsel's knowledge, no other FCC Licenses are required in
connection with the operation of the Systems by the Subsidiaries in the
manner such counsel has been advised they are presently being operated. For
the purposes of such counsel's opinion, an "FCC License" is defined as an
authorization, or renewal thereof, issued by the FCC authorizing the
transmission of radio energy through the airwaves.
(iii) Other than proceedings affecting the cable television industry
generally, there is no action, suit or proceeding pending before or, to the
best of such counsel's knowledge, threatened by the FCC which is reasonably
likely to have a Material Adverse Effect.
(iv) The Subsidiaries hold all authorizations and/or have filed all
notifications required by the FCC in connection with their operation on all
frequencies in the 108-137 MHz and 225-550 MHz bands which such counsel has
been advised are currently being utilized on the Systems. The geographic
and technical parameters with respect to the authorized use of these
frequencies are listed on such Attachment 1.
(v) The execution, delivery and performance by the Issuers of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Notes and compliance by the Issuers with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of any
of the terms or provisions of any of the Cable Acts or Section 111 of the
Copyright Act of 1976, as amended (the "Copyright Act") or any judgment,
order, decree,
<PAGE>
rule or regulation of the FCC or the U.S. Copyright Office, except for
conflicts, breaches and violations which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
(vi) No consent, approval, authorization or order of, or filing or
registration with the FCC or the U.S. Copyright Office under any of the
Cable Acts or Section 111 of the Copyright Act, or the published orders,
rules and regulations of the FCC or the U.S. Copyright Office is required
for the execution, delivery and performance by the Issuers of each of the
Transaction Documents, the issuance, authentication, sale and delivery of
the Notes and compliance by the Issuers with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents.
(vii) The statements in the Prospectus under the captions "Risk
Factors--Non-Exclusive Franchises; Non-Renewal or Termination of
Franchises," "Risk Factors--Regulation in the Cable Television Industry,"
"Business--Competition" and "Legislation and Regulation," and in the
Offering Memorandum under the caption "Risk Factors--Recent Developments
Relating to Competition in the Cable Television Industry," insofar as such
statements summarize applicable provisions of the Cable Acts and the
published orders, rules and regulations of the FCC, are accurate summaries
in all material respects of the provisions purported to be summarized under
such captions in the Prospectus; and the FCC statutes and regulations
summarized under such captions are the FCC statutes and regulations that
are material to the business of the Issuers and the Subsidiaries as
described in the Offering Memorandum.
(viii) In the course of such counsel's representation of the Issuers
and the Subsidiaries, no matters have come to such counsel's attention,
other than matters affecting the cable television industry generally, which
would reasonably be expected to have a Material Adverse Effect.
In rendering such opinion, such counsel may state that such opinion is
limited to such counsel's review of the Cable Acts, Section 111 of the Copyright
Act and the published orders, rules and regulations of the FCC and the U.S.
Copyright Office.
-2-
<PAGE>
ANNEX D
[Form of Opinion of Dow, Lohnes & Albertson, PLLC]
Dow, Lohnes & Albertson, PLLC shall have furnished to the Initial Purchaser
their written opinion, as special regulatory counsel to the Initial Purchaser,
addressed to the Initial Purchaser and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser, substantially to the
effect set forth below.
(i) The execution, delivery and performance by the Issuers of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Notes and compliance by the Issuers with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of any
of the terms or provisions of any of the Cable Acts, or any judgment,
order, decree, rule or regulation of the FCC, except for conflicts,
breaches and violations which individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
(ii) No consent, approval, authorization, order, license,
registration or qualification of or with the FCC is required under the
Cable Acts or the published orders, rules and regulations of the FCC is
required for the execution, delivery and performance by the Issuers of each
of the Transaction Documents, the issuance, authentication, sale and
delivery of the Notes and compliance by the Issuers with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications (i) as have been obtained and are
in full force and effect under the Communications Act, the Cable Acts or
any order, rule or regulation of the FCC or (ii) that may be required in
the future due to the operations or actions of the Company, the Company's
cable television systems or affiliated parties.
(iii) The statements in the Prospectus under the captions "Risk
Factors--Non-Exclusive Franchises; Non-Renewal or Termination of
Franchises," "Risk Factors--Regulation in the Cable Television Industry,"
"Business--Competition" and "Legislation and Regulation," and in the
Offering Memorandum under the caption "Risk Factors--Recent Developments
Relating to Competition in the Cable Television Industry," insofar as such
statements summarize applicable provisions of the Cable Acts and the
published orders, rules and regulations of the FCC, are accurate summaries
in all material respects of the provisions purported to be summarized under
such captions in the Prospectus and the Offering Memorandum; and the FCC
statutes and regulations summarized under such captions are the FCC
statutes and regulations that are material to the business of the Issuers
and the Subsidiaries as described in the Offering Memorandum.
In rendering such opinion, such counsel may state that such opinion is
limited to such counsel's review of the Cable Acts and the published orders,
rules and regulations of the FCC.
<PAGE>
Exhibit 10.5(d)
[EXECUTION COUNTERPART]
AMENDMENT NO. 3 TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 3 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated
as of July 1, 1998, between MEDIACOM CALIFORNIA LLC, a Delaware limited
liability company ("Mediacom California"); MEDIACOM DELAWARE LLC, a Delaware
-------------------
limited liability company ("Mediacom Delaware"); MEDIACOM ARIZONA LLC, a
-----------------
Delaware limited liability company ("Mediacom Arizona" and, together with
----------------
Mediacom California and Mediacom Delaware, the "Borrowers"); each of the lenders
---------
that is a signatory hereto identified under the caption "LENDERS" on the
signature pages hereto (each, individually, a "Lender" and, collectively, the
"Lenders"); THE CHASE MANHATTAN BANK, as administrative agent for the Lenders
-------
(in such capacity, the "Administrative Agent"); and FIRST UNION NATIONAL BANK,
--------------------
as documentation agent (in such capacity, the "Documentation Agent").
-------------------
The Borrowers, the Lenders, the Administrative Agent and the
Documentation Agent are party to a Second Amended and Restated Credit Agreement
dated as of June 24, 1997 (as heretofore modified and supplemented and in effect
on the date hereof, the "Credit Agreement"), providing, subject to the terms and
----------------
conditions thereof, for loans in an aggregate principal amount up to but not
exceeding $100,000,000. The Borrowers, the Lenders, the Administrative Agent and
the Documentation Agent wish to amend the Credit Agreement in certain respects,
and accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this Amendment
-----------
No. 3, terms defined in the Credit Agreement are used herein as defined therein.
Section 2. Amendments. Upon execution and delivery of this Amendment
----------
No. 3 by the Borrowers and Majority Lenders, but effective as of the date
hereof, the Credit Agreement shall be amended as follows:
2.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.02. Section 1.01 of the Credit Agreement shall be amended by adding
the following new definition and inserting the same in the appropriate
alphabetical location:
"Clearlake Acquisition" shall mean the acquisition by Mediacom
---------------------
California of substantially all of the assets of the cable television
systems of Jones Cable Fund 1 - B\C
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-2-
Joint Venture located in Lake County, California pursuant to an Asset
Purchase Agreement dated as of September 17, 1997 between Jones Cable
Fund 1 - B\C Joint Venture and Mediacom California.
2.03. Section 8.09(d) of the Credit Agreement is hereby amended
deleting clause (iii) thereof, inserting the word "and" at the end of clause (i)
thereof and replacing "; and" at the end of clause (ii) thereof with a period.
2.04. Section 8.12 of the Credit Agreement is hereby amended to read
in its entirety as follows:
"8.12 Capital Expenditures. The Borrowers will not permit the
aggregate amount of Capital Expenditures to exceed (i) $19,500,000 for the
period from and including the Effective Date through December 31, 1998,
(ii) $6,000,000 for the fiscal year ending on December 31, 1999 and (iii)
$4,500,000 for each fiscal year commencing after December 31, 1999. If the
aggregate amount of Capital Expenditures shall be less than $19,500,000 for
the period from and including the Effective Date through December 31, 1998,
then the shortfall shall be added to the amount of Capital Expenditures
permitted for the fiscal year ending on December 31, 1999 so long as the
upgrades and rebuilds with respect to the Spring 1997 Acquisitions and the
Clearlake Acquisition have not yet been completed."
Section 3. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 3 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 3 by signing any such counterpart. This
Amendment No. 3 shall be governed by, and construed in accordance with, the law
of the State of New York.
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
3 to be duly executed and delivered as of the day and year first above written.
