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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: July 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to __________________
Commission File No.: 0-11478
TCA CABLE TV, INC.
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(Exact name of registrant as specified in its charter)
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Texas 75-1798185
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
3015 SSE Loop 323, Tyler, Texas 75701
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: 903/595-3701
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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The number of shares outstanding of each of the registrant's classes of
common stock as of September 13, 1995 was:
24,566,735 shares of common stock
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TCA CABLE TV, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets - July 31, 1995 and October 31, 1994 3
Consolidated Statements of Operations -
Three and nine months ended July 31, 1995 and 1994 4
Consolidated Statement of Shareholders' Equity -
Nine months ended July 31, 1995 5
Consolidated Statements of Cash Flows -
Nine months ended July 31, 1995 and 1994 6-7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION 9
SIGNATURES 10
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TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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July 31, October 31,
ASSETS 1995 1994
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(Unaudited)
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Cash $ 2,285,423 $ 2,445,112
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Accounts receivable, subscribers 7,195,483 4,913,712
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Accounts receivable, other 971,881 164,904
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Notes receivable 2,500,000 0
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Investments, at cost 1,708,501 2,223,038
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Property, plant and equipment, at cost:
Land 2,893,678 2,661,055
Distribution systems 284,772,960 243,607,084
Transportation equipment 8,152,506 6,513,387
Other 25,902,738 22,553,063
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321,721,882 275,334,589
Less accumulated depreciation (178,255,051) (162,749,992)
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143,466,831 112,584,597
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Other assets:
Intangibles, net of accumulated
amortization of $70,658,036 and
$65,132,149, respectively 271,668,382 163,386,733
Prepaid expenses 1,807,239 494,839
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273,475,621 163,881,572
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$ 431,603,740 $ 286,212,935
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July 31, October 31,
LIABILITIES 1995 1994
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(Unaudited)
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Accounts payable $ 7,484,156 $ 5,357,363
Accrued expenses 13,122,819 11,276,727
Subscriber advance payments 3,393,566 3,739,313
Income taxes payable (1,265,239) 495,278
Deferred income taxes 45,400,000 40,000,000
Term debt 251,027,409 126,447,345
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319,162,711 187,316,026
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Contingencies and commitments
SHAREHOLDERS' EQUITY
Preferred stock, $1.00 par value,
5,000,000 shares authorized; none
issued
Common stock, $.10 par value, 60,000,000
shares authorized; 24,765,517 and
24,733,261 shares issued, respectively 2,476,552 2,473,326
Additional paid-in capital 43,361,240 42,860,849
Retained earnings 70,406,992 56,266,488
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116,244,784 101,600,663
Less treasury stock, at cost, 209,828
and 159,828 shares, respectively (3,803,754) (2,703,754)
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112,441,030 98,896,909
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$ 431,603,740 $ 286,212,935
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The accompanying notes are an integral part
of the consolidated financial statements.
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TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended Nine Months Ended
July 31, July 31,
------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ------------ ------------
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CATV revenues $49,125,564 $41,077,677 $136,383,643 $120,204,292
----------- ----------- ------------ ------------
Operating expenses:
Salaries, wages and benefits 8,225,263 7,167,566 23,485,915 21,699,247
Programming costs 11,870,717 9,285,814 31,763,534 27,082,088
Other operating expenses 1,655,180 1,448,251 4,679,205 4,206,725
Selling, general and administrative 3,258,751 3,020,524 8,688,572 8,433,165
Depreciation and amortization 8,239,630 8,380,720 21,083,383 25,159,540
----------- ----------- ------------ ------------
33,249,541 29,302,875 89,700,609 86,580,765
----------- ----------- ------------ ------------
Operating income 15,876,023 11,774,802 46,683,034 33,623,527
Other income (136,928) 77,106 165,376 1,719,073
Interest expense (3,984,583) (2,448,017) (8,868,776) (7,311,312)
----------- ----------- ------------ ------------
Income before income taxes 11,754,512 9,403,891 37,979,634 28,031,288
----------- ----------- ------------ ------------
Provision for income taxes:
Current 1,730,000 3,250,000 9,600,000 8,750,000
Deferred 2,500,000 800,000 5,400,000 2,400,000
----------- ----------- ------------ ------------
4,230,000 4,050,000 15,000,000 11,150,000
----------- ----------- ------------ ------------
Income before cumulative effect of
change in accounting principle 7,524,512 5,353,891 22,979,634 16,881,288
Cumulative effect of change in
accounting principle (1,900,000)
----------- ----------- ------------ ------------
Net income $ 7,524,512 $ 5,353,891 $ 22,979,634 $ 14,981,288
=========== =========== ============ ============
Earnings per common share before
cumulative effect of change in
accounting principle $ 0.32 $ 0.21 $ 0.94 $ 0.68
Cumulative effect of change in
accounting principle (0.07)
----------- ----------- ------------ ------------
Earnings per common share $ 0.32 $ 0.21 $ 0.94 $ 0.61
=========== =========== ============ ============
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The accompanying notes are an integral part
of the consolidated financial statements.
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TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
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Common Stock Issued Additional
------------------------ Paid-In Retained Treasury
Shares Amount Capital Earnings Stock
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Balance, October 31, 1994 24,733,261 $2,473,326 $42,860,849 $56,266,488 $(2,703,754)
Net income for the nine months 22,979,634
ended July 31, 1995
Issuance of common stock 14,799 1,480 355,996
Stock options exercised 17,457 1,746 144,395
Treasury stock purchased (1,100,000)
Cash dividends at $.36 a share (8,839,130)
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Balance, July 31, 1995 24,765,517 $2,476,552 $43,361,240 $70,406,992 $(3,803,754)
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The accompanying notes are an integral part
of the consolidated financial statements.
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TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Nine Months Ended
July 31,
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1995 1994
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Cash flows from operating activities:
Cash received from customers $ 132,949,148 $120,466,270
Cash paid to suppliers and employees (65,985,498) (59,630,482)
Other revenue received 516,078 301,316
Interest paid (8,482,542) (7,404,651)
Income taxes paid (11,360,517) (9,850,600)
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Net cash provided by operating activities 47,636,669 43,881,853
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Cash flows from investing activities:
Payments for purchases of companies
and CATV systems (131,819,265) (2,905,411)
Capital expenditures (29,049,498) (20,602,344)
Proceeds from sale of assets 785,331 1,777,950
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Net cash used in investing activities (160,083,432) (21,729,805)
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Cash flows from financing activities:
Borrowings of term debt 277,884,990 53,599,990
Repayments of term debt (153,304,927) (65,104,469)
Loans to affiliates (2,500,000)
Treasury stock purchased (1,100,000) (2,160,000)
Proceeds from stock options exercised 146,141 32,407
Dividends paid (8,839,130) (8,128,750)
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Net cash provided by (used in) financing activities 112,287,074 (21,760,822)
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Net increase (decrease) in cash and cash equivalents (159,689) 391,226
Cash and cash equivalents at beginning of period 2,445,112 1,450,276
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Cash and cash equivalents at end of period $ 2,285,423 $ 1,841,502
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The accompanying notes are an integral part
of the consolidated financial statements.
6
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TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
(UNAUDITED)
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Nine Months Ended
July 31,
--------------------------
1995 1994
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Reconciliation of net income to net cash
provided by operating activities:
Net income $22,979,634 $14,981,288
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense 15,557,846 16,464,413
Amortization expense 5,525,537 8,695,127
Deferred income taxes 5,400,000 4,300,000
Contribution of common stock to retirement plan 357,477 395,105
(Gain) loss on sale of assets (164,225) (1,459,669)
Share of (earnings) losses of affiliates 514,927 41,912
(Increase) decrease in other assets (1,312,400) (540,438)
(Increase) decrease in accounts receivable, subscribers (2,281,771) (95,721)
(Increase) decrease in accounts receivable, other (806,977) 223,382
Increase (decrease) in subscriber advance payments (345,747) 134,317
Increase (decrease) in accrued expenses 1,846,092 3,015,214
Increase (decrease) in income taxes payable (1,760,517) (1,100,600)
Increase (decrease) in accounts payable 2,126,793 (1,172,477)
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Net cash provided by operating activities $47,636,669 $43,881,853
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The accompanying notes are an integral part
of the consolidated financial statements.
7
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TCA CABLE TV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Pursuant to the rules and regulations of the Securities and Exchange
Commission, certain financial information has been condensed and certain
footnote disclosures have been omitted. Such information and disclosures are
normally included in financial statements prepared in accordance with
accounting principles.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto in the Company's latest report on
Form 10-K.
The financial statements as of July 31, 1995 and for the nine month period
then ended are unaudited; however, in the opinion of management, such
statements include all adjustments (consisting solely of normal and recurring
adjustments) necessary to present fairly the financial information included
therein.
B. The consolidated statements of operations for the nine months ended July
31, 1995, are not necessarily indicative of the operating results to be
expected for the full year.
C. Earnings per common share are computed based upon the weighted average
common shares outstanding during the period, including common stock
equivalents, of 24,573,118 shares and 24,579,529 shares for 1995 and 1994,
respectively.
D. In May 1995, the Company through its subsidiaries acquired substantially
all of the assets used by Time Warner Entertainment Company, L.P. in the
operation of the cable television systems in and around the following cities
in Arkansas: Fayetteville, Elkins, Farmington, Greenland, Russellville,
Clarksville, Booneville, Pottsville, Paris, and the unincorporated areas within
the counties in which the foregoing cities are located. The cost of the
acquisition was approximately $66 million, all of which was paid in cash
obtained from the Company's bank lines of credit.
E. On July 1, 1995 the Company, through a subsidiary, acquired substantially
all of the assets used by Marcus Cable of San Angelo, L.P. in the operation of
the cable television systems in and around the following cities, counties, and
areas in Texas: San Angelo, Andrews, Ballinger, Miles, Winters, Goodfellow Air
Force Training Center, Andrews County, and Tom Green County. The cost of the
acquisition was approximately $66 million, all of which was paid in cash from
the Company's bank lines of credit.
F. In August 1995, the Company, through a subsidiary, also purchased the
assets related to the operation of the cable system serving the city of
El Dorado, Arkansas. The purchase price of approximately $19 million was
obtained from the Company's bank lines of credit.
G. Also in August 1995, the Company signed an agreement to acquire the assets
of cable systems from Star Cable Associates, then exchange them, along with
additional cash, with Time Warner Entertainment - Advance/Newhouse Partnership
for the Alexandria and Pineville, Louisiana cable system assets. The system
serves approximately 29,000 basic subscribers.
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TCA CABLE TV, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Comparison of the three-month period ended July 31,
1995 with the same three-month period of the prior year reveals increases in
revenues, operating income and net income. Revenues, operating income, and net
income increased by approximately 20%, 35% and 41%, respectively.
Approximately 44% of the revenue increase was from cable television system
acquisitions and 56% from internal growth. The Company's basic accounts
increased from 454,568 at July 31, 1994 to 526,142 at July 31, 1995 or
approximately 16%. Average revenue per account increased from $29.30 to
$31.50 or approximately 8%.
Operating expenses increased approximately 13% during the third quarter of
fiscal 1995 as compared to the third quarter of fiscal 1994. Approximately
83% of the operating expense increase was attributable to acquisitions. The
remainder of the increase in operating expenses arises from internal growth.
Interest expense increased by approximately $1.5 million or 63%. The increase
was attributable to approximately $132 million in borrowings to fund
acquisitions.
LIQUIDITY AND CAPITAL RESOURCES - The Company's capital expenditures have been
primarily for cable system construction, upgrading and rebuilding, acquisition
of other cable systems and purchases of converters to be furnished to
subscribers.
Expenditures for rebuilding, upgrading and maintaining the Company's cable
systems and for converter purchases have been financed principally with cash
flow from operations. Acquisitions of cable systems have generally been
financed with cash flow from operations and through bank borrowings.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit A
2.1. ASSET PURCHASE AGREEMENT dated August 28, 1995, between Telecable
Associates, Inc. and Star Cable Associates.
2.2. ASSET EXCHANGE AGREEMENT dated August 28, 1995, between Time
Warner Entertainment-Advance/Newhouse Partnership and Telecable
Associates, Inc.
10.1. Credit Agreement dated July 21, 1995 between TCA Cable TV, Inc.,
NationsBank of Texas, N.A., Texas Commerce Bank National Association
and Lenders.
10.2. Note Agreement dated June 23, 1995 between TCA Cable TV, Inc. and
The Prudential Insurance Company of America and the other parties hereto.
27. Financial Data Schedule
B. The following reports on Form 8-K have been filed during the
quarter for which this report is filed:
1. Report dated May 1, 1995, filed May 16, 1995, subsequent to the
Russellville acquisition.
2. Report dated May 9, 1995, filed May 24, 1995, subsequent to the
Fayetteville acquisition.
3. Report dated June 30, 1995, filed July 14, 1995, subsequent to the
San Angelo acquisition.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
TCA CABLE TV, INC.
Date: September 14, 1995 /s/ Robert M. Rogers
-----------------------------------
Robert M. Rogers, Chairman and
Chief Executive Officer
Date: September 14, 1995 /s/ Jimmie F. Taylor
-----------------------------------
Jimmie F. Taylor, Vice President,
CFO and Treasurer
10
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EXHIBIT INDEX
2.1. ASSET PURCHASE AGREEMENT dated August 28, 1995, between Telecable
Associates, Inc. and Star Cable Associates.
2.2. ASSET EXCHANGE AGREEMENT dated August 28, 1995, between Time
Warner Entertainment-Advance/Newhouse Partnership and Telecable
Associates, Inc.
10.1. Credit Agreement dated July 21, 1995 between TCA Cable TV, Inc.,
NationsBank of Texas, N.A., Texas Commerce Bank National Association
and Lenders.
10.2. Note Agreement dated June 23, 1995 between TCA Cable TV, Inc. and
The Prudential Insurance Company of America and the other parties hereto.
27. Financial Data Schedule
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
DATED AUGUST 28, 1995
BETWEEN
TELECABLE ASSOCIATES, INC.
AND
STAR CABLE ASSOCIATES
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TABLE OF CONTENTS
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CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.1 Covenant of Purchase and Sale; Assets . . . . . . . . . . . . 6
Section 2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 Assumed Obligations and Liabilities . . . . . . . . . . . . . 8
Section 2.4 Escrow Amount . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.5 Purchase Price; Indemnification Escrow . . . . . . . . . . . 8
Section 2.6 Current Items Amount . . . . . . . . . . . . . . . . . . . . 9
Section 2.7 Purchase Price Adjustment, Adjustment Amount . . . . . . . . 9
RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.1 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.2 Use of Names and Logos . . . . . . . . . . . . . . . . . . . 11
Section 3.3 Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.4 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.5 HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . 11
BUYER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.1 Organization of Buyer . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3 No Conflict; Required Consents . . . . . . . . . . . . . . . 12
Section 4.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.5 Finders and Brokers . . . . . . . . . . . . . . . . . . . . . 13
Section 4.6 Taxpayer Identification Number . . . . . . . . . . . . . . . 13
SELLER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.1 Organization and Qualification of Seller . . . . . . . . . . 13
Section 5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.3 No Conflict; Required Consents . . . . . . . . . . . . . . . 13
Section 5.4 Assets; Title, Condition, and Sufficiency . . . . . . . . . . 14
Section 5.5 System Franchises, System Licenses, and System Contracts . . 14
Section 5.6 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.8 Financial Statements . . . . . . . . . . . . . . . . . . . . 16
Section 5.9 Tax Returns; Other Reports . . . . . . . . . . . . . . . . . 16
Section 5.10 System Information . . . . . . . . . . . . . . . . . . . . . 17
Section 5.11 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.12 Compliance with Legal Requirements . . . . . . . . . . . . . 17
Section 5.13 Real Property . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.14 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.15 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.16 Environmental . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.17 Non-Infringement . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.18 Books and Records . . . . . . . . . . . . . . . . . . . . . . 22
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Section 5.19 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 22
Section 5.20 No Overbuilds . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.21 Small Systems; Small Cable Company . . . . . . . . . . . . . 22
Section 5.22 No Misrepresentation . . . . . . . . . . . . . . . . . . . . 23
Section 5.23 Taxpayer Identification Number . . . . . . . . . . . . . . . 23
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1 Certain Affirmative Covenants of Seller . . . . . . . . . . . 23
Section 6.2 Certain Negative Covenants of Seller . . . . . . . . . . . . 25
Section 6.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.4 Title Insurance Commitments . . . . . . . . . . . . . . . . . 26
Section 6.5 Cooperation with Seller . . . . . . . . . . . . . . . . . . . 27
Section 6.6 Access to Books and Records . . . . . . . . . . . . . . . . . 27
Section 6.7 Supplements to Exhibits . . . . . . . . . . . . . . . . . . . 27
Section 6.8 Notification of Certain Matters . . . . . . . . . . . . . . . 28
Section 6.9 Employee Benefit Matters . . . . . . . . . . . . . . . . . . 28
Section 6.10 Post-Closing Obtaining of Consents, Authorizations and
Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.11 Designation of Retransmission Consent Agreements . . . . . . 29
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . 30
Section 7.2 Conditions to Seller's Obligations . . . . . . . . . . . . . 32
Section 7.3 Mutual Condition . . . . . . . . . . . . . . . . . . . . . . 33
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.1 Closing; Time and Place . . . . . . . . . . . . . . . . . . . 34
Section 8.2 Seller's Obligations . . . . . . . . . . . . . . . . . . . . 34
Section 8.3 Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . 35
TERMINATION AND DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.1 Termination Events . . . . . . . . . . . . . . . . . . . . . 35
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 36
Section 9.3 Specific Performance; Remedies Cumulative . . . . . . . . . . 36
Section 9.4 Liquidated Damages . . . . . . . . . . . . . . . . . . . . . 36
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.1 Indemnification by Seller . . . . . . . . . . . . . . . . . . 37
Section 10.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . 37
Section 10.3 Procedure for Indemnified Third Party Claim . . . . . . . . . 38
Section 10.4 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 10.5 Time and Manner of Certain Claims . . . . . . . . . . . . . . 39
Section 10.6 Other Indemnification . . . . . . . . . . . . . . . . . . . . 40
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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<S> <C> <C>
Section 11.2 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.5 Entire Agreement; Amendments . . . . . . . . . . . . . . . . 42
Section 11.6 Binding Effect; Benefits . . . . . . . . . . . . . . . . . . 42
Section 11.7 Headings, Schedules, and Exhibits . . . . . . . . . . . . . . 42
Section 11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.12 Third Parties; Joint Ventures . . . . . . . . . . . . . . . . 43
Section 11.13 Construction . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.14 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into
as of the 28th day of August, 1995, by and between Telecable Associates, Inc.,
a Texas corporation ("Buyer"), whose U.S. Taxpayer Identification Number is 75-
1475918, and Star Cable Associates, a Pennsylvania general partnership
("Seller"), whose U.S. Taxpayer Identification Number is 25-1528948.
RECITALS
A. Seller owns and operates cable television systems which are
franchised, or hold other operating authority in, and operate in and around the
areas identified on Exhibit A (collectively, the "Systems").
B. Seller is willing to convey to Buyer, and Buyer is willing to
purchase from Seller, substantially all of the tangible and intangible assets
comprising the Systems other than the Excluded Assets (as hereinafter defined),
upon the terms and conditions set forth in this Agreement.
C. Buyer and Time Warner Entertainment-Advance/Newhouse
Partnership, a New York general partnership ("TWEAN"), desire to effect a
like-kind exchange of assets under Section 1031 of the Code (as hereinafter
defined), whereby, pursuant to an Asset Exchange Agreement of even date
herewith between Buyer and TWEAN (the "Asset Exchange Agreement"), following
the purchase by Buyer from Seller of the assets of the Systems, TWEAN would
acquire from Buyer the assets of the Systems and Buyer would acquire from TWEAN
the assets of certain cable television systems owned by TWEAN.
AGREEMENTS
In consideration of the mutual covenants and promises set forth
herein, Buyer and Seller agree as follows:
ARTICLE 1.
CERTAIN DEFINITIONS
As used in this Agreement, the following terms, whether in singular or
plural forms, shall have the following meanings:
"Adjustment Amounts" has the meaning given in Section 2.7.
"Adjustment Time" means 11:59 P.M., eastern local time, on the date of
Closing.
"Assets" has the meaning given in Section 2.1.
<PAGE> 6
"Assumed Obligations and Liabilities" has the meaning given in Section
2.3.
"Basic Cable" means the cable television services described as such on
Exhibit 5.10.
"Business" means the cable television business conducted by Seller on
the date of this Agreement through one or more Systems.
"Cable Act of 1992" means Title VI of the Communications Act, the
Communications Policy Act of 1984, Pub. L. No. 98-549, and the Cable
Television Consumer Protection Act of 1992, Pub. L. No. 102-385, as such
statutes may be amended from time to time, and the rules and regulations
promulgated thereunder.
"CLI" means Cumulative Leakage Index.
"Closing" has the meaning given in Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.
"Communications Act" means the Communications Act of 1934, as amended,
47 U.S.C. Section 151, et. seq. and rules and regulations promulgated
thereunder.
"Contract" means any written contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right, or other instrument, document, obligation, or agreement, and any oral
obligation, right, or agreement.
"Copyright Act" means the Copyright Act of 1976, as amended.
"Current Items Amount" has the meaning given in Section 2.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and rules and regulations promulgated thereunder and published
interpretations with respect thereto.
"Escrow Agent" means PNC Bank, National Association.
"Escrow Agreement" has the meaning given in Section 2.4.
"Escrow Amount" has the meaning given in Section 2.4.
"Estoppel Certificates" has the meaning given in Section 7.1.
"Excluded Assets" has the meaning given in Section 2.2.
"FAA" means the Federal Aviation Administration.
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<PAGE> 7
"FCC" means the Federal Communications Commission.
"Financial Statements" has the meaning given in Section 5.8.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Authority" means (i) the United States of America, any
state, commonwealth, territory, or possession thereof and any political
subdivision or quasi-governmental authority of any of the same, including but
not limited to courts, tribunals, departments, commissions, boards, bureaus,
agencies, counties, municipalities, provinces, parishes, and other
instrumentalities, and (ii) any foreign (as to the United States of America)
sovereign entity, including but not limited to nations, states, republics,
kingdoms and principalities, any state, province, commonwealth, territory or
possession thereof, and any political subdivision, quasi-governmental
authority, or instrumentality of any of the same.
"Hazardous Substances" means any pollutant, contaminant, chemical,
industrial, toxic, hazardous or noxious substance or waste which is regulated
by any Governmental Authority, including (a) any petroleum or petroleum
compounds (refined or crude), flammable substances, explosives, radioactive
materials, or any other materials or pollutants which pose a hazard or
potential hazard to the Real Property or to persons in or about the Real
Property or cause the Real Property to be in violation of any Legal
Requirements, (b) asbestos or any asbestos-containing material of any kind or
character, (c) polychlorinated biphenyls ("PCBs"), as regulated by the Toxic
Substances Controls Act, 15 U.S.C. Section 2601 et seq., (d) any materials or
substances designated as "hazardous substances" pursuant to the Clean Water
Act, 33 U.S.C. Section 1251 et seq., (e) "economic poison", as defined in the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 135 et
seq., (f) "chemical substance", "new chemical substance", or "hazardous
substance or mixture" pursuant to the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., (g) "hazardous substances" pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601
et seq., and (h) "hazardous waste" pursuant to the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., but excluding immaterial amounts
of the following substances, to the extent used in the ordinary course of the
Business: (i) lubricating, cleaning, coolant, and other compounds customarily
used in building and System maintenance; (ii) materials routinely used in the
day-to-day operations of an office, such as copier toner; (iii) consumer
products; (iv) fuel oil and natural gas for heating; (v) materials reasonably
necessary and customarily used in office and System construction and repair and
System vehicle operation and maintenance; and (vi) fertilizers, pesticides, and
herbicides commonly used for routine office landscaping.
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<PAGE> 8
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Headend Leases" has the meaning given in Section 6.l(k).
"Individual Subscriber" means, as to each System, any subscriber of
such System at that System's regular Basic Cable monthly subscriber rate, who
(i) has been an active subscriber of the System's basic cable television
service for at least one full month, (ii) is not more than sixty days in
arrears in payment for service from the first day of the period to which an
outstanding bill relates, determined as of the first day of the month in which
Closing occurs, (iii) has not given or been given notice of termination and
who, consistent with Seller's standing policy, should not have been given
notice of termination, and (iv) has become a subscriber only pursuant to
customary marketing promotions conducted in the ordinary course of business
consistent with past practices.
"Judgment" means any judgment, writ, order, injunction, award, or
decree of any court, judge, justice, or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
"Knowledge" of any Person of or with respect to any matter means that
such Person (if a natural person) or any of the officers, directors, and senior
managers of such Person (if not a natural Person) has, or after due inquiry and
investigation would have, actual awareness or knowledge of such matter.
"Leased Property" has the meaning given in Section 2.1.
"Legal Requirements" means applicable 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, including without limitation Judgments
and the System Franchises.
"Lien" means any security agreement, financing statement filed with
any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any lien, mortgage, indenture, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including but not limited to reservations,
rights of entry, possibilities of reverter, encroachments, easement,
rights-of-way, restrictive covenants, leases, and licenses) of any kind, which
otherwise constitutes an interest in or claim against property, whether arising
pursuant to any Legal Requirement, Contract, or otherwise.
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<PAGE> 9
"Litigation" means any claim, action, suit, proceeding, arbitration,
investigation, hearing, or other activity or procedure that could result in a
Judgment, and any notice of any of the foregoing.
"Losses" means any claims, losses, liabilities, damages, Judgments,
Liens, penalties, costs, and expenses, including but not limited to interest
which may be imposed in connection therewith, expenses of investigation,
reasonable fees and disbursements of counsel and other experts, and the cost to
any Person making a claim or seeking indemnification under this Agreement with
respect to funds expended by such Person by reason of the occurrence of any
event with respect to which indemnification is sought.
"Operational Information" has the meaning given in Section 5.8.
"Outside Closing Date" has the meaning given in Section 8.1.
"Owned Property" has the meaning given in Section 2.1.
"Permitted Liens" means (i) Liens for ad valorem Taxes not due and
payable, (ii) such imperfections of title, recorded easements, and visible
encroachments, if any, which do not impair the current use, occupancy, or
value, or the marketability of title, of the Owned Real Property or the Leased
Real Property subject thereto, and (iii) matters visible on the date of this
Agreement upon an inspection of the Owned Real Property or the Leased Real
Property.
"Person" means any natural person, Governmental Authority,
corporation, general or limited partnership, joint venture, trust, association,
or unincorporated entity of any kind.
"Post-Closing Adjustment Time" means 11:59 P.M., eastern local time,
on the sixtieth day after the date of Closing.
"Purchase Price" has the meaning given in Section 2.5.
"Subscriber Equivalent" means, as to each System, an equivalent to an
Individual Subscriber, and the number of Subscriber Equivalents shall be equal,
as of any date, to the quotient of (i) the aggregate revenues earned by such
System for Seller's Basic Cable and Tier Cable television service provided by
that System, during the last full month ending on or prior to such date, to
multiple dwelling units, commercial establishments and other subscribers served
by Seller that are billed for such service on a bulk basis or to single family
households which pay less than the System's regular Basic Cable monthly
subscription rate or the System's regular Basic Cable plus Tier Cable monthly
subscription rate, as applicable, and which multiple dwelling units, commercial
establishments, other subscribers or single family households have been active
subscribers of the System's basic cable television
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<PAGE> 10
service for at least one full month and are not more than sixty days in arrears
in payment for service from the first day of the period to which an outstanding
bill relates, determined in each case as of the first day of the month in which
Closing occurs, divided by (ii) the System's regular monthly subscription rate
for Basic Cable and Tier Cable in effect during such month.
"Systems" has the meaning given in Recital A.
"System Contracts" has the meaning given in Section 2.1.
"System Franchises" has the meaning given in Section 2.1.
"System Licenses" has the meaning given in Section 2.1.
"Taxes" means all levies and assessments of any kind or nature imposed
by any Governmental Authority, including but not limited to all income, sales,
use, ad valorem, value added, franchise, severance, net or gross proceeds,
withholding, payroll, employment, excise, or property taxes, together with any
interest thereon and any penalties, additions to tax, or additional amounts
applicable thereto.
"Tier Cable" means the cable television services described as Value
Pak on Exhibit 5.10.
"Title Commitments" has the meaning given in Section 6.4.
"Title Company" has the meaning given in Section 6.4.
"Title Defect" has the meaning given in Section 6.4.
"Title Policies" has the meaning given in Section 8.2(e).
"Transaction Documents" means all instruments and documents executed
and delivered by Buyer or Seller or any officer, director, or affiliate of
either of them in connection with this Agreement or the transactions
contemplated hereby.
"TWEAN" has the meaning given in Recital C.
ARTICLE 2.
PURCHASE AND SALE
Section 2.1 Covenant of Purchase and Sale; Assets. Subject to
the terms and conditions set forth in this Agreement, at Closing Seller shall
convey, assign, and transfer to Buyer, and Buyer shall acquire from Seller, for
the Purchase Price, free and clear of all Liens (except Permitted Liens), all
of the assets and properties, real and personal, tangible and intangible, used
by Seller in its
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<PAGE> 11
operation of, or otherwise relating to, the Systems (the "Assets"), including
but not limited to the following:
(a) Tangible Personal Property. All tangible personal
property, including but not limited to towers, tower equipment, antennae,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, feeder line cable, distribution plant, programming signal
decoders for each satellite service which scrambles its signal, housedrops,
installed subscriber devices, utility poles, local origination equipment,
vehicles and trailers, earth satellite receive stations and related equipment,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, furniture, fixtures, supplies, inventory, and other physical assets,
including but not limited to the items described on Exhibit 2.1(a).
(b) Real Property. All real property and interests in
real property, including but not limited to the fee interests in the real
property described as Owned Property on Exhibit 2.1(b) and all improvements
thereon (the "Owned Property") and the leasehold interests in the real property
described as Leased Property on Exhibit 2.1(b) and improvements thereon or
thereto owned or leased by Seller (the "Leased Property").
(c) Franchises. All franchises and similar
authorizations or permits issued by any Governmental Authority or other Person
(the "System Franchises"), including but not limited to those described on
Exhibit 2.1(c) and other franchises which Seller obtains between the date
hereof and the date of Closing as contemplated by this Agreement.
(d) Licenses. All intangible CATV channel distribution
rights, cable television relay service (CARS), domestic satellite receive only
(TVRO), business radio and other licenses, all copyright notices, and all other
licenses, authorizations, consents, or permits issued by the FCC or any other
Governmental Authority (the "System Licenses"), including but not limited to
those described on Exhibit 2.1(d).
(e) Contracts. All leases, private easements or rights
of access, contractual rights to easements, pole line or joint line agreements,
underground conduit agreements, crossing agreements, construction permits,
purchase orders, bulk and commercial service agreements, retransmission consent
agreements, and other Contracts (the "System Contracts"), including but not
limited to those described on Exhibit 2.1(e).
(f) Accounts Receivable. All subscriber, trade, and
other accounts receivable.
(g) Books and Records. All engineering records, files,
data, drawings, blueprints, schematics, reports, lists, plans and
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<PAGE> 12
processes, and all files of correspondence, lists, records, and reports
concerning subscribers and prospective subscribers of the System, signal and
program carriage, and dealings with Governmental Authorities, including but not
limited to all reports filed by or on behalf of Seller with the FCC and
statements of account filed by or on behalf of Seller with the U.S. Copyright
Office.
Section 2.2 Excluded Assets. Notwithstanding the provisions of
Section 2.1, the Assets shall not include the following, which shall be
retained by Seller (the "Excluded Assets"): (i) programming Contracts; (ii)
insurance policies and rights and claims thereunder; (iii) bonds, letters of
credit, surety instruments, and other similar items; (iv) cash and cash
equivalents; (v) subject to Section 3.2, Seller's trademarks, trade names,
service marks, service names, logos, and similar proprietary rights; and (vi)
the rights, assets, and properties described on Exhibit 2.2.
Section 2.3 Assumed Obligations and Liabilities. After Closing,
Buyer shall assume, pay, discharge, and perform the following (the "Assumed
Obligations and Liabilities"): (i) those obligations and liabilities
attributable to periods after the Adjustment Time under the System Contracts,
System Franchises and System Licenses assigned and transferred to Buyer at
Closing; (ii) other obligations and liabilities of Seller only to the extent
that there shall be an adjustment in favor of Buyer with respect thereto
pursuant to Section 2.6; and (iii) all obligations and liabilities arising out
of Buyer's ownership of the Assets or operation of the System after Closing.
All obligations and liabilities arising out of or relating to the Assets or the
Systems other than the Assumed Obligations and Liabilities shall remain and be
the obligations and liabilities solely of Seller.
Section 2.4 Escrow Amount. Upon execution and delivery of this
Agreement by Buyer and Seller, Buyer shall deliver the sum of $500,000 (the
"Escrow Amount") to the Escrow Agent, to be held and applied pursuant to the
terms of that certain Escrow Agreement, dated the date hereof, by and among
Buyer, Seller, TWEAN and Escrow Agent (the "Escrow Agreement").
Section 2.5 Purchase Price; Indemnification Escrow. The
consideration for the Assets shall be U.S. $53,200,000 (the "Purchase Price"),
subject to adjustment and proration as provided in Section 2.6. The amount to
be paid by Buyer at Closing by wire transfer of immediately available funds
shall be the Purchase Price, as adjusted and prorated, less the amount of the
Escrow Amount, which is to be retained by Escrow Agent in an interest-bearing
account to secure payment by Seller of any post-closing adjustments owed to
Buyer and any indemnification obligations to Buyer in accordance with the terms
of the Escrow Agreement.
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<PAGE> 13
Section 2.6 Current Items Amount. In addition to the payment by
Buyer of the Purchase Price, Buyer or Seller, as appropriate, shall pay to the
other (by increasing or decreasing the funds paid as the Purchase Price) the
net amount of the adjustments and prorations effected pursuant to paragraphs
2.6(a) and (b) (the "Current Items Amount").
(a) Advance Payments and Deposits. Buyer shall be
entitled to an amount equal to the aggregate of (i) all deposits of subscribers
of the Systems for converters, decoders, and similar items, and (ii) all
payments for services to be rendered by Buyer to subscribers of the Systems
after the Adjustment Time, or for other services to be rendered by Buyer to
other third parties after the Adjustment Time for public television
commercials, channel leasing, or other services or rentals to the extent all
obligations of Seller relating thereto are assumed by Buyer at Closing.
(b) Expenses. As of the Adjustment Time, the following
expenses shall be prorated, in accordance with GAAP, so that all expenses for
periods prior to the Adjustment Time shall be for the account of Seller, and
all expenses for periods after the Adjustment Time shall be for the account of
Buyer:
(i) all payments and charges under the System
Franchises, the System Licenses, and the System Contracts transferred to Buyer
at Closing;
(ii) Taxes levied or assessed against any of the
Assets or payable with respect to cable television service and related sales to
System subscribers;
(iii) charges for utilities and other goods or
services furnished to the System;
(iv) copyright fees based on signal carriage by
the System; and
(v) all other items of expense relating to the
System;
provided, however, that Seller and Buyer shall not prorate any items of expense
payable under any Excluded Assets, all of which shall remain and be solely for
the account of Seller.
Section 2.7 Purchase Price Adjustment, Adjustment Amount.
(a) Initial Adjustment Certificate. The Current
Items Amount shall be estimated in good faith by Seller, and set forth,
together with a detailed statement of the calculation thereof, in a certificate
(the "Initial Adjustment Certificate") executed by an officer of Seller and
delivered to Buyer not later than 7 days prior to Closing. If accepted by
Buyer, the Initial
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<PAGE> 14
Adjustment Certificate shall constitute the basis on which the Current Items
Amount is calculated for purposes of Closing.
(b) Adjustment Amounts. Not later than five
business days after the Post-Closing Adjustment Time, Buyer shall inform
Seller, in writing, of Buyer's calculation of the actual Current Items Amount
(the "Adjustment Amount") and shall provide in reasonable detail the basis for
such calculations. Upon reasonable notice and during normal business hours,
Buyer shall give representatives of Seller access to the premises and the books
and records comprising the Systems for purposes of verifying Buyer's
calculation of the Adjustment Amount and shall cause appropriate personnel of
Buyer, without charge therefor to Seller, to assist Seller and its
representatives in making such verification. Unless Seller notifies Buyer, in
writing, that it disagrees with Buyer's calculation of the Adjustment Amount
within ten business days after its receipt of Buyer's calculation thereof,
Buyer's calculation of the Adjustment Amount shall be conclusive and binding on
Seller and Buyer. If Seller notifies Buyer in writing of its disagreement with
Buyer's calculation of the Adjustment Amount within such ten-business-day
period, then Seller and Buyer shall endeavor in good faith to attempt to
resolve their differences with respect thereto within three months after the
Post-Closing Adjustment Time. Any dispute regarding the calculation of the
Adjustment Amount not resolved by Seller and Buyer within such three-month
period shall be resolved by Arthur Andersen & Co. The determination of Arthur
Andersen & Co. as to the calculation of the Adjustment Amounts (with such
modifications thereof, if any, as reflect such determination) shall be
conclusive and binding upon the parties. The fees and expenses of Arthur
Andersen & Co. in acting under this paragraph 2.7(b) shall be shared equally by
Seller and Buyer.
(c) Payment. Not later than fifteen days after the
Adjustment Amount has been finally determined, Seller or Buyer, as appropriate,
shall pay to the other an amount equal to the amount by which the Current Items
Amount as finally determined differs from the Adjustment Amount as estimated in
the Initial Adjustment Certificate.
ARTICLE 3.
RELATED MATTERS
Section 3.1 Employees. Seller shall remain solely responsible
for, and shall indemnify and hold harmless Buyer from and against all Losses
arising with respect to, all salaries and all severance, vacation, sick,
holiday, unemployment benefit, and other benefits to which employees of Seller
may be entitled, as a result of consummation of the transactions contemplated
hereby or otherwise. Seller acknowledges that Buyer may, but shall have no
obligation to, hire any of Seller's employees that render services
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<PAGE> 15
in connection with the operation of the System, whether or not such employees'
employment shall have been terminated by Seller.
Section 3.2 Use of Names and Logos. For a period of sixty days
after Closing, Buyer shall be entitled to use the trademarks, trade names,
service marks, service names, logos, and similar proprietary rights of Seller
to the extent incorporated in or on the Assets, provided that Buyer shall
exercise efforts to remove all such names, marks, logos, and similar
proprietary rights from the Assets as soon as reasonably practicable following
Closing.
Section 3.3 Bulk Sales. Buyer and Seller each waives compliance
by the other with Legal Requirements relating to bulk sales applicable to the
transactions contemplated hereby. Seller shall indemnify and hold Buyer
harmless with respect to all Losses resulting from any noncompliance with bulk
sales Legal Requirements applicable to the transactions contemplated hereby.
Section 3.4 Transfer Taxes. All sales, use, transfer, and
similar taxes or assessments arising from or payable by reason of the
transactions contemplated by this Agreement shall be shared equally by Buyer
and Seller, provided, however, that in no event shall Buyer be obligated to pay
more than $5,000.00 toward such taxes and assessments; and each of Seller and
Buyer shall indemnify and hold harmless the other from and against all Losses
arising from any such taxes or assessments for which the indemnifying party is
responsible under this Section 3.4.
Section 3.5 HSR Act Compliance. As soon as reasonably
practicable, and in any event within thirty days after the date of this
Agreement, Seller and Buyer shall prepare and file or cause to be prepared and
filed proper Premerger Notification and Report Forms and related affidavits in
compliance with the HSR Act, with Buyer and Seller sharing equally the filing
fee related thereto. The parties acknowledge that TWEAN will be responsible
for Buyer's share of the filing fee as the acquiring person of the Assets under
the HSR Act. The parties shall reasonably cooperate in the preparation of such
filings (including the exchange of drafts) and shall cause the filings to be
coordinated so as to minimize the length of any review periods. The parties
shall promptly respond or arrange for a response to any requests for additional
information from either the United States Department of Justice or the Federal
Trade Commission. However, if following the filing of such forms any
Governmental Authority shall request any additional filings or information that
either Seller or Buyer reasonably considers to be inappropriate, unlawful,
unduly burdensome, or otherwise unacceptable, it shall have no obligation to
make or provide such filing or information and in such event shall be entitled,
at its option, to withdraw its filing and terminate this Agreement without
liability or obligation.
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<PAGE> 16
ARTICLE 4.
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller, as of the date of this
Agreement and as of Closing, as follows:
Section 4.1 Organization of Buyer. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Texas, and has all requisite corporate power and authority to own and lease
the properties and assets it currently owns and leases and to conduct its
activities as such activities are currently conducted. Buyer is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of its business or the character of its
properties and assets which it owns makes such qualification necessary.
Section 4.2 Authority. Buyer has all requisite corporate power
and authority to execute, deliver, and perform this Agreement and consummate
the transactions contemplated hereby. The execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby
by Buyer have been duly and validly authorized by all necessary action on the
part of Buyer. This Agreement has been duly and validly executed and delivered
by Buyer, and is the valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights generally or
the availability of equitable remedies.
Section 4.3 No Conflict; Required Consents. Except as described
on Exhibit 4.3 and subject to compliance with the HSR Act, the execution,
delivery, and performance by Buyer of this Agreement do not and will not: (i)
conflict with or violate any provision of the bylaws or articles of
incorporation of Buyer; (ii) violate any provision of any Legal Requirements;
or (iii) conflict with, violate, result in a breach of, constitute a default
under (without regard to requirements of notice, lapse of time, or elections of
other Persons, or any combination thereof) or accelerate or permit the
acceleration of the performance required by, any Contract or Lien to which
Buyer is a party or by which Buyer or the assets or properties owned or leased
by it are bound or affected or (iv) require any consent, approval, or
authorization of, or filing of any certificate, notice, application, report, or
other document with, any Governmental Authority or other Person.
Section 4.4 Litigation. Except for any Litigation as may affect
the cable television industry (national or regional) generally, there is no
Litigation pending, or to the best of Buyer's Knowledge, threatened, in any
court or before any Governmental Authority or any arbitrator, by or against or
affecting or relating to Buyer or any of its affiliates which, if adversely
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<PAGE> 17
determined, would restrain or materially hinder or delay the consummation of
the transactions contemplated by this Agreement or cause any of such
transactions to be rescinded.
Section 4.5 Finders and Brokers. Buyer has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement for which Seller will in any
way have any liability.
Section 4.6 Taxpayer Identification Number. Buyer's U.S.