MEDIACOM CALIFORNIA LLC
By
--------------------------------
Title:
MEDIACOM DELAWARE LLC
By
--------------------------------
Title:
MEDIACOM ARIZONA LLC
By
--------------------------------
Title:
LENDERS
-------
THE CHASE MANHATTAN BANK
By
--------------------------------
Title:
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-4-
FIRST UNION NATIONAL BANK
By
--------------------------------
Title:
BANK OF MONTREAL
By
--------------------------------
Title:
CIBC INC.
By
--------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
--------------------------------
Title:
MELLON BANK, N.A.
By
--------------------------------
Title:
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-5-
ADMINISTRATIVE AGENT
--------------------
THE CHASE MANHATTAN BANK, as
Administrative Agent
By
--------------------------------
Title:
DOCUMENTATION AGENT
-------------------
FIRST UNION NATIONAL BANK, as
Documentation Agent
By
--------------------------------
Title:
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
Exhibit 10.5(e)
[Execution Copy]
AMENDMENT NO. 4 TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 4 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as
of January 26, 1999, between MEDIACOM CALIFORNIA LLC, a Delaware limited
liability company ("Mediacom California"); MEDIACOM DELAWARE LLC, a Delaware
-------------------
limited liability company ("Mediacom Delaware"); MEDIACOM ARIZONA LLC, a
-----------------
Delaware limited liability company ("Mediacom Arizona" and, together with
----------------
Mediacom California and Mediacom Delaware, the "Borrowers"); each of the lenders
---------
that is a signatory hereto identified under the caption "LENDERS" on the
signature pages hereto (each, individually, a "Lender" and, collectively, the
"Lenders") and The Chase Manhattan Bank, as Administrative Agent (the
-------
"Administrative Agent").
--------------------
The Borrowers, the Lenders, the Administrative Agent and First Union
National Bank, as Documentation Agent, are party to a Second Amended and
Restated Credit Agreement dated as of June 24, 1997 (as heretofore modified and
supplemented and in effect on the date hereof, the "Credit Agreement"),
----------------
providing, subject to the terms and conditions thereof, for loans in an
aggregate principal amount up to but not exceeding $100,000,000. The Borrowers
wish to increase the Revolving Credit Commitments under the Credit Agreement
from $69,700,000 to $99,400,000 concurrently with a prepayment of the Term A
Loans in an amount equal to such increase and to amend the Credit Agreement in
certain other respects. The Lenders and the Administrative Agent are willing to
so agree and, accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this Amendment
-----------
No. 4, terms defined in the Credit Agreement are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of the conditions
----------
precedent specified in Section 5 below, but effective as of the date hereof, the
Credit Agreement shall be amended as follows:
2.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.02. Section 1.01 of the Credit Agreement shall be amended by adding
the following new definitions (to the extent not already included in said
Section 1.01) and inserting
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-2-
the same in the appropriate alphabetical locations and amending in their
entirety the following definitions (to the extent already included in said
Section 1.01), as follows:
"Amendment No. 4" shall mean Amendment No. 4 hereto dated as of January
---------------
26, 1999 between the Borrowers, the Lenders, the Administrative Agent and
the Documentation Agent.
"Amendment No. 4 Effective Date" shall mean the date upon which the
------------------------------
amendments provided for in Section 2 of Amendment No. 4 hereto shall become
effective.
"Revolving Credit Commitment" shall mean, as to each Revolving Credit
---------------------------
Lender, the obligation of such Lender to make Revolving Credit Loans in an
aggregate principal amount at any one time outstanding up to but not
exceeding the amount set forth opposite the name of such Lender on Schedule
1 to Amendment No. 4 or, in the case of a Person that becomes a Revolving
Credit Lender pursuant to an assignment permitted under Section 11.06(b)
hereof, as specified in the respective instrument of assignment pursuant to
which such assignment is effected (as the same may be reduced from time to
time pursuant to Section 2.03 or 2.09 hereof, or increased or reduced in
connection with any assignment pursuant to Section 11.06(b) hereof). The
original aggregate principal amount of the Revolving Credit Commitments
(after giving effect to Amendment No. 4) is $99,400,000.
2.03. Section 2.01 of the Credit Agreement is hereby amended by
inserting a new paragraph (f) at the end thereof to read as follows:
"(f) Amendment No. 4 Effective Date. On the Amendment No. 4 Effective
------------------------------
Date, all of the outstanding Term A Loans shall be prepaid be in full by
the Borrowers as provided in Section 5(ii) of Amendment No. 4 hereto.
Following such prepayment, all references in this Agreement to "Term A
Loans", "Term A Lenders" and the like shall be deemed to be inoperative."
2.04. The schedule set forth in Section 2.03(a) of the Credit Agreement
is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
(A) (B) (C)
Revolving Credit Revolving Credit Revolving Credit
Commitment Reduction Commitments Reduced Commitment Reduced
Date Falling on or by the Following to the Following
Nearest to: Amounts: Amounts:
----------- -------- --------
<S> <C> <C>
March 31, 1999 $1,600,000 $97,800,000
</TABLE>
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-3-
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1999 $1,600,000 $96,000,000
September 30, 1999 $1,600,000 $94,600,000
December 31, 1999 $1,600,000 $93,000,000
March 31, 2000 $2,275,000 $90,725,000
June 30, 2000 $2,275,000 $88,450,000
September 30, 2000 $2,275,000 $86,175,000
December 31, 2000 $2,275,000 $83,900,000
March 31, 2001 $2,950,000 $80,950,000
June 30, 2001 $2,950,000 $78,000,000
September 30, 2001 $2,950,000 $75,050,000
December 31, 2001 $2,950,000 $72,100,000
March 31, 2002 $3,400,000 $68,700,000
June 30, 2002 $3,400,000 $65,300,000
September 30, 2002 $3,400,000 $61,900,000
December 31, 2002 $3,400,000 $58,500,000
March 31, 2003 $3,850,000 $54,650,000
June 30, 2003 $3,850,000 $50,800,000
September 30, 2003 $3,850,000 $46,950,000
December 31, 2003 $3,850,000 $43,100,000
March 31, 2004 $4,525,000 $38,575,000
June 30, 2004 $4,525,000 $34,050,000
September 30, 2004 $4,525,000 $29,525,000
December 31, 2004 $4,525,000 $25,000,000
March 31, 2005 $7,850,000 $17,150,000
June 30, 2005 $7,850,000 $ 9,300,000
September 30, 2005 $9,300,000 $ 0
</TABLE>
2.05. Section 8.09(d)(ii) of the Credit Agreement shall be amended in
its entirety to read as follows:
"(ii) after giving effect to such payment during any fiscal quarter (the
"current fiscal quarter"), and to the making of any Capital Expenditures
----------------------
pursuant to the last paragraph of Section 8.12 hereof during the current
fiscal quarter, the Borrowers would (as at the last day of the most recent
fiscal quarter immediately prior to the current fiscal quarter) have been
in compliance on a pro forma basis with Section 8.10 hereof and the Senior
Leverage Ratio calculated on a pro forma basis is at the time less than
5.50 to 1
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-4-
(or, if lower, the applicable requirement at the time under Section 8.10(a)
hereof), the determination of such compliance and such Senior Leverage
Ratio to be determined as if (x) for purposes of calculating the Senior
Leverage Ratio and the Total Leverage Ratio, the amount of such payment,
together with the amount of any such Capital Expenditures, were added to
Indebtedness, and (y) for purposes of calculating the Interest Coverage
Ratio and Fixed Charge Coverage Ratio, the amount of such payment (and any
Cure Monies received during the period for which the Interest Coverage
Ratio or Fixed Charge Coverage Ratio is calculated), together with the
amount of any such Capital Expenditures, represented additional principal
of the Loans outstanding hereunder at all times during the respective
fiscal quarter for which such Ratios are calculated and the amount of
interest that would have been payable hereunder during such fiscal quarter
were recalculated to take into account such additional principal; and"
2.06. Section 8.12 of the Credit Agreement shall be amended by adding a
new paragraph at the end thereof to read as follows:
"In addition to the Capital Expenditures permitted under the preceding
paragraph, the Borrowers and their Subsidiaries may make additional Capital
Expenditures during any fiscal quarter in such amounts as would be
permitted under Section 8.09(d)(ii) (in the case of a payment of principal
of Affiliate Subordinated Indebtedness, as if such Capital Expenditure
constituted a payment in respect of Supplemental Capital thereunder)."
2.07. Section 8.13 of the Credit Agreement shall be amended in its
entirety to read as follows:
"8.13 Interest Rate Protection Agreements. The Borrowers will within 90
-----------------------------------
days of the Effective Date, enter into, and thereafter maintain in full
force and effect, one or more Interest Rate Protection Agreements with one
or more of the Lenders or their affiliates (and/or with a bank or other
financial institution having capital, surplus and undivided profits of at
least $500,000,000), that effectively enables the Borrowers (in a manner
satisfactory to the Majority Lenders) to protect themselves, in a manner
and on terms reasonably satisfactory to the Majority Lenders, against
adverse fluctuations in the three-month London interbank offered rates as
to a notional principal amount which, together with that portion of the
aggregate outstanding principal amount of Indebtedness of the Borrowers
bearing a fixed rate of interest, shall in the aggregate be at least equal
to 50% of the aggregate outstanding principal amount of the Indebtedness
(including Affiliate Subordinated Indebtedness) of the Borrowers."
Section 3. Consent. Subject to the satisfaction of the conditions
-------
precedent specified in Section 5 below, but effective as of the date hereof, the
Lenders hereby consent to the amendment of the instruments and other documents
evidencing or relating to Affiliate
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-5-
Subordinated Indebtedness to permit the rate of interest payable in respect
thereof to be equal to a rate of interest payable by Mediacom on its 8-1/2%
Senior Notes due 2008.
Section 4. Representations and Warranties. Each Borrower represents
------------------------------
and warrants to the Lenders that the representations and warranties set forth in
Section 7 of the Credit Agreement are true and complete on the date hereof as if
made on and as of the date hereof and as if each reference in said Section 7 to
"this Agreement" and "the Notes" included reference to this Amendment No. 4 and
to the New Notes (as defined herein below).
Section 5. Conditions Precedent. The effectiveness of the amendments
--------------------
set forth in Section 2 above, and the consent set forth in Section 3 above, is
subject to: (i) the condition that this Amendment No. 4 shall have been executed
and delivered by each Borrower, each Lender and the Administrative Agent (and
that the Parent Guarantors shall have executed and delivered their confirmation
and consent provided for on the signature pages hereto), in each case on or
before February 15, 1999, (ii) the prepayment, in accordance with the provisions
of Section 2.08 of the Credit Agreement, of Term A Loans in an aggregate amount
of $29,700,000 (which amount is the aggregate principal amount of Term A Loans
outstanding on the date hereof) together with the payment of all interest
accrued thereon in accordance with the provisions of Section 3.02 of the Credit
Agreement (and any amounts that may be payable under Section 5.05 of the Credit
Agreement in connection therewith), which prepayment may be made from any
source, including from the increase in Revolving Credit Commitments contemplated
hereby, and (iii) the receipt by the Administrative Agent of the following
documents, each of which shall be satisfactory to the Administrative Agent (and
to the extent specified below, to each Lender) in form and substance:
(a) New Notes. A new promissory note for each Revolving Credit Lender,
---------
delivered by the Borrowers in exchange for the Revolving Credit Note
heretofore delivered to such Revolving Credit Lender, in substantially the
form of Exhibit A-1 to the Credit Agreement, dated the date of the
Revolving Credit Note being exchanged, payable to such Revolving Credit
Lender in a principal amount equal to its Revolving Credit Commitment (as
increased hereby) and otherwise duly completed. Each such promissory note
(a "New Note") shall constitute a "Revolving Credit Note" under the Credit
--------
Agreement as amended hereby.
(b) Organizational Matters. The Administrative Agent shall have
----------------------
received such documents and certificates as the Administrative Agent or as
Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase, may
reasonably request relating to the organization, existence and good
standing of each Credit Party and the authorization of this Amendment No.
4, all in form and substance reasonably satisfactory to the Administrative
Agent and its counsel.
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-6-
(c) Opinion of Counsel to the Obligors. The Administrative Agent
----------------------------------
shall have received a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Amendment No. 4
Effective Date) of Cooperman, Levitt, Winnikoff, Lester & Newman, P.C.,
counsel to the Obligors, substantially in the form of Exhibit A, and
covering such other matters relating to the Obligors, this Agreement or the
other Loan Documents as the Administrative Agent or any Lender shall
reasonably request (and each Obligor hereby requests such counsel to
deliver such opinion).
(d) Opinion of Special Counsel. The Administrative Agent shall have
--------------------------
received a favorable written legal opinion (addressed to the Administrative
Agent and the Lenders and dated the Amendment No. 4 Effective Date) of
Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase,
substantially in the form of Exhibit B (and the Administrative Agent hereby
requests Special Counsel to deliver such opinion).
(e) Other Documents. Such other documents as either the Administrative
Agent or any Lender or Special Counsel may reasonably request.
Section 6. Confirmation of Security. Each Borrower hereby confirms
------------------------
that the obligations of such Borrower under the Credit Agreement as amended by
this Amendment No. 4 shall be entitled to the benefits of the collateral
security provided for pursuant to the Security Agreement.
Section 7. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 4 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 4 by signing any such counterpart. This
Amendment No. 4 shall be governed by, and construed in accordance with, the law
of the State of New York.
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-7-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4
to be duly executed and delivered as of the day and year first above written.
MEDIACOM CALIFORNIA LLC MEDIACOM DELAWARE LLC
By By
Title: Title:
MEDIACOM ARIZONA LLC
By
Title:
LENDERS
-------
THE CHASE MANHATTAN BANK, FIRST UNION NATIONAL BANK
individually and as Administrative Agent
By By
Title: Title:
BANK OF MONTREAL CIBC INC.
By By
Title: Title:
THE FIRST NATIONAL BANK MELLON BANK, N.A.
OF CHICAGO
By By
Title: Title:
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-8-
By their signatures below, each of the undersigned Parent Guarantors
under the above-referenced Credit Agreement hereby consents to the foregoing
Amendment No. 4 and confirms that the obligations of the Borrowers under said
Credit Agreement as amended by said Amendment No. 4 shall constitute "Guaranteed
Obligations" under the Guarantee and Pledge Agreement under and as defined in
said Credit Agreement for all purposes of said Guarantee and Pledge Agreement.
MEDIACOM LLC MEDIACOM MANAGEMENT
CORPORATION
By_____________________ By_____________________
Rocco B. Commisso, as Title:
Manager
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
SCHEDULE 1
to Amendment No. 4
Revolving Credit Commitments
----------------------------
<TABLE>
<CAPTION>
Lender Revolving Credit Commitment
- ------ ---------------------------
<S> <C>
The Chase Manhattan Bank $19,880,000.00
First Union National Bank $19,880,000.00
Bank of Montreal $14,910,000.00
CIBC Inc. $14,910,000.00
The First National Bank of Chicago $14,910,000.00
Mellon Bank, N.A. $14,910,000.00
TOTAL $99,400,000.00
</TABLE>
Amendment No. 4 to Credit Agreement
-----------------------------------
<PAGE>
-1-
EXHIBIT A
[Form of Opinion of Counsel to the Obligors]
_______, 1999
To the Lenders party to Amendment
No. 4 to the Credit Agreement referred to
below and The Chase Manhattan
Bank, as Administrative Agent
Ladies and Gentlemen:
We have acted as counsel to Mediacom California LLC ("Mediacom
--------
California"), Mediacom Delaware LLC ("Mediacom Delaware"), Mediacom Arizona LLC
- ---------- -----------------
("Mediacom Arizona" and, together with Mediacom California and Mediacom
----------------
Delaware, the "Borrowers") Mediacom LLC ("Mediacom") and Mediacom Management
--------- --------
Corporation (the "Manager", and collectively, together with Mediacom, the
-------
"Parent Guarantors") in connection with (i) the Second Amended and Restated
-----------------
Credit Agreement (the "Credit Agreement") dated as of June 24, 1997, between the
----------------
Borrowers, the lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent, and First Union National Bank, as Documentation Agent,
providing for loans to be made by said lenders to the Borrowers in an aggregate
principal amount not exceeding $100,000,000, (ii) Amendment No. 4 thereto dated
as of January 26, 1999 ("Amendment No. 4") and (iii) the various other
---------------
agreements, instruments and other documents referred to in the next following
paragraph. Terms defined in Amendment No. 4 (including terms incorporated by
reference into Amendment No. 4) are used herein as defined therein; in addition,
the Credit Agreement as amended by Amendment No. 4 is referred to herein as the
"Amended Credit Agreement". This opinion letter is being delivered pursuant to
------------------------
Section 5(iii)(c) of Amendment No. 4.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) Amendment No. 4;
(c) the New Notes being executed and delivered to the Lenders on the
date hereof (collectively, the "New Notes");
---------
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-2-
(d) the Confirmation and Consent of the Parent Guarantors appended to
Amendment No. 4 (the "Confirmation and Consent"); and
------------------------
(e) such records of the Borrowers and such other documents as we have
deemed necessary as a basis for the opinions expressed below.