Taxpayer Identification Number is as set forth in the introductory paragraph of
this Agreement.
ARTICLE 5.
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer, as of the date of this
Agreement and as of Closing, as follows:
Section 5.1 Organization and Qualification of Seller. Seller is
a general partnership duly organized and validly existing under the laws of the
Commonwealth of Pennsylvania, and has all requisite partnership power and
authority to own and lease the properties and assets it currently owns and
leases and to conduct its activities as such activities are currently
conducted. Exhibit 5.1 sets forth an accurate and complete description of the
direct and indirect ownership structure of Seller. Seller is duly qualified to
do business as a foreign partnership in the States of North Carolina and South
Carolina and in the Commonwealth of Virginia.
Section 5.2 Authority. Seller has all requisite partnership
power and authority to execute, deliver, and perform this Agreement and
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby on the part of Seller have been duly and validly authorized
by all necessary action on the part of Seller and its partners. This Agreement
has been duly and validly executed and delivered by Seller, and is the valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies.
Section 5.3 No Conflict; Required Consents. Except as described
on Exhibit 5.3, and subject to compliance with the HSR Act, the execution,
delivery, and performance by Seller of this Agreement do not and will not: (i)
conflict with or violate any provision of the partnership agreement of Seller;
(ii) violate any provision of any Legal Requirements; (iii) conflict with,
violate,
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result in a breach of, constitute a default under (without regard to
requirements of notice, lapse of time, or elections of other Persons, or any
combination thereof), accelerate, or permit the acceleration of the performance
required by, any Contract or Lien to which Seller is a party or by which Seller
or the assets or properties owned or leased by it are bound or affected; (iv)
result in the creation or imposition of any Lien against or upon any of the
Assets; or (v) require any consent, approval or authorization of, or filing of
any certificate, notice, application, report, or other document with, any
Governmental Authority or other Person.
Section 5.4 Assets; Title, Condition, and Sufficiency. Exhibit
2.1(a) contains descriptions of all material items of tangible personal
property included in the Assets and Exhibit 2.1(b) contains descriptions of all
Owned and Leased Property included in the Assets. Except as described on
Exhibit 5.4, Seller has good and marketable title to (or, in the case of Assets
that are leased, valid leasehold interests in) all of the Assets, free and
clear of all Liens, except Permitted Liens. The tangible Assets are in good
operating condition and repair, ordinary wear and tear excepted. All items of
cable plant and headend equipment included in the Assets (i) have been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (ii) will permit the Systems to operate in accordance
with the terms of the Franchises. Except for the Excluded Assets, the Assets
constitute all property and rights, real and personal, tangible and intangible,
necessary or required, to operate the Systems as currently operated and conduct
the business of the Systems as currently conducted.
Section 5.5 System Franchises, System Licenses, and System
Contracts.
(a) Except for the System Franchises, System Licenses,
and System Contracts described on Exhibits 2.1(c), (d) and (e), respectively,
and Contracts included in the Excluded Assets, and except as described on
Exhibit 5.5, Seller is not bound or affected by any of the following that
relate to the System: (i) leases of real or personal property (whether as
lessor or lessee); (ii) Contracts granting any Person a Lien on or against any
of the Assets; (iii) franchises or similar authorizations; (iv) licenses or
permits authorized or issued by any Governmental Authority or other Person; (v)
Contracts of employment, or Contracts with consultants or independent
contractors; or (vi) Contracts other than those described in any other
paragraph of this Section 5.5 which contemplate payments by or to Seller in any
twelve-month period exceeding $500 individually or $2,000 in the aggregate.
Seller possesses all franchises, licenses, permits, consents, approvals, and
authorizations of any Governmental Authority or other Person and all Contracts
necessary or required to operate the Systems as currently operated and to
conduct the business of the Systems as currently conducted, except for those
the absence of
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which would not have a material adverse effect on the business, condition
(financial or otherwise), results of operations, or performance of the System.
(b) Seller has delivered to Buyer true and complete
copies of each of the System Franchises, System Licenses, and System Contracts,
including any amendments, assignments and consents thereto (or, in the case of
oral System Contracts, true and complete written summaries thereof), and true
and complete copies of all standard form Contracts used by Seller in its
operation of the System. Except as described in Exhibit 5.5: (i) each of the
System Franchises, System Licenses, and System Contracts is valid, in full
force and effect, and, to Seller's Knowledge, enforceable in accordance with
its terms against the parties thereto other than Seller, and Seller has
fulfilled when due, or has taken all action necessary to enable it to fulfill
when due, all of its obligations thereunder; (ii) there has not occurred any
default (without regard to lapse of time, the giving of notice, the election of
any Person other than Seller, or any combination thereof) by Seller nor, to the
Knowledge of Seller, has there occurred any default (without regard to lapse of
time, the giving of notice, the election of Seller, or any combination thereof)
by any Person other than Seller under any of the System Franchises, System
Licenses, or System Contracts; and (iii) neither Seller nor, to the Knowledge
of Seller, any other Person is in arrears in the performance or satisfaction of
its obligations under any of the System Franchises, System Licenses, or System
Contracts, and no waiver or indulgence has been granted by any of the parties
thereto. A request for renewal has been timely filed under Section 626(a) of
the Cable Act of 1992 with the proper Governmental Authority with respect to
each System Franchise expiring within 36 months of the date of this Agreement.
Section 5.6 Employee Benefits. Neither Seller nor any
Employee Benefit Plan (as that term is defined in ERISA) maintained by Seller
or to which Seller has or has had the obligation to contribute is in violation
of the provisions of ERISA; no reportable event, within the meaning of Title IV
of ERISA, has occurred and is continuing with respect to any such Employee
Benefit Plan; and no prohibited transaction, within the meaning of Title I of
ERISA, has occurred with respect to any such Employee Benefit Plan.
Section 5.7 Litigation. Except as set forth in Exhibit 5.7: (i)
there is no Litigation pending or, to Seller's Knowledge, threatened, by or
before any Governmental Authority or private arbitration tribunal, against
Seller which could adversely affect the financial condition or operations of
the Systems, the Assets, or the ability of Seller to perform its obligations
under this Agreement, or which seeks or could result in the modification,
revocation, termination, suspension, or other limitation of any of the System
Franchises, System Licenses, or System Contracts, nor,
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to Seller's Knowledge, is there any basis for any such Litigation; and (ii)
there is not in existence any Judgment requiring Seller to take any action of
any kind with respect to the Assets or the operation of the Systems, or to
which Seller (with respect to the Systems), the Systems, or the Assets are
subject or by which they are bound or affected.
Section 5.8 Financial Statements. Seller has delivered to Buyer
(i) an unaudited trial balance of each of the Systems as of December 31, 1994
and unaudited statements of profit and loss of each of the Systems for the
twelve- month period then ended, and an unaudited trial balance for each of the
Systems as of June 30, 1995 and unaudited statements of profit and loss of each
of the Systems for the six-month period then ended (collectively, the
"Financial Statements"), and (i) current operational information, including
statistical information for each of the Systems regarding subscribers,
passings, and miles of plant, for each month since December 1993 through June
30, 1995, together with an accounts receivable aging report for the most recent
month (the "Operational Information"). The Financial Statements and the
Operational Information are in accordance with all books, records, and accounts
of Seller and are true, correct, and complete in all material respects. The
Financial Statements were prepared on the accrual basis of accounting
consistent with appropriate provisions of the Code for accrual basis taxpayers,
present fairly the financial position of each of the Systems as of the dates
indicated and the results of operations of each of the Systems for the periods
indicated subject to normal year-end adjustments, and were prepared on a basis
consistent in all material respects with all other financial statements,
balance sheets, and operating cash flow statements of Seller. The assets and
liabilities and items of income and expense on the Financial Statements are
bona fide, and none were acquired, earned, or incurred pursuant to any Contract
or other transaction entered into, amended, or terminated in anticipation of
the transactions contemplated by this Agreement.
Section 5.9 Tax Returns; Other Reports. Seller has timely and
properly filed in true and correct form all federal, state, local, and foreign
tax returns and other reports required to be filed relating to the Assets or
the Systems, and has timely and properly paid all Taxes relating to the Assets
or the Systems which have become due and payable, whether or not so shown on
any such return or report. Seller has received no notice of, nor does Seller
have any Knowledge of, any notice of deficiency or assessment of proposed
deficiency or assessment relating to the Assets or the Systems from any taxing
Governmental Authority. Except as set forth on Exhibit 5.9, there are no
audits pending with respect to Seller relating to the Assets or the Systems and
there are no outstanding agreements or waivers by or with respect to Seller
relating to the Assets or the Systems that extend the statutory period of
limitations applicable to any federal, state, local, or foreign tax returns or
Taxes for any period. There are no
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determined tax deficiencies or proposed tax assessments against Seller relating
to the Assets or the Systems.
Section 5.10 System Information. Exhibit 5.10 sets forth a
materially true and accurate description of the following information:
(i) the number of miles of plant included in
the Assets as of May 31, 1995;
(ii) the number of Individual Subscribers and
Subscriber Equivalents served by the Systems as of May 31, 1995;
(iii) the number of passings of the Systems as of
May 31, 1995;
(iv) a description of basic and optional or tier
services available from the Systems, the rates charged by Seller for each, and
the number of Individual Subscribers and Subscriber Equivalents receiving each
optional or tier service as of May 31, 1995;
(v) the stations and signals carried by the
Systems, the channel position of each such signal and station, and all
frequencies utilized by the Systems; and
(vi) the MHz and channel capacity of the Systems.
Section 5.11 Bonds. Except as set forth in Exhibit 5.11, there
are no franchise, construction, fidelity, performance, or other bonds posted or
required to be posted by Seller or any other party in connection with the
Systems or the Assets.
Section 5.12 Compliance with Legal Requirements.
(a) The operation of the Systems as currently conducted
does not violate or infringe any Legal Requirements currently in effect or, to
the Knowledge of Seller, proposed to become effective, except where failure to
comply would not have a material adverse effect on the business, condition
(financial or otherwise), results of operation, or performance of the Systems,
would not result in the creation or imposition of any Lien upon or against any
of the Assets, and would not result in the imposition of any fine or penalty.
Seller has received no notice of any violation by Seller or the Systems of any
Legal Requirement applicable to Seller or the operation of the Systems as
currently conducted, and knows of no basis for the allegation of any such
violation.
(b) Without limiting the generality of the foregoing,
Seller is in compliance with the Communications Act and the Cable Act of 1992,
and has submitted to the FCC all filings, including but not limited to cable
television registration statements, annual
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reports, and aeronautical frequency usage notices, that are required under the
rules and regulations of the FCC. The operation of the Systems has been and is
in compliance with the rules and regulations of the FCC, and Seller has not
received notice from the FCC of any violation of its rules and regulations.
(c) Seller is presently permitted under all applicable
FCC rules, regulations and orders to distribute the signals and to utilize all
carrier frequencies generated by the operations of the Systems, and is licensed
to operate all the facilities required by law to be licensed, including any
business radio and any cable television relay service system, being operated as
part of the Systems. Other than requests for network nonduplication, sports
blackout and syndex protection and notices of election of must-carry status and
retransmission consents or other communications made pursuant to the Cable Act
of 1992, no written requests or notices or demands (written or oral) have been
received by Seller during one year preceding the date of this Agreement from
the FCC, any local or other television station or system or from any
governmental authority challenging or questioning the right of Seller's
operation of the Systems, or requesting signal carriage or challenging the
right of Seller to carry or deliver any signal. Seller's operation of the
Systems and of any FCC-licensed or registered facility used in conjunction with
Seller's operation of the Systems, is in compliance in all material respects
with the FCC's rules and regulations and the provisions of the Communications
Act and the Cable Act of 1992. The Systems are carrying all of the "must
carry" signals required to be carried pursuant to the FCC's rules and
regulations. Seller has obtained all necessary retransmission consent for
broadcast stations that are carried by the Systems and that have elected
carriage pursuant to retransmission consent.
(d) Seller has conducted all such system
proof-of-performance tests, microwave tests and such CLI- related tests as are
required to be conducted under FCC regulations with respect to the Systems.
Seller has (i) maintained appropriate log books and other recordkeeping which
accurately and completely reflect all results required to be shown thereon;
(ii) to the extent required by the rules and regulations of the FCC, corrected
any radiation leakage of the Systems required to be corrected in connection
with Seller's monitoring obligations under the rules and regulations of the
FCC; and (iii) otherwise complied in all material respects with all applicable
CLI rules and regulations. Seller has filed all required FCC notifications for
the operation of the Systems in all necessary aeronautical frequency bands.
(e) Seller has deposited with the United States Copyright
Office all statements of account and other documents and instruments, and paid
all royalties, supplemental royalties, fees and other sums to the United States
Copyright Office under the Copyright Act with respect to the business and
operations of the
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Systems as are required to obtain, hold and maintain the compulsory license for
cable television systems prescribed in Section 111 of the Copyright Act.
Seller and the Systems are in compliance with the Copyright Act and the rules
and regulations of the Copyright Office promulgated thereunder, except as to
potential copyright liability arising from the performance, exhibition or
carriage of any music on the Systems. Seller has, under applicable law or in
accordance with the programming agreements relating to the programs carried by
the Systems, the legal right and authority to carry the signals and the
carriage, transmission or use of the signals has not subjected, and does not
subject, the Systems or Seller to any suits or actions, including suits or
actions for copyright infringement. To Seller's Knowledge, there is no
inquiry, claim, action or demand pending before the United States Copyright
Office or from any other party which questions the copyright filings or
payments made by Seller with respect to the Systems with respect to which Buyer
will incur any Losses.
(f) All required FAA no hazard determinations have been
obtained with respect to the construction and/or alteration of towers used in
connection with the operation of the Systems. The towers have been marked and
lit, where required, in compliance in all material respects with applicable FCC
and FAA rules.
(g) The transactions contemplated hereby do not require
any action by Seller or Buyer to comply with the provisions of the Worker
Adjustment and Retraining Notification Act, as amended, 23 U.S.C. Section
2101, et seq.
Section 5.13 Real Property. Except for the Leased Property
described on Exhibit 2.1(b), Seller does not hold or use under lease or lease
to others any real property relating to the Systems. Except for the Owned
Property described on Exhibit 2.1(b), Seller has no other ownership interest in
real property relating to the Systems. Except for routine repairs, all of the
improvements, leasehold improvements, and the premises of the Owned Property
and the Leased Property are in good condition and repair and are suitable for
the purposes used. The current use and occupancy of the Owned Property and
Leased Property do not constitute nonconforming uses under any applicable
zoning Legal Requirements. Each parcel of Owned Property and each parcel of
Leased Property (i) has access to and over public streets, or private streets
for which Seller has a valid right of ingress and egress, (ii) conforms in its
current use to all material zoning requirements without reliance upon a
variance issued by a local government or a classification of the parcel in
question as a nonconforming use, and (iii) conforms in its use to all material
restrictive covenants, if any, or other material encumbrances affecting all or
part of such parcel.
Section 5.14 No Adverse Change. Since June 30, 1995, (i) there
has been no material adverse change in the Assets or the
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financial condition or operations of the Systems; (ii) the Assets and the
financial condition and operations of the Systems have not been materially and
adversely affected as a result of any fire, explosion, accident, casualty,
labor trouble, flood, drought, riot, storm, condemnation, or act of God or
public force or otherwise; and (iii) Seller has not made any sale, assignment,
lease or other transfer of any of the Assets other than in the normal and usual
course of business.
Section 5.15 Employees.
(a) There are no collective bargaining agreements
applicable to any persons employed by Seller that render services in connection
with the Systems, and Seller has no duty to bargain with any labor organization
with respect to any such persons. There are not pending any unfair labor
practice charges against Seller, nor any demand for recognition, or any other
request or demand from a labor organization for representative status with
respect to any persons employed by Seller that render services in connection
with the Systems.
(b) Seller is in compliance in all material respects with
all applicable Legal Requirements respecting employment conditions and
practices, has withheld all amounts required by any applicable Legal
Requirements or Contracts to be withheld from the wages or salaries of its
employees, and is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing.
(c) Seller has not engaged in any unfair labor practice
within the meaning of the National Labor Relations Act and has not violated any
Legal Requirements prohibiting discrimination on the basis of race, color,
national origin, sex, religion, age, marital status, or handicap in its
employment conditions or practices. There are no pending or, to Seller's
Knowledge, threatened unfair labor practice charges or discrimination
complaints relating to race, color, national origin, sex, religion, age,
marital status, or handicap against Seller before any governmental authority
nor, to Seller's Knowledge, does any basis therefor exist.
(d) There are no existing or, to Seller's Knowledge,
threatened, labor strikes, disputes, or grievances affecting the Systems or
other labor controversies which could reasonably be expected to have a material
and adverse effect on the financial condition or operations of the Systems.
There are no pending or, to Seller's Knowledge, threatened representation
questions respecting Seller's employees, or any pending or, to the Knowledge of
Seller, threatened arbitration proceedings under any System Contracts, nor to
the Knowledge of Seller, does any basis therefor exist.
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(e) Except as set forth on Exhibit 5.15, Seller is not a
party to any employment agreement, written or oral, relating to employees of
the Systems which cannot be terminated at will by Seller and, except as set
forth on Exhibit 5.15, Seller has not had and does not currently have any
pension or profit sharing or other employee benefit plan relating to employees
of the System. Copies or written summaries of the material provisions of all
agreements and plans listed on Exhibit 5.15 have been delivered by Seller to
Buyer.
(f) The names, titles and rates of compensation of all of
the employees of the Systems are listed on Exhibit 5.15.
Section 5.16 Environmental.
(a) Seller has received no notice that it is, and to
Seller's Knowledge it is not, (i) the subject of any "Superfund" evaluation or
investigation, or (ii) the subject of any investigation or proceeding of any
Governmental Authority evaluating whether any remedial action is necessary to
respond to any release of Hazardous Substances on or in connection with the
Owned Property or the Leased Property. None of the Owned Property or Leased
Property is included, nor to Seller's Knowledge has it been considered for
inclusion, in any federal, state, or local list or registry of properties
contaminated by Hazardous Substances, including but not limited to the National
Priorities List or the CERCLIS List. Except as disclosed on Exhibit 2.1(b),
there is no underground storage or surface impoundment on the Owned Property or
the Leased Property.
(b) All permits, licenses, permissions, and other
authorizations relating to the Owned Property or Leased Property which are
required under applicable Legal Requirements with respect to pollution or
protection of the environment have been obtained, including Legal Requirements
relating to actual or threatened emissions, discharges, or releases of
Hazardous Substances into ambient air, surface water, ground water, land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of Hazardous Substances.
Seller is in compliance in all material respects with all terms and conditions
of such permits, licenses, permissions, and authorizations, and is in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
time-tables of such Legal Requirements or of any other environmental, health,
or safety Legal Requirements relating to the Owned Property or the Leased
Property. Seller has not received notice of, and has no Knowledge of
circumstances relating to, any past, present, or future events, conditions,
circumstances, activities, practices, incidents, actions, or plans, including
but not limited to the presence, use, generation, manufacture, disposal,
release, or threatened release of any Hazardous Substances from the Owned
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Property or the Leased Property, which could interfere or prevent continued
compliance with, or which are reasonably likely to give rise to any liability
under, any environmental Legal Requirement, based upon or related to the
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release, or threatened release into the
environment, of any Hazardous Substance from or attributable to the Owned
Property or the Leased Property.
Section 5.17 Non-Infringement. The operation of the Systems as
currently conducted does not infringe upon, or otherwise violate, the rights of
any person or entity in any copyright, trade name, trademark right, service
mark, service name, trade name, patent, patent right, license, trade secret or
franchise, and there is not pending or, to Seller's Knowledge, threatened any
action with respect to any such infringement or breach.
Section 5.18 Books and Records. All of the books, records, and
accounts of the Systems are in all material respects true and complete, are
maintained in accordance with good business practice and all applicable Legal
Requirements, accurately present and reflect in all material respects all of
the transactions therein described, and are reflected accurately in the
Financial Statements.
Section 5.19 Accounts Receivable. Seller is the true and lawful
owner of its accounts receivable and has good and clear title to each account,
free and clear of all Liens, except those described on Exhibit 5.4, with the
absolute right to transfer any interest therein. Each such account is (i) a
valid obligation of the account debtor enforceable in accordance with its
terms, free and clear of all encumbrances, set-offs, adverse claims,
assessments, defaults, prepayments, defenses, and conditions precedent, and
(ii) a true and correct statement of the account for merchandise actually sold
and delivered to, or for actual services performed for and accepted by, such
account debtor.
Section 5.20 No Overbuilds. Except for DBS service and except as
described on Exhibit 5.20, to Seller's Knowledge, there are no currently
operating cable television systems (other than the Systems) providing
television programming, multi-point distribution or multi-channel multi-point
distribution or satellite master antenna television systems in any area in
which Seller is authorized to provide cable television service under the System
Franchises and in any area served by the Systems without a System Franchise.
Section 5.21 Small Systems; Small Cable Company. Each of the
Systems is a "small system," and Seller is a "small cable company," as those
terms are used in 47 C.F.R. Section 76.901.
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Section 5.22 No Misrepresentation. No representation or warranty
by Seller in this Agreement, nor any statement or certificate furnished to
Buyer pursuant hereto or in connection with the transactions contemplated
hereby, contains or will at Closing contain any untrue statement of a material
fact, or omits or will at Closing omit to state a material fact necessary to
make the statements contained therein not misleading.
Section 5.23 Taxpayer Identification Number. Seller's U.S.
Taxpayer Identification Number is as set forth in the introductory paragraph of
this Agreement.
ARTICLE 6.
COVENANTS
Section 6.1 Certain Affirmative Covenants of Seller. Except as
Buyer may otherwise consent in writing, between the date of this Agreement and
Closing Seller shall:
(a) Operate the Systems only in the usual, regular, and
ordinary course and in accordance with past practices and, to the extent
consistent with such operation, use its best efforts to (i) preserve the
current business organization of the Systems intact, (ii) keep available the
services of its employees providing services in connection with the Systems,
(iii) continue normal marketing, advertising, and promotional expenditures with
respect to the Systems, and (iv) preserve any beneficial business relationships
with all customers, suppliers, and others having business dealings with Seller
relating to the Systems;
(b) maintain (i) the Assets in good condition and repair,
ordinary wear excepted, and (ii) in full force and effect policies of insurance
with respect to the Assets and the operation of the Systems, in such amounts
and with respect to such risks as are customarily maintained by operators of
cable television systems of the size and in the geographic location of the
Systems;
(c) (i) duly comply in all material respects with all
applicable Legal Requirements; (ii) perform all of its obligations under all of
the System Franchises, System Licenses, and Systems Contracts without default;
and (iii) maintain its books, records, and accounts in the usual, regular, and
ordinary manner on a basis consistent with past practices;
(d) (i) give to Buyer and TWEAN, and their respective
counsel, accountants, and other representatives, full access during normal
business hours to the premises of Seller and the Systems, the Owned Property,
the Leased Property, all of the Assets, Seller's books and records, and the
System's personnel; (ii) furnish to Buyer, TWEAN and such representatives all
such additional documents (certified by an officer of Seller, if
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requested by Buyer or TWEAN), financial information, and other information as
Buyer may from time to time reasonably request; and (iii) cause Seller's
accountants to permit Buyer, TWEAN and their respective accountants to examine
the records and working papers pertaining to its audits and other reviews of
the Systems' financial statements; provided that no investigation by Buyer or
its representatives shall affect or limit the scope of any of the
representations and warranties of Seller herein or in any Transaction Document
or limit the liability of Seller for any breach of such representations and
warranties; and provided further that Buyer and TWEAN shall perform any
investigation pursuant to this paragraph (d) in such a manner as not to
interfere materially with the conduct of Seller's business;
(e) use its best efforts to obtain in writing as promptly
as possible all approvals, authorizations, and consents required to be obtained
by Seller in order to consummate the transactions contemplated hereby and
deliver to Buyer copies, satisfactory in form and substance to Buyer, of such
approvals, authorizations, and consents; provided, however, that Seller shall
not accept or agree or accede to any modifications or amendments to, or any
conditions to the transfer of, any of the System Franchises, System Licenses,
or System Contracts that are not acceptable to Buyer; and provided further that
Seller shall have no obligation to offer or pay any consideration (other than
normal and usual processing and filing fees, and overhead and similar expenses
incurred in obtaining such approvals, authorizations and consents), or to act
as surety or guarantor, in order to obtain any such approval, authorization, or
consent;
(f) promptly deliver to Buyer true and complete copies of
all monthly and quarterly financial statements and operating reports of Seller
and any reports with respect to the operation of the Systems prepared by or for
Seller at any time from the date hereof until Closing, and any other similar
materials which Buyer may reasonably request;
(g) terminate the employment of all employees of Seller
working for the Systems prior to the Adjustment Time;
(h) use its best efforts to (i) consolidate the Systems
serving Lone Hickory, Yadkinville and Dobson, North Carolina and, if Closing
has not occurred by December 31, 1995, the System serving Cross Creek, North
Carolina, into one system served by a single headend located at Dobson, North
Carolina at its sole cost and expense, and (ii) upgrade the Systems serving
Chapin and Dents-ville, South Carolina to 52-channel capacity at its sole cost
and expense;
(i) subject to Buyer's approval of the design and budget
for a system buildout, use its best efforts to obtain a franchise for the
Chestnut Hill Development in Columbia, South Carolina and
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commence a buildout of a system serving such community, each at the expense of
Buyer; and
(j) use its reasonable efforts to obtain extensions of
those real property leases listed on Exhibit 2.1(b) upon which head-ends or
office sites are located and which expire prior to December 31, 1997 (the
"Headend Leases") so that such Headend Leases expire no earlier than December
31, 1997 and on other terms and conditions reasonably acceptable to Buyer.
Section 6.2 Certain Negative Covenants of Seller. Except as
Buyer may otherwise consent in writing, or as contemplated by this Agreement,
between the date of this Agreement and Closing Seller shall not:
(a) modify, terminate, renew, suspend, or abrogate any
System Contract other than in the ordinary course of business;
(b) modify, terminate, renew, suspend, or abrogate any
System Franchise or System License;
(c) enter into any transaction or permit the taking of
any action that would result in any of the representations and warranties
contained in this Agreement or in any Transaction Document not being true and
correct when made or at Closing;
(d) engage in any marketing, subscriber installation, or
collection practices that are inconsistent with such practices of Seller for
the periods covered by the Financial Statements and the Balance Sheet;
(e) solicit or participate in negotiations with (and
Seller shall use its best efforts to prevent any affiliate, partner, director,
officer, employer, agent or other representative of Seller from negotiating
with, soliciting or participating in negotiations with) any third party with
respect to the sale of the Assets or the Systems or any transaction
inconsistent with those contemplated hereby; or
(f) with respect to any of Seller's employees that render
services in connection with the Systems, recognize or negotiate with any labor
organization.
Section 6.3 Confidentiality.
(a) Any non-public information that Buyer may obtain from
Seller in connection with this Agreement with respect to Seller or the Systems
shall be deemed confidential and Buyer shall not disclose any such information
to any third party (other than its directors, officers and employees, and
representatives of its advisers and lenders whose knowledge thereof is
necessary in order to facilitate the consummation of the transactions
contemplated
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hereby and other than Time Warner Entertainment Company, L.P. and TWEAN) or
(except in connection with a claim that Seller has breached this Agreement or
that Buyer is entitled to indemnification hereunder) use such information to
the detriment of Seller; provided that (i) Buyer may use and disclose any such
information once it has been publicly disclosed (other than by Buyer in breach
of its obligations under this Section) or which rightfully has come into the
possession of Buyer (other than from Seller), (ii) to the extent that Buyer may
become compelled by Legal Requirements to disclose any of such information,
Buyer may disclose such information if it shall have used all reasonable
efforts, and shall have afforded Seller the opportunity, to obtain an
appropriate protective order, or other satisfactory assurance of confidential
treatment, for the information compelled to be disclosed, and (iii) Buyer may
use and disclose any such information following the Closing to the extent that
it relates to the Systems. In the event of termination of this Agreement,
Buyer shall use all reasonable efforts to cause to be delivered to Seller, and
retain no copies of, any documents, work papers and other materials obtained by
Buyer or on its behalf from Seller, whether so obtained before or after the
execution hereof.
(b) Any non-public information that Seller shall obtain
from Buyer in connection with this Agreement with respect to Buyer or any of
its affiliates shall be deemed confidential, and Seller shall not disclose such
information to any third party or (except in connection with a claim that Buyer
has breached this Agreement or that Seller is entitled to indemnification
hereunder) use such information to the detriment of Buyer; provided, that (i)
Seller may use and disclose any such information once it has been publicly
disclosed (other than by Seller in breach of its obligations under this
Section) or which rightfully has come into the possession of Seller (other than
from Buyer), and (ii) to the extent that Seller may become compelled by Legal
Requirements to disclose any of such information, Seller may disclose such
information if it shall have used all reasonable efforts, and shall have
afforded Buyer the opportunity, to obtain an appropriate protective order, or
other satisfactory assurance of confidential treatment, for the information
compelled to be disclosed. In the event of termination of this Agreement,
Seller shall use all reasonable efforts to cause to be delivered to Buyer, and
retain no copies of, any documents, work papers, and other materials obtained
by Seller or on its behalf from Buyer, whether so obtained before or after the
execution hereof.
Section 6.4 Title Insurance Commitments. Seller shall provide to
Buyer, within thirty days after the date of this Agreement, (i) commitments of
title insurance (the "Title Commitments") issued by a nationally-recognized
title insurance company (the "Title Company"), and photocopies of all recorded
items described as exceptions therein, committing to insure fee title to each
parcel of the Owned Property, and committing to insure
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leasehold title to each parcel of Leased Property designated by Buyer in
writing to Seller within ten days of the date hereof, in Buyer by ALTA Form B
1982 (Rev. 10/1988) or ALTA Leasehold Owner's Policy-1992 policies of title
insurance, and (ii) ALTA-ATA surveys of each parcel of the Owned Property and
Leased Property and as-built surveys showing the property boundaries, locations
and dimensions of improvements, and all easements of record or visible on the
ground, and locating the property by reference to an identifiable benchmark for
each parcel of the Leased Property (the "Surveys"), certified to Buyer and the
Title Company. If Buyer shall notify Seller within twenty days of its receipt
of both the Title Commitments and the Surveys of any Lien or other matter
affecting title to Owned Property or Leased Property which, in the
determination of Buyer, renders title to any parcel of Owned Property or Leased
Property uninsurable or unmerchantable, or which could adversely affect the use
of any parcel of Owned Property or Leased Property for the purposes for which
it is currently used by Seller (each a "Title Defect"), Seller shall exercise
its best efforts to remove or, with the consent of Buyer, cause the Title
Company to commit to insure over, each Title Defect prior to Closing. The cost
of the Title Commitments and the Surveys shall be shared equally by Buyer and
Seller.
Section 6.5 Cooperation with Seller. Buyer shall use its
commercially reasonable efforts to cooperate with Seller in obtaining all
necessary approvals, waivers, and consents including, but not limited to, to
the extent commercially reasonable, attending meetings with the parties who
must provide such approvals, waivers, and consents and by providing the
appropriate financial statements, insurance certificates, and surety bonds
required in order to obtain such approvals, waivers, and consents.
Section 6.6 Access to Books and Records. Following the Closing,
Buyer shall preserve and make available to Seller, during normal business
hours, such of the books and records transferred to it hereunder as Seller
reasonably may need in connection with the preparation of tax returns and for
tax audits and any other matters reasonably requiring such access.
Section 6.7 Supplements to Exhibits. Each of Seller and Buyer
shall, from time to time prior to Closing, supplement the Exhibits to this
Agreement with additional information that, if existing or known to it on the
date of this Agreement, would have been required to be included in one or more
Exhibits to this Agreement. For purposes of determining the satisfaction of
any of the conditions to the obligations of Buyer and Seller in Sections 7.1
and 7.2 and the liability of Seller or of Buyer following Closing for breaches
of its representations and warranties under this Agreement, the Exhibits to
this Agreement shall be deemed to include only (a) the information contained
therein on the date of this Agreement and (b) information added to the Exhibits
by written supplements to this Agreement delivered prior to Closing by the
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party making such amendment that (i) are accepted in writing by the other party
or (ii) reflect actions permitted by this Agreement to be taken prior to
Closing.
Section 6.8 Notification of Certain Matters.
(a) Each party will promptly notify the other party of
any fact, event, circumstance, action or omission (i) which, if known at the
date of this Agreement, would have been required to be disclosed in or pursuant
to this Agreement, or (ii) the existence or occurrence of which would cause any
of such party's representations or warranties under this Agreement or in any
Transaction Document not to be true in any material respect, and with respect
to clause (ii), use commercially reasonable efforts to remedy the same.
(b) Promptly upon becoming aware of such matter, each
party will notify the other party of any fact, event, circumstance, action or
omission which constitutes a breach by the other party of any of the
representations or warranties made by the other party in the performance of or
compliance with any covenant, agreement or obligation required to be performed
or complied with prior to the date of Closing.
Section 6.9 Employee Benefit Matters.
(a) Seller shall assume full responsibility and liability
for offering and providing "continuation coverage" to any "qualified
beneficiary" who is covered by a "group health plan" sponsored, maintained or
contributed to by Seller and who has experienced a "qualifying event" or is
receiving such "continuation coverage" on or prior to the Closing Time.
Continuation coverage, qualified beneficiary, qualifying event and group health
plan shall have the meanings given such terms under Section 4980B of the Code
and Section 601 et seq. of ERISA. Seller shall hold Buyer and any entity
required to be combined with the Buyer under Section 414 of the Internal
Revenue Code ("Affected Parties") harmless from and fully indemnify such
Affected Parties against any losses incurred or suffered by such Affected
Parties which arise under a group health plan sponsored, maintained or
contributed to by Seller as a result of any action or omission of Seller prior
to the Closing Time or because Buyer is deemed to be a successor employer to
Seller.
(b) Seller acknowledges that Buyer has no obligation to
employ any of Seller's current or prior employees. Seller shall be responsible
for and shall cause to be discharged and satisfied in full all amounts owed to
any current or prior employee, including wages, salaries, accrued vacation, any
employment, incentive, compensation or bonus agreements or other benefits or
payments on account of termination, and shall indemnify Buyer and hold Buyer
harmless from any losses thereunder. Notwithstanding the forego-
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ing, Buyer shall recognize the term of service with Seller of any former
employee of Seller hired by Buyer in determining such employee's accrued
vacation under Buyer's vacation plan; provided, however, that the Purchase
Price shall be adjusted downward to reflect Buyer's foregoing obligation,
pursuant to Section 2.6. Buyer shall permit any former employee of Seller who
is hired by Buyer to take any such accrued vacation at whatever times the
employee would have been entitled to take such vacation had the employee not
left the employ of Seller.
(c) Commencing on the date of Closing, Buyer shall offer
coverage under Buyer's group health plan to any of Seller's current employees
who are hired by Buyer and who request such coverage. Buyer agrees to waive
any exclusions contained in its group health plan for pre-existing medical
conditions insofar as such exclusions might apply to Seller's employees who are
hired by Buyer.
Section 6.10 Post-Closing Obtaining of Consents, Authorizations
and Approvals. Subsequent to Closing, each party shall continue to use its
commercially reasonable efforts at its own expense to obtain in writing as
promptly as possible any consent, authorization or approval required to be
obtained by it that was not obtained on or before Closing, and deliver copies
of such, reasonably satisfactory in form and substance, to the other. The
obligations set forth in this subsection shall survive Closing and shall not be
merged in the consummation of the transactions contemplated hereby. From
Closing until each such consent, authorization or approval is obtained, each
party shall act as the agent for the other, and shall preserve the benefit of
and enforce the System Contract or other right to which such consent,
authorization or approval pertains to the fullest extent permissible under the
applicable System Contract or other right. Upon request of the other, at
Closing, Buyer and Seller shall enter into an agency agreement in a form
mutually satisfactory to each party specifying the terms of such agency.
Section 6.11 Designation of Retransmission Consent Agreements. By
written notice delivered to Seller no later than 30 days prior to the date of
Closing, Buyer may designate those retransmission consent agreements relating
to the Systems which it desires to assume. The agreements which Buyer so
designates will be deemed System Contracts and assigned to Buyer at the
Closing, and the agreements which Buyer does not so designate will be deemed
Excluded Assets. Upon receipt of such notice, Seller shall use its best
efforts to obtain in writing all approvals, authorizations or consents required
to be obtained in order to transfer such System Contracts to Buyer.
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ARTICLE 7.
CONDITIONS PRECEDENT
Section 7.1 Conditions to Buyer's Obligations. The obligations
of Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the following conditions, any of which may be waived by Buyer, in
its sole discretion:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Seller in this Agreement or in any
Transaction Document shall be true and accurate at and as of Closing with the
same effect as if made at and as of Closing.
(b) Performance Of Agreements. Seller shall have
performed all obligations and agreements and complied with all covenants in
this Agreement or in any Transaction Document to be performed and complied with
by it at or before Closing.
(c) Officer's Certificate. Buyer shall have received a
certificate executed by an executive officer of a general partner of Seller,
dated as of Closing, reasonably satisfactory in form and substance to Buyer,
certifying that the conditions specified in paragraphs 7.1(a) and (b) have been
satisfied.
(d) Legal Proceedings. There shall be no Legal
Requirement, and no Judgment shall have been entered and not vacated by any
Governmental Authority of competent jurisdiction in any Litigation or arising
therefrom, which (i) enjoins, restrains, makes illegal, or prohibits
consummation of the transactions contemplated by this Agreement or by any
Transaction Document, or (ii) requires separation or divestiture by Buyer of
all or any significant portion of the Assets after Closing, and there shall be
no Litigation pending or threatened seeking, or which if successful would have
the effect of, any of the foregoing.
(e) Exchange Transactions. Concurrently with the
Closing, Buyer and TWEAN shall have consummated the transactions contemplated
by the Asset Exchange Agreement.
(f) Opinion of FCC Counsel. Buyer shall have received an
opinion of Wiley, Rein & Fielding, special FCC counsel to Seller, dated as of
Closing, in the form of Exhibit 7.1(f).
(g) Seller's Counsel Opinion. Buyer shall have received
an opinion of Matthew M. Polka, counsel to Seller, dated as of Closing, in the
form of Exhibit 7.1(g).
(h) Estoppel Certificates. Buyer shall have received
certificates in the form of Exhibit 7.1(h), dated as of Closing, executed by
the lessor of each of the real property leases included in the System Contracts
under which Seller is a lessee.
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(i) No Material Adverse Change. Since June 30, 1995,
there shall not have been any material adverse change in the Assets or the
financial condition or operations of the Systems.
(j) Title Defects; Title Encumbrances. There shall exist
no Title Defects which the Title Company shall not have deleted from the Title
Commitments or, with the consent of Buyer, committed to insure over, and Seller
shall have secured the termination of all material title encumbrances on the
Assets other than Permitted Liens.
(k) Legal and Other Matters Satisfactory to Buyer and its
Representatives. All actions, proceedings, instruments, and documents required
to carry out the transactions contemplated by this Agreement or incidental
thereto and all related legal matters shall be reasonably satisfactory to and
approved by Buyer's counsel, and such counsel shall have been furnished with
such certified copies of actions and proceedings and such other instruments and
documents as it shall have reasonably requested.
(l) Individual Subscribers. The Systems shall serve at
least 27,500 Individual Subscribers as of Closing.
(m) Tier Penetration. The number of Individual
Subscribers who subscribe to Tier Cable services shall be at least 95% of the
total number of Individual Subscribers served by the Systems.
(n) Monthly Billing. The average monthly billings to
multiple dwelling units and commercial establishments served by the Systems
that are billed on a bulk basis for the three months preceding the month in
which Closing occurs shall be at least $6,000.00.
(o) Distant Signals. Seller shall have deleted all
distant broadcast signals the continued carriage of which would result in
material liability for copyright payments after Closing.
(p) Capital Commitments. As of closing and other than
with respect to a buildout of the Chestnut Hill Development in Columbia, South
Carolina, there shall be no outstanding cable plant construction, equipment
acquisition or other capital commitments with respect to the Systems which have
been requested by any Governmental Authority or financing institution or which
Seller has otherwise committed to.
(q) System Consolidation. The Systems serving Lone
Hickory, Yadkinville and Dobson, North Carolina shall have been consolidated
into one system served by a single headend located at Dobson, North Carolina at
the sole cost and expense of Seller; provided that, if Closing has not occurred
by December 31, 1995, the System serving Cross Creek, North Carolina shall also
have been
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consolidated into the Dobson headend at the sole cost and expense of Seller.
(r) System Upgrade. The Systems serving Chapin and
Dentsville, South Carolina shall have been upgraded to 52-channel capacity at
the sole cost and expense of Seller.
(s) Chestnut Hill System. Seller shall have used its
best efforts to obtain a franchise to serve Chestnut Hill Development in
Columbia, South Carolina and to commence a buildout of a system to serve that
community, each at Buyer's expense.
(t) Franchise Terms. Seller shall have extended or
renewed the term of all System Franchises which expire prior to December 31,
1999 such that such franchises expire no earlier than December 31, 1999 on
terms and conditions reasonably acceptable to Buyer.
(u) No Claims or Disputes. There shall be no material
outstanding claims by, and no material outstanding disputes with, any
franchising Governmental Authority relating to any of the systems.
(v) Rate Rollbacks. Neither the FCC nor any franchising
Governmental Authority shall have announced any rate rollback relating to any
of the rates which have been established by or for any of the Systems pursuant
to cost- of-service showings.
(w) HSR Act Compliance. All waiting periods under the
HSR Act applicable to the transactions contemplated hereby shall have expired
or been terminated.
(x) Consents. Buyer shall have received evidence, in
form and substance reasonably satisfactory to it, that there have been obtained
all consents, approvals and authorizations identified in Exhibit 5.3 as
material; provided, however, that to the extent such material consents,
approvals and authorizations relate to consents by the FCC to assignments of
the System Licenses, this condition shall be deemed met if such consents to
assignment have been requested prior to Closing and Buyer is entitled to
operate such System Licenses pursuant to conditional use authorizations until
the FCC's consent is received.
(y) Lease Extensions. Seller shall have used reasonable
efforts to extend the Headend Leases to at least December 31, 1997 on terms and
conditions reasonably acceptable to Buyer.
Section 7.2 Conditions to Seller's Obligations. The obligations
of Seller to consummate the transactions contemplated by this Agreement shall
be subject to the following conditions, any of which may be waived by Seller,
in its sole discretion:
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(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer in this Agreement or in any Transaction
Document to which Buyer is a party shall be true and accurate at and as of
Closing with the same effect as if made at and as of Closing.