Amendment No. 4, the Amended Credit Agreement, the New Notes and the
Confirmation and Consent are collectively referred to as the "Credit Documents";
----------------
the Borrowers, Mediacom and the Manager are herein collectively referred to as
the "Relevant Parties".
----------------
We have also examined originals, or copies certified to our
satisfaction, of such corporate records, certificates of public officials of
pertinent states, certificates of corporate officers of the Relevant Parties and
such other instruments or documents as we have deemed necessary as a basis for
the opinions hereinafter set forth. As to questions of fact, we have, to the
extent that such facts were not independently established by us, relied upon
such certificates and we have assumed that any such certificates or other
evidence which was given or dated earlier than the date of this letter has
remained accurate, as far as relevant to the opinions contained herein, from
such earlier date through and including the date of this letter. In rendering
the opinions hereinafter set forth as to factual matters, we have also relied
upon, and assumed the accuracy of, the representations and warranties made in
the Credit Documents by the Relevant Parties. Whenever any statement herein is
qualified by our knowledge, it is intended to indicate that, during the course
of our representation of the Relevant Parties no information that would give us
actual knowledge of the inaccuracy of such statement has come to the attention
of the attorneys presently in this firm and who are actively engaged in the
representation of the Relevant Parties.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies.
In rendering the opinions expressed below, we have assumed, with respect
to all of the documents referred to in this opinion letter, that (except, to the
extent set forth in the opinions expressed below, as to the Relevant Parties):
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding
and enforceable obligations of, all of the parties to such
documents;
(ii) all signatories to such documents have been duly authorized; and
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-3-
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate,
limited liability company, partnership or other) to execute,
deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the comments
and qualifications set forth below, and having considered such questions of law
as we have deemed necessary as a basis for the opinions expressed below, we are
of the opinion that:
1. Each Borrower is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Mediacom is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York. The
Manager is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware.
2. Each Relevant Party has all requisite power to execute and deliver
Amendment No. 4 and the New Notes, and to perform its obligations under,
the Credit Documents to which it is a party. Each Borrower has all
requisite power to borrow under the Amended Credit Agreement.
3. The execution, delivery and performance by each Relevant Party of
each Credit Document to which it is a party, and the borrowings by each
Borrower under the Amended Credit Agreement, have been duly authorized by
all necessary corporate or other action (as the case may be) on the part of
such Relevant Party.
4. Amendment No. 4, the New Notes and the Confirmation and Consent
have each been duly executed and delivered by each Relevant Party party
thereto.
5. Each of the Credit Documents constitutes the legal, valid and
binding obligation of each Relevant Party party thereto, enforceable
against such Relevant Party in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of the Credit
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b)
concepts of materiality, reasonableness, good faith and fair dealing.
6. No authorization, approval or consent of, and no filing or
registration with, any governmental or regulatory authority or agency of
the United States of America or the State of New York is required on the
part of any Relevant Party for the execution and
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-4-
delivery of Amendment No. 4 or performance by any Relevant Party of the
Amended Credit Agreement or for the borrowings by each of the Borrowers
under the Amended Credit Agreement.
7. The execution and delivery by each Relevant Party of Amendment No.
4, and the consummation by each Relevant Party of the transactions
contemplated by the Amended Credit Agreement do not and will not (a)
violate any provision of the limited liability company agreement, articles
of organization, certificate of formation or the charter or by-laws or
other organizational instrument of any Relevant Party, (b) violate any
applicable law, rule or regulation, (c) violate any order, writ, injunction
or decree of any court or governmental authority or agency or any arbitral
award applicable to the Relevant Parties of which we have knowledge (after
due inquiry) or (d) result in a breach of, constitute a default under,
require any consent under, or result in the acceleration or required
prepayment of any indebtedness pursuant to the terms of, any agreement or
instrument of which we have knowledge to which any Relevant Party is a
party or by which any of them is bound or to which any of them is subject,
or (except for the Liens created pursuant to the Security Documents) result
in the creation or imposition of any Lien upon any Property of any Relevant
Party pursuant to, the terms of any such agreement or instrument.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 11.03 of the Amended Credit Agreement
may be limited by (i) laws rendering unenforceable indemnification contrary
to Federal or state securities laws and the public policy underlying such
laws and (ii) laws limiting the enforceability of provisions exculpating or
exempting a party, or requiring indemnification of a party for, liability
for its own action or inaction, to the extent the action or inaction
involves gross negligence, recklessness, willful misconduct or unlawful
conduct.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) Section 4.07(c) of the Credit Agreement, (iii) the second
sentence of Section 11.10 of the Credit Agreement (and any similar
provisions in any of the other Credit Documents), insofar as such sentence
relates to the subject matter jurisdiction of the United States District
Court for the Southern District of New York to adjudicate any controversy
related to any of the Credit Documents and (iv) the applicability to the
obligations of the Subsidiary Guarantors (or
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-5-
the enforceability of such obligations) of Section 548 of the Bankruptcy
Code, Article 10 of the New York Debtor Creditor Law, or any provision of
law relating to fraudulent conveyances, transfers or obligations.
We express no opinion (a) as to the, and the effect of, compliance or
non-compliance by the Lenders or the Administrative Agent with any law, rule or
regulation applicable because of the legal or regulatory status or the specific
nature of the business of such Lender or Administrative Agent and (b) regarding
any law, rule or regulation to which any of the Relevant Parties may be subject,
or any approval which any of the Relevant Parties may be required to obtain,
because of the legal or regulatory status of the Lenders or the Administrative
Agent or because of any facts specifically pertaining to the Lenders or the
Administrative Agent.
Our opinions are limited to the specific issues addressed and are
limited in all respects to laws and facts existing on the date hereof. By
rendering our opinions, we do not undertake to advise you of any changes in such
laws or facts which may occur after the date hereof.
The foregoing opinions are limited to matters involving the Federal
laws of the United States, the Delaware General Corporation Law, the Delaware
Limited Liability Company Act and the law of the State of New York, and we do
not express any opinion as to the laws of any other jurisdiction (nor do we
express any opinion as to the applicability to, or the effect upon, the
transactions contemplated by the Credit Documents of the Federal Communications
Act of 1934, as amended, and the rules and regulations promulgated thereunder or
the policies of the FCC).
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-6-
At the request of our clients, this opinion letter is, pursuant to
Section 5(iii)(c) of Amendment No. 4, provided to you by us in our capacity as
counsel to the Relevant Parties and may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by the
Amended Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
[COOPERMAN LEVITT WINIKOFF
LESTER & NEWMAN, P.C.]
By:_______________________
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-1-
EXHIBIT B
[Form of Opinion of Special New York Counsel to Chase]
_______, 1999
To the Lenders party to Amendment
No. 4 to the Credit Agreement referred to
below and The Chase Manhattan
Bank, as Administrative Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan Bank
("Chase") in connection with (i) the Second Amended and Restated Credit
-----
Agreement dated as of June 24, 1997 (the "Credit Agreement") between Mediacom
----------------
California LLC ("Mediacom California"), Mediacom Delaware LLC ("Mediacom
------------------- --------
Delaware"), Mediacom Arizona LLC ("Mediacom Arizona" and, together with Mediacom
- -------- ----------------
California and Mediacom Delaware, the "Borrowers"), the lenders party thereto,
---------
Chase, as Administrative Agent, and First Union National Bank, as Documentation
Agent, providing for loans to be made by said lenders to the Borrowers in an
aggregate principal amount not exceeding $100,000,000, (ii) Amendment No. 4
thereto dated as of January 26, 1999 and (ii) the various other agreements,
instruments and other documents referred to in the next following paragraph.
Terms defined in Amendment No. 4 (including terms incorporated by reference into
Amendment No. 4) are used herein as defined therein; in addition, the Credit
Agreement as amended by Amendment No. 4 is referred to herein as the "Amended
-------
Credit Agreement". This opinion letter is being delivered pursuant to Section
- ----------------
5(iii)(d) of Amendment No. 4.
In rendering the opinions expressed below, we have examined the following
agreements, instruments and other documents:
(a) the Credit Agreement;
(b) Amendment No. 4; and
(c) the New Notes being executed and delivered to the Lenders on the
date hereof (collectively, the "New Notes").
---------
Opinion of Counsel to Chase
---------------------------
<PAGE>
-2-
Amendment No. 4, the Amended Credit Agreement, the New Notes and the
Confirmation and Consent are collectively referred to as the "Credit Documents";
----------------
the Borrowers, Mediacom and the Manager are herein collectively referred to as
the "Relevant Parties".
----------------
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon representations made in or pursuant to Amendment No. 4 and the Amended
Credit Agreement.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except to the extent set forth
in the opinions below as to the Borrowers) constitute legal,
valid, binding and enforceable obligations of, all of the
parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that each of Amendment No. 4 and the
Amended Credit Agreement constitutes the legal, valid and binding obligation of
each Relevant Party party thereto, enforceable against such Relevant Party in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally and except as the enforceability of Amendment No.
4 or the Amended Credit Agreement is subject to the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law), including, without limitation, (a) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy and (b)
concepts of materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 11.03 of the Amended Credit
Agreement may be limited by (i) laws rendering unenforceable
indemnification contrary to Federal or state securities laws and the public
policy underlying such laws and (ii) laws limiting the
Opinion of Counsel to Chase
---------------------------
<PAGE>
-3-
enforceability of provisions exculpating or exempting a party, or requiring
indemnification of a party for, liability for its own action or inaction,
to the extent the action or inaction involves gross negligence,
recklessness, willful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) Section 4.07(c) of the Amended Credit Agreement, and (iii) the
second sentence of Section 11.10 of the Amended Credit Agreement, insofar
as such sentence relates to the subject matter jurisdiction of the United
States District Court for the Southern District of New York to adjudicate
any controversy related to the Credit Documents and (iv) the applicability
to the obligations of the Subsidiary Guarantors (or the enforceability of
such obligations) of Section 548 of the Bankruptcy Code, Article 10 of the
New York Debtor Creditor Law, or any provision of law relating to
fraudulent conveyances, transfers or obligations.
The foregoing opinions are limited to matters involving the Federal
laws of the United States and the law of the State of New York, and we do not
express any opinion as to the laws of any other jurisdiction (nor do we express
any opinion as to the applicability to, or the effect upon, the transactions
contemplated by the Credit Documents of the Federal Communications Act of 1934,
as amended, the rules and regulations promulgated thereunder or the policies of
the FCC).
At the request of our client, this opinion letter is, pursuant to
Section 5(iii)(d) of Amendment No. 4, provided to you by us in our capacity as
special New York counsel to Chase and may not be relied upon by any Person for
any purpose other than in connection with the transactions contemplated by the
Amended Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
RJW/___
Opinion of Counsel to Chase
---------------------------
<PAGE>
Exhibit 10.6(c)
[EXECUTION COUNTERPART]
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT NO. 2 TO CREDIT AGREEMENT dated as of July 1, 1998, between
MEDIACOM SOUTHEAST LLC, a Delaware limited liability company (the "Borrower");
--------
each of the lenders that is a signatory hereto identified under the caption
"LENDERS" on the signature pages hereto (each, individually, a "Lender" and,
------- ------
collectively, the "Lenders"); and THE CHASE MANHATTAN BANK, as administrative
-------
agent for the Lenders (in such capacity, the "Administrative Agent").
--------------------
The Borrower, the Lenders and the Administrative Agent are party to a
Credit Agreement dated as of January 23, 1998 (as heretofore modified and
supplemented and in effect on the date hereof, the "Credit Agreement"),
----------------
providing, subject to the terms and conditions thereof, for extensions of credit
in an aggregate principal amount up to but not exceeding $225,000,000 (which
may, in certain circumstances, be increased to $275,000,000). The Borrower, the
Lenders and the Administrative wish to amend the Credit Agreement in certain
respects, and accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
-----------
Amendment No. 2, terms defined in the Credit Agreement are used herein as
defined therein.
Section 2. Amendments. Upon execution and delivery of this Amendment
----------
No. 2 by the Borrower and Majority Lenders, but effective as of the date hereof,
the Credit Agreement shall be amended as follows:
2.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.02. Section 8.09(e) of the Credit Agreement is hereby amended by
deleting clause (iii) thereof, inserting the word "and" at the end of clause (i)
thereof and replacing "; and" at the end of clause (ii) thereof with a period.
Amendment No. 2 to Credit Agreement
-----------------------------------
<PAGE>
-2-
Section 3. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 2 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 2 by signing any such counterpart. This
Amendment No. 2 shall be governed by, and construed in accordance with, the law
of the State of New York.
<PAGE>
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be duly executed and delivered as of the day and year first above written.
MEDIACOM SOUTHEAST LLC
By /s/ MARK E. STEPHAN
--------------------------------------
Title: CHIEF FINANCIAL OFFICER
LENDERS
-------
THE CHASE MANHATTAN BANK
By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------------
Title: VICE PRESIDENT
BANK OF MONTREAL
By /s/ ALLEGRA GRIFFITHS
--------------------------------------
Title: DIRECTOR
CREDIT SUISSE FIRST BOSTON
By /s/ CHRIS T HORGAN
--------------------------------------
Title: VICE PRESIDENT
By /s/ THOMAS G MUOIO
--------------------------------------
Title: VICE PRESIDENT
<PAGE>
-4-
CIBC INC.
By /s/ TEFTA GHILAGA
---------------------------------------
Title: EXECUTIVE DIRECTOR
CIBC Oppenheimer Corp., AS AGENT
FIRST UNION NATIONAL BANK
By /s/ [SIGNATURE ILLEGIBLE]
---------------------------------------
Title: VICE PRESIDENT
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ [SIGNATURE ILLEGIBLE]
---------------------------------------
Title: CORPORATE BANKING OFFICER
MELLON BANK, N.A.
By /s/ [SIGNATURE ILLEGIBLE]
---------------------------------------
Title: VICE PRESIDENT
ABN AMRO BANK N.V.
By /s/ LARRY KELLEY
---------------------------------------
Title: GROUP VICE PRESIDENT
By ROBERT BUDNEK
---------------------------------------
Title: ASSISTANT VICE PRESIDENT
<PAGE>
-5-
FLEET NATIONAL BANK
By /s/ ERIC S MEYER
---------------------------------------
Title: VICE PRESIDENT
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By /s/ WILLIAM E. LAMBERT
---------------------------------------
Title: ASSISTANT VICE PRESIDENT
By /s/ ROBERT GRELLA
---------------------------------------
Title: VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION
By /s/ JOHN T. WILDEN
---------------------------------------
Title: VICE PRESIDENT
SUNTRUST BANK, CENTRAL FLORIDA,
N.A.
By /s/ JANET P. SAMMONS
---------------------------------------
Title: VICE PRESIDENT
<PAGE>
-6-
ADMINISTRATIVE AGENT
--------------------
THE CHASE MANHATTAN BANK, as
Administrative Agent
By /s/ [SIGNATURE ILLEGIBLE]
---------------------------------------
Title: VICE PRESIDENT
<PAGE>
Exhibit 10.6(d)
[Execution Copy]
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT NO. 3 TO CREDIT AGREEMENT dated as of January 26, 1999,
between MEDIACOM SOUTHEAST LLC, a Delaware limited liability company (the
"Borrower"); each of the lenders that is a signatory hereto identified under the
--------
caption "LENDERS" on the signature pages hereto (each, individually, a "Lender"
------
and, collectively, the "Lenders") and The Chase Manhattan Bank, as
-------
Administrative Agent (the "Administrative Agent").
--------------------
The Borrower, the Lenders and the Administrative Agent, are party to a
Credit Agreement dated as of January 23, 1998 (as heretofore modified and
supplemented and in effect on the date hereof, the "Credit Agreement"),
----------------
providing, subject to the terms and conditions thereof, for extensions of credit
in an aggregate principal amount up to but not exceeding $225,000,000 (which
may, in certain circumstances, be increased to $275,000,000). The Borrower
wishes to increase the Revolving Credit Commitments under the Credit Agreement
from $165,000,000 to $225,000,000 concurrently with a prepayment of the Term
Loans in an amount equal to such increase and to amend the Credit Agreement in
certain other respects. The Lenders and the Administrative Agent are willing to
so agree, and accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
-----------
Amendment No. 3, terms defined in the Credit Agreement are used herein as
defined therein.
Section 2. Amendments. Subject to the satisfaction of the conditions
----------
precedent specified in Section 5 below, but effective as of the date hereof, the
Credit Agreement shall be amended as follows:
2.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.02. Section 1.01 of the Credit Agreement shall be amended by adding
the following new definitions (to the extent not already included in said
Section 1.01) and inserting the same in the appropriate alphabetical locations
and amending in their entirety the following definitions (to the extent already
included in said Section 1.01), as follows:
"Amendment No. 3" shall mean Amendment No. 3 hereto dated as of
---------------
January 26, 1999 between the Borrower, the Lenders and the Administrative
Agent.
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-2-
"Amendment No. 3 Effective Date" shall mean the date upon which the
------------------------------
amendments provided for in Section 2 of Amendment No. 3 hereto shall become
effective.