(b) Performance of Agreements. Buyer shall have
performed all obligations and agreements and complied with all covenants in
this Agreement or in any Transaction Document to which it is a party to be
performed and complied with by it at or before Closing.
(c) Officer's Certificate. Seller shall have received a
certificate executed by an executive officer of Buyer, dated as of Closing,
reasonably satisfactory in form and substance to Seller, certifying that the
conditions specified in paragraphs 7.2(a) and (b) have been satisfied.
(d) Legal Proceedings. There shall be no Legal
Requirement, and no Judgment shall have been entered and not vacated by any
Governmental Authority of competent jurisdiction in any Litigation or arising
therefrom, which enjoins, restrains, makes illegal, or prohibits consummation
of the transactions contemplated hereby or by any Transaction Document.
(e) Legal Matters Satisfactory to Seller's Counsel. All
actions, proceedings, instruments, and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and all
related legal matters shall be reasonably satisfactory to and approved by
Seller's counsel, and such counsel shall have been furnished with such
certified copies of actions and proceedings and such other instruments and
documents as it shall have reasonably requested.
(f) Buyer's Counsel Opinion. Seller shall have received
an opinion of Jackson & Walker, L.L.P., counsel to Buyer, dated as of Closing,
in the form of Exhibit 7.2(f).
(g) HSR Act Compliance. All waiting periods under the
HSR Act applicable to the transactions contemplated hereby shall have expired
or been terminated.
(h) Consents. Seller shall have received evidence, in
form and substance reasonably satisfactory to it that there have been obtained
all consents, approvals and authorizations identified on Exhibit 4.3 as
material.
Section 7.3 Mutual Condition. The respective obligations of
Buyer and Seller to consummate the transactions contemplated by this Agreement
shall be subject to the condition (which may be waived by Buyer and Seller)
that Buyer and Seller shall have received evidence, in form and substance
reasonably satisfactory to
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each of them, that there have been obtained all material consents, approvals,
and authorizations required for the consummation of the transactions
contemplated hereby; provided, however, that the obtaining of any consent,
approval, or authorization required from any general partner or other affiliate
of Seller or any of its general partners shall not be a condition to Seller's
obligations to consummate the transactions contemplated by this Agreement. For
purposes of this Section 7.3, the consents marked with an asterisk on Exhibit
5.3 shall be deemed material, and the consents which are listed on Exhibit 5.3
but which are not marked with an asterisk shall not be deemed material;
provided, however, that if any circumstance arises or event occurs prior to
Closing relating to or in connection with any consent not marked with an
asterisk on Exhibit 5.3 or any Contract under which the need for such consent
arises, which circumstance or event, in the reasonable judgment of Buyer, would
have a material adverse effect upon a System or the use, business, condition
(financial or otherwise), operation, or performance of such System, Buyer, upon
notice to Seller, may declare such consent to be a material consent for the
purpose of the conditions to the obligations of Buyer to consummate the
transactions contemplated by this Agreement.
ARTICLE 8.
CLOSING
Section 8.1 Closing; Time and Place. The closing of the
transactions contemplated by this Agreement ("Closing") shall take place,
simultaneously with the Closing under the Asset Exchange Agreement, at a time
and location mutually determined by Seller and Buyer that is within 10 business
days after the date on which all of the conditions to Closing have been
satisfied, or by mutual agreement, the last business day of the month within or
immediately after such 10-business-day period but in no event later than
December 31, 1995 (the "Outside Closing Date").
Section 8.2 Seller's Obligations. At Closing, Seller shall
deliver or cause to be delivered to Buyer, the following:
(a) Bill of Sale and Assignment. An executed Bill of
Sale and Assignment in the form of Exhibit 8.2(a).
(b) Vehicle Titles. Title certificates to all vehicles
included among the Assets, endorsed for transfer of title to Buyer, and
separate bills of sale therefor, if required by the laws of the States in which
such vehicles are titled.
(c) Evidence of Partnership Actions. Evidence reasonably
satisfactory to Buyer, that Seller has taken all partnership action necessary
to authorize the execution of this Agreement and the consummation of the
transactions contemplated hereby.
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(d) Deeds. General warranty deeds conveying to Buyer,
subject only to the exceptions reflected on the Title Policies (as defined
below), each parcel of the Owned Property.
(e) Title Policies. ALTA Form B 1982 (Rev. 10/1988)
owner's policies, or ALTA 1992 leasehold owners policies, of title insurance,
insuring Buyer's fee title in each parcel of the Owned Property or leasehold
title in each parcel of Leased Property endorsed to delete or modify to the
satisfaction of Buyer the standard printed exceptions and any Title Defects
(the "Title Policies"), or the irrevocable written commitment of the Title
Company to deliver the Title Policies.
(f) Officer's Certificate. The certificate described in
paragraph 7.1(c);
(g) Other. Such other documents and instruments as shall
be necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
Section 8.3 Buyer's Obligations. At Closing, except as otherwise
provided below, Buyer shall deliver or cause to be delivered to Seller the
following:
(a) Purchase Price. The Purchase Price, increased or
decreased, as the case may be, by the net aggregate of the Current Items Amount
estimated in accordance with Section 2.6.
(b) Officer's Certificate. The certificate described in
paragraph 7.2(c).
(c) Assumption Agreement. An executed Assumption
Agreement in the form of Exhibit 8.3(c).
(d) Other. Such other documents and instruments as shall
be necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
ARTICLE 9.
TERMINATION AND DEFAULT
Section 9.1 Termination Events. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual agreement of the Buyer and
Seller;
(b) by either Buyer or Seller, at any time, if the other
is in breach or default of its respective covenants, agreements, or other
obligations herein or in any Transaction Document, or if any
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of its representations herein or in any Transaction Document are not true and
accurate when made or when otherwise required by this Agreement or any
Transaction Document to be true and accurate, and such breach, default or
failure is not cured within 30 days of receipt of notice that such breach,
default or failure exists or has occurred;
(c) by either Buyer or Seller upon written notice to the
other, if Closing shall not have occurred by the Outside Closing Date for any
reason other than a breach or default by such party of its respective
covenants, agreements, or other obligations hereunder, or any of its
representations herein not being true and accurate when made or when otherwise
required by this Agreement to be true and accurate;
(d) by either Buyer or Seller, upon written notice to the
other, if the Asset Exchange Agreement has been terminated; or
(e) as otherwise provided herein.
Section 9.2 Effect of Termination. If this Agreement shall be
terminated pursuant to Section 9.1, all obligations of the parties hereunder
shall terminate, except for the obligations set forth in Sections 6.3, 9.2,
9.4, 11.1, 11.2 and 11.14. Termination of this Agreement pursuant to
paragraphs 9.1(b) or (c) shall not limit or impair any remedies that either
Seller or Buyer may have with respect to a breach or default by the other of
its covenants, agreements or obligations hereunder.
Section 9.3 Specific Performance; Remedies Cumulative. Seller
and Buyer acknowledge that, if either is in material breach or default of its
covenants, agreements or obligations hereunder, the other would be irreparably
damaged by such breach or default and that, in addition to the other remedies
that may be available at law or in equity, the other party shall be entitled to
specific performance of this Agreement and injunctive relief. All rights and
remedies under this Agreement are cumulative of, and not exclusive of, any
rights or remedies otherwise available, and the exercise of any of such rights
or remedies shall not bar the exercise of any other rights or remedies.
Section 9.4 Liquidated Damages. If Buyer is in material breach
or default of its covenants, agreements or obligations hereunder, Seller may,
at its option and in conjunction with its termination of this Agreement
pursuant to Section 9.1(b), and in addition to any other rights or remedies
which may be available, retain the Escrow Amount and all interest earned
thereon as liquidated damages for such breach or default. Seller and Buyer
acknowledge that Seller's actual damages in the event of such a breach or
default would be difficult or impossible to ascertain, and that the Escrow
Amount and all interest earned thereon
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represent a fair and reasonable approximation of such damages and does not
constitute a penalty.
ARTICLE 10.
INDEMNIFICATION
Section 10.1 Indemnification by Seller. From and after Closing,
Seller shall indemnify and hold harmless Buyer, its affiliates, officers and
directors, employees, agents, and representatives, and any Person claiming by
or through any of them, as the case may be, from and against any and all Losses
arising out of or resulting from:
(a) any representations and warranties made by Seller in
this Agreement or in any Transaction Document not being true and accurate when
made or when required by this Agreement or any Transaction Document to be true
and accurate;
(b) any failure by Seller to perform any of its
covenants, agreements, or obligations in this Agreement or in any Transaction
Document;
(c) the operation of the Systems prior to the Adjustment
Time;
(d) all obligations and liabilities arising of or
relating to the Excluded Assets;
(e) any rate refund ordered for periods prior to the
Adjustment Time; and
(f) all liabilities of Seller or relating to the Systems
that are not Assumed Obligations and Liabilities.
If, by reason of the claim of any third party for which Buyer is entitled to
indemnification hereunder, a Lien, attachment, garnishment, or execution is
placed or made upon any of the properties or assets owned or leased by Buyer or
any other Indemnitee under this Section, in addition to any indemnity
obligation of Seller under this Section, Seller shall furnish a bond sufficient
to obtain the prompt release thereof within five days from receipt of notice
relating thereto.
Section 10.2 Indemnification by Buyer. From and after Closing,
Buyer shall indemnify and hold harmless Seller, its affiliates, officers and
directors, agents, and representatives, and any Person claiming by or through
any of them, as the case may be, from and against any and all Losses arising
out of or resulting from:
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(a) any representations and warranties made by Buyer in
this Agreement or in any Transaction Document not being true and accurate when
made or when required by this Agreement or any Transaction Document to be true
and accurate;
(b) any failure by Buyer to perform any of its covenants,
agreements, or obligations in this Agreement or in any Transaction Document;
(c) the Assumed Obligations and Liabilities; or
(d) the use by Buyer of Seller's trademarks, trade names,
service marks, service names, logos, and similar proprietary rights for any
reason following the Closing.
Section 10.3 Procedure for Indemnified Third Party Claim.
(a) If any Person not a party to this Agreement shall
make any demand or claim or file or threaten to file or continue any Litigation
with respect to which Buyer or Seller is entitled to indemnification pursuant
to Sections 10.1 or 10.2, respectively, then within ten business days after
notice (the "Notice") by the party entitled to such indemnification (the
"Indemnitee") to the other (the "Indemnitor") of such demand, claim or
Litigation, the Indemnitor shall have the option, at its sole cost and expense,
to retain counsel for the Indemnitee (which counsel shall be reasonably
satisfactory to the Indemnitee), to defend any such Litigation. The failure,
refusal or neglect of the Indemnitee to notify the Indemnitor within the time
period specified above of any such Litigation shall not relieve such Indemnitor
from any liability which it may have to the Indemnitee in connection therewith,
unless the effect of such failure, refusal or neglect is to prejudice
materially the rights of the Indemnitor in defending against the Litigation.
The Indemnitee shall be permitted to participate in such defense undertaken by
the Indemnitor at its own expense, provided that, if the named parties to any
such Litigation (including any impleaded parties) include both the Indemnitor
and the Indemnitee or, if the Indemnitor proposes that the same counsel
represent both the Indemnitee and the Indemnitor and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, then the Indemnitee shall have the right to
retain its own counsel at the cost and expense of the Indemnitor. If the
Indemnitor shall fail to respond within ten days after receipt of the Notice,
the Indemnitee may retain counsel and conduct the defense of such Litigation as
it may in its sole discretion deem proper, at the sole cost and expense of the
Indemnitor.
(b) The Indemnitee shall provide reasonable assistance to
the Indemnitor and provide access to its books, records and personnel as the
Indemnitor reasonably requests in connection with the investigation or defense
of the indemnified Losses. The
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Indemnitor shall promptly upon receipt of reasonable supporting documentation
reimburse the Indemnitee for out-of-pocket costs and expenses incurred by the
latter in providing the requested assistance.
(c) With regard to Litigation of third parties for which
Buyer or Seller is entitled to indemnification under Sections 10.1 or 10.2,
such indemnification shall be paid by the indemnifying party upon: (i) the
entry of a Judgment against the Indemnitee and the expiration of any applicable
appeal period; (ii) the entry of an unappealable Judgment or final appellate
Judgment against the Indemnitee; or (iii) a settlement with the consent of the
Indemnitor, which consent shall not be unreasonably withheld, provided that no
such consent need be obtained if the Indemnitor fails to respond to the Notice
as provided in paragraph 10.3(a). Notwithstanding the foregoing, provided that
there is no dispute as to the applicability of indemnification, expenses of
counsel to the Indemnitee shall be reimbursed on a current basis by the
Indemnitor if such expenses are a liability of the Indemnitor.
Section 10.4 Interest. Amounts payable by the Indemnitor to the
Indemnitee in respect of any Losses under Sections 10.1 or 10.2 shall be
payable by the Indemnitor as incurred by the Indemnitee, and shall bear
interest at the rate per annum equal to the interest rate announced and charged
from time to time by Chase Manhattan Bank, N.A. as its "prime rate," from the
date the Losses for which indemnification is sought were incurred by the
Indemnitee (or, if applicable, the date on which such indemnification is
payable in accordance with paragraph 10.3(c)) until the date of payment of
indemnification by the Indemnitor. The "prime rate" may not be the most
favorable interest rate charged by Chase Manhattan Bank to its commercial
customers, and the effective date of each change in the interest rate for
purposes of this Section 10.4 shall be the date on which a change in the "prime
rate" is effected.
Section 10.5 Time and Manner of Certain Claims. The
representations and warranties of Buyer and Seller in this Agreement and any
Transaction Document shall survive Closing for a period of two years, except
(i) those stated in Section 5.9 (Tax Matters), which shall survive Closing for
six months beyond the expiration of all statutory periods of limitations
applicable to claims for which Buyer or Seller could incur any liability if the
representations and warranties stated therein were not true and accurate, (ii)
those stated in Section 5.12 (Legal Compliance), which shall survive Closing
for one year beyond the expiration of all statutory periods of limitations
applicable to claims for which Buyer or Seller could incur any liability if the
representations and warranties stated therein were not true and accurate, (iii)
those stated in Section 5.16 (Environmental Matters), which shall survive
Closing for a period of fifteen years, and (iv) those stated in Section 5.4
(Assets), which shall survive Closing indefinitely (the "Survival Periods").
Neither party shall have any
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<PAGE> 44
liability under paragraphs 10.1(a) or 10.2(a), respectively, unless a claim for
Losses for which indemnification is sought thereunder is asserted by the party
seeking indemnification by written notice to the party from whom
indemnification is sought within the respective Survival Periods and, in the
case of claims for indemnification by Buyer, unless and to the extent that the
amount of such claimed Losses exceeds an aggregate amount of $50,000.
Notwithstanding anything to the contrary contained herein, Buyer shall not be
entitled to recover more than the amount of the Purchase Price, as adjusted by
the Adjustment Amount, if any, for all Losses for which indemnification is
sought under this Agreement, absent fraud or willful misconduct on Seller's
part.
Section 10.6 Other Indemnification. The provisions of Sections
10.3 and 10.4 shall be applicable to any claim for indemnification made under
any other provision of this Agreement, and all references in Sections 10.3 and
10.4 to Sections 10.1 and 10.2 shall be deemed to be references to such other
provisions of this Agreement.
ARTICLE 11.
MISCELLANEOUS PROVISIONS
Section 11.1 Expenses. Except as otherwise provided in Section
11.14 or elsewhere in this Agreement, each of the parties shall pay its own
expenses and the fees and expenses of its counsel, accountants, and other
experts in connection with this Agreement.
Section 11.2 Brokerage. Seller shall indemnify and hold Buyer
harmless from and against any and all Losses arising from any employment by it
of, or services rendered to it by, any finder, broker, agency, or other
intermediary, in connection with the transactions contemplated hereby, or any
allegation of any such employment or services. Buyer shall indemnify and hold
Seller harmless from and against any and all Losses arising from any employment
by it of, or services rendered to it by, any finder, broker, agency, or other
intermediary, in connection with the transactions contemplated hereby, or any
allegation of any such employment or services.
Section 11.3 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto, shall be
deemed to constitute a waiver by the party taking the action of compliance with
any representation, warranty, covenant or agreement contained herein or in any
Transaction Document. The waiver by any party hereto of any condition or of a
breach of another provision of this Agreement or any Transaction Document shall
not operate or be construed as a waiver of any other condition or subsequent
breach. The waiver by any party of any of the conditions precedent to its
obligations under this Agreement
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<PAGE> 45
shall not preclude it from seeking redress for breach of this Agreement other
than with respect to the condition so waived.
Section 11.4 Notices. All notices, requests, demands,
applications, services of process, and other communications which are required
to be or may be given under this Agreement or any Transaction Document shall be
in writing and shall be deemed to have been duly given if sent by telecopy or
facsimile transmission, answer back requested, or delivered by courier or
mailed, certified first class mail, postage prepaid, return receipt requested,
to the parties hereto at the following addresses:
To Seller:
Star Cable Associates
100 Greentree Commons
381 Mansfield Avenue
Pittsburgh, PA 15220
Attn: Richard W. Talarico
Telecopy: (412) 937-0145
Copies:
Eckert Seamans Cherin & Mellott
600 Grant Street, 42nd Floor
Pittsburgh, PA 15219
Attn: Louis J. Moraytis
Telecopy: (412) 566-6099
To Buyer:
Telecable Associates, Inc.
3015 SSE Loop 323
P.O. Box 130489
Tyler, TX 75713-0489
Attn: Fred R. Nichols
Telecopy: (903) 595-1929
Copies:
Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, TX 75202-3797
Attn: James S. Ryan, III, Esq.
Telecopy: (214) 953-5822
Time Warner Entertainment-Advance/Newhouse
Partnership
c/o Time Warner Entertainment Company, L.P.
300 First Stamford Place
Stamford, CT 06902-6732
Attn: Jeffrey D. Elberson
Telecopy: (203) 328-4828
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<PAGE> 46
Holland & Hart
P.O. Box 8749
555 17th Street, Suite 3200
Denver, CO 80201 (mail)
80202 (delivery)
Attn: Davis O. O'Connor
Telecopy: (303) 295-8261
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section. Such notice shall be effective,
(i) if delivered in person or by courier, upon actual receipt by the intended
recipient, or (ii) if sent by telecopy or facsimile transmission, when answer
back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
Section 11.5 Entire Agreement; Amendments. This Agreement
embodies the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect thereto. This Agreement may not be modified
orally, but only by an agreement in writing signed by the party or parties
against whom any waiver, change, amendment, modification, or discharge may be
sought to be enforced.
Section 11.6 Binding Effect; Benefits. This Agreement shall inure
to the benefit of and shall be binding upon the parties hereto and their
respective heirs, legal representatives, successors, and permitted assigns.
Neither Buyer nor Seller shall assign this Agreement or delegate any of its
duties hereunder to any other Person without the prior written consent of the
other. For purposes of this Section any change in control of Buyer or Seller
shall constitute an assignment of this Agreement. Notwithstanding the
foregoing, Buyer shall be entitled to assign this Agreement, in whole or in
part, without the consent of Seller, (i) to any affiliate of Buyer, or (ii) to
TWEAN or any affiliate of TWEAN.
Section 11.7 Headings, Schedules, and Exhibits. The section and
other headings contained in this Agreement are for reference purposes only and
will not affect the meaning or interpretation of this Agreement. Reference to
Exhibits shall, unless otherwise indicated, refer to the Exhibits attached to
this Agreement, which shall be incorporated in and constitute a part of this
Agreement by such reference.
Section 11.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when executed, shall be deemed to be an
original and all of which together will be deemed to be one and the same
instrument.
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<PAGE> 47
Section 11.9 Publicity. Seller and Buyer shall consult with and
cooperate with the other with respect to the content and timing of all press
releases and other public announcements, and any oral or written statements to
Seller's employees concerning this Agreement and the transactions contemplated
hereby. Except as required by applicable Legal Requirements, neither Seller
nor Buyer shall make any such release, announcement, or statements without the
prior written consent and approval of the other.
SECTION 11.10 GOVERNING LAW. THE VALIDITY, PERFORMANCE, AND
ENFORCEMENT OF THIS AGREEMENT AND ALL TRANSACTION DOCUMENTS, UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH
STATE.
Section 11.11 Severability. Any term or provision of this
Agreement which is invalid or unenforceable shall be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining rights of the Person intended to be benefitted by
such provision or any other provisions of this Agreement.
Section 11.12 Third Parties; Joint Ventures. This Agreement
constitutes an agreement solely among the parties hereto, and, except as
otherwise provided herein, is not intended to and will not confer any rights,
remedies, obligations, or liabilities, legal or equitable, including any right
of employment, on any Person (including but not limited to any employee or
former employee of Seller) other than the parties hereto and their respective
successors, or assigns, or otherwise constitute any Person a third party
beneficiary under or by reason of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to or shall constitute the parties hereto
partners or participants in a joint venture.
Section 11.13 Construction. This Agreement has been negotiated by
Buyer and Seller and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement shall not
apply in any construction or interpretation of this Agreement.
Section 11.14 Risk of Loss. The risk of any loss or damage to the
Assets resulting from fire, theft or any other casualty (except reasonable wear
and tear) shall be borne by Seller at all times prior to Closing. In the event
that any such loss or damage shall be sufficiently substantial so as to
preclude and prevent resumption of normal operations of any material portion of
the Systems or the replacement or restoration of the lost or damaged property
within twenty days from the occurrence of the event resulting in such loss or
damage, Seller shall immediately notify Buyer in writing of its inability to
resume normal operations or to
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<PAGE> 48
replace or restore the lost or damage property, and Buyer, at any time within
ten days after receipt of such notice, may elect by written notice to Seller to
either (i) waive such defect and proceed toward consummation of the transaction
in accordance with terms of this Agreement, or (ii) terminate this Agreement.
If Buyer elects to so terminate this Agreement, Buyer and Seller shall stand
fully released and discharged of any and all obligations hereunder. If Buyer
shall elect to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, there shall be no diminution
of the Purchase Price on account of such loss or damage but all insurance
proceeds payable as a result of the occurrence of the event resulting in such
loss or damage shall be delivered by Seller to Buyer, or the rights thereto
shall be assigned by Seller to Buyer if not yet paid over to Seller.
[This space intentionally left blank.]
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<PAGE> 49
Buyer and Seller have executed this Agreement as of the date first
written above.
SELLER
STAR CABLE ASSOCIATES
By: STAR CABLE MANAGEMENT, INC.,
general partner
By: ___________________________
Name: Richard W. Talarico
Title: Executive Vice Pres-
ident and Chief
Financial Officer
BUYER
TELECABLE ASSOCIATES, INC.
By: ________________________________
Name: Fred R. Nichols
Title: President
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<PAGE> 1
EXHIBIT 2.2
ASSET EXCHANGE AGREEMENT
DATED AS OF AUGUST 28, 1995
BETWEEN
TIME WARNER ENTERTAINMENT - ADVANCE/NEWHOUSE PARTNERSHIP
AND
TELECABLE ASSOCIATES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Defined Terms. . . . . . . . . . . . . . . . . . . . 6
Section 1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . 7
EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1 Exchange of TWEAN and TCA Assets . . . . . . . . . . . . . . 7
Section 2.2 TCA Assumed Obligations and Liabilities . . . . . . . . . . . 9
Section 2.3 TWEAN Assumed Obligations and Liabilities . . . . . . . . . . 9
Section 2.4 Current Items Amount . . . . . . . . . . . . . . . . . . . . 9
Section 2.5 Current Items Amount Calculated . . . . . . . . . . . . . . . 11
Section 2.6 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . 12
RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.1 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.2 Use of Names and Logos . . . . . . . . . . . . . . . . . . . 12
Section 3.3 Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . 13
Section 3.6 Enforcement of Purchase Agreement. . . . . . . . . . . . . . 13
Section 3.7 Performance Agreement . . . . . . . . . . . . . . . . . . . . 13
Section 3.8 Home Security System . . . . . . . . . . . . . . . . . . . . 13
TWEAN'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.1 Organization and Qualification of TWEAN . . . . . . . . . . . 13
Section 4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.3 No Conflict; Required Consents . . . . . . . . . . . . . . . 14
Section 4.4 Assets; Title, Condition and Sufficiency . . . . . . . . . . 14
Section 4.5 TWEAN Franchises, Licenses and Contracts. . . . . . . . . . . 15
Section 4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.7 Financial Information . . . . . . . . . . . . . . . . . . . . 16
Section 4.8 Tax Returns; Other Reports . . . . . . . . . . . . . . . . . 16
Section 4.9 TWEAN System Information . . . . . . . . . . . . . . . . . . 17
Section 4.10 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.11 Compliance with Legal Requirements . . . . . . . . . . . . . 17
Section 4.12 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.13 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.14 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.15 Environmental . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.16 Franchise and Pole Attachment Fees . . . . . . . . . . . . . 20
Section 4.17 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.18 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 21
Section 4.19 Accuracy of Billing Records . . . . . . . . . . . . . . . . . 21
Section 4.20 Taxpayer Identification Number . . . . . . . . . . . . . . . 21
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
TCA'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 Organization and Qualification of TCA . . . . . . . . . . . . 21
Section 5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.3 No Conflict; Required Consents . . . . . . . . . . . . . . . 22
Section 5.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.5 Tax Returns; Other Reports . . . . . . . . . . . . . . . . . 22
Section 5.6 Taxpayer Identification Number . . . . . . . . . . . . . . . 22
Section 5.7 Liens and Encumbrances . . . . . . . . . . . . . . . . . . . 22
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1 Certain Affirmative Covenants . . . . . . . . . . . . . . . . 23
Section 6.2 Certain Negative Covenants . . . . . . . . . . . . . . . . . 25
Section 6.3 Certain Additional Covenants . . . . . . . . . . . . . . . . 25
Section 6.4 Notification of Certain Matters . . . . . . . . . . . . . . . 26
Section 6.5 Post-Closing Obtaining of Consents, Authorizations and
Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.6 Confidentiality and Publicity . . . . . . . . . . . . . . . . 26
Section 6.7 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.8 HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . 27
Section 6.9 Access to Books and Records . . . . . . . . . . . . . . . . . 28
Section 6.10 Supplements to Exhibits . . . . . . . . . . . . . . . . . . . 28
Section 6.11 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.12 Transitional Billing Services . . . . . . . . . . . . . . . . 28
Section 6.13 Employee Benefit Matters . . . . . . . . . . . . . . . . . . 29
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.1 Conditions to TWEAN's Obligations . . . . . . . . . . . . . . 30
Section 7.2 Conditions to TCA's Obligations . . . . . . . . . . . . . . . 32
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.1 Closing; Time and Place . . . . . . . . . . . . . . . . . . . 34
Section 8.2 TCA's Obligations . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.3 TWEAN's Obligations . . . . . . . . . . . . . . . . . . . . . 35
TERMINATION AND DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.1 Termination Events . . . . . . . . . . . . . . . . . . . . . 36
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 36
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.1 Indemnification by TCA . . . . . . . . . . . . . . . . . . . 37
Section 10.2 Indemnification by TWEAN . . . . . . . . . . . . . . . . . . 37
Section 10.3 Procedure for Indemnified Third Party Claim . . . . . . . . . 38
Section 10.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 10.5 Time and Manner of Certain Claims . . . . . . . . . . . . . . 39
Section 10.6 Other Indemnification . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.2 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.5 Entire Agreement; Prior Representations; Amendments . . . . . 41
Section 11.6 Binding Effect; Benefits . . . . . . . . . . . . . . . . . . 41
Section 11.7 Headings and Exhibits . . . . . . . . . . . . . . . . . . . . 41
Section 11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.11 Third Parties; Joint Ventures . . . . . . . . . . . . . . . . 42
Section 11.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.13 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.14 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.15 Audited Financial Statements . . . . . . . . . . . . . . . . 43
</TABLE>
iii
<PAGE> 5
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into
as of August ___, 1995, by and between Time Warner
Entertainment-Advance/Newhouse Partnership, a New York general partnership,
whose U.S. Taxpayer Identification Number is 13-3790433 ("TWEAN"), and
Telecable Associates, Inc. a Texas corporation ("TCA"), whose U.S. Taxpayer
Identification Number is 75-1475918.
RECITALS
A. TWEAN owns and operates cable television systems that are
franchised or hold other operating authority and operate in and around the
communities of Alexandria and Pineville, Louisiana (each a "TWEAN System" and
collectively, the "TWEAN Systems").
B. As of Closing, TCA intends to acquire the assets of cable
television systems that are franchised or hold other operating authority and
operate in and around the areas set forth on Exhibit A (each a "TCA System" and
collectively, the "TCA Systems"), pursuant to an Asset Purchase Agreement of
even date herewith (the "Purchase Agreement") between TCA and Star Cable
Associates, a Pennsylvania general partnership ("Star").
C. This Agreement sets forth the terms and conditions on which
TWEAN will convey to TCA substantially all of the assets of the TWEAN Systems,
and TCA will convey or cause to be conveyed to TWEAN substantially all of the
assets of the TCA Systems, in such a manner as to effect a like-kind exchange
of such assets under Section 1031 of the United States Internal Revenue Code of
1986, as amended.
AGREEMENTS
In consideration of the mutual covenants and promises set forth
herein, TWEAN and TCA agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1 Certain Terms Defined. As used in this Agreement,
the following terms, whether used in singular or plural forms, shall have the
following meanings:
"Adjustment Time" means 11:59 P.M., central time, on the date of
Closing.
<PAGE> 6
"Assets" means the TWEAN Assets or the TCA Assets, as the context
requires.
"Basic Cable" means the cable television services described as such
onExhibit 4.9.
"Cable Act" means Title VI of the Communications Act, the
Communications Policy Act of 1984, Pub. L. No. 98-549, and the Cable Television
Consumer Protection Act of 1992, Pub. L. No. 102-385, as such statutes may be
amended from time to time, and the rules and regulations promulgated
thereunder.
"CLI" means Cumulative Leakage Index.
"Code" means the Internal Revenue Code of 1986, as amended, and rules
and regulations promulgated hereunder.
"Communications Act" means the Communications Act of 1934, as amended,
47 U.S.C. Section 151, et. seq. and rules and regulations promulgated
thereunder.
"Contract" means any written contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right, or other instrument, document, obligation, or agreement, and any oral
obligation, right, or agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and rules and regulations promulgated thereunder and published
interpretations with respect thereto.
"FCC" means the Federal Communications Commission.
"GAAP" means generally-accepted accounting principles, consistently
applied.
"Governmental Authority" means the United States of America, any
state, commonwealth, territory, or possession thereof and any political
subdivision or quasi-governmental authority of any of the same, including but
not limited to courts, tribunals, departments, commissions, boards, bureaus,
agencies, counties, municipalities, provinces, parishes, and other
instrumentalities.
"Hazardous Substances" means any pollutant, contaminant, chemical,
industrial, toxic, hazardous or noxious substance or waste which is regulated
by any Governmental Authority, including (a) any petroleum or petroleum
compounds (refined or crude), flammable substances, explosives, radioactive
materials, or any other materials or pollutants which pose a hazard or
potential hazard to the Real Property or to persons in or about the Real
Property or cause the Real Property to be in violation of any Legal
Requirements, (b) asbestos or any asbestos-containing
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material of any kind or character, (c) polychlorinated biphenyls ("PCBs"), as
regulated by the Toxic Substances Controls Act, 15 U.S.C. Section 2601 et seq.,
(d) any materials or substances designated as "hazardous substances" pursuant
to the Clean Water Act, 33 U.S.C. Section 1251 et seq., (e) "economic poison",
as defined in the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 135 et seq., (f) "chemical substance", "new chemical substance", or
"hazardous substance or mixture" pursuant to the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq., (g) "hazardous substances" pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., and (h) "hazardous waste" pursuant to the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., but excluding
immaterial amounts of the following substances, to the extent used in the
ordinary course of the Business: (i) lubricating, cleaning, coolant, and other
compounds customarily used in building and System maintenance; (ii) materials
routinely used in the day-to-day operations of an office, such as copier toner;
(iii) consumer products; (iv) fuel oil and natural gas for heating; (v)
materials reasonably necessary and customarily used in office and System
construction and repair and System vehicle maintenance; and (vi) fertilizers,
pesticides, and herbicides commonly used for routine office landscaping.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Individual Subscriber" means, as to any System, any subscriber to
such System at that System's regular Basic Cable monthly subscriber rate, who
(i) has been an active subscriber of the System's basic cable television
service for at least one full month, (ii) is not more than sixty days in
arrears in payment for service from the first day of the period to which an
outstanding bill relates, determined as of the first day of the month in which
Closing occurs, (iii) has not given or been given notice of termination and
who, consistent with Seller's standing policy, should not have been given
notice of termination, and (iv) has become a subscriber only pursuant to
customary marketing promotions conducted in the ordinary course of business
consistent with past practices.
"Judgment" means any judgment, writ, order, injunction, award, or
decree of any court, judge, justice, or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
"knowledge" of any Person of or with respect to any matter means that
such Person (if a natural person) or any of the officers or senior managers,
including system managers, of such Person (if not a natural Person) has actual
awareness or knowledge of such matter.
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<PAGE> 8
"Legal Requirements" means applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement, or procedure enacted, adopted, promulgated,
applied, or followed by any Governmental Authority, including without
limitation Judgments and System Franchises.
"Lien" means any security agreement, financing statement filed with
any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any lien, mortgage, indenture, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including but not limited to reservations,
rights of entry, possibilities of reverter, encroachments, easement,
rights-of-way, restrictive covenants leases and licenses) of any kind, which
otherwise constitutes an interest in or claim against property, whether arising
pursuant to any Legal Requirement, Contract, or otherwise.
"Litigation" means any claim, action, suit, proceeding, arbitration,
investigation, hearing, or other activity or procedure that could result in a
Judgment, and any notice of any of the foregoing.
"Losses" means any claims, losses, liabilities, damages, Judgments,
Liens, penalties, costs, and expenses, including but not limited to interest
which may be imposed in connection therewith, expenses of investigation,
reasonable fees and disbursements of counsel and other experts, and the cost to
any Person making a claim or seeking indemnification under this Agreement with
respect to funds expended by such Person by reason of the occurrence of any
event with respect to which indemnification is sought.
"Permitted Liens" means (a) liens for Taxes, assessments and
governmental charges not yet due and payable, (b) zoning laws and ordinances
and similar governmental regulations, (c) rights reserved to any municipality,
government or statutory or public authority to regulate the affected property,
and (d) as to real property, any liens, encumbrances, easements, rights-of-way,
servitudes, permits, leases, conditions, covenants, restrictions and minor
imperfections or irregularities in title which are reflected in the public
records and which do not individually or in the aggregate interfere with the
right or ability to own, use, enjoy or operate the real property or to convey
good, marketable and indefeasible title to the same; provided that "Permitted
Liens" will not include any Lien that could prevent or inhibit in any way the
conduct of the business of the affected System.
"Person" means any natural person, Governmental Authority,
corporation, general or limited partnership, joint venture,
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<PAGE> 9
limited liability company, trust, association or unincorporated entity of any
kind.
"Required Consents" means the TCA Required Consents or the TWEAN
Required Consents, as the context requires.
"Subscriber Equivalent" means, as to any System, an equivalent to an
Individual Subscriber, and the number of Subscriber Equivalents shall be equal,
as of any date, to the quotient of (i) the aggregate revenues earned by such
System for Basic Cable and Tier Cable television service provided by that
System, during the last full month ending on or prior to such date, to multiple
dwelling units, commercial establishments and other subscribers served by such
System that are billed for such service on a bulk basis or to single family
households which pay less than the System's regular Basic Cable monthly
subscription rate or the System's regular Basic Cable plus Tier Cable monthly
subscription rate, as applicable, and which multiple dwelling units, commercial
establishments, other subscribers or single family households have been active
subscribers of the System's Basic Cable television service for at least one
full month and are not more than sixty days in arrears in payment for service
from the first day of the period to which an outstanding bill relates,
determined in each case as of the first day of the month in which Closing
occurs, divided by (ii) the System's regular monthly subscription rate for
Basic Cable and Tier Cable in effect during such month.
"Systems" means the TWEAN Systems or the TCA Systems, as the context
requires.
"System Contracts" means the System Contracts as defined in the
Purchase Agreement or the TWEAN Contracts, as the context requires.
"System Franchises" means the System Franchises as defined in the
Purchase Agreement or the TWEAN Franchises, as the context requires.
"System Licenses" means the System Licenses as defined in the Purchase
Agreement or the TWEAN Licenses, as the context requires.
"Taxes" means all levies and assessments of any kind or nature imposed
by any Governmental Authority, including but not limited to all income, sales,
use, ad valorem, value added, franchise, severance, net or gross proceeds,
withholding, payroll, employment, excise, or property taxes, together with any
interest thereon and any penalties, additions to tax or additional amounts
applicable thereto.
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"TCA Required Consents" means any and all consents, authorizations and
approvals that are identified and marked with an asterisk on either Exhibit 4.3
or Exhibit 5.3 to the Purchase Agreement.
"Tier Cable" means the cable television services described as Tier
onExhibit 4.9.
"TWEAN Required Consents" means any and all consents, authorizations
and approvals that are identified and marked with an asterisk on Exhibit 4.3 to
this Agreement.
Section 1.2 Other Defined Terms. The following capitalized
terms, whether used in singular or plural forms, have the meanings given in the
sections indicated.
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Cash Payment 2.1(a)(iii)
Closing 8.1
Current Items Amount 2.4
Eligible Accounts Receivable 2.4(a)
FCC Counsel Opinion 7.1(f)
Final Adjustment Certificate 2.5
Home Security System 2.1(c)
Indemnitee 10.3
Indemnitor 10.3
Initial Adjustment Certificate 2.5
Notice 10.3
Outside Closing Date 9.1(c)
Plans 4.14
Purchase Agreement Recital B
Rebuild 6.1(i)
Security System Bill of Sale 3.8
Security System Payment 3.8
Star Recital B
Surveys 6.7
TCA Assets 2.1(a)(i)
TCA Assumed Obligations and Liabilities 2.2
TCA Counsel Opinion 7.1(e)
TCA Lien Releases 7.1(i)
TCA Title Policies ?
TCA Systems Recital B
Title Company 6.7
Title Commitment 6.7
Title Defect 6.7
Transfer Taxes 3.4
TWEAN Assets 2.1(b)
TWEAN Assumed Obligations and Liabilities 2.3
TWEAN Contracts 2.1(b)(v)
TWEAN Counsel Opinion 7.2(e)
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
TWEAN Excluded Assets 2.1(c)
TWEAN FCC Counsel Opinion 7.2(f)
TWEAN Franchises 2.1(b)(iii)
TWEAN Leased Real Property 2.1(b)(ii)
TWEAN Licenses 2.1(b)(iv)
TWEAN Lien Releases 7.2(i)
TWEAN Owned Real Property 2.1(b)(ii)
TWEAN Systems Recital A
TWEAN Tangible Personal Property 2.1(b)(i)
</TABLE>
Section 1.3 Accounting Terms. All accounting terms used in this
Agreement, unless otherwise provided in this Agreement, shall have the meanings
given under GAAP.
ARTICLE 2.
EXCHANGE
Section 2.1 Exchange of TWEAN and TCA Assets.
(a) Exchange Covenant. Subject to the terms and
conditions set forth in this Agreement, at Closing TWEAN and TCA shall effect
the above-described exchange as follows:
(i) TCA shall convey, assign and transfer, or
cause to be conveyed, assigned or transferred, to TWEAN, free and clear of all
Liens (except Permitted Liens) all of the assets and properties included as
"Assets" pursuant to Section 2.1 of the Purchase Agreement (the "TCA Assets");
(ii) TWEAN shall convey, assign and transfer, or
cause to be conveyed, assigned or transferred, to TCA, free and clear of all
Liens (except Permitted Liens) the TWEAN Assets; and
(iii) TCA shall pay to TWEAN, in immediately
available funds, $9,000,000 (the "Cash Payment"), and TCA shall receive credit
for the Escrow Amount (as defined in the Purchase Agreement) deposited by TCA
under the Purchase Agreement, the aggregate of which reflects the agreed-upon
difference between (A) the aggregate fair market value of the TWEAN Assets, and
(B) the fair market value of the TCA Assets; and
(iv) TWEAN or TCA, as appropriate, shall pay to
the other (by increasing or decreasing the funds paid as the Cash Payment), an
amount equal to the net amount of the adjustments and prorations provided for
in Section 2.4 (the "Current Items Amount").
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<PAGE> 12
(b) TWEAN Assets. "TWEAN Assets" means all of the assets
and properties, real and personal, tangible and intangible, used by TWEAN in
its operation of, or otherwise relating to, the TWEAN Systems as of the
Adjustment Time that are not TWEAN Excluded Assets, including but not limited
to the following:
(i) Tangible Personal Property. All tangible
personal property, including but not limited to towers, tower equipment,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, microwave equipment, converters, testing equipment, motor
vehicles, office equipment, furniture, fixtures, supplies, inventory, all
antennae, earth satellite receive stations and related equipment, and other
physical assets (the "TWEAN Tangible Personal Property"), including but not
limited to the items described on Exhibit 2.1(b)(i).
(ii) Real Property. All real property and
interests in real property, including but not limited to the fee interests in
the real property described as Owned Real Property on Exhibit 2.1(b)(ii) and
all improvements thereon (the "TWEAN Owned Real Property"), and all leasehold
interests in the real property described as Leased Real Property on Exhibit
2.1(b)(ii) and improvements thereon or thereto owned by TWEAN (the "TWEAN
Leased Real Property").
(iii) Franchises. All franchises and similar
authorizations or permits issued by any Governmental Authority or other Person
(the "TWEAN Franchises"), including but not limited to those described on
Exhibit 2.1(b)(iii).
(iv) Licenses. All intangible CATV channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, intangible domestic satellite receive only (TVRO) licenses, all
copyright notices, and all other licenses, authorizations, consents or permits
issued by the FCC or any other Governmental Authority (the "TWEAN Licenses"),
including but not limited to those described on Exhibit 2.1(b)(iv).
(v) System Contracts. All leases, private
easements or rights of access, contractual rights to easements, pole line or
joint line agreements, underground conduit agreements, crossing agreements,
construction permits, purchase orders, bulk and commercial service agreements,
retransmission consent agreements, and other Contracts (the "TWEAN Contracts"),
including but not limited to those described on Exhibit 2.1(b)(v).
(vi) Accounts Receivable. All subscriber, trade,
and other accounts receivable.