"Revolving Credit Commitment" shall mean, as to each Revolving Credit
---------------------------
Lender, the obligation of such Lender to make Revolving Credit Loans, and
to issue or participate in Letters of Credit pursuant to Section 2.03
hereof, in an aggregate principal amount at any one time outstanding up to
but not exceeding the amount set forth opposite the name of such Lender on
Schedule 1 to Amendment No. 3 or, in the case of a Person that becomes a
Revolving Credit Lender pursuant to an assignment permitted under Section
11.06(b) hereof, as specified in the respective instrument of assignment
pursuant to which such assignment is effected (as the same may be reduced
from time to time pursuant to Section 2.04 or 2.10 hereof, or increased or
reduced in connection with any assignment pursuant to Section 11.06(b)
hereof). The original aggregate principal amount of the Revolving Credit
Commitments (after giving effect to Amendment No. 3) is $225,000,000.
2.03. Section 2.01 of the Credit Agreement is hereby amended by
inserting a new paragraph (f) at the end thereof to read as follows:
"(f) Amendment No. 3 Effective Date. On the Amendment No. 3
------------------------------
Effective Date, all of the outstanding Term Loans shall be prepaid be in
full by the Borrower as provided in Section 5(ii) of Amendment No. 3
hereto. Following such prepayment, all references in this Agreement to
"Term Loans", "Term Loan Lenders" and the like shall be deemed to be
inoperative."
2.04. The schedule set forth in Section 2.04(a) of the Credit
Agreement is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
(A) (B) (C)
Revolving Credit Revolving Credit Revolving Credit
Commitment Reduction Commitments Reduced Commitments Reduced
Date Falling on or by the Following to the Following
Nearest to: Amounts: Amounts:
---------- ------- -------
<S> <C> <C>
March 31, 2001 $ 2,750,000 $222,250,000
June 30, 2001 $ 2,750,000 $219,500,000
September 30, 2001 $ 2,750,000 $216,750,000
December 31, 2001 $ 2,750,000 $214,000,000
</TABLE>
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-3-
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 2002 $ 5,375,000 $208,625,000
June 30, 2002 $ 5,375,000 $203,250,000
September 30, 2002 $ 5,375,000 $197,875,000
December 31, 2002 $ 5,375,000 $192,500,000
March 31, 2003 $ 8,750,000 $183,750,000
June 30, 2003 $ 8,750,000 $175,000,000
September 30, 2003 $ 8,750,000 $166,250,000
December 31, 2003 $ 8,750,000 $157,500,000
March 31, 2004 $11,500,000 $146,000,000
June 30, 2004 $11,500,000 $134,500,000
September 30, 2004 $11,500,000 $123,000,000
December 31, 2004 $11,500,000 $111,500,000
March 31, 2005 $13,750,000 $ 97,750,000
June 30, 2005 $13,750,000 $ 84,000,000
September 30, 2005 $13,750,000 $ 70,250,000
December 31, 2005 $13,750,000 $ 56,500,000
March 31, 2006 $28,250,000 $ 28,250,000
June 30, 2006 $28,250,000 $ 0
</TABLE>
2.05. Section 8.13 of the Credit Agreement shall be amended in its
entirety to read as follows:
"8.13 Interest Rate Protection Agreements. The Borrower will within
-----------------------------------
90 days of the Closing Date, enter into, and thereafter maintain in full
force and effect, one or more Interest Rate Protection Agreements with one
or more of the Lenders or their affiliates (and/or with a bank or other
financial institution having capital, surplus and undivided profits of at
least $500,000,000), that effectively enables the Borrower (in a manner
satisfactory to the Majority Lenders) to protect itself, in a manner and on
terms reasonably satisfactory to the Majority Lenders, against adverse
fluctuations in the three-month London interbank offered rates as to a
notional principal amount which, together with that portion of the
aggregate outstanding principal amount of Indebtedness of the Borrower
bearing a fixed rate of interest and the aggregate amount of the Preferred
Membership Interests, shall in the aggregate be at least equal to 40% of
the sum of (x) the aggregate outstanding principal amount of the
Indebtedness (including Affiliate Subordinated Indebtedness) of the
Borrower and (y) the aggregate amount of the Preferred Membership
Interests."
Section 3. Consent. Subject to the satisfaction of the conditions
-------
precedent specified in Section 5 below, but effective as of the date hereof, the
Lenders hereby consent to the amendment of the instruments and other documents
evidencing or relating to Affiliate
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-4-
Subordinated Indebtedness to permit the rate of interest payable in respect
thereof to be equal to a rate of interest payable by Mediacom on its 8-1/2%
Senior Notes due 2008.
Section 4. Representations and Warranties. The Borrower represents
------------------------------
and warrants to the Lenders that the representations and warranties set forth in
Section 7 of the Credit Agreement are true and complete on the date hereof as if
made on and as of the date hereof and as if each reference in said Section 7 to
"this Agreement" and "the Notes" included reference to this Amendment No. 3 and
to the New Notes (as defined herein below).
Section 5. Conditions Precedent. The effectiveness of the amendments
--------------------
set forth in Section 2 above, and the consent set forth in Section 3 above, is
subject to: (i) the condition that this Amendment No. 3 shall have been executed
and delivered by the Borrower, each Lender and the Administrative Agent (and
that Mediacom shall have executed and delivered its confirmation and consent
provided for on the signature pages hereto), in each case on or before February
15, 1999, (ii) the prepayment, in accordance with the provisions of Section 2.09
of the Credit Agreement, of Term Loans in an aggregate amount of $60,000,000
(which amount is the aggregate principal amount of Term Loans outstanding on the
date hereof) together with the payment of all interest accrued thereon in
accordance with the provisions of Section 3.02 of the Credit Agreement (and any
amounts that may be payable under Section 5.05 of the Credit Agreement in
connection therewith), which prepayment may be made from any source, including
from the increase in Revolving Credit Commitments contemplated hereby, and (iii)
the receipt by the Administrative Agent of the following documents, each of
which shall be satisfactory to the Administrative Agent (and to the extent
specified below, to each Lender or the Majority Lenders) in form and substance:
(a) New Notes. A new promissory note for each Revolving Credit
---------
Lender, delivered by the Borrower in exchange for the Revolving Credit Note
heretofore delivered to such Revolving Credit Lender, in substantially the
form of Exhibit A-1 to the Credit Agreement, dated the date of the
Revolving Credit Note being exchanged, payable to such Revolving Credit
Lender in a principal amount equal to its Revolving Credit Commitment (as
increased hereby) and otherwise duly completed. Each such promissory note
(a "New Note") shall constitute a "Revolving Credit Note" under the Credit
--------
Agreement as amended hereby.
(b) Organizational Matters. The Administrative Agent shall have
----------------------
received such documents and certificates as the Administrative Agent or as
Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase, may
reasonably request relating to the organization, existence and good
standing of each Credit Party and the authorization of this Amendment No.
3, all in form and substance reasonably satisfactory to the Administrative
Agent and its counsel.
(c) Opinion of Counsel to the Obligors. The Administrative Agent
----------------------------------
shall have received a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Amendment No. 3
Effective Date) of Cooperman, Levitt,
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-5-
Winnikoff, Lester & Newman, P.C., counsel to the Obligors, substantially in
the form of Exhibit A, and covering such other matters relating to the
Obligors, this Agreement or the other Loan Documents as the Administrative
Agent or any Lender shall reasonably request (and each Obligor hereby
requests such counsel to deliver such opinion).
(d) Opinion of Special Counsel. The Administrative Agent shall have
--------------------------
received a favorable written legal opinion (addressed to the Administrative
Agent and the Lenders and dated the Effective Date) of Milbank, Tweed,
Hadley & McCloy, special New York counsel to Chase, substantially in the
form of Exhibit B (and the Administrative Agent hereby requests Special
Counsel to deliver such opinion).
(e) Other Documents. Such other documents as either the
---------------
Administrative Agent or any Lender or Special Counsel may reasonably
request.
Section 6. Confirmation of Security. The Borrower hereby confirms
------------------------
that the obligations of the Borrower under the Credit Agreement, as amended by
this Amendment No. 3, shall be entitled to the benefits of the collateral
security provided for pursuant to the Security Agreement.
Section 7. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 3 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 3 by signing any such counterpart. This
Amendment No. 3 shall be governed by, and construed in accordance with, the law
of the State of New York.
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
3 to be duly executed and delivered as of the day and year first above written.
MEDIACOM SOUTHEAST LLC
By /s/ MARK E. STEPHAN
---------------------------------------
Title: Chief Financial Officer
LENDERS
-------
THE CHASE MANHATTAN BANK, BANK OF MONTREAL
individually and as Administrative Agent
By /s/ CONSTANCE M. COHEN By /s/ ALLEGRA GRIFFITHS
-------------------------- -------------------------------
Title: Vice President Title: Director
CREDIT SUISSE FIRST BOSTON CIBC INC.