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(vii) Books and Records. All engineering records,
files, data, drawings, blueprints, schematics, reports, lists, plans and
processes, and all files of correspondence, lists, records, and reports
concerning subscribers and prospective subscribers of the TWEAN Systems, signal
and program carriage, and dealings with Governmental Authorities, including but
not limited to all reports filed by or on behalf of TWEAN with the FCC and
statements of account filed by or on behalf of TWEAN with the U.S. Copyright
Office.
(c) TWEAN Excluded Assets. The TWEAN Assets shall
not include the following, which shall be retained by TWEAN (the "TWEAN
Excluded Assets"): (i) programming Contracts; (ii) insurance policies and
rights and claims thereunder; (iii) bonds, letters of credit, surety
instruments, and other similar items; (iv) cash and cash equivalents; (v)
subject to Section 3.2, TWEAN's trademarks, trade names, service marks, service
names, logos, and similar proprietary rights; (vi) all of the assets, rights
and obligations of the home security business owned and operated by TWEAN in
Alexandria, Louisiana (the "Home Security System"); and (vii) the rights,
assets, and properties described on Exhibit 2.1(c).
Section 2.2 TCA Assumed Obligations and Liabilities. After
Closing, TCA shall assume, pay, discharge, and perform the following (the "TCA
Assumed Obligations and Liabilities"): (i) those obligations and liabilities
attributable to periods after the Adjustment Time under or with respect to the
TWEAN Assets assigned and transferred to TCA at Closing; (ii) other obligations
and liabilities of TWEAN only to the extent that there is an adjustment in
favor of TCA with respect thereto pursuant to Section 2.4; and (iii) all
obligations and liabilities arising out of TCA's ownership of the TWEAN Assets
or operation of the TWEAN Systems after Closing. All obligations and
liabilities of TWEAN arising out of or relating to the TWEAN Assets or the
TWEAN Systems other than the TCA Assumed Obligations and Liabilities shall
remain and be the obligations and liabilities solely of TWEAN.
Section 2.3 TWEAN Assumed Obligations and Liabilities.
After Closing, TWEAN shall assume, pay, discharge, and perform all of the
"Assumed Obligations and Liabilities" set forth in Section 2.3 of the Purchase
Agreement (the "TWEAN Assumed Obligations and Liabilities").
Section 2.4 Current Items Amount. The Current Items Amount
shall be the net amount of the following adjustments and prorations:
(a) Eligible Accounts Receivable. TWEAN shall be
entitled to an amount equal to the sum of (A) 100% of the face amount of all
Eligible Accounts Receivable of the TWEAN Systems
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<PAGE> 14
that are 30 or fewer days past due as of the Adjustment Time, plus (B) 75% of
the face amount of all Eligible Accounts Receivable of the TWEAN Systems that
are more than 30 but less than 60 days past due as of the Adjustment Time.
"Eligible Accounts Receivable" shall mean accounts receivable resulting from
the provision of cable television service by the TWEAN Systems to their active
subscribers (as of the Adjustment Time) that relate to periods of time prior to
the Adjustment Time. For purposes of making "past due" calculations under this
paragraph, the billing statements of a System shall be deemed to be due and
payable on the first day of the period during which the service to which such
billing statements relate is provided.
(b) Advance Payments and Deposits. TCA shall be
entitled to an amount equal to the aggregate of (i) all deposits of subscribers
of the TWEAN Systems for converters, decoders, and similar items, and (ii) all
payments received by TWEAN prior to the Adjustment Time for services to be
rendered or equipment to be provided to subscribers of the TWEAN Systems after
the Adjustment Time, or for other services to be rendered to other third
parties after the Adjustment Time for public television commercials, channel
leasing, or other services or rentals to the extent all obligations of TWEAN
relating thereto are assumed by TCA at Closing.
(c) Expenses. As of the Adjustment Time, the
following expenses shall be prorated, in accordance with GAAP, so that all
expenses for periods prior to the Adjustment Time shall be for the account of
TWEAN, and all expenses for periods after the Adjustment Time shall be for the
account of TCA:
(i) all payments and charges under or with
respect to the TWEAN Franchises, the TWEAN Licenses and the TWEAN Contracts;
(ii) Taxes levied or assessed against any of the
TWEAN Assets or payable with respect to cable television service and related
sales to TWEAN Systems subscribers;
(iii) charges for utilities and other goods or
services furnished to the TWEAN Systems;
(iv) copyright fees based on signal carriage by
the TWEAN Systems; and
(vi) all other items of expense relating to the
TWEAN Systems;
provided, however, that TWEAN and TCA shall not prorate any items of expense
attributable to any TWEAN Excluded Assets, all of which shall remain and be
solely for the account of TWEAN.
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<PAGE> 15
(d) Star Current Items Amount. TCA shall be entitled to
an amount equal to the Current Items Amount, if any, payable by TCA to Star
pursuant to Section 2.6 of the Purchase Agreement. TWEAN shall be entitled to
an amount equal to the Current Items Amount, if any, payable by Star to TCA
pursuant to Section 2.6 of the Purchase Agreement. If there is a dispute
relating to the Current Items Amount, such payments shall be due upon
resolution of such dispute.
(e) Failure to Complete Rebuild. If the Rebuild (as
defined in Section 6.1(i)) has not been completed by Closing, TCA shall assume
full responsibility for completion of the Rebuild and shall be entitled to an
amount equal to TWEAN's best good faith estimate of all material, labor, fiber
and headend equipment costs which would be required to be incurred after
Closing in order to complete the Rebuild; provided, however, that such credit
shall not exceed the difference between (i) $4,400,000 (excluding costs of
converters) and (ii) the actual costs incurred by TWEAN or its predecessor as
of the Adjustment Time in carrying out the Rebuild, if such costs are less than
$4,400,000. Any such credit shall reduce the Cash Payment.
(f) Certain Test Equipment. TCA shall be entitled to
$8,900.00 plus related taxes and freight for the acquisition by TCA of one
Tektronix #TFS-3031/04/21 OTDR (1310 S Ingle Wavelength, FC Connector).
Section 2.5 Current Items Amount Calculated. The
adjustments and prorations included in the Current Items Amount shall be
estimated in good faith by TWEAN and set forth, together with a detailed
statement of the calculation thereof, in a certificate (the "Initial Adjustment
Certificate") executed by a representative of TWEAN and delivered to TCA at
least seven days prior to Closing. Each of TWEAN and TCA shall cause their
representatives to diligently attempt to jointly determine prior to Closing, on
the basis of the Initial Adjustment Certificate and such other information as
they deem relevant, their best estimate of the Current Items Amount. At
Closing, the party against whose favor the estimated Current Items Amount is so
determined shall pay to the other the estimated Current Items Amount. Within
90 days after Closing, TWEAN and TCA each shall deliver to the other a
certificate (the "Final Adjustment Certificate") showing in detail the final
determination of the Current Items Amount. TWEAN and TCA each shall review the
other's Final Adjustment Certificate and shall give written notice to the other
party of any objections it has to the calculations shown in such certificate
within 30 days after its receipt thereof. If there are no objections by either
party, the appropriate party shall pay to the other the Current Items Amount
within 10 business days after the end of the 30-day objection period. TWEAN
and TCA shall endeavor in good faith to resolve
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<PAGE> 16
any objections within 30 days after receipt by the parties of each other's
objections.
Section 2.6 Reporting. The TWEAN Assets shall be transferred and
conveyed by TWEAN to TCA in exchange or consideration for the TCA Assets, and
the TCA Assets shall be transferred and conveyed by or at the direction of TCA
to TWEAN in exchange or consideration for the TWEAN Assets. TWEAN shall, for
purposes of income taxes, report the transactions contemplated by this
Agreement as they pertain to TWEAN as a like-kind exchange under Section 1031
of the Code, and TCA shall not take any action inconsistent with such
reporting.
ARTICLE 3.
RELATED MATTERS
Section 3.1 Employees. TWEAN shall remain solely responsible
for, and shall indemnify and hold harmless TCA from and against all Losses
arising with respect to, all salaries and all severance, vacation, sick,
holiday, unemployment benefit, and other compensation or benefits to which
employees of TWEAN may be entitled, as a result of consummation of the
transactions contemplated hereby, or otherwise. TCA may, but shall have no
obligation to, hire any of TWEAN's employees that render services in connection
with the operation of the TWEAN Systems, whether or not such employees'
employment shall have been terminated by TWEAN.
Section 3.2 Use of Names and Logos. For a period of 60 days
after Closing, TCA shall be entitled to use the trademarks, trade names,
service marks, service names, logos, and similar proprietary rights of TWEAN to
the extent incorporated in or on the TWEAN Assets transferred to it at Closing,
provided that it shall exercise efforts to remove all such names, marks, logos,
and similar proprietary rights of TWEAN from the TWEAN Assets as soon as
reasonably practicable following Closing.
Section 3.3 Bulk Sales. TWEAN and TCA each waive compliance by
the other with Legal Requirements relating to bulk sales applicable to the
transactions contemplated hereby. Each party shall indemnify and hold the
other harmless from and against all Losses resulting from any noncompliance
with bulk sales Legal Requirements applicable to the transactions contemplated
hereby.
Section 3.4 Transfer Taxes. TCA shall pay all sales, use,
transfer, and similar taxes or assessments ("Transfer Taxes"), arising from or
payable by reason of the conveyance to it of the TWEAN Assets. TWEAN shall pay
all Transfer Taxes arising from or payable by reason of the conveyance to it of
the TCA Assets. Each of TWEAN and TCA shall indemnify and hold
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<PAGE> 17
harmless the other from and against all Losses arising from any such Transfer
Taxes for which the indemnifying party is responsible under this Section 3.4.
Section 3.5 Further Assurances. At or after Closing, each of
TWEAN and TCA, at the request of the other, shall promptly execute and deliver,
or cause to be executed and delivered, to the other all such documents and
instruments, in addition to those otherwise required by this Agreement, in form
and substance reasonably satisfactory to the other, as the other may reasonably
request to carry out or evidence the terms of this Agreement, or to collect any
accounts receivable or other claims included in the TWEAN Assets or the TCA
Assets. Without limiting the generality of the foregoing, each of TWEAN and
TCA shall take, or cause to be taken, all actions consistent with the terms of
this Agreement, including execution and delivery of any documents or
instruments, as the other may reasonably request to effect the qualification of
the transactions contemplated hereby as a like-kind exchange under Section 1031
of the Code.
Section 3.6 Enforcement of Purchase Agreement. TCA assigns to
TWEAN all of its remedies against Star arising under or in connection with the
Purchase Agreement to the extent that such remedies relate to the liabilities
and obligations assumed by TWEAN, and agrees that TWEAN may enforce such
remedies directly against Star, without notice to or consent by TCA.
Section 3.7 Performance Agreement. At, or shortly following, the
execution and delivery of this Agreement, TWEAN shall enter into an agreement
with Star substantially in the form of the Performance Agreement attached
hereto as Exhibit 3.7.
Section 3.8 Home Security System. At Closing, TWEAN shall
transfer to TCA the Home Security System by a Bill of Sale substantially in the
form attached hereto as Exhibit 3.8 (the "Home Security System Bill of Sale")
in consideration of $200,000 paid to TWEAN by TCA in immediately-available
funds (the "Security System Payment").
ARTICLE 4.
TWEAN'S REPRESENTATIONS AND WARRANTIES
TWEAN represents and warrants to TCA, as of the date of this Agreement
and, except as otherwise provided or contemplated herein, as of Closing, as
follows:
Section 4.1 Organization and Qualification of TWEAN. TWEAN is a
general partnership duly organized, validly existing, and in good standing
under the laws of the State of New York, and has all requisite partnership
power and authority to own and lease the TWEAN Assets and to conduct its
activities as such
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<PAGE> 18
activities are currently conducted. TWEAN is duly qualified to do business as
a foreign limited partnership and is in good standing in all jurisdictions in
which the ownership or leasing of the TWEAN Assets or the nature of its
activities in connection with the TWEAN Systems makes such qualification
necessary.
Section 4.2 Authority. TWEAN has all requisite partnership power
and authority to execute, deliver, and perform this Agreement and consummate
the transactions contemplated hereby. Other than the approval of the
Management Committee of Time Warner Cable, the execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby by TWEAN have been duly and validly authorized by all
necessary action on the part of TWEAN. This Agreement has been duly and
validly executed and delivered by TWEAN, and is the valid and binding
obligation of TWEAN, enforceable against TWEAN in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies.
Section 4.3 No Conflict; Required Consents. Except as described
on Exhibit 4.3, and subject to compliance with the HSR Act, the execution,
delivery, and performance by TWEAN of this Agreement do not and will not: (i)
conflict with or violate any provision of the partnership agreement of TWEAN;
(ii) violate any provision of any Legal Requirements; (iii) conflict with,
violate, result in a breach of, constitute a default under (without regard to
requirements of notice, lapse of time, or elections of other Persons, or any
combination thereof), accelerate or permit the acceleration of the performance
required by, any Contract or Lien to which TWEAN is a party or by which TWEAN
or the assets or properties owned or leased by it are bound or affected; (iv)
result in the creation or imposition of any Lien against or upon any of the
TWEAN Assets; or (v) require any consent, approval, or authorization of, or
filing of any certificate, notice, application, report, or other document with,
any Governmental Authority or other Person.
Section 4.4 Assets; Title, Condition and Sufficiency. Exhibit
2.1(b)(i) contains descriptions of all material items of tangible personal
property included in the TWEAN Assets and Exhibit 2.1(b)(ii) contains
descriptions of all Owned and Leased Real Property included in the TWEAN
Assets. Except as described on Exhibit 4.4, (i) TWEAN has good and marketable
title to all of the TWEAN Tangible Personal Property and TWEAN Owned Real
Property free and clear of all Liens except for Permitted Liens, and (ii) TWEAN
has valid leasehold interests in those TWEAN Assets which are leased by TWEAN.
The TWEAN Tangible Personal Property is in good condition and repair, ordinary
wear and tear excepted. All items of cable plant and headend equipment
included in the TWEAN Assets (i) have been maintained in a manner
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consistent with generally accepted standards of good engineering practice, and
(ii) will permit the TWEAN systems to operate in accordance with the terms of
the TWEAN Franchises. The TWEAN Assets, constitute all of the assets necessary
to operate the TWEAN Systems substantially as they are being operated on the
date of this Agreement, taking into account the exclusion of the TWEAN Excluded
Assets.
Section 4.5 TWEAN Franchises, Licenses and Contracts.
(a) Except as described on Exhibits 2.1(b)(ii),
2.1(b)(iii), 2.1(b)(iv), 2.1(b)(v) or 2.1(c) with respect to the TWEAN Systems,
TWEAN is not bound or affected by any of the following that relate primarily or
in whole to the TWEAN Systems: (i) leases of real or personal property; (ii)
franchises for the construction or operation of cable television systems, or
Contracts of substantially equivalent effect; (iii) other licenses,
authorizations, consents or permits of the FCC or any other Governmental
Authority; (iv) easements or rights of access; (v) pole attachment or joint
line agreements, underground conduit agreements, crossing agreements,
construction permits, purchase orders, service agreements, retransmission
consent agreements or bulk or commercial service agreements; or (vi) Contracts
other than those described in any other clause of this Section 4.5(a) that
contemplate payments by or to TWEAN in any 12-month period exceeding $2,500
individually or $10,000 in the aggregate.
(b) TWEAN has delivered to TCA true and complete copies
of (i) each of the TWEAN Franchises, TWEAN Licenses and TWEAN Contracts,
including any amendments thereto (or, in the case of oral TWEAN Contracts, true
and complete written summaries thereof), (ii) each document evidencing TWEAN's
ownership of the TWEAN Owned Real Property and (iii) each document evidencing
TWEAN's leasehold interest in the TWEAN Leased Real Property. Except as
described in Exhibit 4.5: (i) TWEAN is in compliance with each of the TWEAN
Franchises and the TWEAN Licenses; (ii) TWEAN has fulfilled when due, or has
taken all action necessary to enable it to fulfill when due, all of its
obligations under each of the TWEAN Contracts; and (iii) to the knowledge of
TWEAN, there has not occurred any default (without regard to lapse of time or
the giving of notice, or both) by any Person under any of the TWEAN Franchises,
TWEAN Licenses or TWEAN Contracts.
(c) Except for the TWEAN Owned Real Property, TWEAN has
no other ownership interest in real property relating to the TWEAN Systems.
Except for the TWEAN Leased Real Property, TWEAN does not hold or use under
lease or lease to others any real property relating to the TWEAN Systems.
Except for routine repairs and except for ordinary wear and tear, all of the
improvements, leasehold improvements, and the premises of the
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TWEAN Owned Real Property and the TWEAN Leased Real Property are in good
condition and repair and are suitable for the purposes used. The current use
and occupancy of the TWEAN Owned Real Property and TWEAN Leased Real Property
do not constitute nonconforming uses under any applicable zoning Legal
Requirements.
Section 4.6 Litigation. Except as set forth in Exhibit 4.6: (i)
there is no Litigation pending or, to TWEAN's knowledge, threatened, by or
before any Governmental Authority or private arbitration tribunal, against
TWEAN that could adversely affect the financial condition or operations of the
TWEAN Systems, the TWEAN Assets, or the ability of TWEAN to perform its
obligations under this Agreement, or that seeks or could result in the
modification, revocation, termination, suspension, or other limitation of any
of the TWEAN Franchises, TWEAN Licenses or TWEAN Contracts nor to TWEAN's
knowledge, is there any basis for any such Litigation; and (ii) there is not in
existence any Judgment requiring TWEAN to take any action of any kind with
respect to the TWEAN Assets or the operation of the TWEAN Systems, or to which
TWEAN (with respect to the TWEAN Systems), the TWEAN Systems, or the TWEAN
Assets are subject or by which they are bound or affected.
Section 4.7 Financial Information. TWEAN has delivered to TCA an
unaudited trial balance sheet of each of the TWEAN Systems as of June 30, 1995
and unaudited statements of profit and loss of the TWEAN Systems for the
six-month period ending June 30, 1995 and other operational information
relating to the TWEAN Systems. The trial balance sheet and operational
information were prepared in the ordinary course of business. The statements
of profit and loss present fairly the results of operations of the TWEAN
Systems for the periods indicated. The unaudited trial balance and operational
information were prepared in the ordinary course of business.
Section 4.8 Tax Returns; Other Reports. TWEAN has filed in true
and correct form all federal, state, local, and foreign tax returns and other
reports required to be filed relating to the TWEAN Assets or the TWEAN Systems,
and has timely paid all Taxes relating to the TWEAN Assets or the TWEAN Systems
that have become due and payable, whether or not so shown on any such return or
report, the failure of which to file or pay could affect or result in the
imposition of a Lien upon the TWEAN Assets. TWEAN has received no notice of,
nor does TWEAN have any knowledge of, any deficiency or assessment or proposed
deficiency or assessment from any taxing Governmental Authority that could
affect or result in the imposition of a Lien upon the TWEAN Assets. TWEAN has
provided TCA with true and complete copies of TWEAN's State and local tax
returns filed with respect to taxes on the TWEAN Owned and Leased Real Property
and tangible personal
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property relating to the TWEAN Systems for all time periods beginning after
December 31, 1993.
Section 4.9 TWEAN System Information. Exhibit 4.9 sets forth a
materially true and accurate description of the following information:
(a) the number of miles of plant included within the
TWEAN Assets;
(b) as of August 4, 1995, the number of Individual
Subscribers and Subscriber Equivalents served by each TWEAN System; a
description of basic and optional or tier services available from each TWEAN
System, the rates charged by TWEAN for each; and, as of August 4, 1995, the
number of Individual Subscribers and Subscriber Equivalents receiving each
optional or tier service;
(c) the stations and signals carried by each TWEAN
System, the channel position of each such signal and station, and all
frequencies utilized by each TWEAN System; and
(d) the MHz and channel capacity of each TWEAN System.
Notwithstanding any other provision of this Agreement, the representations and
warranties in Section 4.9(a) and (d) shall survive for 6 months after the date
of Closing. The representations and warranties in Section 4.9(b) and (c) shall
not survive Closing.
Section 4.10 Bonds. Exhibit 4.10 contains an accurate and
complete list of all bonds (franchise, construction, fidelity or performance)
of TWEAN that relate in any way to the ownership or use of the TWEAN Assets or
the operation of the TWEAN Systems.
Section 4.11 Compliance with Legal Requirements. Except as set
forth in Exhibit 4.11:
(a) The operation of the TWEAN Systems as currently
conducted does not violate or infringe any Legal Requirements currently in
effect. TWEAN has received no notice of any violation by the TWEAN Systems or
in connection with the TWEAN Assets of any Legal Requirement applicable to the
TWEAN Systems, as currently conducted, and knows of no basis for the allegation
of any such violation.
(b) To TWEAN's knowledge, TWEAN's operation of the TWEAN
Systems has not and does not violate the Cable Act, except for violation(s)
which, individually or in the aggregate, reasonably could not be expected to
have a material adverse effect on the TWEAN Systems. TWEAN has delivered to
TCA complete and correct copies of all reports and filings for the past three
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years made or filed pursuant to the Cable Act, the Communications Act or FCC
rules or regulations with respect to the operation of the TWEAN Systems,
including, without limitation, FCC Forms 328, 329, 393, 1200, 1205, 1210 and
1215, copies of TWEAN's correspondence with any Governmental Authority relating
to rate regulation generally or specific rates charged to subscribers of the
TWEAN Systems including, without limitation, copies of any complaints filed
with the FCC with respect to TWEAN's rates charged to such subscribers and any
other documentation supporting an exemption from the rate regulation provisions
of the Cable Act. A request for renewal has been timely filed under Section
626(a) of the Cable Act with the proper Governmental Authority with respect to
each franchise included within the TWEAN Assets expiring within 36 months of
the date of this Agreement.
(c) All of the broadcast television signals carried by
the TWEAN Systems are carried either pursuant to the must-carry requirements or
pursuant to executed retransmission consent agreements.
(d) For each relevant semi-annual reporting period, TWEAN
has timely filed with the U.S. Copyright Office all required Statements of
Account in true and correct form, and has paid when due all required copyright
royalty fee payments, relating to the TWEAN Systems' carriage of television
broadcast signals.
(e) Other than requests for network nonduplication,
sports blackout and syndex protection and notices of election of must-carry
status and retransmission consents or other communications made pursuant to the
Cable Act, TWEAN has received no requests, notices or demands, whether written
or oral, from the FCC, any other Governmental Authority or other Person
challenging or questioning TWEAN's rights to operate the TWEAN Systems or carry
any signal, or requesting signal carriage. The TWEAN Systems and TWEAN's
operation of any FCC-licensed or registered facility used in conjunction with
the TWEAN Systems is in compliance in all material respects with the FCC's
rules and regulations and the provisions of the Communications Act.
(f) TWEAN has conducted all system and microwave
performance tests and all CLI related tests applicable to the TWEAN Systems.
TWEAN has (i) maintained appropriate log books and other recordkeeping that
accurately and completely reflect in all material respects all results required
to be shown thereon; (ii) to the extent required by the rules and regulations
of the FCC, corrected any radiation leakage of the TWEAN Systems required to be
corrected in connection with TWEAN's monitoring obligations under the rules and
regulations of the FCC, and (iii) otherwise complied in all material respects
with all
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applicable CLI rules and regulations in connection with the operation of the
TWEAN Systems.
Section 4.12 No Adverse Change. Since June 30, 1995, there has
been no material adverse change in the TWEAN Assets or the financial condition
or operations of the TWEAN Systems and the TWEAN Assets, and the financial
condition and operations of the TWEAN Systems have not been materially and
adversely affected as a result of any fire, explosion, accident, casualty,
labor trouble, flood, drought, riot, storm, condemnation, or act of God or
public force or otherwise.
Section 4.13 Employees.
(a) Exhibit 4.13(a) sets forth a true and complete list
of all individuals employed by TWEAN who render services to the TWEAN Systems.
Except as described on Exhibit 4.13(a), TWEAN is not a party to any written or
oral employment Contract with any such individual.
(b) (i) TWEAN is not party or subject to any labor union
or collective bargaining agreement in connection with the TWEAN Systems, and
(ii) TWEAN is not a party to any labor or employment dispute involving any of
its employees that render services in connection with the TWEAN Systems.
Section 4.14 Employee Benefits. Neither TWEAN nor any
Employee Benefit Plan (as defined in ERISA) maintained by TWEAN or to which
TWEAN has the obligation to contribute (hereinafter, the "Plans"), is in
material violation of any provision of ERISA. No reportable event (as defined
in Section 4043 of ERISA) has occurred and is continuing with respect to any
such Plan and no prohibited transaction (as defined in Section 406 of ERISA)
has occurred with respect to any such Plan which would result in material
liability to TWEAN.
Section 4.15 Environmental.
(a) TWEAN has received no notice and has no knowledge
that it is the subject of any "Superfund" evaluation or investigation, and has
received no notice from a Governmental Authority that such Governmental
Authority is considering making it the subject of any Superfund investigation
or proceeding, or that it is the subject of any investigation or proceeding of
any Governmental Authority evaluating whether any remedial action is necessary
to respond to any release of Hazardous Substances, on or in connection with the
TWEAN Owned Real Property or the TWEAN Leased Real Property. To TWEAN's
knowledge, except as described on Exhibit 4.15, no surface impoundments or
underground storage tanks are located in or on the TWEAN Owned Real Property or
TWEAN Leased Real Property.
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(b) To its knowledge and except as described on Exhibit
4.15, TWEAN is in substantial compliance with all Legal Requirements with
respect to pollution or protection of the environment, including Legal
Requirements relating to actual or threatened emissions, discharges, or
releases of Hazardous Substances into ambient air, surface water, ground water,
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of Hazardous Substances,
insofar as they relate to the TWEAN Owned Real Property or the TWEAN Leased
Real Property. Except as described on Exhibit 4.15, TWEAN has not received
notice of circumstances relating to, any past, present, or future events,
conditions, circumstances, activities, practices or incidents (including but
not limited to the presence, use, generation, manufacture, disposal, release,
or threatened release of any Hazardous Substances from or on the TWEAN Owned
Real Property or the TWEAN Leased Real Property) that could interfere with or
prevent continued compliance with, or that are reasonably likely to give rise
to any liability under, any environmental Legal Requirement based upon or
related to the processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release, or threatened
release into the environment, of any Hazardous Substance from or attributable
to the TWEAN Owned Real Property or the TWEAN Leased Real Property.
Section 4.16 Franchise and Pole Attachment Fees. The current
rates for all franchise fees payable with respect to the TWEAN Franchises and
for all pole attachment or conduit fees and the number of poles or conduits
covered by each of TWEAN's pole attachment and conduit agreements are disclosed
in Exhibit 4.16. TWEAN has paid all "make ready" or other related charges
required under its pole attachment and conduit agreements for which it has
received an invoice. Except as disclosed in Exhibit 4.16, TWEAN has not been
notified by any Governmental Authority or third party regarding any adjustment
to the amount of franchise fees, pole attachment or conduit fees paid by TWEAN
to such Governmental Authority or third party.
Section 4.17 Intangibles. TWEAN neither uses nor holds any
copyrights, trademarks, trade names, service marks, service names, logos,
licenses, permits or other similar intangible property rights and interests in
the operations of the TWEAN Systems that do not incorporate the name "Al-Pine,"
"Alpine," "Metrovision," "Warner," "Time Warner," or variations thereof. In
the operation of the TWEAN Systems, TWEAN is not aware that it is infringing
upon or otherwise acting adversely to any such intangible property rights and
interests owned by any other person or persons, and there is no claim or action
pending, or to the knowledge of TWEAN threatened, with respect thereto.
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Section 4.18 Accounts Receivable. TWEAN's accounts receivable are
actual and bona fide receivables representing obligations for the total dollar
amount thereof shown on the books of TWEAN which resulted from the regular
course of TWEAN's business, and are fully collectible in accordance with their
terms, subject to no offset or reduction of any nature except for a reserve for
uncollectible accounts consistent with the reserve established by TWEAN in its
most recent trial balance delivered to Buyer in accordance with Section 4.7.
Section 4.19 Accuracy of Billing Records. The billing reports and
aging reports provided to TCA by TWEAN in connection with this Agreement are
accurate and complete in all material respects.
Section 4.20 Taxpayer Identification Number. TWEAN's U.S.
Taxpayer Identification Number is as set forth in the introductory paragraph of
this Agreement.
ARTICLE 5.
TCA'S REPRESENTATIONS AND WARRANTIES
TCA represents and warrants to TWEAN, as of the date of this Agreement
and, except as otherwise provided or contemplated herein, as of Closing, as
follows:
Section 5.1 Organization and Qualification of TCA. TCA is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas, and has all requisite corporate power and authority
to own and lease the TCA Assets and to conduct its activities as such
activities are currently conducted. TCA is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
ownership or leasing of the TCA Assets or the nature of its activities in
connection with the TCA Systems makes such qualification necessary.
Section 5.2 Authority. TCA has all requisite corporate power and
authority to execute, deliver, and perform this Agreement and consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated hereby on
the part of TCA have been duly and validly authorized by all necessary action
on the part of TCA. This Agreement has been duly and validly executed and
delivered by TCA, and is the valid and binding obligation of TCA, enforceable
against TCA in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
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Section 5.3 No Conflict; Required Consents. Except as described
on Exhibit 5.3, and subject to compliance with the HSR Act, the execution,
delivery, and performance by TCA of this Agreement do not and will not: (i)
conflict with or violate any provision of the articles of incorporation or
bylaws of TCA; (ii) violate any provision of any Legal Requirements; (iii)
conflict with, violate, result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or elections of other
Persons, or any combination thereof), accelerate, or permit the acceleration of
the performance required by, any Contract or Lien to which TCA is a party or by
which TCA or the assets or properties owned or leased by it are bound or
affected; (iv) result in the creation or imposition of any Lien against or upon
any of the TCA Assets; or (v) require any consent, approval or authorization
of, or filing of any certificate, notice, application, report, or other
document with, any Governmental Authority or other Person.
Section 5.4 Litigation. Except as set forth in Exhibit 5.4: (i)
there is no Litigation pending or, to TCA's knowledge, threatened, by or before
any Governmental Authority or private arbitration tribunal, against TCA that
could adversely affect the ability of TCA to perform its obligations under this
Agreement, nor, to TCA's knowledge, is there any basis for any such Litigation;
and (ii) there is not in existence any Judgment requiring TCA to take any
action of any kind with respect to the TCA Assets or the operation of the TCA
Systems, or to which TCA (with respect to the TCA Systems), is subject or by
which it is bound or affected.
Section 5.5 Tax Returns; Other Reports. TCA has filed in true
and correct form all federal, state, local, and foreign tax returns and other
reports required to be filed, and has timely paid all Taxes which have become
due and payable, whether or not so shown on any such return or report, the
failure to file or pay which could affect or result in the imposition of a Lien
upon the TCA Assets. TCA has received no notice of, nor does TCA have any
knowledge of, any deficiency or assessment or proposed deficiency or assessment
from any taxing Governmental Authority which could affect or result in the
imposition of a Lien upon the TCA Assets.
Section 5.6 Taxpayer Identification Number. TCA's U.S. Taxpayer
Identification Number is as set forth in the introductory paragraph of this
Agreement.
Section 5.7 Liens and Encumbrances. The TCA Assets are free and
clear of all liens and encumbrances arising as a result of TCA's ownership
thereof.
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ARTICLE 6.
COVENANTS
Section 6.1 Certain Affirmative Covenants. Except as the other
party may otherwise consent in writing, between the date of this Agreement and
Closing:
(a) TWEAN shall operate the TWEAN Systems only in the
usual, regular, and ordinary course and in accordance with past practices and,
to the extent consistent with such operation, use its reasonable efforts to (i)
preserve the current business organization of the TWEAN Systems intact,
including preserving existing relationships with franchising authorities,
suppliers, customers, and others having business dealings with the TWEAN
Systems, unless TCA requests otherwise, (ii) keep available the services of its
employees providing services in connection with the TWEAN Systems, (iii)
continue normal marketing, advertising, and promotional expenditures with
respect to the TWEAN Systems, and (iv) preserve any beneficial business
relationships with all customers, suppliers, and others having business
dealings with TWEAN relating to the TWEAN Systems;
(b) TWEAN shall maintain (i) the TWEAN Assets in good
condition and repair, ordinary wear excepted, and (ii) in full force and effect
policies of insurance with respect to the TWEAN Assets and the operation of the
TWEAN Systems, in such amounts and with respect to such risks as are
customarily maintained by TWEAN;
(c) TWEAN shall maintain its books, records, and accounts
with respect to the TWEAN Assets and the operation of the TWEAN Systems in the
usual, regular, and ordinary manner on a basis consistent with past practices;
(d) (i) each party (the "disclosing party") shall give
to the other (the "receiving party"), and its counsel, accountants, and other
representatives, full access during normal business hours to the disclosing
party's premises and to its Systems, its Owned Real Property, its Leased Real
Property, all of its Assets, its books and records, and its Systems' personnel;
(ii) furnish to the receiving party and such representatives all such additional
documents (certified by an officer of the disclosing party, if requested),
financial information, and other information as the receiving party from time to
time reasonably may request; and (iii) cause the disclosing party's accountants
to permit the receiving party and its accountants to examine the records and
working papers pertaining to its audits and other reviews of the disclosing
party's Systems' financial statements; provided that no investigation by the
receiving party shall affect or limit the scope of any of the representations
and warranties of the disclosing party herein or limit liability of the
disclosing party for any breach of such representations and
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warranties; and provided further that the receiving party shall perform any
investigation pursuant to this paragraph (d) in such a manner as not to
interfere materially with the conduct of the disclosing party's business;
provided, however, that TCA's obligations under this Section are limited to
providing to TWEAN and its representatives such access as permitted under the
Purchase Agreement;
(e) Each party shall use its commercially-reasonable
efforts to obtain in writing as promptly as possible the Required Consents and
any other consent, authorization, or approval required to be obtained by it in
connection with the transactions contemplated hereunder, and deliver to the
other party copies, reasonably satisfactory in form and substance to it, of the
Required Consents and such other consents, authorizations, or approvals;
provided, however, that each party will afford the other the opportunity to
review, approve and revise the form of consent prior to delivery to the party
whose consent is sought, and neither party shall accept or agree or accede to
any modifications or amendments to, or any conditions to the transfer of, any
of the System Franchises, System Licenses or System Contracts that are not
acceptable to the other; and provided further that neither party shall have any
obligation to offer or pay any consideration (other than normal and usual
processing and filing fees, and overhead and similar expenses incurred in
obtaining such approvals, authorizations and consents), or to act as surety or
guarantor, in order to obtain any such approval, authorization, or consent;
(f) TWEAN shall terminate the employment of all employees
of TWEAN working for the TWEAN Systems as of the Adjustment Time;
(g) not later than 30 days after the date of this
Agreement, TCA shall deliver to TWEAN a written notice containing the names, if
any, of employees of the TWEAN Systems whom TCA intends to hire as of the
Adjustment Time. Not later than 10 days after delivering such written notice
to TWEAN, TCA shall notify those employees whom TCA intends to hire as of the
Adjustment Time, and the form and manner of such notification shall be
reasonably satisfactory to, and approved in advance by, TWEAN and shall specify
the terms of employment, including compensation and all benefits relating
thereto;
(h) TWEAN shall promptly deliver to TCA, upon reasonable
request, true and complete copies of all monthly and quarterly financial
statements and operating reports and any reports with respect to the operation
of the TWEAN Systems prepared by or for TWEAN at any time from the date hereof
until Closing, and any other similar materials that TCA may reasonably request;
and
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(i) until the date of Closing, TWEAN shall continue to
rebuild the TWEAN Systems in accordance with TWEAN's 1995 capital budget for
such rebuild (a true and complete copy of which has been delivered to TCA),
including upgrading approximately 445 miles of cable plant to 550 MHz spaced
750 MHz digital, and completing a fiber cable network for the TWEAN Systems
(the "Rebuild"); provided, however, that TWEAN shall not be obligated to spend
more than $4,400,000 in connection with the Rebuild; any capital expenditures
required to complete the Rebuild in excess of $4,400,000 shall be paid by TCA.
Section 6.2 Certain Negative Covenants. Except as the other may
otherwise consent in writing, or as contemplated by this Agreement, between the
date of this Agreement and Closing:
(a) TWEAN shall not modify, terminate, renew, suspend, or
abrogate any TWEAN Contract other than in the ordinary course of business;
(b) TWEAN shall not modify, terminate, renew, suspend, or
abrogate any TWEAN Franchise or TWEAN License;
(c) neither party shall enter into any transaction or
take any action that would result in any of its representations and warranties
in this Agreement not being true and correct in all material respects when made
or at Closing;
(d) TWEAN shall not engage in any marketing, subscriber
installation, or collection practices that are inconsistent with its past
practices;
(e) TCA shall not waive any of its conditions to closing
in the Purchase Agreement or accept or agree or accede to any modifications or
amendments to, or any conditions to the transfer of, any of the System
Franchises, System Licenses or System Contracts, as such terms are defined in
the Purchase Agreement, or any other assets, rights or obligations under the
Purchase Agreement; and
(f) to the extent that doing so would not violate the
National Labor Relations Act or any other applicable law, TWEAN shall not
recognize or negotiate any collective bargaining agreement with any labor
organization.
Section 6.3 Certain Additional Covenants. Each party shall
cooperate reasonably with the other in its efforts to obtain all consents,
authorizations, and approvals required to consummate the transactions
contemplated hereby, but shall have no obligation to agree or accede to any
modifications or amendments thereto that are not acceptable to it in its
reasonable discretion.
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Section 6.4 Notification of Certain Matters.
(a) Each party shall promptly notify the other party of
any fact, event, circumstance, action or omission (i) which, if known at the
date of this Agreement, would have been required to be disclosed in or pursuant
to this Agreement, or (ii) the existence or occurrence of which would cause any
of such party's representations or warranties under this Agreement not to be
true in any material respect, and with respect to clause (ii), use commercially
reasonable efforts to remedy the same.
(b) Promptly upon becoming aware of such matter, each
party shall notify the other party of any fact, event, circumstance, action or
omission which constitutes a breach by the other party of any of the
representations or warranties made by the other party in the performance of or
compliance with any covenant, agreement or obligation required to be performed
or complied with prior to the date of Closing.
Section 6.5 Post-Closing Obtaining of Consents, Authorizations
and Approvals. Subsequent to Closing, each party shall continue to use its
commercially reasonable efforts at its own expense to obtain in writing as
promptly as possible any consent, authorization or approval required to be
obtained by it that was not obtained on or before Closing, and deliver copies
of such, reasonably satisfactory in form and substance, to the other. The
obligations set forth in this subsection shall survive Closing and shall not be
merged in the consummation of the transactions contemplated hereby. From
Closing until each such consent, authorization or approval is obtained, each
party shall act as the agent for the other, and shall preserve the benefit of
and enforce the System Contract or other right to which such consent,
authorization or approval pertains to the fullest extent permissible under the
applicable System Contract or other right. Upon request by the other, at
Closing, TWEAN and TCA shall enter into an agency agreement in a form mutually
satisfactory to each party specifying the terms of such agency.
Section 6.6 Confidentiality and Publicity.
(a) Any non-public information regarding this Agreement
or that either party may obtain from the other in connection with this
Agreement with respect to the other's Systems shall be confidential and, unless
and until Closing shall occur, such party shall not disclose any such
information to any other Person (other than its directors, officers and
employees, its partners and such partner's directors, officers and employees,
and representatives of its advisers and lenders whose knowledge thereof is
necessary in order to facilitate the consummation of the transactions
contemplated hereby) or use such information to the detriment of the other;
provided that (i) such party may use and disclose any such information once it
has been
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publicly disclosed (other than by such party in breach of its obligations under
this Section) or which rightfully has come into the possession of such party
(other than from the other party), and (ii) to the extent that such party may,
in the reasonable judgment of its counsel, be compelled by Legal Requirements
to disclose any of such information, such party may disclose such information
if it shall have used all reasonable efforts, and shall have afforded the other
the opportunity, to obtain an appropriate protective order, or other
satisfactory assurance of confidential treatment, for the information compelled
to be disclosed. In the event of termination of this Agreement, each party
shall use all reasonable efforts to cause to be delivered to the other, and
retain no copies of, any documents, work papers and other materials obtained by
such party or on its behalf from the other, whether so obtained before or after
the execution hereof.
(b) TCA and TWEAN each shall consult and cooperate with
the other with respect to the content and timing of all press releases and
other public announcements, and any oral or written statements to TWEAN's
employees concerning this Agreement and the transactions contemplated hereby.
Except as required by applicable Legal Requirements, neither TCA nor TWEAN
shall make any such release, announcement, or statements without the prior
written consent and approval of the other.
Section 6.7 Title Insurance. TWEAN shall reasonably cooperate
with TCA if TCA elects to obtain title insurance policies on parcels of TWEAN
Owned Real Property or Leased Real Property, it being understood that TCA shall
have the sole responsibility for obtaining and paying for such policies. The
obtaining of title insurance shall not be a condition to the obligations of TCA
to consummate the transactions contemplated hereunder.
Section 6.8 HSR Act Compliance. Within 30 days after the date of
this Agreement, TCA and TWEAN shall, if required, prepare and file proper
premerger notification and report forms and related affidavits in compliance
with the HSR Act. The fees payable to Governmental Authorities required for
such filings relating to the transfer of the TWEAN Systems shall be shared
equally by TWEAN and TCA. If following the filing of such forms any
Governmental Authority shall challenge the transaction contemplated hereby, or
request additional filings or information, TWEAN and TCA shall take preliminary
steps to attempt to ascertain the nature of the challenge and the likelihood
that the Governmental Authority will permit the transaction contemplated hereby
to proceed notwithstanding the challenge. After taking such preliminary steps,
neither TWEAN nor TCA shall have any obligation to contest such challenge or
make or provide any such filing or information, and each shall be
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entitled, at its option, to withdraw its filing and terminate this Agreement.
Section 6.9 Access to Books and Records. Following the Closing,
TCA shall preserve and make available to TWEAN, during normal business hours,
such of the books and records transferred to it hereunder as TWEAN reasonably
may need in connection with the preparation of tax returns and for tax audits
and any other matters reasonably requiring such access.
Section 6.10 Supplements to Exhibits. Each of TCA and TWEAN
shall, from time to time prior to Closing, supplement the Exhibits to this
Agreement with additional information that, if existing or known to it on the
date of this Agreement, would have been required to be in included in one or
more Exhibits to this Agreement. For purposes of determining the satisfaction
of any of the conditions to the obligations of TCA and TWEAN in Sections 7.1
and 7.2 and the liability of TCA or of TWEAN following Closing for breaches of
its respective representations or warranties under this Agreement, the Exhibits
to this Agreement shall be deemed to include only the information contained
therein on the date of this Agreement or added to the Exhibits by written
amendments or supplements to this Agreement delivered prior to Closing by the
party making such amendment and accepted in writing by the other party.
Section 6.11 Defaults. Neither TWEAN nor TCA shall have an
obligation to cure any default, deficiency, violation or other condition
rendering any of its representations or warranties untrue or inaccurate. If
one party elects to consummate the transaction contemplated by this Agreement
despite its knowledge that any representation or warranty of the other party is
untrue or inaccurate, such representation or warranty shall be deemed amended
and limited to conform to the scope of the first party's knowledge with regard
thereto.
Section 6.12 Transitional Billing Services.
(a) At the request of TCA, for a period of 60 days from
the date of Closing (the "initial term") TWEAN shall perform, or cause to be
performed, usual and customary billing services for the TWEAN Systems in
accordance with past practices ("regular services"), during which time TCA
shall complete the transition to a new billing system. Notwithstanding the
foregoing, TWEAN shall automatically continue the regular services for three
(3) successive 30-day renewal terms ("renewal terms") unless TCA notifies TWEAN
not less than ten (10) days prior to the expiration of the then- existing term
that it no longer requires the billing services hereunder. TWEAN shall comply
with all reasonable requests by TCA for special billing requests including, but
not limited to, rate changes, unusual marketing campaigns requiring billing
support, and any unusual
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conversion or month-end reporting requests requiring a substantial amount of
TWEAN's time ("special services"). Problems with equipment not a part of the
billing system (addressable controller, ANI interface, etc.) are the
responsibility of TCA to resolve unless such problems are caused by the billing
system.
(b) TCA shall pay TWEAN TWEAN's cost per month for
providing regular services, and additional amounts as stated by TWEAN upon
request for all special services. TCA shall pay the foregoing amounts payable
with respect to the initial term within fourteen (14) days after the expiration
of the initial term, and shall pay the amounts payable with respect to any
Renewal Term within fourteen (14) days after the expiration of such Term.
Section 6.13 Employee Benefit Matters.
(a) TWEAN shall assume full responsibility and liability
for offering and providing "continuation coverage" to any "qualified
beneficiary" who is covered by a "group health plan" sponsored, maintained or
contributed to by TWEAN and who has experienced a "qualifying event" or is
receiving such "continuation coverage" on or prior to the Closing Time.
Continuation coverage, qualified beneficiary, qualifying event and group health
plan shall have the meanings given such terms under Section 4980B of the Code
and Section 601 et seq. of ERISA. TWEAN shall hold TCA and any entity required
to be combined with TCA under Section 414 of the Internal Revenue Code
("Affected Parties") harmless from and fully indemnify such Affected Parties
against any losses incurred or suffered by such Affected Parties which arise
under a group health plan sponsored, maintained or contributed to by TWEAN as a
result of any action or omission of TWEAN prior to the Closing Time or because
Buyer is deemed to be a successor employer to TWEAN.
(b) TWEAN acknowledges that TCA has no obligation to
employ any of TWEAN's current or prior employees. TWEAN shall be responsible
for and shall cause to be discharged and satisfied in full all amounts owed to
any current or prior employee, including wages, salaries, accrued vacation, any
employment, incentive, compensation or bonus agreements or other benefits or
payments on account of termination, and shall indemnify TCA and hold TCA
harmless from any losses thereunder. Notwithstanding the foregoing, TCA shall
recognize the term of service with TWEAN of any former employee of TWEAN hired
by TCA in determining such employee's accrued vacation under TCA's vacation
plan; provided, however, that the Purchase Price shall be adjusted downward to
reflect TCA's foregoing obligation, pursuant to Section 2.6; and provided
further that to the extent that, under TWEAN's vacation plan, an employee would
be entitled to more vacation than such employee would be entitled to under
TCA's vacation plan ("excess vacation"), TWEAN shall pay such employee the
value of the excess
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vacation, and TCA shall permit any former employee of TWEAN who is hired by TCA
to take any such accrued vacation at whatever times the employee would have
been entitled to take such vacation had the employee not left the employ of
TWEAN.
ARTICLE 7.
CONDITIONS PRECEDENT
Section 7.1 Conditions to TWEAN's Obligations. The obligations
of TWEAN to consummate the transactions contemplated by this Agreement shall be
subject to the following conditions, any of which may be waived by TWEAN in its
sole discretion:
(a) Accuracy of Representations and Warranties. The
representations and warranties of TCA in this Agreement shall be true and
accurate in all material respects at and as of Closing with the same effect as
if made at and as of Closing.
(b) Performance of Agreements. TCA shall have performed
in all material respects all obligations and agreements and complied in all
material respects with all covenants in this Agreement to be performed and
complied with by it at or before Closing.
(c) Officer's Certificate. TWEAN shall have received a
certificate executed by an executive officer of TCA, dated as of Closing,
reasonably satisfactory in form and substance to TWEAN, certifying that the
conditions specified in Sections 7.1(a) and 7.1(b) have been satisfied.
(d) Legal Proceedings. There shall be no Legal
Requirement, and no Judgment shall have been entered and not vacated by any
Governmental Authority of competent jurisdiction in any Litigation or arising
therefrom, that (i) enjoins, restrains, makes illegal, or prohibits
consummation of the transactions contemplated by this Agreement, or (ii)
requires separation or divestiture by TWEAN of all or any significant portion
of the TCA Assets after Closing, and there shall be no Litigation pending or
threatened seeking, or that if successful would have the effect of, any of the
foregoing.
(e) TCA Counsel Opinion. TWEAN shall have received an
opinion of Jackson & Walker, L.L.P., counsel to TCA, dated as of Closing, in
the form of Exhibit 7.1(e) (the "TCA Counsel Opinion").
(f) FCC Counsel Opinion. TWEAN shall have received an
opinion of Wiley, Rein & Fielding, special FCC counsel to Star, dated as of
Closing, substantially in the form of Exhibit 7.1(f) (the "FCC Counsel
Opinion").
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(g) HSR Act Compliance. All waiting periods under the
HSR Act applicable to this Agreement or the transactions contemplated hereby
shall have expired or been terminated.
(h) Consents. TWEAN shall have received evidence, in
form and substance reasonably satisfactory to it, that the TCA Required
Consents have been obtained; provided, however, that to the extent such
Required Consents relate to consents by the FCC to assignments of Licenses,
this condition shall be deemed met if such consents to assignment have been
requested prior to Closing and TWEAN is entitled to operate such Licenses
pursuant to conditional use authorizations until the FCC's consent is received.
(i) Lien Releases. TWEAN shall have received evidence
satisfactory to it that all Liens (other than Permitted Liens) affecting or
encumbering the TCA Assets have been terminated, released, or waived, as
appropriate, or shall have received original, executed instruments in form
satisfactory to TWEAN effecting such terminations, releases, or waivers ("TCA
Lien Releases").
(j) No Material Adverse Change. There shall not have
been any material adverse change in the TCA Assets or the financial condition
or operations of the TCA Systems since the date of this Agreement.
(k) Purchase Agreement. Each of the conditions to TCA's
obligations under the Purchase Agreement shall have been satisfied or, with the
prior written consent of TWEAN, waived.
(l) Closing of the Purchase Agreement. TCA and Star
shall have concurrently closed the transactions contemplated by the Purchase
Agreement.
(m) Evidence of Necessary Actions. TWEAN shall have
received evidence reasonably satisfactory to it that TCA has taken all action
necessary to authorize the execution of this Agreement and the consummation of
the transactions contemplated thereby.
(n) Environmental Assessments. Any environmental audits
or assessments conducted by TWEAN with respect to the TCA Systems shall not
have indicated the presence thereon, or the likelihood of presence thereon, of
Hazardous Substances.
(o) Legal Matters Satisfactory to TWEAN's Counsel. All
actions, proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and all
related legal matters shall be reasonably satisfactory to and approved by
TWEAN's counsel, and such counsel shall have been furnished with such certified
copies
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of actions and proceedings and such other instruments and documents as it
reasonably shall have requested.
(p) Approvals. This Agreement and the transactions
contemplated hereby shall have been approved by the Management Committee of
Time Warner Cable.
Section 7.2 Conditions to TCA's Obligations. The
obligations of TCA to consummate the transactions contemplated by this
Agreement shall be subject to the following conditions, any of which may be
waived by TCA in its sole discretion:
(a) Accuracy of Representations and Warranties. The
representations and warranties of TWEAN in this Agreement shall be true and
accurate in all material respects at and as of Closing with the same effect as
if made at and as of Closing.
(b) Performance of Agreements. TWEAN shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants in this Agreement to be performed
and complied with by it at or before Closing.
(c) Officer's Certificate. TCA shall have received a
certificate executed by a general partner of TWEAN, dated as of Closing,
reasonably satisfactory in form and substance to TCA, certifying that the
conditions specified in Sections 7.2(a) and 7.2(b) have been satisfied.
(d) Legal Proceedings. There shall be no Legal
Requirement, and no Judgment shall have been entered and not vacated by any
Governmental Authority of competent jurisdiction in any Litigation or arising
therefrom, that (i) enjoins, restrains, makes illegal, or prohibits
consummation of the transactions contemplated by this Agreement, or (ii)
requires separation or divestiture by TCA of all or any significant portion of
the TWEAN Assets after Closing, and there shall be no Litigation pending or
threatened seeking, or that if successful would have the effect of, any of the
foregoing.
(e) TWEAN Counsel Opinion. TCA shall have received an
opinion of Linda Weiler, counsel to TWEAN, dated as of Closing, in the form of
Exhibit 7.2(e) (the "TWEAN Counsel Opinion").
(f) TWEAN FCC Counsel Opinion. TCA shall have received
an opinion of Bryan Cave, special FCC counsel to TWEAN, dated as of Closing,
substantially in the form of Exhibit 7.2(f) (the "TWEAN FCC Counsel Opinion").
(g) HSR Act Compliance. All waiting periods under the
HSR Act applicable to this Agreement or the transactions contemplated hereby
shall have expired or been terminated.
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(h) Consents. TCA shall have received evidence, in form
and substance reasonably satisfactory to it, that the TWEAN Required Consents
have been obtained; provided, however, that to the extent such Required
Consents relate to consents by the FCC to assignments of Licenses, this
condition shall be deemed met if such consents to assignment have been
requested prior to Closing and TCA is entitled to operate such Licenses
pursuant to conditional use authorizations until the FCC's consent is received.
(i) Lien Releases. TCA shall have received evidence
satisfactory to it that all Liens (other than Permitted Liens) affecting or
encumbering the TWEAN Assets have been terminated, released, or waived, as
appropriate, or shall have received original, executed instruments in form
satisfactory to TCA effecting such terminations, releases, or waivers ("TWEAN
Lien Releases").
(j) No Material Adverse Change. There shall not have
been any material adverse change in the TWEAN Assets or the financial condition
or operations of the TWEAN Systems since the date of this Agreement.
(k) Purchase Agreement. Each of the conditions to TCA's
obligations under the Purchase Agreement shall have been satisfied or, with the
prior consent of TWEAN, waived.
(l) Closing of the Purchase Agreement. TCA and Star
shall have concurrently closed the transactions contemplated by the Purchase
Agreement.
(m) Evidence of Necessary Actions. TCA shall have
received evidence reasonably satisfactory to it that TWEAN has taken all action
necessary to authorize the execution of this Agreement and the consummation of
the transactions contemplated thereby.
(n) Environmental Assessments. Any environmental audits
or assessments conducted by TCA with respect to the TWEAN Systems shall not
have indicated the presence thereon, or the likelihood of presence thereon, of
Hazardous Substances.
(o) Legal Matters Satisfactory to TCA's Counsel. All
actions, proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and all
related legal matters shall be reasonably satisfactory to and approved by TCA's
counsel, and such counsel shall have been furnished with such certified copies
of actions and proceedings and such other instruments and documents as it
reasonably shall have requested.
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(p) Subscribers. At Closing, the TWEAN Systems shall
serve at least 29,300 of Individual Subscribers and Subscriber Equivalents in
the aggregate.
ARTICLE 8.
CLOSING
Section 8.1 Closing; Time and Place. The closing of the
transactions contemplated by this Agreement ("Closing") shall take place,
contemporaneously with the Closing under the Purchase Agreement, within 10
business days after satisfaction of all conditions stated in Sections 7.1 and
7.2 at a time and location mutually determined by TCA and TWEAN, but in no
event later than December 31, 1995 (the "Outside Closing Date"); provided,
however, that each party shall have the right to designate the date of Closing
as the last business day of the month, but not later than the Outside Closing
Date, within or immediately after such 10 business day period by prior written
notice delivered to the other at least three business days in advance of such
date.
Section 8.2 TCA's Obligations. At Closing, TCA shall deliver or
cause to be delivered to TWEAN, the following:
(a) Payments. The Cash Payment and the Security System
Payment.
(b) Current Items Amount. The agreed estimated Current
Items Amount, if it favors TWEAN.
(c) TCA Bill of Sale and Assignment. The executed TCA
Bill of Sale and Assignment in the form of Exhibit 8.2(c).
(d) Vehicle Titles. Title certificates to all vehicles
included among the TCA Assets, endorsed for transfer of title to TWEAN, and
separate bills of sale therefor, if required by the laws of the states in which
such vehicles are titled.
(e) Deeds. General warranty deeds from Star conveying to
TWEAN each parcel of Owned Property, as defined in the Purchase Agreement, and
quitclaim deeds from TCA conveying to TWEAN each parcel of Owned Property, as
defined in the Purchase Agreement;
(f) Officer's Certificate. The certificate described in
Section 7.1(c);
(g) TCA Counsel Opinion. The TCA Counsel Opinion.
(h) FCC Counsel Opinion. The FCC Counsel Opinion.
(i) Lien Releases. The TCA Lien Releases.
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(j) Estoppel Certificates. The Estoppel Certificates.
(k) FIRPTA Affidavit. FIRPTA Non-Foreign Seller
Affidavit certifying that TCA is not a foreign person within the meaning of
Section 1445 of the Code, reasonably satisfactory in form and substance to
TWEAN.
(l) Evidence of Necessary Actions. Evidence reasonably
satisfactory to TWEAN that TCA has taken all action necessary to authorize the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
(m) Other. Such other documents and instruments as shall
be necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
Section 8.3 TWEAN's Obligations. At Closing, except as otherwise
provided below, TWEAN shall deliver or cause to be delivered to TCA the
following:
(a) Current Items Amount. The agreed estimated Current
Items Amount, if it favors TCA.
(b) TWEAN Bill of Sale and Assignment. The executed
TWEAN Bill of Sale and Assignment in the form of Exhibit 8.3(b).
(c) Vehicle Titles. Title certificates to all vehicles
included among the TWEAN Assets, endorsed for transfer of title to TCA, and
separate bills of sale therefor, if required by the laws of the States in which
such vehicles are titled.
(d) Deeds. Special warranty deeds conveying to TCA each
parcel of the TWEAN Owned Real Property.
(e) Officer's Certificate. The certificate described in
Section 7.2(c).
(f) TWEAN FCC Counsel Opinion. TWEAN FCC Counsel Opinion.
(g) TWEAN Counsel Opinion. TWEAN Counsel Opinion.
(h) Lien Releases. The TWEAN Lien Releases.
(i) FIRPTA Affidavit. FIRPTA Non-Foreign Seller
Affidavit certifying that TWEAN is not a foreign person within the meaning of
Section 1445 of the Code, reasonably satisfactory in form and substance to TCA.
(j) Evidence of Necessary Actions. Evidence reasonably
satisfactory to TCA that TWEAN has taken all action
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necessary to authorize the execution of this Agreement and the consummation of
the transactions contemplated hereby.
(k) Security System Bill of Sale. The executed Security
System Bill of Sale.
(l) Other. Such other documents and instruments as shall
be necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
ARTICLE 9.
TERMINATION AND DEFAULT
Section 9.1 Termination Events. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual written agreement of TWEAN
and TCA;
(b) by either TWEAN or TCA by written notice, at any
time, if the other is in material breach or default of its respective
covenants, agreements, or other obligations herein, or if any of its
representations herein are not true and accurate in all material respects when
made or when otherwise required by this Agreement to be true and accurate, and
such breach, default or failure is not cured within 30 days of receipt of
notice that such breach, default or failure exists or has occurred;
(c) by either TWEAN or TCA, upon written notice to the
other, if Closing shall not have occurred by the Outside Closing Date, for any
reason other than a material breach or default by such party of its respective
covenants, agreements, or other obligations hereunder, or any of its
representations herein not being true and accurate in all material respects
when made or when otherwise required by this Agreement to be true and accurate
in all material respects;
(d) by either TWEAN or TCA, upon written notice to the
other, if the Purchase Agreement has been terminated; or
(e) as otherwise provided herein.
Section 9.2 Effect of Termination. If this Agreement shall be
terminated pursuant to Section 9.1, all obligations of the parties hereunder
shall terminate, except for the obligations set forth in Sections 6.6, 9.2,
11.1, 11.2 and 11.13. Termination of this Agreement pursuant to Sections
9.1(b) or 9.1(c) shall not limit or impair any remedies that either TCA or
TWEAN may have with respect to a breach or default by the other of its
covenants, agreements or obligations hereunder.
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ARTICLE 10.
INDEMNIFICATION
Section 10.1 Indemnification by TCA. From and after Closing, TCA
shall indemnify and hold harmless TWEAN, its affiliates, partners, officers and
directors, employees, agents, and representatives, and any Person claiming by
or through any of them, as the case may be, from and against any and all Losses
arising out of or resulting from:
(a) any representations and warranties made by TCA in
this Agreement not being true and accurate in all material respects, when made
or at Closing;
(b) any failure by TCA to perform in all material
respects any of its covenants, agreements, or obligations in this Agreement;
(c) all liabilities relating to the TCA Systems that are
attributable to any negligent act or omission of TCA other than acquisition of
the TCA Systems and that are not TWEAN Assumed Obligations and Liabilities;
(d) the TCA Assumed Obligations and Liabilities; and
(e) subject to Section 3.2, the use by TCA of TWEAN's
trademarks, trade names, service marks, service names, logos, and similar
proprietary rights for any reason following the Closing.
If, by reason of the claim of any third party relating to any of the matters
subject to such indemnification, a Lien is placed or made upon any of the
properties or assets owned or leased by TWEAN or any other Indemnitee under
this Section, in addition to any indemnity obligation of TCA under this
Section, TCA shall furnish a bond sufficient to obtain the prompt release
thereof within ten days after receipt from TWEAN of notice thereof.
Section 10.2 Indemnification by TWEAN. From and after Closing,
TWEAN shall indemnify and hold harmless TCA, its affiliates, officers and
directors, employees, agents, and representatives, and any Person claiming by
or through any of them, as the case may be, from and against any and all Losses
arising out of or resulting from:
(a) any representations and warranties made by TWEAN in
this Agreement not being true and accurate in all material respects when made
or at Closing;
(b) any failure by TWEAN to perform in all material
respects any of its covenants, agreements, or obligations in this Agreement;
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(c) the operation and ownership of the TWEAN Systems
prior to the Adjustment Time;
(d) the operation and ownership of the TCA Systems by TCA
and all liabilities of TCA relating to the TCA Systems and all liabilities of
TCA arising out of the Purchase Agreement, including without limitation, all
liabilities assumed under Section 2.3 of the Purchase Agreement, obligations to
indemnify, if any, under Section 10.2 of the Purchase Agreement (other than
Losses that are attributable to an act or omission of TCA other than the
acquisition of the TCA Systems);
(e) all liabilities of TWEAN or relating to the TWEAN
Systems that are not TCA Assumed Obligations and Liabilities; and
(f) the TWEAN Assumed Obligations and Liabilities.
If, by reason of the claim of any third party relating to any of the matters
subject to such indemnification, a Lien is placed or made upon any of the
properties or assets owned or leased by TCA or any other Indemnitee under this
Section, in addition to any indemnity obligation of TWEAN under this Section,
TWEAN shall furnish a bond sufficient to obtain the prompt release thereof
within ten days after receipt from TCA of notice thereof.
Section 10.3 Procedure for Indemnified Third Party Claim.
Promptly after receipt by a party entitled to indemnification hereunder (the
"Indemnitee") of written notice of the assertion or the commencement of any
Litigation with respect to any matter referred to in Sections 10.1 or 10.2, the
Indemnitee shall give written notice thereof to the party from whom
indemnification is sought pursuant hereto (the "Indemnitor") and thereafter
shall keep the Indemnitor reasonably informed with respect thereto if the
Indemnitor does not assume the defense of such claim; provided, however, that
failure of the Indemnitee to give the Indemnitor notice as provided herein
shall not relieve the Indemnitor of its obligations hereunder, except to the
extent that such failure to give notice shall prejudice any defense or claim
available to the Indemnitor. In case any Litigation shall be brought against
any Indemnitee, the Indemnitor shall be entitled to assume the defense thereof
with counsel reasonably satisfactory to the Indemnitee, at the Indemnitor's
sole expense; provided, however, that if the Litigation relates to a claim for
which TCA is entitled to indemnification pursuant to Section 10.2(d), TCA may,
at its option, require TWEAN to assume the defense thereof with counsel
reasonably satisfactory to TCA, at TWEAN's sole expense. If the Indemnitor
shall assume the defense of any Litigation, it shall not settle the Litigation
unless the settlement shall include as an unconditional term thereof the giving
by the claimant or the plaintiff of a release of the Indemnitee, satisfactory
to the Indemnitee, from all liability with respect to such Litigation. If the
Indemnitor
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does not assume the defense of any Litigation, the Indemnitor shall
nevertheless provide reasonable cooperation to the Indemnitee in the defense of
such Litigation, and any settlement of such Litigation shall be on terms
reasonable satisfactory to the Indemnitor.
Section 10.4 Interest. Amounts payable by the Indemnitor to the
Indemnitee in respect of any Losses under Sections 10.1 or 10.2 shall be
payable by the Indemnitor as incurred by the Indemnitee, and shall bear
interest at the rate publicly announced from time to time by the Bank of New
York as its prime rate plus 2% per annum from the date the Losses for which
indemnification is sought were incurred by the Indemnitee until the date of
payment of indemnification by the Indemnitor.
Section 10.5 Time and Manner of Certain Claims. The
representations and warranties of TWEAN and TCA in this Agreement shall survive
Closing for a period of 24 months, except that (i) the liability of the parties
shall extend beyond such 24-month period with respect to any claim which has
been asserted in a written notice before the expiration of such 24-month
period, (ii) all such representations and warranties with respect to any
federal, state or local taxes and with respect to any FCC or Copyright matters
will survive until the expiration of the applicable statute of limitations,
(iii) the covenants and agreements of the parties in this Agreement and all
representations with respect to title to the Assets shall survive Closing and
shall continue in full force and effect without limitation, and (iv) the
representations and warranties set forth in Section 4.15 shall survive Closing
for a period of 15 years. TCA's liability under Section 10.1 and TWEAN's
liability under Section 10.2 (other than Section 10.2(d)) shall be limited to
Losses exceeding in the aggregate $50,000 (the "Deductible"), and neither party
shall have any liability under this Agreement for Losses constituting the
Deductible. TCA's and TWEAN's liability, respectively, under this Agreement
shall be limited to Losses not exceeding in the aggregate the amount of
$62,700,000.
Section 10.6 Other Indemnification. The provisions of Sections
10.3, 10.4 and 10.5 shall be applicable to any claim for indemnification made
under any other provision of this Agreement, and all references in Sections
10.3, 10.4 and 10.5 to Sections 10.1 and 10.2 shall be deemed to be references
to such other provisions of this Agreement.
ARTICLE 11.
MISCELLANEOUS PROVISIONS
Section 11.1 Expenses. Except as otherwise provided elsewhere in
this Agreement, each of the parties shall pay its
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own expenses and the fees and expenses of its counsel, accountants, and other
experts in connection with this Agreement.
Section 11.2 Brokerage. TCA shall indemnify and hold TWEAN
harmless from and against any and all Losses arising from any employment by it
of, or services rendered to it by, any finder, broker, agency, or other
intermediary, in connection with the transactions contemplated hereby, or any
allegation of any such employment or services. TWEAN shall indemnify and hold
TCA harmless from and against any and all Losses arising from any employment by
it of, or services rendered to it by, any finder, broker, agency, or other
intermediary, in connection with the transactions contemplated hereby, or any
allegation of any such employment or services.
Section 11.3 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto, shall be
deemed to constitute a waiver by the party taking the action of compliance with
any representation, warranty, covenant or agreement contained herein. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall be in writing and shall not operate or be construed as
a waiver of any other condition or subsequent breach. The waiver by any party
of any of the conditions precedent to its obligations under this Agreement
shall not preclude it from seeking redress for breach of this Agreement other
than with respect to the condition so waived.
Section 11.4 Notices. All notices, requests, demands,
applications, services of process, and other communications which are required
to be or may be given under this Agreement or any shall be in writing and
shall be deemed to have been duly given if sent by telecopy or facsimile
transmission, answer back requested, or delivered by courier or mailed,
certified first class mail, postage prepaid, return receipt requested, to the
parties hereto at the following addresses:
To TCA: Telecable Associates, Inc.
3015 SSE Loop 323
Tyler, TX 75713-0489
Attention: Fred R. Nichols
Telecopy: (903) 595-3701
Copies: Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, TX 75202-3797
Attention: James S. Ryan, III, Esq.
Telecopy: (214) 953-5822
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To TWEAN: Time Warner Entertainment-
Advance/Newhouse Partnership
c/o Time Warner Cable Ventures
300 First Stamford Place
Stamford, CT 06902-6732
Attention: Jeffrey D. Elberson
Telecopy: (203) 328-4828
Copies: Holland & Hart
P.O. Box 8749
555 17th Street, Suite 2900
Denver, CO 80201-8749 (mail)
Denver, CO 80202 (delivery)
Attention: Davis O. O'Connor, Esq.
Telecopy: (303) 295-8261
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section. Such notice shall be effective,
(i) if delivered in person or by courier, upon actual receipt by the intended
recipient, or (ii) if sent by telecopy or facsimile transmission, when answer
back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
Section 11.5 Entire Agreement; Prior Representations; Amendments.
This Agreement and the Purchase Agreement embody the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede all
prior representations, agreements and understandings, oral or written, with
respect thereto. This Agreement may not be modified orally, but only by an
agreement in writing signed by the party or parties against whom any waiver,
change, amendment, modification, or discharge may be sought to be enforced.
Section 11.6 Binding Effect; Benefits. This Agreement shall inure
to the benefit of and will be binding upon the parties hereto and their
respective heirs, legal representatives, successors, and permitted assigns.
Neither TWEAN nor TCA shall assign this Agreement or delegate any of its duties
hereunder to any other Person without the prior written consent of the other,
except that TWEAN or TCA may assign this Agreement to any affiliate thereof
without the other's prior written approval. For purposes of this Section any
change in control of TWEAN or TCA shall constitute an assignment by it of this
Agreement.
Section 11.7 Headings and Exhibits. The section and other
headings contained in this Agreement are for reference purposes only and will
not affect the meaning or interpretation of this Agreement. Reference to
Exhibits shall, unless otherwise indicated, refer to the Exhibits attached to
this Agreement,
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which shall be incorporated in and constitute a part of this Agreement by such
reference.
Section 11.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when executed, shall be deemed to be an
original and all of which together will be deemed to be one and the same
instrument.
Section 11.9 Governing Law. The validity, performance, and
enforcement of this Agreement, unless expressly provided to the contrary, shall
be governed by the laws of the State of Delaware without giving effect to the
principles of conflicts of law of such state.
Section 11.10 Severability. Any term or provision of this
Agreement which is invalid or unenforceable shall be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining rights of the Person intended to be benefitted by
such provision or any other provisions of this Agreement.
Section 11.11 Third Parties; Joint Ventures. This Agreement
constitutes an agreement solely among the parties hereto, and, except as
otherwise provided herein, is not intended to and will not confer any rights,
remedies, obligations, or liabilities, legal or equitable, including any right
of employment, on any Person other than the parties hereto and their respective
successors, or assigns, or otherwise constitute any Person a third party
beneficiary under or by reason of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to or shall constitute the parties hereto
partners or participants in a joint venture.
Section 11.12 Construction. This Agreement has been negotiated by
TWEAN and TCA and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement shall not
apply in any construction or interpretation of this Agreement.
Section 11.13 Attorneys' Fees. If any Litigation between TCA and
TWEAN with respect to this Agreement or the transactions contemplated hereby
shall be resolved or adjudicated by a Judgment of any court, the party
prevailing under such Judgment shall be entitled, as part of such Judgment, to
recover from the other party its reasonable attorneys' fees and costs and
expenses of litigation.
Section 11.14 Risk of Loss. The risk of any loss or damage to the
TWEAN Assets resulting from fire, theft or any other casualty (except
reasonable wear and tear) shall be borne by TWEAN, at all times prior to the
Adjustment Time. The risk of
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any loss or damage to the TCA Assets resulting from fire, theft or any other
casualty (except reasonable wear and tear) shall be borne by Star, at all times
prior to the Adjustment Time. In the event that any such loss or damage shall
be sufficiently substantial so as to preclude and prevent resumption of normal
operations of any material portion of a System or the replacement or
restoration of the lost or damaged property within twenty days from the
occurrence of the event resulting in such loss or damage, TWEAN or TCA, as
appropriate, shall immediately notify the other in writing of the inability to
resume normal operations or to replace or restore the lost or damaged property,
and the other, at any time within ten days after receipt of such notice, may
elect by written notice to the notifying party to either (i) waive such defect
and proceed toward consummation of the transaction in accordance with terms of
this Agreement, or (ii) terminate this Agreement. If the other elects to so
terminate this Agreement, both parties shall stand fully released and
discharged of any and all obligations hereunder. If the other shall elect to
consummate the transactions contemplated by this Agreement notwithstanding such
loss or damage and does so, all insurance proceeds payable as a result of the
occurrence of the event resulting in such loss or damage shall be delivered by
the notifying party to the other, or the rights thereto shall be assigned by
the notifying party to the other if not yet paid over to the notifying party,
and the notifying party shall pay to the other an amount equal to the
difference between the amount of such insurance costs and the full replacement
cost of the damaged or lost Assets.
Section 11.15 Audited Financial Statements. To the extent that TCA
or its parent is required to file with the Securities and Exchange Commission a
Current Report on Form 8-K or a registration statement containing audited
balance sheets for the TWEAN Systems for either of the two most-recent fiscal
years and audited statements of income and changes in financial position for
any of the three most-recent fiscal years, prior to and following the Closing,
TWEAN shall provide TCA's employees and auditors access to TWEAN's financial
and accounting records during normal business hours and upon reasonable advance
notice. TWEAN shall instruct Ernst & Young at TCA's expense to fully cooperate
with TCA in order to allow TCA to develop the financial information required by
TCA.
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TWEAN and TCA have executed this Agreement as of the date first
written above.
TCA
TELECABLE ASSOCIATES, INC.,
A TEXAS CORPORATION
By:_______________________________________
Fred R. Nichols, President
TWEAN
TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE
PARTNERSHIP, A NEW YORK GENERAL
PARTNERSHIP
By: TIME WARNER ENTERTAINMENT COMPANY,
L.P., A DELAWARE LIMITED
PARTNERSHIP, THROUGH ITS DIVISION,
TIME WARNER CABLE VENTURES,
GENERAL PARTNER
By:__________________________________
Jeffrey D. Elberson,
Vice President, Time Warner
Cable Ventures
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LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A Municipalities and Counties Served by the Systems
Exhibit 2.1(b)(i) TWEAN Tangible Personal Property
Exhibit 2.1(b)(ii) TWEAN Real Property Interests
Exhibit 2.1(b)(iii) TWEAN Franchises
Exhibit 2.1(b)(iv) TWEAN Licenses
Exhibit 2.1(b)(v) TWEAN Contracts
Exhibit 2.1(c) TWEAN Excluded Assets
Exhibit 3.7 Performance Agreement
Exhibit 3.8 Security System Bill of Sale
Exhibit 4.3 TWEAN Conflicts and Consents
Exhibit 4.4 TWEAN Liens and Permitted Liens
Exhibit 4.5 TWEAN Defaults and Notices
Exhibit 4.6 TWEAN Litigation
Exhibit 4.9 TWEAN System Information
Exhibit 4.10 TWEAN Bonds
Exhibit 4.11 TWEAN Compliance with Legal Requirements
Exhibit 4.13(a) TWEAN Employees and Employment Contracts
Exhibit 4.15 TWEAN Environmental
Exhibit 4.16 TWEAN Franchise and Pole Attachment Fees
Exhibit 5.3 TCA Conflicts and Consents
Exhibit 5.4 TCA Litigation
Exhibit 7.1(e) Form of TCA Counsel Opinion
Exhibit 7.1(f) Form of FCC Counsel Opinion
Exhibit 7.2(e) Form of TWEAN Counsel Opinion
Exhibit 7.2(f) Form of TWEAN FCC Counsel Opinion
Exhibit 8.2(c) TCA Bill of Sale
Exhibit 8.3(b) TWEAN Bill of Sale
</TABLE>
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EXHIBIT 10.1
________________________________________________________________________________
________________________________________________________________________________
CREDIT AGREEMENT
$200,000,000
AMONG
TCA CABLE TV, INC.
THE LENDERS PARTY HERETO
AND
NATIONSBANK OF TEXAS, N.A.
AS ADMINISTRATIVE AGENT AND MANAGING AGENT
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AS MANAGING AGENT
DATED AS OF JULY 21, 1995
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION 1
DEFINITIONS AND TERMS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2
COMMITMENT
2.1 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3 Termination and Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3
TERMS OF PAYMENT
3.1 Notes and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Interest and Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Interest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.7 Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.9 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.10 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.11 Booking Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.12 Basis Unavailable or Inadequate for LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . 23
3.13 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.14 Change in Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.15 Consequential Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.16 Replacement of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4
FEES
4.1 Treatment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4 Agency Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2 Conditions Precedent to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Purpose of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Corporate Existence, Good Standing, and Authority . . . . . . . . . . . . . . . . . . . . . 29
6.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.4 Authorization and Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.10 ERISA and Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.11 Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.12 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.13 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.14 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.17 Franchises, Licenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.18 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7
COVENANTS
7.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Items to be Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.4 Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.7 Maintenance of Existence, Assets, and Business . . . . . . . . . . . . . . . . . . . . . . 36
7.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.9 Preservation and Protection of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.10 Employee Benefit Plans and Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.11 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.12 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.13 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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7.14 Compliance with Laws and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.15 Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.16 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.17 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.18 Loans, Advances, and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.19 Dividends and Distributions; Transactions with Affiliates . . . . . . . . . . . . . . . . . 42
7.20 Mergers, Dissolutions and Dispositions of Assets . . . . . . . . . . . . . . . . . . . . . 42
7.21 Payments on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.22 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8
DEFAULT
8.1 Payment of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.3 Debtor Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.4 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.5 Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.6 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.7 Franchise Agreements; FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8 Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.9 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.10 Validity and Enforceability of Loan Papers . . . . . . . . . . . . . . . . . . . . . . . . 45
8.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9
RIGHTS AND REMEDIES
9.1 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.2 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.3 Delegation of Duties and Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.4 Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.5 Course of Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.6 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.7 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.8 Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.9 Expenditures by Administrative Agent and Lenders . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10
THE ADMINISTRATIVE AGENT
10.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.2. Administrative Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.3. NationsBank of Texas, National Association and Affiliates . . . . . . . . . . . . . . . . . 49
</TABLE>
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10.4. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.5. Indemnification by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.6. Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.7. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11
MISCELLANEOUS
11.1 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.2 Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.3 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.4 Form and Number of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.5 Exceptions to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.8 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.9 ENTIRETY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.10 VENUE; SERVICE OF PROCESS; JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.11 Amendments, Consents, Conflicts and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 54
11.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.13 Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.14 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances . . . . . . . . 57
11.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
iv
<PAGE> 6
TABLE OF SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
--------
<S> <C>
Exhibit A Form of Note
Exhibit B Form of Borrowing Notice
Exhibit C Form of Conversion Notice
Exhibit D Form of Compliance Certificate
Exhibit E Form of Opinion of Counsel
Exhibit F Form of Assignment and Acceptance
SCHEDULES
---------
Schedule 6.2 Jurisdiction of Incorporation of Borrower and its Subsidiaries
Schedule 6.3 Existing Subsidiaries
Schedule 6.11 Systems and Basic Subscribers
Schedule 6.14 Material Agreements
Schedule 6.17 Franchise Agreements, Termination Dates and Licenses
Schedule 7.12 Indebtedness
Schedule 7.13 Liens
Schedule 7.18 Loans and Investments, Description of Certain Acquisitions
Schedule 7.20 Partnerships Permitted to be Dissolved
</TABLE>
v
<PAGE> 7
$200,000,000
TCA CABLE TV, INC.
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of July 21, 1995, between TCA CABLE
TV, INC., a Texas corporation ("Borrower"), NATIONSBANK OF TEXAS, N.A.
("Administrative Agent" and "Managing Agent"), Texas Commerce Bank National
Association ("Managing Agent" and, collectively, "Managing Agents") and Lenders
(as defined below).
Borrower has requested that Lenders extend credit to Borrower, never
to exceed the aggregate of $200,000,000, in the form of a reducing revolving
loan. Upon and subject to the terms of this Agreement, Lenders are willing to
extend such credit to Borrower. Accordingly, in consideration of the mutual
covenants contained herein, Borrower, Administrative Agent, Managing Agents and
Lenders agree as follows:
SECTION 1
DEFINITIONS AND TERMS
1.1 Definitions. As used herein:
ACQUISITION means any transaction, or any series of related
transactions, consummated on or after the Closing Date, by which any Company
directly or indirectly (a) acquires any domestic cable television system, (b)
acquires all or substantially all of the assets of any Person or division of
any Person, whether through purchase of assets, merger, or otherwise or (c)
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes for the election of
directors) of the securities (or similar ownership interests) of any Person.
AFFILIATE means a Person (a) which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common
control with, Borrower or (b) five percent or more of the voting stock (or in
the case of a Person which is not a corporation, five percent or more of the
equity interest) of which is beneficially owned or held by Borrower. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
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<PAGE> 8
AGREEMENT means this Credit Agreement (as the same may hereafter be
amended, modified, supplemented or restated from time to time).
ANNUALIZED OPERATING CASH FLOW means Operating Cash Flow times four.
APPLICABLE MARGIN means, at the time of any determination thereof, for
purposes of all Loans, the margin of interest over the Base Rate or the LIBOR
Rate, as the case may be, that is applicable at the time of any determination
of interest rates under this Agreement, which Applicable Margin shall be
subject to adjustment (upwards or downwards, as appropriate) based on the ratio
of Total Debt to Annualized Operating Cash Flow (calculated on a consolidated
basis for the Companies), as follows, subject to adjustment as set forth below:
<TABLE>
<CAPTION>
=======================================================================================================
APPLICABLE APPLICABLE
RATIO OF TOTAL DEBT TO MARGIN FOR BASE MARGIN FOR
ANNUALIZED OPERATING CASH FLOW RATE LOANS LIBOR RATE LOANS
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than 3.50 to 1.00 0% 7/8%
-------------------------------------------------------------------------------------------------------
Less than or equal to 3.50 to
1.00 but greater 0% 3/4%
than 3.00 to 1.00
-------------------------------------------------------------------------------------------------------
Less than or equal to 3.00 to 0% 5/8%
1.00
=======================================================================================================
</TABLE>
The ratio of Total Debt to Annualized Operating Cash Flow shall be
determined from the Current Financials and related Compliance Certificate. The
adjustment, if any, to the Applicable Margin shall be effective commencing on
the second Business Day after the delivery of such Financial Statements and
related Compliance Certificate. If Borrower fails to timely furnish to
Administrative Agent the Financial Statements and related Compliance
Certificates as required to be delivered pursuant to Sections 7.3(a) and (b)
hereof, then the margin applicable in the case of a ratio greater than 3.50 to
1.00 shall apply until such time as such Financial Statements and Compliance
Certificate are so delivered.
ASSET SALE means any sale, disposition, liquidation, conveyance or
transfer by Borrower or any Subsidiary of any property or assets (or portion
thereof) or an interest (other than Permitted Liens or a Lien granted to the
Administrative Agent on behalf of the Lenders) therein, other than in the
ordinary course of business.
ASSIGNMENT AND ACCEPTANCE means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by Administrative
Agent, in the form of EXHIBIT F hereto, as each such agreement may be amended,
modified, extended, restated, renewed, substituted or replaced from time to
time.
2
<PAGE> 9
AUTHORIZATIONS means all filings, recordings, and registrations with,
and all validations or exemptions, approvals, orders, authorizations, consents,
Franchises, licenses, certificates, and permits from, any Tribunal (including,
without limitation, the FCC).
BANK AFFILIATE means the holding company of any Lender, or any
wholly-owned direct or indirect subsidiary of such holding company or of such
Lender.
BASE RATE means, for any day, a fluctuating rate per annum as shall be
in effect from time to time equal to the higher of (a) the prime rate per annum
most recently announced by the Administrative Agent as its prime rate in effect
at its principal office in Dallas, Texas automatically fluctuating upward and
downward with and at the time specified in each such announcement without
special notice to Borrower or any other Person, which prime rate may not
necessarily represent the lowest or best rate actually charged to a customer
and (b) the sum of the Federal Funds Rate plus .50%.
BASE RATE LOAN means a Loan bearing interest at the sum of the Base
Rate plus the Applicable Margin.
BASIC RATE means, with respect to each particular System, the minimum
standard monthly fees and charges charged to customers of such System for the
level of cable television service that is subscribed to by all subscribers.
BASIC SUBSCRIBERS means, at any time, the total number of subscribers
subscribing to a System (excluding "SECOND CONNECTS" as such term is commonly
understood in the cable television industry) who (a) pay the Basic Rate for
service in such System, and (b) are not more than 90 days past due in payment.
BORROWER is defined in the preamble to this Agreement.
BORROWING DATE is defined in Section 2.2(a) hereof.
BORROWING NOTICE is defined in Section 2.2(a) hereof.
BUSINESS DAY means (a) for all purposes, any day other than Saturday,
Sunday, and any other day on which commercial banking institutions are required
or authorized by Law to be closed in Dallas, Texas, and (b) in respect of any
LIBOR Rate Loan, a day on which dealings in U.S. Dollars are carried on in the
London interbank market and commercial banks are open for business in London.
CAPITAL EXPENDITURE means, for any Person, the aggregate amount of all
purchases or acquisitions by such Person of, and expenditures for additions to,
items considered to be capital items, including, without limitation,
expenditures relating to property, plant, or equipment, which would be
capitalized on such Person's balance sheet.