By /s/ JUDITH E. SMITH By /s/ TEFTA GHILAGA
-------------------------- -------------------------------
Title: Director Title: Executive Director
CIBC Oppenheimer Corp.,
By /s/ TODD C. MORGAN AS AGENT
--------------------------
Title: Director
FIRST UNION NATIONAL BANK BANK ONE (formerly, First
National Bank of Chicago)
By /s/ [SIGNATURE ILLEGIBLE] By /s/ SIGNATURE ILLEGIBLE]
-------------------------- -------------------------------
Title: Title: Corporate Banking Officer
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-7-
MELLON BANK, N.A. ABN AMRO BANK N.V.
By /s/ [SIGNATURE ILLEGIBLE] By /s/ [SIGNATURE ILLEGIBLE]
-------------------------- ----------------------------
Title: First Vice President Title: Senior Vice President
By /s/ WILLIAM S. BENNETT
----------------------------
Title: Vice President
FLEET NATIONAL BANK DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By /s/ ADAM BESTER By /s/ CONSTANCE LOOSEMORE
--------------------------- ----------------------------
Title: Senior Vice President Title: Senior Vice President
By /s/ [SIGNATURE ILLEGIBLE]
----------------------------
Title: Assistant Vice
President
PNC BANK, NATIONAL ASSOCIATION SUNTRUST BANK, CENTRAL
FLORIDA, N.A.
By /s/ JOHN T. WILDEN By /s/ DAVID D. MILLER
---------------------------- ----------------------------
Title: Vice President Title: Vice President
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-8-
By its signature below, the undersigned hereby consents to the
foregoing Amendment No. 3 and confirms that the obligations of the Borrower
under said Credit Agreement as amended by said Amendment No. 3 shall constitute
"Guaranteed Obligations" under the Guarantee and Pledge Agreement under and as
defined in said Credit Agreement for all purposes of said Guarantee and Pledge
Agreement.
MEDIACOM LLC
By: /s/ ROCCO B. COMMISSO
---------------------------------
Rocco B. Commisso, as Manager
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
SCHEDULE 1
to Amendment No. 3
Revolving Credit Commitments
----------------------------
<TABLE>
<CAPTION>
Lender Revolving Credit Commitment
- ------ ---------------------------
<S> <C>
The Chase Manhattan Bank $ 27,000,000.00
Bank of Montreal $ 24,000,000.00
Credit Suisse First Boston $ 14,000,000.00
CIBC, Inc. $ 22,000,000.00
First Union National Bank $ 20,222,222.22
The First National Bank of Chicago $ 20,000,000.00
Mellon Bank, N.A. $ 20,000,000.00
ABN AMRO Bank N.V. $ 19,777,777.78
Fleet National Bank $ 18,000,000.00
Dresdner Bank AG, New York and Grand Cayman Branches $ 15,000,000.00
PNC Bank, National Association $ 15,000,000.00
SunTrust Bank, Central Florida $ 10,000,000.00
TOTAL $225,000,000.00
</TABLE>
Amendment No. 3 to Credit Agreement
-----------------------------------
<PAGE>
-1-
EXHIBIT A
[Form of Opinion of Counsel to the Obligors]
_______, 1999
To the Lenders party to Amendment
No. 3 to the Credit Agreement referred to
below and The Chase Manhattan
Bank, as Administrative Agent
Ladies and Gentlemen:
We have acted as counsel to Mediacom Southeast LLC (the "Borrower"),
--------
and Mediacom LLC ("Mediacom") in connection with (i) the Credit Agreement (the
--------
"Credit Agreement") dated as of January 23, 1998, between the Borrower, the
----------------
lenders party thereto and The Chase Manhattan Bank, as Administrative Agent,
providing for loans to be made by said lenders to the Borrower in an aggregate
principal amount not exceeding $225,000,000, (ii) Amendment No. 3 thereto dated
as of January 26, 1999 ("Amendment No. 3") and (iii) the various other
---------------
agreements, instruments and other documents referred to in the next following
paragraph. Terms defined in Amendment No. 3 (including terms incorporated by
reference into Amendment No. 3) are used herein as defined therein; in addition,
the Credit Agreement as amended by Amendment No. 3 is referred to herein as the
"Amended Credit Agreement". This opinion letter is being delivered pursuant to
------------------------
Section 5(iii)(c) of Amendment No. 3.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) Amendment No. 3;
(c) the New Notes being executed and delivered to the Lenders on
the date hereof (collectively, the "New Notes");
---------
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-2-
(d) the Confirmation and Consent of Mediacom appended to
Amendment No. 3 (the "Confirmation and Consent"); and
------------------------
(e) such records of the Borrower and such other documents as we
have deemed necessary as a basis for the opinions expressed
below.
Amendment No. 3, the Amended Credit Agreement, the New Notes and the
Confirmation and Consent are collectively referred to as the "Credit Documents";
----------------
the Borrower and Mediacom are herein collectively referred to as the "Relevant
--------
Parties".
- -------
We have also examined originals, or copies certified to our
satisfaction, of such corporate records, certificates of public officials of
pertinent states, certificates of corporate officers of the Relevant Parties and
such other instruments or documents as we have deemed necessary as a basis for
the opinions hereinafter set forth. As to questions of fact, we have, to the
extent that such facts were not independently established by us, relied upon
such certificates and we have assumed that any such certificates or other
evidence which was given or dated earlier than the date of this letter has
remained accurate, as far as relevant to the opinions contained herein, from
such earlier date through and including the date of this letter. In rendering
the opinions hereinafter set forth as to factual matters, we have also relied
upon, and assumed the accuracy of, the representations and warranties made in
the Credit Documents by the Relevant Parties. Whenever any statement herein is
qualified by our knowledge, it is intended to indicate that, during the course
of our representation of the Relevant Parties no information that would give us
actual knowledge of the inaccuracy of such statement has come to the attention
of the attorneys presently in this firm and who are actively engaged in the
representation of the Relevant Parties.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Relevant Parties):
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding
and enforceable obligations of, all of the parties to such
documents;
(ii) all signatories to such documents have been duly authorized;
and
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-3-
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate,
limited liability company, partnership or other) to execute,
deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Borrower is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Mediacom is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York.
2. Each Relevant Party has all requisite power to execute and
deliver Amendment No. 3 and the New Notes, and to perform its obligations
under, the Credit Documents to which it is a party. The Borrower has all
requisite power to borrow under the Amended Credit Agreement.
3. The execution, delivery and performance by each Relevant Party of
each Credit Document to which it is a party, and the borrowings by the
Borrower under the Amended Credit Agreement, have been duly authorized by
all necessary corporate or other action (as the case may be) on the part of
such Relevant Party.
4. Amendment No. 3, the New Notes and the Confirmation and Consent
have each been duly executed and delivered by each Relevant Party party
thereto.
5. Each of the Credit Documents constitutes the legal, valid and
binding obligation of each Relevant Party party thereto, enforceable
against such Relevant Party in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of the Credit
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b)
concepts of materiality, reasonableness, good faith and fair dealing.
6. No authorization, approval or consent of, and no filing or
registration with, any governmental or regulatory authority or agency of
the United States of America or the State of New York is required on the
part of any Relevant Party for the execution and
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-4-
delivery of Amendment No. 3 or performance by any Relevant Party of the
Amended Credit Agreement or for the borrowings by the Borrower under the
Amended Credit Agreement.
7. The execution and delivery by each Relevant Party of Amendment
No. 3, and the consummation by each Relevant Party of the transactions
contemplated by the Amended Credit Agreement do not and will not (a)
violate any provision of the limited liability company agreement, articles
of organization, certificate of formation or the charter or by-laws or
other organizational instrument of any Relevant Party, (b) violate any
applicable law, rule or regulation, (c) violate any order, writ, injunction
or decree of any court or governmental authority or agency or any arbitral
award applicable to the Relevant Parties of which we have knowledge (after
due inquiry) or (d) result in a breach of, constitute a default under,
require any consent under, or result in the acceleration or required
prepayment of any indebtedness pursuant to the terms of, any agreement or
instrument of which we have knowledge to which any Relevant Party is a
party or by which any of them is bound or to which any of them is subject,
or (except for the Liens created pursuant to the Security Documents) result
in the creation or imposition of any Lien upon any Property of any Relevant
Party pursuant to, the terms of any such agreement or instrument.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 11.03 of the Amended Credit
Agreement may be limited by (i) laws rendering unenforceable
indemnification contrary to Federal or state securities laws and the public
policy underlying such laws and (ii) laws limiting the enforceability of
provisions exculpating or exempting a party, or requiring indemnification
of a party for, liability for its own action or inaction, to the extent the
action or inaction involves gross negligence, recklessness, willful
misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) Section 4.07(c) of the Credit Agreement, (iii) the second
sentence of Section 11.10 of the Credit Agreement (and any similar
provisions in any of the other Credit Documents), insofar as such sentence
relates to the subject matter jurisdiction of the United States District
Court for the Southern District of New York to adjudicate any controversy
related to any of the Credit Documents and (iv) the applicability to the
obligations of the Subsidiary Guarantors (or
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-5-
the enforceability of such obligations) of Section 548 of the Bankruptcy
Code, Article 10 of the New York Debtor Creditor Law, or any provision of
law relating to fraudulent conveyances, transfers or obligations.