3
<PAGE> 10
CAPITAL LEASE means any capital lease or sublease which should be
capitalized in accordance with GAAP on a balance sheet.
CHANGE IN CONTROL means (a) the direct or indirect acquisition by any
person (as such term is used in Section 13(d) and Section 14(d)(2) of the
Exchange Act) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act), of (i) the beneficial ownership of issued
and outstanding shares of Voting Stock of the Borrower, the result of which
acquisition is that such person or such group possesses in excess of 35% of the
combined voting power of all then issued and outstanding Voting Stock of the
Borrower, or (ii) the power to elect, appoint, or cause the election or
appointment of, at least a majority of the members of the Board of Directors of
the Borrower, or (b) the sale of all or substantially all of the assets of the
Borrower; provided however, that in the case of subparagraph (a), the Current
Control Group shall be deemed not to be persons or members of such acquiring
group in determining whether such direct or indirect beneficial ownership or
power has been acquired by any person or any group.
CLOSING DATE means the date of execution and delivery of this
Agreement.
CODE means the Internal Revenue Code of 1986, as amended, together
with rules and regulations promulgated thereunder.
COMMITMENT means $200,000,000, subject to reduction and cancellation
as provided in this Agreement, including, without limitation, Section 2.3
hereof and Section 3.16 hereof.
COMMUNICATIONS ACT shall mean the Communications Act of 1934, as
amended by the Cable Communications Policy Act of 1984, the Cable Television
Consumer Protection and Competition Act of 1992, and as further amended from
time to time, and all rules and regulations thereunder, in each case as from
time to time in effect.
COMPANIES means, at the time of any determination thereof, Borrower
and each of its Subsidiaries and "COMPANY" means any one of them.
COMPLIANCE CERTIFICATE means a certificate signed by a Responsible
Officer of Borrower, substantially in the form of EXHIBIT D hereto.
CONSEQUENTIAL LOSS means any loss or expense other than loss of the
Applicable Margin which any Lender may reasonably incur in respect of a LIBOR
Rate Loan as a consequence of (a) any failure or refusal of Borrower to take
such Loan after Borrower shall have requested it under this Agreement, or (b)
any prepayment or payment of such Loan or conversion of such Loan to a Loan of
another Type, in each case, prior to the last day of the Interest Period
therefor.
CONSOLIDATED SUBSIDIARIES at any particular time shall mean those
Subsidiaries whose accounts are or should be consolidated with those of
Borrower in accordance with GAAP.
4
<PAGE> 11
CONTROLLED GROUP means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) which are under common control with such Person and which,
together with such Person, are treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
CONVERSION NOTICE is defined in Section 2.2(d) hereof.
CURRENT CONTROL GROUP means (a) Robert M. Rogers, (b) his spouse,
children and lineal descendants, and (c) the estate of, or any trust with not
less than 50% of the assets of such trust designated for the benefit of, any of
the foregoing persons.
CURRENT DATE has the meaning ascribed thereto in Section 5.1(c) hereof.
CURRENT FINANCIALS means, at the time of any determination thereof,
the most recently delivered to Administrative Agent of (a) the consolidated
Financial Statements of Borrower and its Consolidated Subsidiaries for the
fiscal year ended October 31, 1994, and (b) the Financial Statements of
Borrower and its Consolidated Subsidiaries most recently delivered under
Sections 7.3(a) or 7.3(b) hereof, as the case may be.
DEBTOR RELIEF LAWS means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent
transfer or conveyance, suspension of payments or similar Laws from time to
time in effect affecting the Rights of creditors generally.
DEFAULT is defined in Section 8 hereof.
DEFAULT RATE means a per annum rate of interest equal from day to day
to the lesser of (a) the Base Rate plus 2% and (b) the Maximum Rate.
DISTRIBUTION for any Person means, with respect to any shares of any
capital stock or other equity securities issued by such Person, (a) the
retirement, redemption, purchase, or other acquisition for value of any such
securities, (b) the declaration or payment of any dividend on or with respect
to any such securities, (c) any loan or advance by such Person to, or other
investment by such Person in, the holder of any of such securities, and (d) any
other payment by such Person with respect to such securities.
ELIGIBLE ASSIGNEE means (a) any Bank Affiliate, (b) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $500,000,000; (c) a commercial bank organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and having total assets in excess of $500,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is described in this clause; and (d) the
central bank of any country which is a member of the Organization for Economic
Cooperation and Development.
5
<PAGE> 12
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Hazardous Substances.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rulings thereunder, as from time to time in
effect.
ERISA AFFILIATE means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of Borrower or any Company, or is
under common control with Borrower or any Company, within the meaning of
Section 414(c) of the Code.
ERISA EVENT means (a) a reportable event, within the meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect
thereto has been waived by the PBGC, (b) the issuance by the administrator of
any Plan of a notice of intent to terminate such Plan in a distress situation,
pursuant to Section 4041(a)(2) and 4041(c) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA), (c)
the cessation of operations at a facility in the circumstances described in
Section 4062(e) of ERISA, (d) the withdrawal by Borrower, any Company, or an
ERISA Affiliate from a Multiple Employer Plan during a Plan year for which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA, (e) the
failure by Borrower, any Company, or any ERISA Affiliate to make a payment to a
Plan required under Section 302 of ERISA, (f) the adoption of an amendment to a
Plan requiring the provision of security to such Plan, pursuant to Section 307
of ERISA, or (g) the institution by the PBGC of proceedings to terminate a
Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition that constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, a Plan.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
EXHIBIT means an exhibit to this Agreement unless otherwise specified.
EXISTING CREDIT AGREEMENTS means (i) that certain Credit Agreement
dated as of March 4, 1993, between Borrower and NationsBank of Texas, N.A., as
amended, and (ii) that certain Credit Agreement dated September 13, 1989,
between Borrower and Texas Commerce Bank National Association, as amended.
FCC means the Federal Communications Commission or any successor
agency thereto performing functions similar to those performed by the Federal
Communications Commission on the date hereof.
6
<PAGE> 13
FCC LICENSE means any license or permit issued by the FCC, including,
without limitation, licenses issued in connection with the operation of
community antenna television systems, community antenna relay systems,
microwave systems, earth stations and business and other two-way radios.
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of Dallas, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such date on
such transactions received by Administrative Agent from three federal funds
brokers of recognized standing selected by it.
FEE LETTERS means those certain fee letters among the Administrative
Agent, the Managing Agents, the Lenders and Borrower, each dated as of the date
hereof, providing for certain fees to be paid to the Lenders, the Managing
Agents and the Administrative Agent by Borrower in connection with this
Agreement, as such letters may be amended, substituted, replaced, extended,
increased or otherwise modified from time to time.
FINANCIAL STATEMENTS means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared in
accordance with GAAP, which profit and loss statements and statements of cash
flow shall be in comparative form to the corresponding period of the preceding
fiscal year, and which balance sheets and reconciliations of capital and
surplus shall be in comparative form to the prior year end figures.
FIXED CHARGES means, as of the end of any fiscal quarter, the sum of
(a) all cash dividends paid during the preceding twelve month period, (b) all
cash Interest Expense paid or due to be paid and all scheduled principal
payments (whether or not paid) on Total Debt during the succeeding twelve month
period, and (c) the aggregate Capital Expenditures (excluding expenditures for
any Acquisition of any System) by Borrower and its Consolidated Subsidiaries
during the preceding twelve-month period ending on such date.
FRANCHISE means any franchise, permit, license or other authorization
granted by any governmental unit or authority, including all laws, regulations
and ordinances relating thereto, for the construction, operation and
maintenance of a cable television system and the reception and transmission of
signals by microwave, and shall include, without limitation, all FCC Licenses
and all certificates of compliance and cable television registration statements
which are required to be issued by or filed with the FCC.
FRANCHISE AGREEMENT means any ordinance, agreement, contract or other
document stating the terms and conditions of any Franchise, including, without
limitation, all exhibits and schedules thereto, all amendments thereof and
consents, waivers and extensions issued
7
<PAGE> 14
thereunder, any documents incorporated therein by reference and the application
from which such Franchise was granted.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board which (except as set forth in Section
1.3 hereof) are applicable from time to time.
GUARANTY means any agreement by which Borrower or any Subsidiary,
directly or indirectly, assumes, guarantees, endorses, contingently agrees to
purchase or provide funds for the payment of, or otherwise becomes liable upon,
the obligation of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person or otherwise
assure any creditor of such other Person against loss, and shall include,
without limitation, the contingent liability of Borrower or any Subsidiary
under any letter of credit or similar document or instrument.
HAZARDOUS SUBSTANCE means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant, or toxic or hazardous substance under any Environmental
Law.
INDEBTEDNESS means Borrower's (on a consolidated basis) (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of property other than accounts payable arising in connection
with the purchase of inventory on terms customary in the trade, (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by
Borrower or any Subsidiary, (iv) obligations under Capital Leases, and (v)
obligations under any outstanding Guaranties.
INSUFFICIENCY means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.
INTEREST EXPENSE means for any period of calculation thereof, all
interest (whether accrued as a liability and payable in cash or imputed, to the
extent required by GAAP) on Indebtedness of Borrower and its Consolidated
Subsidiaries during such period (including, without limitation, imputed
interest on Capital Lease obligations to the extent required by GAAP).
INTEREST PERIOD is determined in accordance with Section 2.2(c) hereof.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, or
interpretations of any Tribunal.
LENDERS means the lenders listed on the signature pages of this
Agreement (including the Managing Agents in their individual capacity), and
each Eligible Assignee which hereafter becomes a party to this Agreement
pursuant to Section 11.13(c) hereof, for so long as any such
8
<PAGE> 15
Person is owed any portion of the Obligation or obligated to make any Loan
hereunder, but not including any Participant.
LIBOR RATE means with respect to a LIBOR Rate Loan for the relevant
Interest Period, the per annum rate of interest (rounded upward, if necessary,
to the nearest 0.01%) equal to the quotient obtained by dividing (a) the rate
at which deposits in United States dollars are offered to Administrative Agent
by first-class banks in the London interbank market at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of the applicable
Interest Period in an amount comparable to the amount of Administrative Agent's
relevant LIBOR Rate Loan therefor and having a maturity comparable to the
applicable Interest Period; by (b) one minus the LIBOR Rate Reserve Requirement
(expressed as a decimal) applicable to such Interest Period.
LIBOR RATE LOAN means a Loan bearing interest at the sum of the LIBOR
Rate plus the Applicable Margin.
LIBOR RATE RESERVE REQUIREMENT means, with respect to any LIBOR Rate
Loan for the relevant Interest Period, the minimum aggregate reserve
requirements (including all basic, supplemental, emergency, special, marginal,
and other reserves required by applicable Law) applicable to a member bank of
the Federal Reserve System and/or United States branches and agencies of
foreign banks in respect of eurocurrency fundings or liabilities.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor to have its claim satisfied out of
any property or assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
LITIGATION means any action by or before any Tribunal.
LOAN means any amount disbursed by Lenders to Borrower under this
Agreement, whether such amount constitutes an original disbursement of funds or
the continuation of an amount outstanding.
LOAN PAPERS means (a) this Agreement, the Notes, the Fee Letters,
certificates delivered pursuant to this Agreement, and Exhibits and Schedules
hereto, (b) all agreements, documents, or instruments in favor of
Administrative Agent, either Managing Agent or any Lender ever delivered
pursuant to this Agreement or otherwise delivered in connection with all or any
part of the Obligation, and (c) all renewals, extensions, or restatements of,
or amendments or supplements to, any of the foregoing.
MAJORITY LENDERS means any combination of Lenders having at least
66.67% of the aggregate amount of Loans outstanding under this Agreement;
provided, however, that if no Loans are outstanding under this Agreement, such
term means any combination of Lenders having a Specified Percentage equal to at
least 66.67%.
9
<PAGE> 16
MATERIAL ADVERSE EVENT means any set of one or more circumstances or
events which, individually or collectively, would reasonably be expected to
result in any (a) impairment of the ability of any Company to perform any of
its payment or other material obligations under the Loan Papers or, except as a
result of actions taken by Administrative Agent, either Managing Agent or any
Lender, the ability of Administrative Agent, any Managing Agent or any Lender
to enforce any such obligations or any of its Rights under the Loan Papers, (b)
material and adverse effect on the financial condition of the Companies as a
whole as represented to Managing Agents and Lenders in the consolidated
Financial Statements of Borrower and its Consolidated Subsidiaries for the
fiscal year ended October 31, 1994, or (c) Default or Potential Default.
MATERIAL AGREEMENT means, for any Person, any material written or oral
agreement, contract, commitment, or understanding to which such Person is a
party, by which such Person is directly or indirectly bound, or to which any
assets of such Person may be subject, and which is not cancelable by such
Person upon 30 days or less notice without liability for further payment other
than nominal penalty, and which requires such Person to pay more than
$1,000,000 during any 12-month period, excluding programming agreements and
purchase orders for materials or inventory in the ordinary course of business.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean the maximum
non-usurious amount and the maximum non-usurious rate of interest which, under
applicable Law, any Lender is permitted to contract for, charge, take, reserve,
or receive on the Obligation.
MULTIEMPLOYER PLAN means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which Borrower, any Company, or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions, such plan being maintained pursuant to one or more collective
bargaining agreements.
MULTIPLE EMPLOYER PLAN means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Borrower,
any Company, or any ERISA Affiliate and at least one Person other than
Borrower, any Company and any ERISA Affiliate, or (b) was so maintained and in
respect of which Borrower, any Company, or any ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such plan has been
or were to be terminated.
NET SALE PROCEEDS means the gross proceeds received by Borrower or any
Subsidiary in connection with or as a result of any Asset Sale, minus the sum
of (so long as the following is estimated in good faith by the board of
directors of Borrower or such Subsidiary and certified to the Administrative
Agent on behalf of Lenders in reasonable detail by a Responsible Officer) (a)
reasonable and customary transaction costs payable by Borrower or any
Subsidiary related to such sale, and (b) estimated Taxes payable solely as a
result of such Asset Sale, taking into account all Tax benefits available to
Borrower and its Subsidiaries, including net operating losses.
10
<PAGE> 17
NOTES means promissory notes in substantially the form of EXHIBIT A
hereto, dated the date hereof, duly executed and delivered to each Lender by
Borrower and payable to the order of each Lender in the amount of such Lender's
Specified Percentage of the Commitment, and all renewals, extensions,
amendments, restatements, and consolidations of all or any part of such
promissory notes.
OBLIGATION means all present and future indebtedness, liabilities, and
obligations, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to Administrative Agent, either Managing Agent or any Lender
by Borrower arising from, by virtue of, or pursuant to any Loan Paper, together
with all interest accruing thereon, fees, costs, and expenses (including,
without limitation, all attorneys' fees and expenses incurred in the
enforcement or collection thereof) payable under the Loan Papers.
OPERATING CASH FLOW means, with respect to Borrower (on a consolidated
basis) for any three month fiscal period most recently ended on or as of the
date of calculation, an amount equal to (A) the sum of (i) pre-tax income or
deficit, as the case may be, excluding extraordinary gains and the write up of
any asset for such period, plus (ii) Interest Expense, plus (iii) depreciation
and amortization expense and, to the extent not otherwise included, other non-
cash expense items for such period, minus (B) interest income. Operating Cash
Flow shall be adjusted to (a) include cash flow of any System acquired during
any such three month period in accordance with the terms hereof as if such
System had been acquired on the first day of such period, and (b) exclude cash
flow of any System sold during any such three month period as if such System
had been sold on the first day of such period.
PARTICIPANT is defined in Section 11.13(b) hereof.
PBGC means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
PERMITTED ACQUISITION means
(a) any Acquisition by Borrower or any Subsidiary, with respect to
which each of the following requirements shall have been satisfied:
(i) such Acquisition shall involve assets constituting a
domestic cable television business;
(ii) Borrower shall have delivered to Administrative
Agent the following: (A) a written description of the targeted entity
or System to be acquired and its operations and a copy of the related
purchase agreement and financial information available to Borrower,
(B) five year income and balance sheet projections in respect of the
Companies and the entity to be acquired, after giving effect to such
Acquisition, (C) a certificate signed on behalf of Borrower by a
Responsible Officer demonstrating compliance on a pro forma basis with
the financial covenants set forth herein for the
11
<PAGE> 18
fiscal quarter in which such Acquisition is made adjusted to reflect
each such acquisition, (D) supplemental information, if any, to the
Schedules, and (E) such other information in respect of such
Acquisition as the Administrative Agent shall have requested on behalf
of any Managing Agent or any Lender;
(iii) following such Acquisition, the acquiring party must
be Solvent and the Companies, on a consolidated basis, must be
Solvent;
(iv) no Default or Potential Default shall exist or occur
as a result of such Acquisition; and
(v) if such Acquisition is structured as a merger,
Borrower or a Subsidiary must be the surviving entity after giving
effect to such merger; and
(b) any Acquisition by Borrower or any Subsidiary, with respect to
which each of the following requirements shall have been satisfied:
(i) such Acquisition shall involve assets related to the
cable television business, SMATV, an ancillary business (not included
in (a) above) or any other telecommunications system;
(ii) not less than 6 Business Days prior to consummation
of any Acquisition the purchase price of which, singly or together
with other Acquisitions in a series of related transactions, is less
than $3,000,000, Borrower shall have delivered to the Administrative
Agent the following: (A) a written description of the targeted entity,
assets or System to be acquired and its operations and a copy of the
related purchase agreement and financial information available to
Borrower, (B) five year income and balance sheet projections in
respect of the Companies and the entity to be acquired, after giving
effect to such Acquisition, (C) a certificate signed on behalf of
Borrower by a Responsible Officer demonstrating compliance on a pro
forma basis with the financial covenants set forth herein for the
fiscal quarter in which such Acquisition is made adjusted to reflect
each such acquisition, (D) supplemental information, if any, to the
Schedules, and (E) such other information in respect of such
Acquisition as Administrative Agent may request on behalf of any
Managing Agent;
(iii) following such Acquisition, the acquiring party must
be Solvent and the Companies, on a consolidated basis, must be
Solvent;
(iv) no Default or Potential Default shall exist or occur
as a result of such Acquisition; and
(v) if such Acquisition is structured as a merger,
Borrower or a Subsidiary must be the surviving entity after giving
effect to such merger; and
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<PAGE> 19
(c) any Acquisition by Borrower or any Subsidiary, with respect to
which each of the following requirements shall have been satisfied:
(i) such Acquisition shall involve assets related to the
cable television business, SMATV, an ancillary business (not included
in (a) above) or any other telecommunications system;
(ii) not less than 6 Business Days prior to consummation
of any Acquisition the purchase price of which, singly or together
with other Acquisitions in a series of related transactions, equals or
exceeds $3,000,000, Borrower shall have delivered to the
Administrative Agent the following, and Majority Lenders shall have
consented to such Acquisition, which consent shall not be unreasonably
withheld (and which consent shall be presumed if within 15 Business
Days after receipt of such information Administrative Agent shall not
have notified Borrower in writing that Lenders do not consent to such
Acquisition): (A) a written description of the targeted entity, assets
or System to be acquired and its operations and a copy of the related
purchase agreement and financial information available to Borrower,
(B) five year income and balance sheet projections in respect of the
Companies and the entity to be acquired, after giving effect to such
Acquisition, (C) a certificate signed on behalf of Borrower by a
Responsible Officer demonstrating compliance on a pro forma basis with
the financial covenants set forth herein for the fiscal quarter in
which such Acquisition is made adjusted to reflect each such
acquisition, (D) supplemental information, if any, to the Schedules,
and (E) such other information in respect of such Acquisition as
Administrative Agent may request on behalf of any Managing Agent;
(iii) following such Acquisition, the acquiring party must
be Solvent and the Companies, on a consolidated basis, must be
Solvent;
(iv) no Default or Potential Default shall exist or occur
as a result of such Acquisition; and
(v) if such Acquisition is structured as a merger,
Borrower or a Subsidiary must be the surviving entity after giving
effect to such merger.
PERMITTED DEBT means Indebtedness described in Section 7.12 hereof.
PERMITTED LIENS means Liens described in Section 7.13 hereof.
PERSON means any individual, entity, or Tribunal.
PLAN means a Single Employer Plan or a Multiple Employer Plan.
POLE AGREEMENT means any pole agreement, pole rental, pole use, access
or similar agreement with any telephone company, public authority, public
utility or other entity pursuant
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<PAGE> 20
to which the coaxial, fiber optic or other type of cable and local distribution
units of cable television system are extended.
POTENTIAL DEFAULT means the occurrence of any event or existence of
any circumstance which, with the giving of notice or lapse of time or both,
would become a Default.
PRINCIPAL DEBT means, at the time of any determination thereof, the
aggregate unpaid principal balance of all Loans.
PROHIBITED TRANSACTION has the meaning specified therefor in Section
4975 of the Code or Section 406 of ERISA.
PURCHASER is defined in Section 11.13(c) hereof.
QUARTERLY PAYMENT DATE means the last day of each March, June,
September and December.
RATABLE means, as to any Lender, in accordance with its Specified
Percentage.
REPORTABLE EVENT means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waivers in
accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.
RESPONSIBLE OFFICER means the president, vice president or chief
financial officer.
RIGHTS means rights, remedies, powers, privileges, and benefits.
SCHEDULE means a schedule attached to this Agreement unless specified
otherwise.
SINGLE EMPLOYER PLAN means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, other than a Multiple Employer Plan, that is
maintained for employees of Borrower, any Company or any ERISA Affiliate.
SMATV means a satellite master antenna television system.
SOLVENT means, as to a Person, that (a) the aggregate fair market
value of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or
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<PAGE> 21
otherwise), (b) such Person has sufficient cash flow to enable it to pay its
Indebtedness as it matures, and (c) such Person does not have unreasonably
small capital to conduct such Person's businesses.
SPECIFIED PERCENTAGE means, as to any Lender, the percentage indicated
beside its name on the signature pages hereof, or as adjusted or specified in
any Assignment and Acceptance or any amendment to this Agreement.
SUBORDINATED DEBT means at any time the outstanding principal amount
of subordinated Indebtedness incurred in compliance with Section 7.12(b)(viii)
hereof.
SUBSIDIARY means any corporation of which a total of more than 50% of
the outstanding voting securities is at the time owned or controlled, directly
or indirectly, by Borrower or one or more Subsidiaries.
SYSTEM OR SYSTEMS means the assets constituting a domestic cable
television system (including, without limitation, all related licenses,
Franchises and permits issued under federal, state or local laws from time to
time, and all agreements with public utilities and microwave transmission
companies, Pole Agreements, utility easements and all other property owned or
used in connection with the entertainment and services provided pursuant to,
and all interest of Borrower and its Subsidiaries to receive revenues from, or
pursuant to, such licenses, Franchises and permits) owned and operated,
directly or indirectly, by Borrower or any Subsidiary and serving subscribers
within a geographical area covered by one or more Franchises from the same head
end facility or by two or more related head end facilities.
TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon such Person, its income, or any of its
properties, Franchises, or assets.
TERMINATION DATE means the earlier of (a) June 30, 2002, and (b) the
effective date that Lenders' commitment to lend under this Agreement is
otherwise canceled or terminated in accordance with this Agreement.
TOTAL DEBT means at any time the sum of (i) aggregate outstanding
amount of all Indebtedness of Borrower and its Consolidated Subsidiaries,
without duplication, plus (ii) to the extent not included in (i) preceding, the
discounted present (as of the date of computation) value of the aggregate fixed
unpaid obligations of Borrower and its Consolidated Subsidiaries under all
non-compete agreements (assuming a discount rate of 10%).
TRIBUNAL means any (a) local, state, commonwealth, federal or foreign
judicial, executive, or legislative instrumentality, or any agency, authority,
commission, or board thereof, including, without limitation, any franchising
authority, (b) private arbitration board or panel, or (c) central bank.
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<PAGE> 22
TYPE means any type of Loan determined with respect to the interest
option applicable thereto.
VOTING STOCK means, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of any contingency.)
WITHDRAWAL LIABILITY has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
1.2 Number and Gender of Words. Whenever in any Loan Paper the
singular number is used, the same shall include the plural where appropriate
and vice versa, and words of any gender shall include each other gender where
appropriate.
1.3 Accounting Principles. All accounting and financial terms
used in the Loan Papers and the compliance with each financial covenant therein
shall be determined in accordance with GAAP, and, all accounting principles
shall be applied on a consistent basis so that the accounting principles in a
current period are comparable in all material respects to those applied during
the preceding comparable period; provided that, unless Lenders otherwise agree,
such determinations and computations with respect to financial covenants and
ratios in this Agreement shall be made in accordance with GAAP as in effect on
the Closing Date.
SECTION 2
COMMITMENT
2.1 Commitment. Subject to and in reliance upon the terms,
conditions, representations, and warranties in the Loan Papers, each Lender
severally (and not jointly) agrees, to make one or more Loans to Borrower,
which, subject to the Loan Papers, Borrower may borrow, repay, and reborrow
under this Agreement; provided that (i) each such Loan must occur on a Business
Day and no later than the Business Day immediately preceding the Termination
Date; (ii) each such Loan shall be in an amount not less than (x) $500,000 or a
greater integral multiple of $100,000 (if a Base Rate Loan), or (y) $1,000,000
or a greater integral multiple of $l,000,000 (if a LIBOR Rate Loan); and (iii)
on any date of determination, the Principal Debt shall never exceed
$200,000,000 (as such amount is subject to reduction and cancellation in
accordance with this Agreement).
2.2 Borrowing Procedure. The following procedures apply to Loans.
(a) Each Loan shall be made on Borrower's notice (a
"BORROWING NOTICE," in the form of EXHIBIT B hereto) to Administrative
Agent requesting that Lenders fund a Loan on a certain date (the
"BORROWING DATE"), which notice (i) shall be irrevocable and binding
on Borrower, (ii) shall specify the Borrowing Date, amount, Type, and
(for a
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<PAGE> 23
Loan comprised of LIBOR Rate Loans) Interest Period, and (iii) must
be received by Administrative Agent no later than 11:00 a.m. Dallas,
Texas time on the third Business Day preceding the Borrowing Date for
any LIBOR Rate Loan or on the Borrowing Date for any Base Rate Loan.
Administrative Agent shall promptly notify each Lender of the receipt
of any such Borrowing Notice.
(b) Each Lender shall make such funds available to
Administrative Agent prior to 1:00 p.m., Dallas, Texas time, on the
date of funding. Administrative Agent shall make funds available to
Borrower by causing such funds to be deposited to Borrower's account
with Administrative Agent, which account shall be designated to
Administrative Agent by Borrower. Unless a Lender shall have notified
Administrative Agent prior to the date of any Loan that it will not
make available its Specified Percentage of any Loan, Administrative
Agent may assume that such Lender has made the appropriate amount
available, and Administrative Agent may, in reliance upon such
assumption, make available to Borrower a corresponding amount. If and
to the extent any Lender shall not have made such amount available to
Administrative Agent, such Lender and Borrower severally agree to
repay to Administrative Agent immediately on demand such corresponding
amount together with interest thereon, from the date such amount is
made available to Borrower until the date such amount is repaid to
Administrative Agent, at (i) in the case of Borrower, the Base Rate
plus the Applicable Margin, and (ii) in the case of such Lender, the
Federal Funds Rate. If (i) a Borrowing shall not occur on any such
Borrowing Date because any condition precedent herein specified shall
not have been met, and (ii) any Lender has made funds available for
such Borrowing to the Administrative Agent, then the Administrative
Agent shall return the amounts so received to the respective Lenders
as soon as practicable; provided, however, if and to the extent the
Administrative Agent fails to return any such amounts to a Lender on
the date for such Borrowing, the Administrative Agent shall pay
interest on such unreturned amounts, for each day from such Borrowing
Date to the date such amounts are returned to such Lender, at the
Federal Funds Rate.
(c) When Borrower requests a LIBOR Rate Loan, Borrower
may elect the interest period (each an "INTEREST PERIOD") applicable
thereto, which shall be, at Borrower's option, one, two, three or six
months, or subject to Administrative Agent's determination of
availability, twelve months; provided, however, (a) the initial
interest Period for a LIBOR Rate Loan shall commence on the date of
such loan (including the date of any conversion thereto), and each
Interest Period occurring thereafter in respect of such Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires; (b) if any Interest Period for a LIBOR
Rate Loan begins on a day for which there is no numerically
corresponding Business Day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business
Day of such calendar month; (c) no Interest Period may be chosen with
respect to any portion of the Principal Debt which would extend beyond
the scheduled repayment date for such portion of the Principal Debt;
and (d) no more than an aggregate of six Interest Periods shall be in
effect at one time.
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<PAGE> 24
(d) Borrower may (a) convert a LIBOR Rate Loan on the
last day of an Interest Period to a Base Rate Loan, (b) convert a Base
Rate Loan at any time to a LIBOR Rate Loan (in each instance, subject
to the notice requirement of Section 2.2(a) hereof and the dollar
limits and denominations of Section 2.1 hereof), and (c) elect a new
Interest Period (in the case of a LIBOR Rate Loan), by giving notice
(a "CONVERSION NOTICE"), substantially in the form of EXHIBIT C
hereto) of such intent no later than 12:00 noon Dallas, Texas time on
the third Business Day prior to the date of conversion or the last day
of the Interest Period, as the case may be (in the case of a
conversion to a LIBOR Rate Loan or an election of a new Interest
Period with respect to any LIBOR Rate Loan); provided, that Borrower
may not convert to or continue a LIBOR Rate Loan if a Default or
Potential Default has occurred and is continuing. Absent Borrower's
notice of conversion or election of a new Interest Period, a LIBOR
Rate Loan shall be deemed converted to a Base Rate Loan effective as
of the expiration of the Interest Period applicable thereto.
(e) The failure by any Lender to make available its Specified
Percentage of any Loan hereunder shall not relieve any other Lender of
its obligation, if any, to make available its Specified Percentage of
any Loan. In no event, however, shall any Lender be responsible for
the failure of any other Lender to make available any portion of any
Loan.
2.3 Termination and Reduction of Commitment.
(a) Voluntary. Without premium or penalty, and upon
giving not less than 5 Business Days prior written and irrevocable
notice to Administrative Agent (which shall promptly notify the
Lenders), Borrower may terminate in whole or in part the unused
portion of the Commitment; provided that each partial termination
shall be in an amount of not less than $5,000,000 or a greater
integral multiple of $1,000,000. Any such voluntary reduction in the
Commitment shall be applied against the scheduled Commitment
reductions in 2.3(b) below as directed by Borrower.
(b) Mandatory.
(i) Scheduled Reduction. The Commitment in
effect from time to time shall be automatically and
permanently reduced by the amount specified below on the
corresponding reduction date set forth below, as follows (and
no other reduction in the Commitment pursuant to any other
provision of this Agreement will affect the reduction required
as set forth below, except as provided in Section 2.3(b)(ii)
below):
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<PAGE> 25
<TABLE>
<CAPTION>
COMMITMENT REDUCTION DATE COMMITMENT REDUCTION AMOUNT
------------------------- ---------------------------
<S> <C>
September 30, 1997 $ 7,500,000
December 31, 1997 $ 7,500,000
March 31, 1998 $ 7,500,000
June 30, 1998 $ 7,500,000
September 30, 1998 $10,000,000
December 31, 1998 $10,000,000
March 31, 1999 $10,000,000
June 30, 1999 $10,000,000
September 30, 1999 $10,000,000
December 31, 1999 $10,000,000
March 31, 2000 $10,000,000
June 30, 2000 $10,000,000
September 30, 2000 $10,000,000
December 31, 2000 $10,000,000
March 31, 2001 $10,000,000
June 30, 2001 $10,000,000
September 30, 2001 $12,500,000
December 31, 2001 $12,500,000
March 31, 2002 $12,500,000
June 30, 2002 $12,500,000 - and the Commitment shall be equal to $0
</TABLE>
(ii) Asset Sales. If (A) Net Sale Proceeds exceed
$30,000,000 over the term of this Agreement and $5,000,000 for any
single Asset Sale, and such excess Net Sale Proceeds have not been
reinvested by Borrower in like assets within twelve months of
receipt of such Net Sale Proceeds then, the Commitment shall
automatically and permanently reduce in an amount equal to such Net
Sale Proceeds in excess of such amounts, or (B) there exists a
Default or Potential Default at the time of any Asset Sale by
Borrower or any Subsidiaries, then, the Commitment shall
automatically and permanently reduce in an amount equal to the Net
Sale Proceeds. Any such reduction shall be applied (X) if there
exists no Default or Potential Default, pro rata against the
required Commitment reductions in Section 2.3(b)(i) hereof, and (Y)
if there exists a Default or Potential Default, against the
required Commitment reductions in Section 2.3(b)(i) hereof
beginning with the June 30, 2002 scheduled Commitment reduction and
working back in reverse chronological order.
(c) Commitment Reductions, Generally. After the
occurrence and during the continuance of any Default or Potential Default, any
reduction in the Commitment, whether voluntary or mandatory, shall be applied
to the scheduled Commitment reductions in Section 2.3(b) above, in inverse
chronological order. Once reduced, the Commitment may not be reinstated.
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<PAGE> 26
SECTION 3
TERMS OF PAYMENT
3.1 Notes and Payments. Principal Debt shall be evidenced by the
Notes. Each payment or prepayment on the Obligation must be paid at
Administrative Agent's principal office in Dallas in funds which are or will be
available for immediate use by Administrative Agent (on behalf of Lenders) on
the day due.
3.2 Interest and Principal Payments.
(a) Interest on each LIBOR Rate Loan shall be due and payable as
it accrues on the last day of its respective Interest Period; provided
that if any Interest Period is a period greater than 3 months, then
accrued interest shall also be due and payable on the date 3 months
after the commencement of such Interest Period. Interest on each Base
Rate Loan shall be due and payable as it accrues on each Quarterly
Payment Date (commencing September 30, 1995) and on the Termination
Date.
(b) After giving effect to (i) each scheduled reduction of the
Commitment set forth in Section 2.3(b)(i) above, (ii) each reduction
of the Commitment due to any Asset Sale as set forth in Section
2.3(b)(ii) above, or (iii) any other reduction in the Commitment, if
the Principal Debt exceeds the Commitment then in effect, Borrower
shall repay or prepay the Principal Debt in an amount equal to such
excess, together with all accrued and unpaid interest on the principal
amount so repaid or prepaid and any Consequential Loss arising in
connection therewith.
(c) On the date of any Asset Sale, Borrower must prepay
outstanding Loans in an amount equal to the Net Sale Proceeds,
together with (x) all accrued and unpaid interest on the principal
amount so prepaid and (y) any Consequential Loss arising as a result
thereof.
(d) On any date of determination (i) if the Principal
Debt exceeds the Commitment, then Borrower shall make a mandatory
prepayment of the Principal Debt in at least the amount of such
excess, together with (x) all accrued and unpaid interest on the
principal amount so prepaid and (y) any Consequential Loss arising as
a result thereof.
(e) Borrower may voluntarily prepay all or any part of
the Principal Debt from time to time and at any time, in whole or in
part, without premium or penalty; provided that (i) each such partial
prepayment must be in a minimum amount of at least $1,000,000 or a
greater integral multiple of $1,000,000 thereof (in the case of a
LIBOR Rate Loan), or $100,000 or a greater integral multiple of
$100,000 (in the case of a Base Rate Loan); (ii) in the case of a
LIBOR Rate Loan, all accrued interest on the amount so paid must also
be paid in full, to the date of such prepayment; and (iii) Borrower
shall pay any related Consequential Loss within five Business Days
after demand therefor.
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<PAGE> 27
3.3 Interest Options. Except where specifically otherwise
provided, Loans shall bear interest at a rate per annum equal to the lesser of
(a), as to the respective Type of Loan (as designated by Borrower in accordance
with this Agreement), the Base Rate plus the Applicable Margin, or the LIBOR
Rate plus the Applicable Margin, as the case may be, and (b) the Maximum Rate.
Each change in the Base Rate and Maximum Rate, subject to the terms of this
Agreement, will become effective, without notice to Borrower or any other
Person, upon the effective date of such change.
3.4 Quotation of Rates. It is hereby acknowledged that a
Responsible Officer or other appropriately designated officer of Borrower may
telephone Administrative Agent on or before the date on which a Borrowing
Notice is to be delivered by Administrative Agent in order to receive an
indication of the rates then in effect, but such indicated rates shall neither
be binding upon Administrative Agent or any Lender, nor affect the rate of
interest which thereafter is actually in effect when the Borrowing Notice is
given.
3.5 Default Rate. To the extent permitted by Law, all Principal
Debt and past due interest thereon shall bear interest after the occurrence and
during the continuance of a Default at the Default Rate until paid, regardless
whether such payment is made before or after entry of a judgment.
3.6 Interest Recapture. If the designated rate applicable to any
Loan exceeds the Maximum Rate, the rate of interest on such Loan shall be
limited to the Maximum Rate, but any subsequent reductions in such designated
rate shall not reduce the rate of interest thereon below the Maximum Rate until
the total amount of interest accrued thereon equals the amount of interest
which would have accrued thereon if such designated rate had at all times been
in effect. In the event that at maturity (stated or by acceleration), or at
final payment of the Notes, the total amount of interest paid or accrued is
less than the amount of interest which would have accrued if such designated
rates had at all times been in effect, then, at such time and to the extent
permitted by Law, Borrower shall pay an amount equal to the difference between
(a) the lesser of the amount of interest which would have accrued if such
designated rates had at all times been in effect and the amount of interest
which would have accrued if the Maximum Rate had at all times been in effect,
and (b) the amount of interest actually paid or accrued on the Notes.
3.7 Interest Calculations.
(a) All payments of interest shall be calculated on the
basis of actual number of days (including the first day but excluding
the last day) elapsed but computed as if each calendar year consisted
of 360 days in the case of a LIBOR Rate Loan (unless such calculation
would result in the interest on the Loans exceeding the Maximum Rate
in which event such interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be) and 365 or 366 days, as
the case may be, in the case of a Base Rate Loan. All interest rate
determinations and calculations by Administrative Agent shall be
conclusive and binding absent manifest error.
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<PAGE> 28
(b) The provisions of this Agreement relating to
calculation of the Base Rate and the LIBOR Rate are included only for
the purpose of determining the rate of interest or other amounts to be
paid hereunder that are based upon such rate. Each Lender may fund
and maintain its funding of all or any part of each Loan as it
selects.
3.8 Maximum Rate. Regardless of any provision contained in any
Loan Paper, no Lender shall ever be entitled to contract for, charge, take,
reserve, receive, or apply, as interest on the Obligation, or any part thereof,
any amount in excess of the Maximum Rate, and, if any Lender ever does so, then
such excess shall be deemed a partial prepayment of principal and treated
hereunder as such and any remaining excess shall be refunded to Borrower. In
determining if the interest paid or payable exceeds the Maximum Rate, Borrower
and Lenders shall, to the maximum extent permitted under applicable Law, (a)
treat all Loans as but a single extension of credit (and Lenders and Borrower
agree that such is the case and that provisions herein for multiple Loans is
for convenience only), (b) characterize any nonprincipal payment as an expense,
fee, or premium rather than as interest, (c) exclude voluntary prepayments and
the effects thereof, and (d) amortize, prorate, allocate, and spread the total
amount of interest throughout the entire contemplated term of the Obligation;
provided that, if the Obligation is paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Amount, Lenders shall
refund such excess, and, in such event, Lenders shall not, to the extent
permitted by Law, be subject to any penalties provided by any Laws for
contracting for, charging, taking, reserving, or receiving interest in excess
of the Maximum Amount. If the Laws of the State of Texas are applicable for
purposes of determining the "MAXIMUM RATE" or the "MAXIMUM AMOUNT," such term
shall mean the "INDICATED RATE CEILING" from time to time in effect under
Article 1.04, Title 79, Revised Civil Statutes of Texas, as amended. Pursuant
to Article 15.10(b) of Chapter 15, Subtitle 79, Revised Civil Statutes of
Texas, 1925, as amended, Borrower agrees that such Chapter 15 (which regulates
certain revolving credit loan accounts and revolving triparty accounts) shall
not govern or in any manner apply to the Obligation.
3.9 Order of Application.
(a) If no Default or Potential Default has occurred and
is continuing, payments and prepayments of the Obligation shall be
applied to the Obligation first to outstanding Base Rate Loans and
then to outstanding LIBOR Rate Loans, and, with respect to whether
such payment is applied to fees, expenses, interest or the outstanding
principal amount of the Loan, as directed by Borrower.
(b) If a Default or Potential Default has occurred and is
continuing or if Borrower fails to give direction as described in (a)
preceding, any payment or prepayment (including proceeds from the
exercise of any Rights) shall be applied in the following order: (i)
to all fees and expenses for which Administrative Agent, either
Managing Agent or any Lender (in that order) have not been paid or
reimbursed in accordance with the Loan Papers; (ii) to accrued
interest on the Principal Debt; (iii) to
22
<PAGE> 29
the Principal Debt, first to outstanding Base Rate Loans and then to
outstanding LIBOR Rate Loans; and (iv) to any remaining Obligation.
3.10 Offset. Upon the occurrence and during the continuance of a
Default, each Lender shall be entitled to exercise the Rights of offset and/or
banker's Lien against each and every account and other property, or any
interest therein, which Borrower may now or hereafter have with, or which is
now or hereafter in the possession of, each Lender to the extent of the full
amount of the Obligation.
3.11 Booking Loans. To the extent permitted by Law, each Lender
may make, carry, or transfer its Loans at, to, or for the account of any of its
branch offices or the office of any of its affiliates, provided that no
affiliate shall be entitled to receive any greater payment under Section 3.13
hereof than any such Lender would have been entitled to receive with respect to
such Loans.
3.12 Basis Unavailable or Inadequate for LIBOR Rate. If, on or
before any date on which a LIBOR Rate is to be determined for a Loan, the
Administrative Agent determines in good faith that the basis for determining
any such rate is not available or that the resulting rate does not accurately
reflect the cost to Lenders of making, maintaining, or converting Loans at such
rate for the applicable Interest Period, then the Administrative Agent shall
promptly give notice of such determination to the Lenders and Borrower (and
such determination shall be conclusive and binding on Borrower, absent manifest
error) and such Loans shall bear interest at the sum of the Base Rate plus the
Applicable Margin, but not greater than the Maximum Rate. Until Administrative
Agent notifies the Lenders and Borrower that the circumstances giving rise to
such condition no longer exist, Lenders' commitment hereunder to make or
maintain, or to convert to, LIBOR Rate Loans shall be suspended and such Loans
shall be made or maintained at the sum of the Base Rate plus the Applicable
Margin, but not greater than the Maximum Rate. Subject to the terms and
conditions of this Agreement, if Administrative Agent notifies the Lenders and
Borrower that the circumstances giving rise to the suspension of its
obligations to make or maintain LIBOR Rate Loans no longer exist, Borrower
shall be entitled to request LIBOR Rate Loans and convert Base Rate Loans to
LIBOR Rate Loans as if the provisions of this paragraph had never applied.
3.13 Additional Costs.
(a) If, in respect of all or any portion of any LIBOR
Rate Loan owed to any Lender (i) any present or future Law shall
impose, modify, or deem applicable, or compliance by Lender with any
requirement or condition (whether or not having the force of Law) of
any Tribunal shall result, in any requirement that any reserves or
additional costs (including, without limitation, any marginal,
emergency, supplemental, special, or other reserves) be maintained,
and (ii) any of the same results in a reduction in any sums receivable
by any Lender hereunder or an increase in the costs incurred by any
such Lender in advancing or maintaining any portion of any LIBOR Rate
Loan, then (iii) such Lender shall notify Administrative Agent and
Borrower upon becoming aware
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of same and deliver to Administrative Agent and Borrower a certificate
setting forth in reasonable detail the amount necessary to compensate
such Lender for such reduction or such increase (which certificate
shall be conclusive and binding as to such amount, absent manifest
error), and (iv) Borrower shall promptly pay such amount to such
Lender within 10 Business Days after demand therefor.
(b) If with respect to all or any portion of any Loan,
any change in present Law or any future Law regarding capital adequacy
or compliance by any Lender with any request, directive, or
requirement now existing or hereafter imposed by any Tribunal
regarding capital adequacy (whether or not having the force of Law),
shall result in a reduction in the rate of return on its capital as a
consequence of its obligations under this Agreement to a level below
that which it otherwise could have achieved (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by
it to be material (and it may, in determining such amount, utilize
such assumptions and allocations of costs and expenses as it shall
deem reasonable and may use any reasonable averaging or attribution
method), then (unless the effect of such event is already reflected in
the rate of interest then applicable hereunder) such Lender shall
notify Borrower and the Administrative Agent upon becoming aware of
same and deliver to Administrative Agent and Borrower a certificate
setting forth in reasonable detail the calculation of the amount
necessary to compensate such Lender therefor, which certificate shall
be conclusive and binding absent manifest error, and Borrower shall
promptly pay such amount to such Lender within 10 Business Days after
demand therefor.
(c) All payments of the principal of and interest on
Loans shall, to the extent permitted by applicable Law, be made
without deduction for any present and future Taxes, which amounts
shall be paid by Borrower (other than Taxes paid in respect of the
overall pre-tax income of Lenders). To the extent permitted by
applicable Law, Borrower will pay Administrative Agent on behalf of
Lenders the amounts necessary such that the net amount of the
principal and interest received and retained by Lenders is not less
than the amount payable under this Agreement had such Taxes not been
imposed. If, notwithstanding the previous two sentences, any Lender
pays any such Taxes, Borrower will reimburse such Lender for the
amount paid. Borrower will furnish to Administrative Agent and such
Lender official tax receipts or other evidence of payment of all such
taxes.
3.14 Change in Laws. If at any time any Law shall make it unlawful
for any Lender to make or maintain LIBOR Rate Loans, then such Lender shall
promptly notify Borrower and the Administrative Agent, and (a) in respect of
undisbursed funds, such Lender shall not be obligated to make any requested
Loan which would be unlawful, and (b) in respect of any outstanding Loan (i) if
maintaining such Loan until the last day of the Interest Period applicable
thereto is unlawful, such Loan shall be converted to a Base Rate Loan as of the
date of such notice, and Borrower shall pay any related Consequential Loss, or
(ii) if not so prohibited by Law, such Loan shall be converted to a Base Rate
Loan as of the last day of the Interest Period then applicable thereto, or
(iii) if any such conversion will not resolve such unlawfulness,
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Borrower shall prepay promptly such LIBOR Rate Loan, without penalty, but with
any related Consequential Loss.
3.15 Consequential Loss. Borrower shall indemnify each Lender
against, and shall pay to Administrative Agent on behalf of each Lender within
five Business Days after demand, any Consequential Loss of any such Lender.
When any Lender demands that Borrower pay any Consequential Loss, such Lender
shall deliver to Administrative Agent and Borrower a certificate setting forth
in reasonable detail the basis for imposing such Consequential Loss and the
calculation of such amount thereof, which calculation shall be conclusive and
binding absent manifest error.
3.16 Replacement of Lender.
(a) Capital Adequacy. If any Lender has requested compensation in
accordance with the terms of Section 3.13 hereof and (i) such request is not
the result of any uniform changes in the statutes or regulations for capital
adequacy, (ii) there exists no Default or Potential Default hereunder, and
(iii) Borrower and such Lender are unable to reach a written agreement
regarding such request within 30 days following written notice by such Lender
to Borrower and Administrative Agent of such request, then after the expiration
of 30 days following the delivery of the notice under Section 3.13, Borrower
may (A) replace such Lender in whole with another Eligible Assignee reasonably
acceptable to Administrative Agent and Managing Agents pursuant to an
Assignment and Acceptance and in accordance with Section 11.13, or (B) reduce
the Commitment in the full amount of such Lender's Specified Percentage of the
Commitment and repay such Lender in full. So long as Borrower accomplishes the
replacement or repayment of such Lender within 30 days following the delivery
of such notice, Borrower shall not owe any such Lender any amounts under
Section 3.13 hereof. If Borrower does not accomplish either replacement or
repayment of such Lender within such 60 days, Borrower shall owe such Lender in
accordance with the terms of any written agreement reached between such Lender
and Borrower, and, if no such agreement has been reached, Borrower shall owe
such Lender in accordance with the terms and provisions of Section 3.13 hereof.
If the Commitment is reduced by Borrower pursuant to this Section 3.16,
Borrower and Lenders agree that the Specified Percentages of each Lender will
be automatically ratably adjusted to reflect such reduction of the Commitment.
(b) Acquired Lender. If any Lender is acquired by or merges with any
other Person (including any other Lender) and (i) such Lender is not the
surviving Person, and (ii) there exists no Default or Potential Default
hereunder, Borrower may replace such Lender in whole with another Eligible
Assignee acceptable to Administrative Agent and Managing Agents pursuant to an
Assignment and Acceptance Agreement within thirty days following the date of
consummation of any such acquisition.
(c) Certain Circumstances. If (a) there exists no Default or
Potential Default on any such date and no Default or Potential Default shall be
caused by the action permitted below and (b) any Lender refuses to consent to
any amendment, waiver or consent to any provision hereof
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or in any Loan Paper in accordance with the terms of Section 11.11 hereof
(other than an amendment to increase the Commitment of such Lender), but to
which each other Lender has previously agreed, then, Borrower may, with the
prior written consent of Administrative Agent and the Managing Agents, within
90 days after the date of such consent, amendment or waiver, replace such
Lender in whole with another Eligible Assignee, pursuant to an Assignment and
Acceptance and otherwise in accordance with the terms of Section 11.13 hereof,
and such replaced Lender shall be repaid in full and have no further Rights or
obligations under the Loan Papers, provided that, the Companies' obligations
under Section 7.17 hereof shall survive any Lender's repayment in full.
SECTION 4
FEES
4.1 Treatment of Fees. Except as otherwise provided by Law, the
fees described in this Section 4 hereof (a) do not constitute compensation for
the use, detention, or forbearance of money, (b) are in addition to, and not in
lieu of, interest and expenses otherwise described in this Agreement, (c) shall
be payable in accordance with Section 3 hereof, (d) shall be non-refundable,
(e) shall, to the fullest extent permitted by Law, bear interest, if not paid
when due, at the Default Rate, and (f) shall be calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed, calculated on the basis of a year of 365 or 366 days, as the case may
be.
4.2 Facility Fee. On the Closing Date, Borrower shall pay to
Administrative Agent, on behalf of Lenders, such fees as are set forth in that
certain Fee Letter.
4.3 Commitment Fee. Borrower shall pay to Administrative Agent on
behalf of Lenders a commitment fee, payable as it accrues on each Quarterly
Payment Date (commencing on the Closing Date), and on the Termination Date,
equal to 0.25% per annum, calculated on the amount by which (a) the Commitment
exceeds (b) the average daily Principal Debt during the three month period (or
portion thereof commencing on the date hereof) preceding and including such due
date.
4.4 Agency Fees. On the Closing Date, Borrower shall pay to the
Administrative Agent, as an administrative fee, the amount set forth in its Fee
Letter.
SECTION 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Loan. Lenders will not be
obligated to fund the initial Loan, unless they have received all of the
following in form and substance satisfactory to Administrative Agent and each
Managing Agent (unless otherwise indicated, all documents shall be dated as of
the Closing Date):
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(a) The Agreement. This Agreement (together with all
Schedules thereto) executed by Borrower, Administrative Agent, each
Managing Agent and each Lender.
(b) Notes. The Notes in the form of EXHIBIT A, payable
to the order of each Lender.
(c) Articles of Incorporation. Copies of the Articles or
Certificate of Incorporation, and all amendments thereto, of Borrower,
accompanied by certificates that such copy is correct and complete,
one dated a Current Date (as used herein, the term "CURRENT DATE"
means any date not more than 60 days prior to the Closing Date),
issued by the appropriate Tribunal of the jurisdiction of
incorporation of Borrower, and one dated the Closing Date, executed by
the Secretary of Borrower.
(d) Bylaws. Copies of the Bylaws, and all amendments
thereto, of Borrower, accompanied by a certificate that such copy is
correct and complete, dated the Closing Date, executed by the
Secretary of Borrower.
(e) Good Standing and Authority. Certificates of the
appropriate Tribunals of such jurisdictions as Administrative Agent
may request, each dated a Current Date, to the effect that Borrower is
in good standing with respect to the payment of franchise and similar
Taxes and is duly qualified to transact business in such
jurisdictions.
(f) Incumbency. Certificates of incumbency of all
officers of Borrower who will be authorized to execute or attest any
of the Loan Papers on behalf of Borrower, executed by the Secretary of
Borrower.
(g) Resolutions. Copies of resolutions approving the
Loan Papers and authorizing the transactions contemplated in the Loan
Papers duly adopted by the Board of Directors of Borrower, accompanied
by a certificate of the Secretary or an Assistant Secretary of
Borrower, that such copy is a true and correct copy of resolutions
duly adopted at a meeting of, or by the unanimous written consent of,
the Board of Directors of Borrower, and that such resolutions
constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any
respect, and are in full force and effect as of the Closing Date.
(h) Opinion of Counsel to Borrower. The opinion of
Jackson & Walker, L.L.P., counsel to Borrower, addressed to
Administrative Agent on behalf of Lenders, substantially in the form
of EXHIBIT E hereto.
(i) Lien Searches and Lien Releases. Filing officer
certificates (or commercial reports similar thereto, if satisfactory
to Administrative Agent) under Section 9-407(2) of the UCC, releases
or partial releases of Liens or financing statements, and other
evidence satisfactory to Administrative Agent that there are no Liens
on any assets of any Company, except Permitted Liens.
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(j) Borrowing Notice. A duly completed Borrowing Notice
for the initial Loan.
(k) Current Financials. Copies of the Current Financials.
(l) Payment of Fees and Other Closing Fees. Payment of
all fees payable on or prior to the Closing Date to Administrative
Agent, Managing Agents and Lenders as provided for in Section 4 of the
Agreement, together with reimbursements to Administrative Agent and
Managing Agents for all reasonable fees and expenses incurred in
connection with the negotiation, preparation, syndication and closing
of the transactions evidenced by the Loan Papers (including, without
limitation, reasonable attorneys' fees and expenses).
(m) Insurance. Copies of certificates of insurance for
each policy of insurance maintained by any Company (including, without
limitation, flood insurance where required by Law), together with
evidence of payment of all premiums thereon.
(n) Subsidiary Certificates. Copies of certificates of
existence and good standing for each Subsidiary of Borrower from the
appropriate Tribunals, together with copies of the articles of
incorporation of each such Subsidiary.
(o) Other Documents. Such other agreements, documents,
instruments, opinions, certificates, and evidences as any Lender may
reasonably request.
5.2 Conditions Precedent to Each Loan. In addition, no Lender
will be obligated to fund (as opposed to continue or convert) any Loan unless
on the Borrowing Date of such Loan (and after giving effect thereto): (a)
Administrative Agent shall have timely received therefor a Borrowing Notice;
(b) all of the representations and warranties of Borrower or any Company set
forth in the Loan Papers are true and correct in all material respects (except
to the extent that the representations and warranties speak to a specific date
or the facts on which such representations and warranties are based have been
changed by transactions contemplated or permitted by this Agreement and, when
required by this Agreement, supplemental Schedules or information have been
delivered with respect thereto); (c) no change in the financial condition of
any Company which is a Material Adverse Event shall have occurred; (d) no
Default or Potential Default shall have occurred and be continuing; (e) the
funding of such Loans is permitted by Law; and (f) all conditions related to
such Loan must be satisfied in the reasonable determination of Administrative
Agent. Each Borrowing Notice delivered to Administrative Agent shall
constitute the representation and warranty by Borrower to Lenders that the
statements in clauses (b), (c), and (d) above are true and correct in all
respects. Each condition precedent in this Agreement is material to the
transactions contemplated in this Agreement, and time is of the essence in
respect of each thereof. Lenders may fund any Loan without all conditions
being satisfied, but, to the extent permitted by Law, the same shall not be
deemed to be a waiver of the requirement that each such condition precedent be
satisfied as a
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prerequisite for any subsequent funding, unless Lenders specifically waive each
such item in writing.
SECTION 6
REPRESENTATIONS AND WARRANTIES
Borrower, as to itself and each Company, represents and warrants to
Lender as follows:
6.1 Purpose of Credit Facility. Borrower will use; (a) some of
the proceeds of the Loans on the Closing Date to repay and cancel all
outstanding Indebtedness created pursuant to the Existing Credit Agreements;
and (b) all other proceeds of the Loans for (i) working capital, (ii) general
corporate purposes and (iii) Permitted Acquisitions consummated in accordance
with Section 7.18(g) and (j) hereof. No Company is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any "MARGIN STOCK" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended. No part of the proceeds of any Loan will be used, directly or
indirectly, for a purpose which violates any Law, including without limitation,
the provisions of Regulation U of the Board of Governors of the Federal Reserve
System, as amended.
6.2 Corporate Existence, Good Standing, and Authority. Each
Company is duly organized, validly existing, and in good standing under the
Laws of its jurisdiction of incorporation (such jurisdictions being identified
on SCHEDULE 6.2, as supplemented after the Closing Date as required pursuant to
Section 7.3(c) hereof and as required in connection with any Permitted
Acquisition). Except where failure would not be a Material Adverse Event, each
Company is duly qualified to transact business and is in good standing as a
foreign corporation in each jurisdiction where the nature and extent of its
business and properties require the same (such jurisdictions being identified
on SCHEDULE 6.2, as supplemented after the Closing Date as required pursuant to
Section 7.3(c) hereof and as required in connection with any Permitted
Acquisition). No Authorization which has not heretofore been obtained is
required to authorize, or is required in connection with, the execution,
delivery, legality, validity, binding effect, performance of, or enforceability
of the Loan Papers.
6.3 Subsidiaries. Borrower has no Subsidiaries except as
disclosed on SCHEDULE 6.3, as supplemented after the Closing Date as required
pursuant to Section 7.3(c) hereof and as required in connection with any
Permitted Acquisition, and all of the outstanding shares of capital stock (or
similar voting interests) of each Subsidiary are owned of record and
beneficially as set forth thereon, free and clear of any Liens, restrictions,
claims, or Rights of another Person, other than Permitted Liens.
6.4 Authorization and Contravention. The execution and delivery
by Borrower of each Loan Paper and the performance by each Company of its
obligations thereunder (a) are within the corporate power of each Company, (b)
have been duly authorized by all necessary corporate action, (c) require no
action by or in respect of, or filing with, any Tribunal, which action or
filing has not been taken or made on or prior to the Closing Date, (d) will not
violate
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any provision of the charter or bylaws of any Company, (e) will not violate any
provision of Law applicable to any Company, other than such violations which
individually or collectively would not be a Material Adverse Event, (f) will
not violate any Material Agreement to which any Company is a party, other than
such violations which would not be a Material Adverse Event, or (g) will not
result in the creation or imposition of any Lien on any asset of any Company.
No Company is in violation of any provision of Law applicable to it, other than
such violations which would not be a Material Adverse Event.
6.5 Binding Effect. Upon execution and delivery by all parties
thereto, each Loan Paper will constitute a legal, valid, and binding obligation
of each Company party thereto, enforceable against each such Company in
accordance with its terms, except as enforceability may be limited by
applicable Debtor Relief Laws and general principles of equity.
6.6 Financial Statements. The Current Financials were prepared in
accordance with GAAP and present fairly the consolidated financial condition,
results of operations, and cash flows of Borrower and its Consolidated
Subsidiaries as of, and for the portion of the fiscal year ending on the date
or dates thereof (subject in the case of interim statements only to normal
year-end audit adjustments). All material liabilities, direct or indirect,
fixed or contingent, of the Companies as of the date or dates of the Current
Financials are reflected therein or in the notes thereto. Except for
transactions directly related to, or specifically contemplated by, the Loan
Papers, there have been no material adverse changes in the consolidated
financial condition of the Companies from that shown in the Current Financials
after such date, nor has Borrower or any Company incurred any liability, direct
or indirect, fixed or contingent, after such date except in the ordinary course
of business or as permitted by this Agreement.
6.7 Litigation. Except for Litigation affecting the cable
industry generally, no Company is subject to, or aware of the threat of, any
Litigation which if adversely determined, would be a Material Adverse Event.
There are no outstanding or unpaid judgments against any Company or any
proceedings against any Company's assets which would constitute a Default or
Potential default under Section 8.4 hereof.
6.8 Taxes. All Tax returns of each Company required to be filed
have been filed (or extensions have been granted) prior to delinquency, and all
Taxes imposed upon each Company which are due and payable have been paid prior
to delinquency, other than Taxes for which the criteria specified in Section
7.5 hereof have been satisfied.
6.9 Environmental Matters. Except for conditions, circumstances,
or violations that would not, individually or in the aggregate, be a Material
Adverse Event, no Company (a) knows of any environmental condition or
circumstance, such as the presence of any Hazardous Substance, adversely
affecting the properties or operations of any Company, (b) has received any
report of a violation by any Company of any Environmental Law, or (c) knows
that any Company is under any obligation to remedy any violation of any
Environmental Law. No facility of any Company is currently used for, or to the
knowledge of any Company has previously been used for, storage, treatment, or
disposal of any Hazardous Substance.
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6.10 ERISA and Employee Benefit Plans. Each Plan of Borrower and
each other Company has satisfied the minimum funding standards under all Laws
applicable thereto, and no Plan has an accumulated funding deficiency
thereunder. Borrower has not, and neither has any Company incurred any
material liability to the PBGC with respect to any Plan. No ERISA Event has
occurred with respect to any Plan for which an Insufficiency in excess of
$100,000 exists on the date of such occurrence. No Company has participated in
any non-exempt Prohibited Transaction with respect to any Plan or trust created
thereunder. No Company nor any ERISA Affiliate has incurred any Withdrawal
Liability to any Multiemployer Plan that has not been satisfied. No Company
nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA.
6.11 Properties; Liens. Each Company has good and indefeasible
title to all its property reflected on the Current Financials (except for
property that is obsolete or that has been disposed of in the ordinary course
of business). Except for Permitted Liens, there is no Lien on any property of
any Company, and the execution, delivery, performance, or observance of the
Loan Papers will not require or result in the creation of any Lien on such
property. The Systems set forth on SCHEDULE 6.11, as supplemented after the
Closing Date as required pursuant to Section 7.3(c) hereof and as required in
connection with any Permitted Acquisition, constitute all Systems owned by the
Companies as of the Closing Date or as the date of such supplement, as
applicable, and such Schedule sets forth, to the best of Borrower's knowledge,
the number of Basic Subscribers of each such System as of such date.
6.12 Government Regulations. No Company is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, or any other Law (other than
Regulations G, T, U, and X of the Board of Governors of the Federal Reserve
System) which regulates the incurrence of Indebtedness.
6.13 Indebtedness. No Company is an obligor on any Indebtedness
other than Permitted Debt.
6.14 Material Agreements. No Company is a party to any Material
Agreement, except for the Loan Papers and the Material Agreements described on
SCHEDULE 6.14, as supplemented after the Closing Date as required pursuant to
Section 7.3(c) hereof and as required in connection with any Permitted
Acquisition. All such Material Agreements and all programming contracts are in
full force and effect, and no default or potential default exists on the part
of any Company thereunder, which would be a Material Adverse Event.
6.15 Insurance. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against such casualties and
contingencies and of such types and in such amounts (and with co-insurance and
deductibles) as is customary in the case of same or similar businesses.
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6.16 Solvency. At the time of each Loan hereunder and on the dates
of each Permitted Acquisition, each Company is (and after giving effect to the
transactions contemplated by the Loan Papers, any Permitted Acquisition, and
any incurrence of additional indebtedness will be) Solvent.
6.17 Franchises, Licenses, etc. SCHEDULE 6.17, as supplemented
after the Closing Date as required pursuant to Section 7.3(c) hereof and as
required in connection with any Permitted Acquisition, lists all Franchise
Agreements of the Companies relating to the Systems and correctly identifies
the franchisee and termination date of each such Franchise Agreement and lists
all Licenses of the Companies as of the Closing Date or as of the date of such
supplement, as applicable. Each Company possesses all Franchises, licenses
(including any FCC Licenses), copyrights, and other Authorizations and all
other rights, including, without limitation, all agreements with public
utilities and microwave transmission companies, Pole Agreements and all other
utility easements, necessary to own and operate its properties (including
Systems) and to carry on its business as presently conducted. Each of the
foregoing that is material to the business of the Companies is in full force
and effect, and each Company is in compliance in all material respects with all
of the material terms and conditions of each thereof, with no known conflict
with the rights of others. No event has occurred or exists which permits, or,
after the giving of notice, or the lapse of time or both would permit, the
revocation or termination of any such Franchise, license, or other
Authorization or other right that is material to the business of the Companies.
The Systems are operated in compliance with applicable standards and
regulations of the FCC and other applicable Tribunals.
6.18 Full Disclosure. There is no material fact or condition
relating to the Loan Papers or the financial condition, business, or property
of any Company which would be a Material Adverse Event and which has not been
related, in writing, to Administrative Agent. All information heretofore
furnished by any Company to Administrative Agent, any Managing Agent or any
Lender in connection with the Loan Papers was, and all such information
hereafter furnished by any Company to Administrative Agent, any Managing Agent
or any Lender will be, true and accurate in all material respects or based on
reasonable estimates on the date as of which such information is stated or
certified.
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SECTION 7
COVENANTS
So long as Lenders are committed to fund Loans under this Agreement
and thereafter until the Obligation is paid and performed in full and canceled,
unless Borrower receives a prior written consent to the contrary by Lenders in
accordance with the terms of Section 11.11 hereof, Borrower covenants and
agrees that it shall and shall cause each Subsidiary to comply with the
following:
7.1 Use of Proceeds. Borrower shall use the proceeds of Loans
only for the purposes represented in Section 6.1. hereof.
7.2 Books and Records. Each Company shall maintain books, records
and accounts necessary to prepare financial statements in accordance with GAAP.
7.3 Items to be Furnished. Borrower shall cause the following to
be furnished to Administrative Agent:
(a) Promptly after preparation, and no later than 90 days
after the last day of each fiscal year of Borrower, Financial
Statements showing the consolidated and consolidating financial
condition and results of operations of Borrower and its Consolidated
Subsidiaries as of, and for the year ended on, such last day,
accompanied by:
(i) the unqualified opinion of a firm of
nationally-recognized independent certified
public accountants, based on an audit using
generally accepted auditing standards, that
such Financial Statements were prepared in
accordance with GAAP and present fairly the
consolidated financial condition and results
of operations of Borrower and its
Consolidated Subsidiaries,
(ii) any management letter prepared by such
accounting firm,
(iii) a certificate from such accounting firm to
Administrative Agent as agent for Lenders
indicating that during its audit it obtained
no knowledge of any Default or Potential
Default or, if it obtained such knowledge,
the nature and period of existence thereof,
and
(iv) a Compliance Certificate with respect to such
Financial Statements.
(b) Promptly after preparation, and no later than 60 days
after the last day of each fiscal quarter of Borrower, Financial
Statements showing the consolidated financial condition and results of
operations of Borrower and its Consolidated Subsidiaries for such
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fiscal quarter and for the period from the beginning of the current
fiscal year to, such last day, accompanied by a Compliance Certificate
with respect to such Financial Statements.
(c) With each Compliance Certificate delivered pursuant
to subsections (a) and (b) preceding, supplemental information, if
any, to SCHEDULES 6.2, 6.3, 6.11, 6.14 and 6.17.
(d) Promptly after preparation, true, correct and
complete copies of any periodic or special reports filed by or on
behalf of Borrower or any Subsidiary with the FCC or any governmental
authority succeeding to any of its functions or with any state or
local CATV authority if (i) such reports indicate any material adverse
change in the businesses, operations, affairs or conditions of
Borrower or its Subsidiaries, or (ii) copies thereof are reasonably
requested by Administrative Agent on behalf of any Lender. Borrower
will also promptly provide to Administrative Agent copies of any
material notices or other material communications from the FCC or any
governmental authority succeeding to any of its functions or from any
state or local CATV authority which specifically relate to the
operation of the business of Borrower and its Subsidiaries and which
could have a material adverse effect on any Company.
(e) Notice, promptly after Borrower knows or has reason
to know, of any amendment or supplement to, or renegotiation,
extension or renewal of, or waiver by any other party thereto of any
right under or conditions of any Franchise Agreement or any FCC
license, or change in any material regulation, which amendment,
supplement, renegotiation, extension, renewal, change in regulation or
waiver would constitute a Material Adverse Event or have a material
adverse effect on any Company.
(f) Notice, promptly after Borrower knows or has reason
to know (but in no event later than five days after Borrower knows or
has reason to know), of (i) the existence and status of any Litigation
which, if determined adversely to any Company, would be a Material
Adverse Event, (ii) any change in any fact or circumstance represented
or warranted in any Loan Paper which could be a Material Adverse
Event, (iii) a Default or Potential Default, specifying the nature
thereof and what action Borrower or any other Company has taken, is
taking, or proposes to take with respect thereto, (iv) the receipt by
any Company of any notice from any Tribunal of the expiration without
renewal, termination, material modification or suspension of, or
institution of any proceedings to terminate, materially modify, or
suspend, any Authorization granted by the FCC or any other
Authorization now or hereafter held by any Company which is required
for such Company to operate its business, (v) any federal, state, or
local statute, regulation, or ordinance or judicial or administrative
order limiting or controlling the operations of any Company which has
been issued or adopted hereafter and which is of material adverse
importance or effect in relation to the operation of the Companies
taken as a whole, or (vi) the receipt by any Company of notice of any
violation or alleged violation of any Environmental Law, which
violation
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or alleged violation could individually or collectively with other
such violations or allegations, be a Material Adverse Event.
(g) Promptly after the filing thereof, a true, correct,
and complete copy of each Form 10-K and Form 10-Q and each other
report filed by or on behalf of Borrower with the Securities and
Exchange Commission.
(h) Within 270 days after the close of each fiscal year,
a statement of the Insufficiencies of each Plan (but only if the
aggregate amount of all Insufficiencies for all Plans exceeds
$250,000), certified as correct by an actuary enrolled under ERISA.
(i) As soon as possible and in any event within 10 days
after Borrower or any Company knows that any Reportable Event has
occurred with respect to any Plan, a statement, signed by an
Responsible Officer, describing said Reportable Event and the action
which the such Person proposes to take with respect thereto.
(j) Promptly upon request therefor by Administrative
Agent on behalf of any Lender, such information (not otherwise
required to be furnished under the Loan Papers) respecting the
business affairs, assets, and liabilities of the Companies, in
addition to those mentioned in this Agreement, as reasonably
requested.
7.4 Inspections. Each Company shall allow each Lender (or its
Representatives) to inspect any of its properties, to review reports, files,
and other records and to make and take away copies thereof, and to discuss any
of its affairs, conditions, and finances with such Company's directors,
officers, employees, public accountants, or other representatives from time to
time, during reasonable business hours upon reasonable notice; provided that,
if a Default or Potential Default has occurred and is continuing, no such prior
notice shall be required.
7.5 Taxes. Each Company shall pay on or before the date on which
penalties attach thereto, any and all Taxes other than Taxes the amount or
validity of which is being contested in good faith by appropriate and lawful
proceedings diligently conducted, against which reserve or other provision
required by GAAP has been made, and in respect of which levy and execution of
any lien securing same have been and continue to be stayed.
7.6 Expenses. Borrower shall promptly pay within 13 Business Days
after request therefor (a) all reasonable out-of-pocket costs, fees, and
expenses paid or incurred by Administrative Agent and Managing Agents incident
to any Loan Paper, administration or syndication (including, but not limited
to, the reasonable fees and expenses of counsel to Lender in connection with
the negotiation, preparation, delivery, and execution of the Loan Papers and
any related amendment, waiver or consent) and (b) all reasonable costs and
expenses of Administrative Agent, any Managing Agent and any Lender incurred in
connection with the enforcement of the obligations of any Company arising under
the Loan Papers or the exercise of any Rights arising under the Loan Papers
(including, but not limited to, reasonable attorneys' fees and court costs),
all of which shall be a part of the Obligation.
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7.7 Maintenance of Existence, Assets, and Business. Except as
otherwise permitted by Section 7.20 hereof, each Company shall at all times (a)
maintain its corporate existence and good standing in its state of
incorporation and its authority to transact business in all other jurisdictions
listed herein where the failure to so maintain its authority to transact
business is a Material Adverse Event; (b) maintain, preserve and comply with
all licenses, permits, Franchises, Pole Agreements and other agreements
necessary for its business where the failure to so maintain is a Material
Adverse Event; (c) keep all of its assets which are useful in and necessary to
its business in good working order and condition (ordinary wear and tear
excepted) and make all necessary repairs thereto and replacements thereof; (d)
do all things necessary to renew, extend, and continue in effect all
Authorizations which may at any time and from time to time be necessary for the
Companies to operate in compliance with applicable Law, where the failure to so
renew, extend, or continue in effect would be a Material Adverse Event; and (e)
conduct its business in substantially the same manner and in substantially the
same fields of enterprise as it is presently conducted.
7.8 Insurance. Each Company shall, at its cost and expense,
maintain insurance with financially sound and reputable insurers, in such
amounts, and covering such risks, as shall be ordinary and customary for
similar companies in the industry. Each Company shall deliver to
Administrative Agent certificates of insurance from time to time received by it
for each such policy of insurance and evidence of payment of all premiums
thereon.
7.9 Preservation and Protection of Rights. Each Company shall
perform such acts and duly authorize, execute, acknowledge, deliver, file, and
record any additional agreements, documents, instruments, and certificates as
Administrative Agent and Lenders may reasonably deem necessary or appropriate
in order to preserve and protect and exercise the Rights of Administrative
Agent and Lenders under any Loan Paper.
7.10 Employee Benefit Plans and Applicable Law. Borrower shall,
and shall cause each Company to, comply with all Applicable Laws, including
without limitation compliance with ERISA and all applicable federal and state
securities Laws. Borrower shall not, and shall not permit any of the Companies
to, directly or indirectly, or permit any member of such Person's Controlled
Group to directly or indirectly, (a) terminate any Plan so as to result in any
material (in the opinion of Managing Agents) liability to any Company or any
member of its Controlled Group, (b) permit to exist any ERISA Event, or any
other event or condition, which presents the risk of any material (in the
opinion of Managing Agents) liability of any Company or any member of its
Controlled Group, (c) make a complete or partial withdrawal (within the meaning
of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
material (in the opinion of Managing Agents) liability to any Company or any
member of its Controlled Group, (d) enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder (except in the
ordinary course of business consistent with past practice) which could result
in any material (in the opinion of Managing Agents) liability to any Company or
any member of its Controlled Group, or (e) permit the present value of all
benefit liabilities, as defined in Title IV of ERISA, under each Plan of each
Company or any member of its Controlled Group (using the actuarial assumptions
utilized by the PBGC upon termination of a
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<PAGE> 43
Plan) to materially (in the opinion of Managing Agent) exceed the fair market
value of Plan assets allocable to such benefits all determined as of the most
recent valuation date for each such Plan.
7.11 Environmental Laws. Each Company shall conduct its business
so as to comply with all applicable Environmental Laws and shall promptly take
corrective action to remedy any non-compliance with any Environmental Law,
except where failure to so comply or take such action would not be a Material
Adverse Event.
7.12 Indebtedness.
(a) Subsidiary Indebtedness. No Subsidiary shall,
directly or indirectly, create, incur, or suffer to exist any direct,
indirect, fixed, or contingent liability for any Indebtedness, other
than:
(i) unsecured and secured Indebtedness existing
on the Closing Date, as more particularly described on
SCHEDULE 7.12 hereto;
(ii) Indebtedness under this Agreement and the
Notes;
(iii) endorsements of instruments or items of
payment for deposit to the general account of any Subsidiary
in the ordinary course of business;
(iv) current accounts payable arising out of
transactions (other than borrowings) in the ordinary course of
business;
(v) indemnities by any such Subsidiary of
liabilities of directors and officers pursuant to provisions
contained in such Subsidiary's articles of incorporation or
bylaws, or otherwise permitted by applicable laws;
(vi) Loans described in Subsection 7.18(f) hereof;
and
(vii) unsecured Indebtedness of the Subsidiaries in
the aggregate not to exceed $3,000,000 at any one time
outstanding;
(b) Borrower Indebtedness. Borrower shall not, directly
or indirectly, create, incur, or suffer to exist any direct, indirect,
fixed, or contingent liability for any Indebtedness, other than:
(i) unsecured and secured Indebtedness existing
on the Closing Date, as more particularly described on
SCHEDULE 7.12 hereto;
(ii) Indebtedness under this Agreement and the
Notes;
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(iii) Loans described in Subsection 7.18(f) hereof;
(iv) Indebtedness of Borrower secured by a Lien
described in Section 7.13(b) hereof not to exceed in the
aggregate $1,000,000;
(v) current accounts payable arising out of
transactions (other than borrowings) in the ordinary course of
business;
(vi) obligations of Borrower under Capital Leases
not to exceed in the aggregate $2,000,000;
(vii) endorsements of instruments or items of
payment for deposit to the general account of any Company in
the ordinary course of business;
(viii) Indebtedness of Borrower that is subordinated
to the Obligation on terms satisfactory to each Lender and the
terms and conditions of which are satisfactory to Majority
Lenders;
(ix) indemnities by Borrower of liabilities of
directors and officers pursuant to provisions contained in
Borrower's articles of incorporation or bylaws, or otherwise
permitted by applicable laws; and
(x) other unsecured Indebtedness of Borrower not
to exceed in the aggregate at any time $10,000,000.
7.13 Liens. No Company will, directly or indirectly, create,
incur, or suffer or permit to be created or incurred or to exist any Lien upon
any of its assets, other than the Loan Papers and operating leases or Capital
Leases (so long as any such Lien under such leases are limited to the property
being leased thereunder), other than:
(a) The existing Liens described on SCHEDULE 7.13 hereto
(and extension, renewal and replacement Liens upon the same property
theretofore subject to a Lien described in this Section 7.13(a),
provided that the amount secured by each Lien constituting such
extension, renewal or replacement shall not exceed the amount secured
by the Lien theretofore existing);
(b) Liens on property securing all or part of the
purchase price thereof to Borrower or a Subsidiary and Liens (whether
or not assumed) existing in property at the time of purchase thereof
by Borrower or a Subsidiary, as the case may be (and extension,
renewal and replacement Liens upon the same property theretofore
subject to a Lien described in this Section 7.13(b), provided that the
amount secured by each Lien constituting such extension, renewal or
replacement shall not exceed the amount secured by the Lien
theretofore existing), and, provided, further, that each such Lien is
confined solely to the property so purchased, improvements thereto and
proceeds thereof;
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(c) Pledges or deposits made to secure payment of
worker's compensation, or to participate in any fund in connection
with worker's compensation, unemployment insurance, pensions, or other
social security programs;
(d) Good-faith pledges or deposits made to secure
performance of bids, tenders, contracts (other than for the repayment
of borrowed money), or leases, or to secure statutory obligations,
surety or appeal bonds, or indemnity, performance, or other similar
bonds (other than for the repayment of borrowed money) as all such
Liens arise in the ordinary course of business of the Companies;
(e) Encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, none of
which impair in any material respect the use of such property by the
Person in question in the operation of its business, and none of which
is violated by existing or proposed structures or land use; and
(f) The following so long as the validity or amount
thereof is being contested in good faith and by appropriate and lawful
proceedings diligently conducted, reserve or other appropriate
provision (if any) required by GAAP shall have been made, levy and
execution thereon have been stayed and continue to be stayed, and they
do not in the aggregate materially detract from the value of the
property of the Person in question, or materially impair the use
thereof in the operation of its business: claims and Liens for Taxes
due and payable; claims and Liens upon, and defects of title to, real
or personal property, including any attachment of personal or
real-property or other legal process prior to adjudication of a
dispute on the merits; claims and Liens of mechanics, materialmen,
warehousemen, carriers, landlords, or other like Liens; and adverse
judgments on appeal.
7.14 Compliance with Laws and Documents. No Company shall (a)
violate the provisions of any Laws applicable to it, including, without
limitation, any rules, regulations or policies promulgated by the FCC, or any
Material Agreement to which it is a party if such violation alone, or when
aggregated with all other such violations, would be a Material Adverse Event,
(b) violate any standards or regulations promulgated by the FCC relating to the
construction and operation of CATV systems and the quality of picture and
sound, (c) violate the provisions of its charter or bylaws, or (d) modify,
repeal, replace, or amend any provision of its charter or bylaws if such action
would be a Material Adverse Event.
7.15 Fiscal Year and Accounting Methods. No Company will change
its fiscal year for book accounting purposes or its method of accounting (other
than (i) changes as are concurred with by Borrower's independent public
accountants as being required by GAAP and (ii) conforming changes in the fiscal
year to coincide with the fiscal year of Borrower, as such changes are made by
any Company acquired as a Permitted Acquisition).
7.16 Government Regulations. No Company will conduct its business
in such a way that it will become subject to regulation under the Investment
Company Act of 1940, as
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amended, the Public Utility Holding Company Act of 1935, as amended, or any
other Law (other than Regulations G, T, U, and X of the Board of Governors of
the Federal Reserve System) which regulates the incurrence of Indebtedness.
7.17 Indemnification. The Companies shall, jointly and severally,
indemnify, protect, and hold Administrative Agent, each Managing Agent and each
Lender and its parents, subsidiaries, directors, officers, employees,
representatives, agents, successors and assigns (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all reasonable and necessary costs, expenses (including, without
limitation, all reasonable attorneys' fees and legal expenses whether or not
suit is brought), and disbursements of any kind or nature whatsoever (the
"INDEMNIFIED LIABILITIES") which may at any time be imposed on, incurred by, or
asserted against the indemnified parties, in any way relating to or arising out
of (a) the direct or indirect result of the violation by any Company of any
Environmental Law, (b) any Company's generation, manufacture, production,
storage, release, threatened release, discharge, disposal or presence in
connection with its properties of a Hazardous Substance (including, without
limitation, (i) all damages of any such use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal, or
presence, or (ii) the costs of any required or necessary environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Papers or any of the transactions contemplated therein or the use
of proceeds of any Loan, to the extent that any of the indemnified liabilities
results, directly or indirectly, from any claim made or action, suit, or
proceeding commenced by or on behalf of any Person other than the indemnified
parties (provided that, no indemnified party shall have the Right to be
indemnified hereunder for its own fraud, gross negligence, or willful
misconduct). The provisions of and undertakings and indemnification set forth
in this paragraph shall survive the satisfaction and payment of the Obligation
and termination of this Agreement.
7.18 Loans, Advances, and Investments. No Company shall at any
time make or suffer to remain outstanding any loan or advance to, or purchase,
acquire or own any stock, bonds, notes or securities of, or any partnership
interest (whether general or limited) in, or any other interest in, or make any
capital contribution to, any other person, or agree, become or remain liable to
do any of the foregoing, except:
(a) the capital stock of a Subsidiary owned on the date
hereof and listed in SCHEDULE 6.3 hereto;
(b) loans and investments existing on the date hereof and
listed in SCHEDULE 7.18 hereto (including any extensions or renewals
thereof);
(c) obligations backed by the full faith and credit of
the United States of America, or obligations of the U.S. Treasury or
any federal agency;
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(d) commercial paper rated P-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Ratings Group on the date of
acquisition, or certificates of deposits of (i) any Lender or (ii) any
other financial institution having one of the two highest ratings by
Moody's Investors Service, Inc. or Standard & Poor's Ratings Group;
(e) debt securities with a final maturity of less than
one year which has one of the two highest ratings by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group;
(f) loans from Borrower to any wholly-owned Subsidiary,
and loans from any wholly-owned Subsidiary to any other wholly-owned
Subsidiary or to Borrower;
(g) so long as Borrower provides the Administrative Agent
with detailed calculations demonstrating compliance with all
provisions of Section 7.22 hereof both before and after giving effect
to any such transaction, Permitted Acquisitions;
(h) so long as there exists no Default or Potential
Default both before and after giving effect to any such capital
contribution or loan, capital contributions and loans not to exceed in
the aggregate for any fiscal year of Borrower, $5,000,000;
(i) advances to employees to meet expenses incurred by
such employees in the ordinary course of business;
(j) so long as there exists no Default or Potential
Default both before and after giving effect to any such transaction,
each acquisition as described on SCHEDULE 7.18 hereto, but only in the
form and manner set forth on SCHEDULE 7.18 hereto; and
(k) trade credit extended, and loans and advances
extended to subcontractors or suppliers, under usual and customary
terms in the ordinary course of business.
7.19 Dividends and Distributions; Transactions with Affiliates. No
Company shall directly or indirectly declare, make, or pay any Distribution
other than (a) Distributions declared, made, or paid by Borrower or any
Subsidiary wholly in the form of its capital stock, (b) Distributions declared,
made or paid by a Subsidiary if all of the capital stock of such Subsidiary is
owned by Borrower or a Subsidiary, (c) dividends in respect of capital stock of
Borrower so long as no Default or Potential Default exists or would result
therefrom, and (d) loans and advances permitted by Section 7.18(f) hereof. No
Company will directly or indirectly enter into any material transaction with
any of its Affiliates other than loans and advances permitted by Section
7.18(f) hereof and other than transactions upon terms not materially less
favorable to Borrower or such Company than such Company could obtain in an
arm's-length transaction with a Person that was not an Affiliate.