We express no opinion (a) as to the, and the effect of, compliance or
non-compliance by the Lenders or the Administrative Agent with any law, rule or
regulation applicable because of the legal or regulatory status or the specific
nature of the business of such Lender or Administrative Agent and (b) regarding
any law, rule or regulation to which any of the Relevant Parties may be subject,
or any approval which any of the Relevant Parties may be required to obtain,
because of the legal or regulatory status of the Lenders or the Administrative
Agent or because of any facts specifically pertaining to the Lenders or the
Administrative Agent.
Our opinions are limited to the specific issues addressed and are
limited in all respects to laws and facts existing on the date hereof. By
rendering our opinions, we do not undertake to advise you of any changes in such
laws or facts which may occur after the date hereof.
The foregoing opinions are limited to matters involving the Federal
laws of the United States, the Delaware General Corporation Law, the Delaware
Limited Liability Company Act and the law of the State of New York, and we do
not express any opinion as to the laws of any other jurisdiction (nor do we
express any opinion as to the applicability to, or the effect upon, the
transactions contemplated by the Credit Documents of the Federal Communications
Act of 1934, as amended, and the rules and regulations promulgated thereunder or
the policies of the FCC).
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-6-
At the request of our clients, this opinion letter is, pursuant to
Section 5(iii)(c) of Amendment No. 3, provided to you by us in our capacity as
counsel to the Relevant Parties and may not be relied upon by any Person for any
purpose other than in connection with the transactions contemplated by the
Amended Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
[COOPERMAN LEVITT WINIKOFF
LESTER & NEWMAN, P.C.]
By:
------------------------
Opinion of Counsel to the Obligors
----------------------------------
<PAGE>
-1-
EXHIBIT B
[Form of Opinion of Special New York Counsel to Chase]
_______, 1999
To the Lenders party to Amendment
No. 3 to the Credit Agreement referred to
below and The Chase Manhattan
Bank, as Administrative Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase Manhattan Bank
("Chase") in connection with (i) the Credit Agreement dated as of January 23,
-----
1998 (the "Credit Agreement") between Mediacom Southeast LLC (the "Borrower"),
---------------- --------
the lenders party thereto, Chase, as Administrative Agent, and First Union
National Bank, as Documentation Agent, providing for loans to be made by said
lenders to the Borrower in an aggregate principal amount not exceeding
$225,000,000, (ii) Amendment No. 3 thereto dated as of January 26, 1999 and (ii)
the various other agreements, instruments and other documents referred to in the
next following paragraph. Terms defined in Amendment No. 3 (including terms
incorporated by reference into Amendment No. 3) are used herein as defined
therein; in addition, the Credit Agreement as amended by Amendment No. 3 is
referred to herein as the "Amended Credit Agreement". This opinion letter is
------------------------
being delivered pursuant to Section 5(iii)(d) of Amendment No. 3.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) Amendment No. 3; and
(c) the New Notes being executed and delivered to the Lenders on
the date hereof (collectively, the "New Notes").
---------
Opinion of Counsel to Chase
---------------------------
<PAGE>
-2-
Amendment No. 3, the Amended Credit Agreement, the New Notes and the
Confirmation and Consent are collectively referred to as the "Credit Documents";
----------------
the Borrower and Mediacom are herein collectively referred to as the "Relevant
--------
Parties".
- -------
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon representations made in or pursuant to Amendment No. 3 and the Amended
Credit Agreement.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except to the extent set forth
in the opinions below as to the Borrower) constitute legal,
valid, binding and enforceable obligations of, all of the
parties to such documents;
(ii) all signatories to such documents have been duly authorized;
and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that each of Amendment No. 3 and the
Amended Credit Agreement constitutes the legal, valid and binding obligation of
each Relevant Party party thereto, enforceable against such Relevant Party in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally and except as the enforceability of Amendment No.
3 or the Amended Credit Agreement is subject to the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law), including, without limitation, (a) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy and (b)
concepts of materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 11.03 of the Amended Credit
Agreement may be limited by (i) laws rendering unenforceable
indemnification contrary to Federal or state securities laws and the public
policy underlying such laws and (ii) laws limiting the
Opinion of Counsel to Chase
---------------------------
<PAGE>
-3-
enforceability of provisions exculpating or exempting a party, or requiring
indemnification of a party for, liability for its own action or inaction,
to the extent the action or inaction involves gross negligence,
recklessness, willful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) Section 4.07(c) of the Amended Credit Agreement, and (iii) the
second sentence of Section 11.10 of the Amended Credit Agreement, insofar
as such sentence relates to the subject matter jurisdiction of the United
States District Court for the Southern District of New York to adjudicate
any controversy related to the Credit Documents and (iv) the applicability
to the obligations of the Subsidiary Guarantors (or the enforceability of
such obligations) of Section 548 of the Bankruptcy Code, Article 10 of the
New York Debtor Creditor Law, or any provision of law relating to
fraudulent conveyances, transfers or obligations.
The foregoing opinions are limited to matters involving the Federal
laws of the United States and the law of the State of New York, and we do not
express any opinion as to the laws of any other jurisdiction (nor do we express
any opinion as to the applicability to, or the effect upon, the transactions
contemplated by the Credit Documents of the Federal Communications Act of 1934,
as amended, the rules and regulations promulgated thereunder or the policies of
the FCC).
At the request of our client, this opinion letter is, pursuant to
Section 5(iii)(d) of Amendment No. 3, provided to you by us in our capacity as
special New York counsel to Chase and may not be relied upon by any Person for
any purpose other than in connection with the transactions contemplated by the
Amended Credit Agreement without, in each instance, our prior written consent.
Very truly yours,
RJW/___
Opinion of Counsel to Chase
---------------------------
<PAGE>
Exhibit 12.1
MEDIACOM LLC AND SUBSIDIARIES
Calculation of the Deficiency of Earnings to Fixed Charges
(All dollar amounts in 000's)
<TABLE>
<CAPTION>
For the period For the period
January 1, March 12, 1996
Years Ended December 31, 1996 to March to December 31, Years Ended December 31,
1994 1995 11, 1996 1996 1997 1998
-------- -------- -------------- --------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Loss from operations $ 2,485 $ 2,565 $ 261 $ 1,953 $ 4,596 $ 39,790
Add :
Fixed charges (878) (935) (201) (1,528) (4,829) (24,460)
-------- -------- -------- -------- -------- --------
Earnings, as adjusted $ 1,607 $ 1,630 $ 60 $ 425 $ (233) $ 15,330
======== ======== ======== ======== ======== ========
Fixed Charges:
Interest on debt $ 878 $ 935 $ 201 $ 1,528 $ 4,829 $ 23,994
Amortization of deferred financing costs -- -- -- -- -- 466
-------- -------- -------- -------- -------- --------
Total fixed charges $ 878 $ 935 $ 201 $ 1,528 $ 4,829 $ 24,460
======== ======== ======== ======== ======== ========
Deficiency of earnings to fixed charges $ 2,485 $ 2,565 $ 261 $ 1,953 $ 4,596 $ 39,790
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the consolidated
statements of operations and consolidated balance sheets of Mediacom LLC and it
subsidiaries and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,212
<SECURITIES> 0
<RECEIVABLES> 2,810
<ALLOWANCES> 298
<INVENTORY> 8,240
<CURRENT-ASSETS> 0
<PP&E> 314,627
<DEPRECIATION> (45,423)
<TOTAL-ASSETS> 451,152
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 78,651
<TOTAL-LIABILITY-AND-EQUITY> 451,152
<SALES> 129,297
<TOTAL-REVENUES> 129,297
<CGS> 43,849
<TOTAL-COSTS> 141,035
<OTHER-EXPENSES> 4,058
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,994
<INCOME-PRETAX> (39,790)
<INCOME-TAX> 0
<INCOME-CONTINUING> (39,790)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,790)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