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7.20 Mergers, Dissolutions and Dispositions of Assets. No Company
will, directly or indirectly, merge or consolidate with or into any other
Person, or liquidate, wind up, or dissolve (or suffer any liquidation or
dissolution), or lease, sell or otherwise dispose of, in a single transaction
or series of transactions all, or a substantial portion of, its property,
assets or business (including but not limited to sale, assignment, discount or
other disposition of accounts, contract rights, chattel paper or general
intangibles with or without recourse), or consummate any Asset Sale, except:
(a) Borrower may merge with any other corporation
provided that Borrower is the surviving corporation and after giving
effect to such merger, no Default or Potential Default is in existence
(including, without limitations, to effect Permitted Acquisitions);
(b) any Subsidiary may merge with or into any other
Subsidiary or into Borrower;
(c) so long as there exists no Default or Potential
Default both prior to and after giving effect to any such transaction,
Borrower may dissolve or wind-up, or merge into Borrower, any Person
described on SCHEDULE 7.20 hereto, but only in the form and manner set
forth on SCHEDULE 7.20 hereto; and
(d) so long as (i) there exists no Default or Potential
Default after giving effect to any Asset Sale (which shall be
demonstrated to Administrative Agent and Lenders in a certificate in
reasonable detail setting forth the computations of the financial
covenants in Section 7.22 hereof), and (ii) all Systems sold by
Borrower and its Subsidiaries after the Closing Date shall have
contributed less than 25% in the aggregate of Borrower's Operating
Cash Flow during the four fiscal quarters prior to each such
respective Asset Sale, Borrower or any Subsidiary may consummate any
Asset Sale of assets in any fiscal year which have contributed, in the
aggregate for such period, not more then 10% of Borrower's Operating
Cash Flow during the preceding twelve-month period.
7.21 Payments on Other Indebtedness. Borrower shall not, nor shall
it permit any Subsidiary to, make any prepayment on, or purchase or redeem
prior to its stated maturity, any other Indebtedness of Borrower or any
Subsidiary, including without limitation, any Subordinated Debt, at any time a
Default or Potential Default exists or would result from such payment or
purchase.
7.22 Financial Covenants. As calculated on a consolidated basis
for Borrower and its Subsidiaries:
(a) Borrower shall never permit the ratio of its Total
Debt to its Annualized Operating Cash Flow as of the last day of any
fiscal quarter ending during a period set forth below to be greater
than the amount set forth below opposite such period:
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<TABLE>
<CAPTION>
Period Maximum Ratio Permitted
------ -----------------------
<S> <C>
Closing Date through June 30, 1996 4.00 to 1.00
July 1, 1996 through June 30, 1997 3.50 to 1.00
July 1, 1997 and thereafter 3.00 to 1.00
</TABLE>
(b) Borrower shall never permit the ratio of its
Annualized Operating Cash Flow to its Interest Expense for the
immediately preceding four fiscal quarters to be less than 2.50 to
1.00 as of the last day of any fiscal quarter.
(c) Borrower shall never permit the ratio of its Annualized
Operating Cash Flow less cash taxes paid or scheduled to be paid for
the immediately preceding four fiscal quarters to its Fixed Charges to
be less than 1.05 to 1.00 as of the last day of any fiscal quarter.
SECTION 8
DEFAULT
The term "DEFAULT" means the occurrence of any one or more of the
following events:
8.1 Payment of Obligation. The failure or refusal of Borrower to
pay (a) Principal Debt when the same becomes due in accordance with the Loan
Papers, or (b) interest or fees within 3 Business Days after the same becomes
due and payable in accordance with the Loan Papers, or (c) any other part of
the Obligation within 5 Business Days after the same becomes due and payable in
accordance with the Loan Papers.
8.2 Covenants. The failure or refusal of Borrower (and, if
applicable, any other Company) to punctually and properly perform, observe, and
comply with:
(a) Any covenant, agreement, or condition contained in
Sections 7.1, 7.10, 7.12, 7.13, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19,
7.20, 7.21 and 7.22 hereof; and
(b) Any other covenant, agreement, or condition contained
in any Loan Paper (other than the covenants to pay the Obligation and
the covenants in clause (a) preceding), and such failure or refusal
continues for 30 days after the earlier of (i) actual notice by any
Responsible Officer or (ii) notice by any Managing Agent or Lender of
such breach or failure to comply.
8.3 Debtor Relief. Any Company (a) shall not be Solvent, (b)
shall fail to pay its Indebtedness generally as it becomes due, (c) shall
voluntarily seek, consent to, or acquiesces in the benefit of any Debtor Relief
Law, or (d) shall become a party to or is made the subject of any proceeding
provided for by any Debtor Relief Law, other than as a creditor or claimant
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(unless, in the event such proceeding is involuntary, the petition instituting
same is dismissed within 60 days after its filing).
8.4 Judgments and Attachments. Any Company fails to have
discharged within a period of 30 days after the expiration of all Rights of
appeal, any judgment, warrant of attachment, sequestration, or similar
proceeding against any assets of Borrower with a value, individually or
collectively, in excess of $1,000,000.
8.5 Government Action. (a) A final non-appealable order is issued
by any Tribunal, including, but not limited to, the FCC or the United States
Justice Department, seeking to cause any Company to divest a substantial
portion of its assets pursuant to any antitrust, restraint of trade, unfair
competition, industry regulation, or similar Laws, or (b) any Tribunal shall
condemn, seize, or otherwise appropriate, or take custody or control of all or
any substantial portion of the assets of any Company.
8.6 Misrepresentation. Any material representation or warranty
made by any Company contained in any Loan Paper shall at any time prove to have
been incorrect in any material respect when made.
8.7 Franchise Agreements; FCC Licenses. Any Franchise Agreement
relating to more than 10% of the Basic Subscribers in the aggregate with
respect to all Systems or any other material license, permit, certificate,
consent, approval, authorization or agreement granted by the FCC or by any
other Tribunal with jurisdiction over any System having more than 10% of the
Basic Subscribers in the aggregate with respect to all Systems, whether
presently existing or hereafter granted to or obtained by Borrower or any
Subsidiary shall expire without renewal on or before payment in full of the
Notes and all Obligations hereunder, or be suspended or revoked, or Borrower or
any Subsidiary shall become subject to any injunction or other order materially
affecting or which may materially affect (both in the sole good faith judgment
of Majority Lenders) Borrower's or a Subsidiary's present or proposed
operations under any such Franchise Agreement or any such other material
license, permit, certificate, consent, approval, authorization or agreement.
8.8 Systems. Any System or group of Systems (excluding any System
as to which any loss of revenues is fully covered by business interruption
insurance) providing in the aggregate more than 15% of the net revenues of
Borrower for the preceding twelve month period shall cease to operate, for any
reason, for 10 or more days during any calendar year.
8.9 Default Under Other Agreements. (a) Any Company fails to pay
when due (after lapse of any applicable grace periods) any Indebtedness for
borrowed money in excess (individually or collectively) of $5,000,000; or (b)
any default exists and has not been waived under any agreement to which a
Company is a party, the effect of which is to cause, or permit (after the lapse
of time or giving of notice) any Person to cause, an amount in excess
(individually or collectively) of $5,000,000 to become due and payable by any
Company prior to the stated maturity thereof, or to cause or require any
Company to purchase or otherwise
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<PAGE> 51
acquire any Indebtedness for borrowed money in an amount in excess
(individually or collectively) of $5,000,000.
8.10 Validity and Enforceability of Loan Papers. Any Loan Paper
shall, at any time after its execution and delivery and for any reason, cease
to be in full force and effect in any material respect or be declared to be
null and void or the validity or enforceability thereof be contested by
Borrower, or Borrower shall deny that it has any or any further liability or
obligations under any Loan Paper.
8.11 ERISA. Borrower, any Company or any ERISA Affiliate shall
have committed a failure described in Section 302(f)(l) of ERISA, and the
amount determined under Section 302(f)(3) of ERISA is equal to or greater than
$50,000.
8.12 Change in Control. There shall have occurred any Change in
Control.
SECTION 9
RIGHTS AND REMEDIES
9.1 Remedies Upon Default.
(a) If a Default exists under Section 8.3 hereof, the
commitment to extend credit hereunder shall automatically terminate
and the entire unpaid balance of the Obligation shall automatically
become due and payable without any action of any kind whatsoever.
(b) If any other Default exists, Administrative Agent may at
its election, or at the direction of the Majority Lenders, shall, do
any one or more of the following: (i) if the maturity of the
Obligation has not already been accelerated under Section 9.1(a)
hereof, declare the entire unpaid balance of the Obligation, or any
part thereof, immediately due and payable, whereupon it shall be due
and payable; (ii) terminate the commitments of Lenders to extend
credit hereunder; (iii) reduce any claim to judgment; (iv) to the
extent permitted by Law, exercise the Rights of offset or banker's
Lien against the interest of any Company in and to every account and
other property of Borrower which are in the possession of the
Administrative Agent to the extent of the full amount of the
Obligation (in addition to the rights of each Lender set forth in
Section 3.10 hereof); and (v) exercise any and all other legal or
equitable Rights afforded by the Loan Papers, the Laws of the State of
Texas or any other applicable jurisdiction as Lenders shall deem
appropriate, or otherwise, including, but not limited to, the Right to
bring suit or other proceedings before any Tribunal either for
specific performance of any covenant or condition contained in any of
the Loan Papers or in aid of the exercise of any Right granted to
Lenders in any of the Loan Papers.
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9.2 Waivers. To the extent permitted by Law, Borrower hereby
waives presentment and demand for payment, protest, notice of intention to
accelerate, notice of acceleration, and notice of protest and nonpayment, and
agrees that its liability with respect to the Obligation, or any part thereof,
shall not be affected by any renewal or extension in the time of payment of the
Obligation, by any indulgence, or by any release or change in any security for
the payment of the Obligation.
9.3 Delegation of Duties and Rights. Administrative Agent may
perform any of its duties or exercise any of its Rights under the Loan Papers
by or through its Representatives, and Lenders may perform any of their duties
or exercise any of their Rights under the Loan Papers by or through their
Representatives.
9.4 Not in Control. None of the covenants or other provisions
contained in any Loan Paper shall, or shall be deemed to, give Administrative
Agent or any Lender the Right to exercise control over the assets (including,
without limitation, real property), affairs, or management of any Company, the
power of Administrative Agent and each Lender being limited to the Right to
exercise the remedies provided in this Section 9.
9.5 Course of Dealing. The acceptance by any Lender at any time
and from time to time of partial payment on the Obligation shall not be deemed
to be a waiver of any Default then existing. No waiver by any Lender of any
Default shall be deemed to be a waiver of any other then-existing or subsequent
Default. No delay or omission by any Lender in exercising any Right under the
Loan Papers shall impair such Right or be construed as a waiver thereof or any
acquiescence therein, nor shall any single or partial exercise of any such
Right preclude other or further exercise thereof, or the exercise of any other
Right under the Loan Papers or otherwise.
9.6 Cumulative Rights. All Rights available to Administrative
Agent and Lenders under the Loan Papers are cumulative of and in addition to
all other Rights granted to Administrative Agent and Lenders at law or in
equity, whether or not the Obligation is due and payable and whether or not
Administrative Agent or any Lender has instituted any suit for collection,
foreclosure, or other action in connection with the Loan Papers.
9.7 Application of Proceeds. Any and all proceeds ever received
by any Lender from the exercise of any Rights pertaining to the Obligation
shall be applied to the Obligation in the order and manner set forth in Section
3 hereof.
9.8 Limitation of Rights. Notwithstanding any other provision of
this Agreement or any other Loan Paper, any action taken or proposed to be
taken by Administrative Agent or any Lender under any Loan Paper which would
affect the operational, voting, or other control of any Company, shall be
pursuant to the Communications Act, any applicable state Law and any other
applicable Laws in effect from time to time, and the applicable rules and
regulations thereunder and, if and to the-extent required thereby, subject to
the prior consent of the FCC and other applicable authorities.
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9.9 Expenditures by Administrative Agent and Lenders. All court
costs, reasonable attorneys' fees, other costs of collection, and other sums
spent by Administrative Agent or any Lender pursuant to the exercise of any
Right (including, without limitation, any effort to collect or enforce any of
the Notes) provided herein shall be payable to Administrative Agent or such
Lender on demand, shall become part of the Obligation, and shall bear interest
at the Default Rate from the date spent until the date repaid by Borrower.
SECTION 10
THE ADMINISTRATIVE AGENT
10.1. Authorization and Action. Each Lender hereby appoints and
authorizes Administrative Agent to take such action as Administrative Agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Papers as are delegated to the Administrative Agent by the terms of the Loan
Papers, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement and the other Loan
Papers (including without limitation enforcement or collection of the Notes),
Administrative Agent may take any action or refrain from taking any action in
its discretion, but Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of Majority Lenders and such instructions shall be
binding upon all Lenders; provided, however, that Administrative Agent shall
not be required to take any action which exposes Administrative Agent to
personal liability or which is contrary to any Loan Papers or applicable Law.
Administrative Agent agrees to (a) promptly give to each Lender notice of each
notice given to it by Borrower pursuant to the terms of this Agreement, (b)
promptly give to each Lender copies of all documents and information received
by the Administrative Agent pursuant to the terms of Section 7.3 hereof and
pursuant to the definition of Permitted Acquisition herein, and (c) distribute
to each applicable Lender in like funds all amounts delivered to Administrative
Agent by Borrower for the Ratable or individual account of any Lender. If the
Administrative Agent fails to send to any Lender its portion of any payment
timely received by the Administrative Agent hereunder by the close of business
on the day such payment was received, the Administrative Agent shall pay to
such Lender interest on its portion of such payment from the day such payment
was timely received by the Administrative Agent until the date such Lender's
portion of such payment is sent to such Lender, at the Federal Funds Rate.
10.2. Administrative Agent's Reliance, Etc. Neither Administrative
Agent, nor any of its directors, officers, agents, employees, or
representatives shall be liable for any action taken or omitted to be taken by
it or them under or in connection with this Agreement or any other Loan Paper,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, Administrative Agent (a) may
treat the payee of any Note as the holder thereof until Administrative Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Administrative Agent; (b) may consult with
legal counsel (including counsel for Borrower or any of its Subsidiaries),
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independent public accountants, and other experts selected by it, and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants, or experts; (c) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties, or representations made in or in
connection with this Agreement or any other Loan Papers; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants, or conditions of this Agreement or any other Loan Papers
on the part of Borrower or its Subsidiaries or to inspect the property
(including the books and records) of Borrower or its Subsidiaries; (e) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, any other
Loan Papers, or any other instrument or document furnished pursuant hereto; and
(f) shall incur no liability under or in respect of this Agreement or any other
Loan Papers by acting upon any notice, consent, certificate, or other
instrument or writing believed by it to be genuine and signed or sent by the
proper party or parties.
10.3. NationsBank of Texas, National Association and Affiliates.
With respect to its commitments, its Loans, and any Loan Papers, NationsBank of
Texas, National Association has the same Rights under this Agreement as any
other Lender and may exercise the same as though it were not Administrative
Agent. NationsBank of Texas, National Association and its affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, Borrower, any Subsidiary, any
affiliate thereof, and any Person who may do business therewith, all as if
NationsBank of Texas, National Association were not Administrative Agent and
without any duty to account therefor to any Lender.
10.4. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Agent or any other
Lender, and based on the financial statements referred to in Sections 6.6 and
7.3 hereof and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon Administrative Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Papers.
10.5. Indemnification by Lenders. Lenders shall indemnify
Administrative Agent, pro rata, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Administrative Agent in any way
relating to or arising out of any Loan Papers or any action taken or omitted by
Administrative Agent thereunder, including any negligence of Administrative
Agent; provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements resulting from Administrative Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
Lenders shall reimburse Administrative Agent, pro rata, promptly upon demand
for any out-of-pocket expenses (including reasonable attorneys' fees) incurred
by Administrative Agent in connection
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with the preparation, execution, delivery, administration, modification,
amendment, or enforcement (whether through negotiation, legal proceedings or
otherwise) of, or legal and other advice in respect of rights or
responsibilities under, the Loan Papers. The indemnity provided in this
Section 10.5 shall survive the termination of this Agreement.
10.6. Successor Administrative Agent. Administrative Agent may
resign at any time by giving written notice thereof to Lenders and Borrower,
and may be removed at any time with or without cause by the action of all
Lenders (other than Administrative Agent, if it is a Lender). Upon any such
resignation, Majority Lenders shall have the right to appoint a successor
Administrative Agent, and, if there exists no Default or Potential Default,
such appointment shall require the prior consent of Borrower, which such
consent shall not be unreasonably withheld. If no successor Administrative
Agent shall have been so appointed and shall have accepted such appointment
within thirty days after the retiring Administrative Agent's giving of notice
of resignation, then the retiring Administrative Agent may, on behalf of
Lenders, appoint a successor Administrative Agent, which shall be a commercial
bank organized under the Laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000,
and, if there exists no Default or Potential Default, such appointment shall
require the prior consent of Borrower, which such consent shall not be
unreasonably withheld. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the Rights and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Papers, provided that if the retiring or removed
Administrative Agent is unable to appoint a successor Administrative Agent,
Administrative Agent shall, after the expiration of a sixty day period from the
date of notice, be relieved of all obligations as Administrative Agent
hereunder. Notwithstanding any Administrative Agent's resignation or removal
hereunder, the provisions of this Section shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
10.7. Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any Right of set-off,
or otherwise) on account of its Loans in excess of its pro rata share of
payments made by Borrower, such Lender shall forthwith purchase participations
in Loans made by the other Lenders as shall be necessary to share the excess
payment pro rata with each of them; provided, however, that if any of such
excess payment is thereafter recovered from the purchasing Lender, its purchase
from each Lender shall be rescinded and each Lender shall repay the purchase
price to the extent of such recovery together with a pro rata share of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 10.7 may, to the
fullest extent permitted by Law, exercise all its Rights of payment (including
the Right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such
participation.
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SECTION 11
MISCELLANEOUS
11.1 Headings. The headings, captions, and arrangements used in
any of the Loan Papers are, unless specified otherwise, for convenience only
and shall not be deemed to limit, amplify, or modify the terms of the Loan
Papers, nor affect the meaning thereof.
11.2 Nonbusiness Days. In any case where any payment or action is
due under any Loan Paper on a day which is not a Business Day, such payment or
action may be delayed until the next-succeeding Business Day, but interest
shall continue to accrue in respect of any payment to which it is applicable
until such payment is in fact made; provided that, if in the case of any such
payment in respect of a LIBOR Rate Loan the next-succeeding Business Day is in
the next calendar month, then such payment shall be made on the next-preceding
Business Day.
11.3 Communications. Unless specifically otherwise provided,
whenever any Loan Paper requires or permits any consent, approval, notice,
request, or demand from one party to another, such communication must be in
writing (which may be by telex or telecopy) to be effective and shall be deemed
to have been given (a) if by telex, when transmitted to the telex number, if
any, for such party, and the appropriate answerback is received, (b) if by
telecopy, when transmitted to the telecopy number for such party, if any, (and
all such communications sent by telecopy shall be confirmed promptly thereafter
by personal delivery or mailing in accordance with the provisions of this
section; provided, that any requirement in this parenthetical shall not effect
the date on which such telecopy shall be deemed to have been delivered), (c) if
by mail, on the fifth Business Day after it is enclosed in an envelope,
properly addressed to such party, properly stamped, sealed, and deposited in
the appropriate official postal service, or (d) if by any other means, when
actually delivered to such party. Until changed by notice pursuant hereto, the
address (and telex and telecopy numbers, if any) for the Companies,
Administrative Agent and Managing Agents is set forth below. Notices to
Lenders shall be at the addresses set forth opposite each such Lender's
signature on the signature pages hereto (or such other address any Lender
requests by notification to the Administrative Agent and Borrower) or such
other address for any Lender set forth in any Assignment and Acceptance.
Communications to Borrower, Administrative Agent and each Managing Agent shall
be addressed as follows:
If to Borrower or a Subsidiary: TCA Cable TV, Inc.
3015 S.E. Loop 323
Tyler, Texas 75701
Attn: Mr. Jimmie Taylor
Fax: (903) 595-1929
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<TABLE>
<S> <C>
with a copy to: Jackson & Walker, L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75202-3797
Attn: Kimberlee K. Rozman, Esq.
Fax: (214) 953-5822
If to Administrative Agent
and Managing Agent: NationsBank of Texas, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75201
Attn: Mr. Jay Tweed
Vice President
Fax: (214) 508-9390
with a copy to: Donohoe, Jameson & Carroll, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Attn: Melissa Ruman Stewart
Fax: (214) 744-0231
If to Managing Agent: Texas Commerce Bank National Association
2200 Ross Avenue
Third Floor
Dallas, Texas 75266
Attn: Mr. Kevin Kelty
Senior Vice President
Fax: (214) 965-2990
</TABLE>
11.4 Form and Number of Documents. Each agreement, document,
instrument, or other writing to be furnished under any provision of this
Agreement must be in form and substance and in such number of counterparts as
may be satisfactory to Administrative Agent and its counsel.
11.5 Exceptions to Covenants. No Company shall take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained in any Loan Paper if such action or omission would result
in the breach of any other covenant contained in any of the Loan Papers.
11.6 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Papers shall survive
all closings under the Loan Papers and, except as otherwise indicated, shall
not be affected by any investigation made by any party. All
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rights of reimbursement and indemnification shall survive termination of this
Agreement and payment in full of the Obligation.
11.7 GOVERNING LAW. THE LAWS (OTHER THAN CONFLICT-OF-LAWS
PROVISIONS THEREOF) OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA
SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES TO THE LOAN PAPERS AND THE
VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THE LOAN PAPERS.
11.8 Invalid Provisions. If any provision in any Loan Paper is
held to be illegal, invalid, or unenforceable, such provision shall be fully
severable; the appropriate Loan Paper shall be construed and enforced as if
such provision had never comprised a part thereof; and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by such
provision or by its severance therefrom. Administrative Agent, Managing
Agents, Lenders and Borrower agree to negotiate, in good faith, the terms of a
replacement provision as similar to the severed provision as may be possible
and be legal, valid, and enforceable.
11.9 ENTIRETY. A CREDIT AGREEMENT IN WHICH THE AMOUNT INVOLVED
EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING
AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY'S AUTHORIZED
REPRESENTATIVE. THE RIGHTS AND OBLIGATIONS OF BORROWER, ADMINISTRATIVE AGENT,
EACH MANAGING AGENT AND EACH LENDER SHALL BE DETERMINED SOLELY FROM WRITTEN
AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN
SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT
(AS AMENDED IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN PAPERS
EXECUTED BY BORROWER, ADMINISTRATIVE AGENT, EACH MANAGING AGENT AND EACH LENDER
REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER, ADMINISTRATIVE AGENT, EACH
MANAGING AGENT AND EACH LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES. THIS PARAGRAPH IS
INCLUDED HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE
CODE, AS AMENDED FROM TIME TO TIME.
11.10 VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY HERETO, IN
EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS (AND IN THE CASE OF BORROWER,
FOR EACH OF ITS SUBSIDIARIES), HEREBY (a) IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF TEXAS
AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY
LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE
OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS LAW, (b) IRREVOCABLY
WAIVES,
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TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN
CONNECTION WITH THE LOAN PAPERS AND THE OBLIGATION BROUGHT IN DISTRICT COURTS
OF DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, (c) IRREVOCABLY WAIVES ANY CLAIMS
THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (d) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF
COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT
ITS ADDRESS SET FORTH HEREIN, AND (e) IRREVOCABLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY LOAN PAPER. The scope of each of
the foregoing waivers is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter
of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Borrower (for itself and on behalf of each of its Subsidiaries) acknowledges
that this waiver is a material inducement to Administrative Agent's, each
Managing Agent's and Lenders' agreement to enter into a business relationship,
that Administrative Agent, each Managing Agent and Lenders have already relied
on this waiver in entering into this Agreement, and that Administrative Agent,
each Managing Agent and each Lender will continue to rely on each of such
waivers in related future dealings. Borrower (for itself and on behalf of each
of its Subsidiaries) further warrants and represents that it has reviewed these
waivers with its legal counsel, and that it knowingly and voluntarily agrees to
each such waiver following consultation with legal counsel. THE WAIVERS IN
THIS SECTION 11.10 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN
PAPER. In the event of Litigation, this Agreement may be filed as a written
consent to a trial by the court.
11.11 Amendments, Consents, Conflicts and Waivers.
(a) No amendment or waiver of any provision of this
Agreement or any other Loan Papers, nor consent to any departure by
Borrower or any Subsidiary therefrom, shall be effective unless the
same shall be in writing and signed by Administrative Agent with the
consent of Majority Lenders, and then any such waiver or consent shall
be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver,
or consent shall (and the result of action or failure to take action
shall not) unless in writing and signed by all of Lenders and
Administrative Agent, (a) increase the Commitment, (b) reduce any
principal, interest, fees, or other amounts payable hereunder, or
waive or result in the waiver of any Default under Section 8.1 hereof,
(c) postpone any date fixed for any scheduled reduction of the
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Commitment, or the payment of any principal, interest, fees, or other
amounts payable hereunder, (d) release any collateral or guaranties
securing Borrower's obligations hereunder, other than releases
contemplated hereby and by the Loan Papers, (e) change the meaning of
Specified Percentage, Majority Lenders or the number of Lenders
required to take any action hereunder, (f) change the definition of
Subordinated Debt or any of the subordination terms of any
Subordinated Debt or (g) amend this Section. No amendment, waiver, or
consent shall affect the Rights or duties of Administrative Agent
under any Loan Papers, unless it is in writing and signed by
Administrative Agent in addition to the requisite number of Lenders.
(b) Any conflict or ambiguity between the terms and
provisions herein and terms and provisions in any other Loan Paper
shall be controlled by the terms and provisions herein.
(c) No course of dealing nor any failure or delay by
Administrative Agent, any Managing Agent or any Lender, or any of
their Representatives with respect to exercising any Right of
Administrative Agent, any Managing Agent or any Lender hereunder shall
operate as a waiver thereof. A waiver must be in writing and signed
by the applicable parties set forth in Section 11.11(a) above to be
effective, and such waiver will be effective only in the specific
instance and for the specific purpose for which it is given.
11.12 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart. It is not necessary that each party
execute the same counterpart so long as identical counterparts are executed by
each party.
11.13 Successors and Assigns; Participations.
(a) This Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective successors and
assigns, except that Borrower may not, directly or indirectly, assign
or transfer, or attempt to assign or transfer, any of its Rights,
duties or obligations under any Loan Papers without the express
written consent of Administrative Agent, Managing Agents and Lenders.
(b) Each Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable Law, at
any time sell to one or more Persons (each a "PARTICIPANT", such term
not to include any Lender purchasing a participation pursuant to
Section 10.7 hereof) participating interests in the Obligation. In
the event of any such sale to a Participant, (i) any selling Lender's
obligations under this Agreement shall remain unchanged, (ii) such
selling Lender shall remain solely responsible for the performance
thereof, (iii) such selling Lender shall remain the holder
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of the Principal Debt for all purposes under this Agreement, and (iv)
Borrower shall continue to deal solely and directly with such selling
Lender in connection with such selling Lender's Rights and obligations
under the Loan Papers. Participants shall have no Rights under the
Loan Papers other than certain voting Rights as provided below.
Subject to the following, each Lender shall be entitled to obtain (on
behalf of its Participants) the benefits of Section 3 hereof with
respect to all participation in the Obligation outstanding from time
to time so long as Borrower shall not be obligated to pay any amount
in excess of the amount that would be due to such selling Lender under
Section 3 hereof calculated as though no participation had been made.
No Lender shall sell any participating interest under which the
Participant shall have any Rights to approve any amendment,
modification, or waiver of any Loan Paper, except to the extent such
amendment, modification, or waiver extends the due date for payment of
any amount in respect of principal, interest, or fees due under the
Loan Papers, reduces the interest rate or the amount of principal or
fees applicable to the Obligation (except such reductions as are
contemplated by this Agreement), or releases any guaranty or
collateral, if any, for the Obligation.
(c) Each Lender may, pursuant to an Assignment and
Acceptance and in the ordinary course of its commercial banking
business and in accordance with applicable Law, sell to one or more
Eligible Assignees (each a "PURCHASER") all or any part of its Rights
and obligations under the Loan Papers (including, without limitation,
the same portion of its Commitment and the Loans at the time owing to
it and the Note held by it), and such Purchaser shall assume such
Rights and obligations; provided, however, that neither Managing Agent
shall assign in the aggregate more than 51% of its Specified
Percentage of the Commitment at any time, and, with respect to any
assignment by any Lender, no assignment shall be in an amount less
than $5,000,000. The consent of the Administrative Agent and the
Managing Agents, which consent shall not be unreasonably withheld,
shall be required prior to an assignment becoming effective, and,
unless a Default or Potential Default has occurred and is continuing,
the consent of Borrower, which consent shall not be unreasonably
withheld, shall be required prior to an assignment becoming effective.
From and after the assignment's effective date and the payment to the
Administrative Agent by such transferring Lender of a transfer and
administrative fee of $5,000, such Purchaser shall for all purposes be
a "Lender" party to this Agreement and shall have all the Rights and
obligations of a Lender under this Agreement to the same extent as if
it were an original party hereto with commitments as set forth in the
assignment agreement, and the transferor Lender shall be released from
its obligations hereunder to a corresponding extent, and no further
consent or action by Borrower or such Lender shall be required. Upon
the consummation of any transfer to a Purchaser pursuant to this
clause (c), and upon the payment by the transferring Lender to the
Administrative Agent of the $5,000 transfer and administrative fee,
Borrower shall execute and deliver to each of the transferor Lender
and such Purchaser a Note in the face amount of its portion of the
Commitment following such transfer, and, upon receipt of such Note,
such transferor Lender shall return to Borrower the Note previously
delivered to such Lender hereunder.
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(d) No Participant or Purchaser (including for this
purpose a different lending office of Lender) shall be entitled to
receive any greater payment under Section 3 hereof than Lender would
have been entitled to receive with respect to the Rights assigned.
(e) Borrower authorizes each Lender to disclose to any
Participant or Purchaser (each, a "transferee") and any prospective
transferee any and all financial and other information in such
Lender's possession concerning Borrower and its Subsidiaries and
affiliates which has been or may be delivered to such Lender by or on
behalf of Borrower in connection with this Agreement or any other Loan
Paper or such Lender's credit evaluation of Borrower and its
Subsidiaries.
11.14 Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances. Each Company's obligations under the Loan Papers shall remain in
full force and effect until the Commitment shall have terminated and the
Obligation shall have been paid in full. If at any time any payment of the
principal of or interest on the Notes or any other amount payable by Borrower
under any Loan Paper is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy, or reorganization of Borrower or otherwise,
the obligations of Borrower under the Loan Papers with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
11.15 Taxes. Each Lender which is not a United States Person hereby
agrees that:
(i) it shall, no later than the Closing Date (or, in the case
of a Lender which becomes a party hereto pursuant to Section 11.13
hereof after the Closing Date, the date upon which such Lender becomes
a party hereto) deliver to Borrower through the Administrative Agent,
with a copy to the Administrative Agent and each Managing Agent:
(A) if any lending office is located in the United States
of America, two accurate and complete signed
originals of Internal Revenue Service Form 4224 or
any successor thereto ("Form 4224"),
(B) if any lending office is located outside the United
States of America, two accurate and complete signed
originals of Internal Revenue Service Form 1001 or
any successor thereto ("Form 1001").
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such lending office or lending offices under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or
lending offices or selects an additional lending office it shall, at
the same time or reasonably promptly thereafter but only to the extent
the forms previously delivered by it hereunder are no longer
56
<PAGE> 63
effective, deliver to Borrower through the Administrative Agent, with
a copy to the Administrative Agent and each Managing Agent, in
replacement for the forms previously delivered by it hereunder:
(A) if such changed or additional lending office is
located in the United States of America, two accurate
and complete signed originals of Form 4224; or
(B) otherwise, two accurate and complete signed originals
of Form 1001,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such changed or additional lending office under
this Agreement free from withholding of United States Federal income
tax;
(iii) it shall, before or promptly after the occurrence of any
event (including the passing of time but excluding any event mentioned
in clause (ii) above) requiring a change in the most recent Form 4224
or Form 1001 previously delivered by such Lender and if the delivery
of the same be lawful, deliver to Borrower through the Administrative
Agent with a copy to the Administrative Agent and each Managing Agent,
two accurate and complete original signed copies of Form 4224 or Form
1001 in replacement for the forms previously delivered by such Lender;
and
(iv) it shall, promptly upon the request of Borrower to that
effect, deliver to Borrower such other forms or similar documentation
as may be required from time to time by any applicable law, treaty,
rule or regulation in order to establish such Lender's tax status for
withholding purposes.
(f) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 11.15 shall survive the payment in full of principal and interest
hereunder and the termination of this Agreement.
11.16 Confidentiality. Each Lender agrees to keep information
obtained by it pursuant to the terms hereof or the terms of any other Loan
Paper that has been designated "Confidential" in writing across the top of such
information by Borrower, and which such information is not otherwise publicly
available ("Confidential Information") confidential in accordance with such
Person's customary practices and agrees that it will only use such Confidential
Information in connection with the transactions contemplated by this Agreement
and not disclose any of such Confidential Information other than (a) to such
Person's employees, counsel (inhouse and outside), accountants, consultants,
representatives, professional advisors, Affiliates and agents of such Person to
the extent required for such persons to perform their duties or in accordance
with policy or customary practice of such Person, (b) to regulatory officials,
and to the extent that such Person deems disclosure reasonably necessary, or to
the extent that such Person has been advised by counsel that disclosure is
required, in order to comply with any Law, regulation or judicial order, or
requested or required by bank regulators or auditors or other governmental
57
<PAGE> 64
authorities or Tribunals, (c) as reasonably deemed necessary in connection with
any policy, investigation, legal process or litigation, or (d) to assignees or
participants or proposed assignees or proposed participants of all or any part
of this credit facility who in each case agree in writing to be bound by the
provisions of this Section 11.16. Each Lender agrees that if it is required by
applicable law or legal process to disclose any confidential information, such
Lender will, as soon as practicable, notify Borrower of the request or
requirement relating to such applicable law or legal process and the date on
which a response to the same is due from it, provided that (a) the failure of
any Lender to comply with the provisions of this sentence shall not affect the
Obligations, or the obligation of Borrower to comply with the terms of this
Agreement and the Loan Papers, and (b) this sentence shall not apply to any
disclosure that any Lender is required by applicable law to make to any
governmental authority having authority over such Lender.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
58
<PAGE> 65
EXECUTED as of the day and year first mentioned.
BORROWER: TCA CABLE TV, INC., as Borrower
By:____________________________________
(Name)_________________________________
(Title)________________________________
ADMINISTRATIVE AGENT
AND MANAGING AGENT: NATIONSBANK OF TEXAS, N.A., as
Administrative Agent and Managing Agent
_______________________________________
By: Jay S. Tweed
Title: Vice President
MANAGING AGENT: TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Managing Agent
By:____________________________________
(Name)_________________________________
(Title)________________________________
LENDERS: NATIONSBANK OF TEXAS, N.A., as a Lender
Specified Percentage: 20.00%
Address: _______________________________________
901 Main Street By: Jay S. Tweed
64th Floor Title: Vice President
Dallas, Texas 75201
Attn: Jay S. Tweed
Vice President
Phone: (214) 508-0973
Fax: (214) 508-9390
59
<PAGE> 66
Specified Percentage: 20.00% TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Lender
Address:
2200 Ross Avenue
3rd Floor By:____________________________________
Dallas, Texas 75201
Attn: J. Kevin Kelty (Name)_________________________________
Senior Vice President
Phone: (214) 965-4020 (Title)________________________________
Fax: (214) 922-2990
Specified Percentage: 9.50% ABN AMRO BANK N.V., as a Lender
Address:
Three Riverway, Suite 1700
Houston, Texas 77056 By:____________________________________
(Name)_________________________________
Attn: Lila Jordan (Title)________________________________
Vice President
Phone: (713) 964-3312
Fax: (713) 629-7533
with a copy to:
By:____________________________________
ABN AMRO Bank, N.V. (Name)_________________________________
135 South LaSalle
Suite 711 (Title)________________________________
Chicago, Illinois 60603
Attn: Douglas Zylstra
Phone: (312) 904-2807
Fax: (312) 904-6387
60
<PAGE> 67
Specified Percentage: 6.25% HIBERNIA NATIONAL BANK, as a Lender
Address:
313 Carondelet
New Orleans, Louisiana 70130 By:____________________________________
(Name)_________________________________
Attn: Troy Villafarra (Title)________________________________
Vice President
Phone: (504) 533-2738
Fax: (504) 533-5344
Specified Percentage: 9.50% THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH, as a Lender
Address:
165 Broadway
New York, New York 10006 By:____________________________________
Attn: T.J. Fukunaga
Vice President (Name)_________________________________
Phone: (212) 335-4549
FAX: (212) 335-4524 (Title)________________________________
or (212) 608-2371
with a copy to:
2200 Ross Avenue
Suite 4700 West
Dallas, Texas 75201
Attn: Robert Nelson
(Title)
-----------------
Phone: (214) 969-5352
Fax: (214) 969-5357
61
<PAGE> 68
Specified Percentage: 9.50% THE MITSUBISHI BANK LIMITED, HOUSTON
AGENCY, as a Lender
Address:
1100 Louisiana Street
Suite 2800 By:____________________________________
Houston, Texas 77002-5216
Attn: Michael A. Innes (Name)_________________________________
(Title)
----------------- (Title)________________________________
Phone: (713) 655-3807
Fax: (713) 658-0116
Specified Percentage: 6.25% TRUST COMPANY BANK, as a Lender
Address:
25 Park Place
24th Floor
Atlanta, Georgia 30303 By:____________________________________
(Name)_________________________________
Attn: Jennifer L. McClure (Title)________________________________
Banking Officer
Phone: (404) 588-7412
Fax: (404) 827-6270
By:____________________________________
(Name)_________________________________
(Title)________________________________
Specified Percentage: 9.50% FIRST INTERSTATE BANK OF TEXAS, N.A.,
as a Lender
Address:
1445 Ross Avenue
Dallas, Texas 75202 By:____________________________________
(Name)_________________________________
Attn: Craig Scheef (Title)________________________________
Vice President
Phone: (214) 740-1548
Fax: (214) 740-1519
62
<PAGE> 69
Specified Percentage: 9.50% MELLON BANK, N.A., as a Lender
Address:
Room 4440
1 Mellon Bank Center
500 Grant Street By:____________________________________
Pittsburgh, Pennsylvania 15258
Attn: Lisa M. Pellow (Name)_________________________________
Vice President
Phone: (412) 236-2790 (Title)________________________________
Fax: (412) 234-6375
63
<PAGE> 70
EXHIBIT A
PROMISSORY NOTE
$_______________ July 21, 1995
FOR VALUE RECEIVED, TCA CABLE TV, INC., a Texas corporation
("Borrower"), promises to pay to the order of ____________________, ("Lender"),
at the principal offices of NationsBank of Texas, N.A., as Administrative Agent
for Lenders ("Administrative Agent"), located at 901 Main Street Dallas, Texas,
75201, that principal amount of $____________ (___________________ Million and
____ Dollars), or such lesser amount as shall have been advanced and remains
unpaid hereunder, together with interest on the unpaid principal balance from
time to time outstanding at the applicable rates described in the Credit
Agreement (as defined below).
This note is one of the "Notes" under the Credit Agreement (as
amended, modified, supplemented, or restated from time to time, the "Credit
Agreement") dated as of the date of this note, between Borrower, Administrative
Agent, Texas Commerce Bank National Association ("Managing Agent") and Lenders.
All of the defined terms in the Credit Agreement have the same meanings when
used in this note.
This note incorporates by reference the principal and interest payment
terms in the Credit Agreement -- including, without limitation, the Termination
Date.
This note incorporates by reference all other provisions in the Credit
Agreement applicable to this note, including, without limitation, provisions
for disbursements of principal, applicable interest rates before and after
Default, voluntary and mandatory prepayments, acceleration of maturity,
exercise of Rights, payment of attorneys' fees, court costs, and other costs of
collection, certain waivers by Borrower and other obligors, assurances and
security, choice of Texas and United States federal law, usury savings, and
other matters applicable to "Loan Papers" under the Credit Agreement.
TCA CABLE TV, INC.
By:________________________________
(Name)_____________________________
(Title)____________________________
EXHIBIT "A" - Page Solo
<PAGE> 71
EXHIBIT B
BORROWING NOTICE
________________, ______
NationsBank of Texas, N.A., as Administrative Agent
NationsBank Plaza, 64th Floor
901 Main Street
Dallas, Texas 75202
Attn: Jay S. Tweed
Reference is made to the Credit Agreement dated as of July 21, 1995
(as renewed, extended, amended, supplemented, replaced, or restated, the
"CREDIT AGREEMENT"), between the undersigned, NationsBank of Texas, N.A., Texas
Commerce Bank National Association and the Lenders (as defined therein).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The undersigned
hereby gives you notice pursuant to Section 2.2(a) of the Credit Agreement that
it requests a Loan under the Credit Agreement, and in that connection sets
forth below the terms on which such Loan is requested to be made:
<TABLE>
<S> <C>
(A) Borrowing Date of Loan (a Business Day) _________
(B) Principal Amount of Loan 1 _________
(C) Type of Loan 2 _________
(D) For LIBOR Rate Loan,
Interest Period and the last day thereof 3 _________
</TABLE>
On the date the rate is set, please confirm the interest rate below
and return by facsimile transmission to _______________________________.
____________________
1 Not less than $100,000 or an integral multiple of
$100,000 (if a Base Rate Loan); not less than
$1,000,000 or a greater integral multiple of
$100,000,000 (if a LIBOR Rate Loan; and not greater
then the unused Commitment [, as reduced or canceled].
2 LIBOR Rate Loan or Base Rate Loan.
3 LIBOR Rate Loan -- 1, 2, 3, 6 or 12 months.
In no event may the Interest Period end after the
Termination Date.
EXHIBIT "B" - Page 1
<PAGE> 72
Borrower hereby certifies that the following statements are true and
correct on the date hereof, and will be true and correct on the Borrowing Date
specified herein after giving effect to such Loan:
(a) all of the representations and warranties in the Loan
Papers are true and correct in all material respects (except to the
extent that (i) the representations and warranties speak to a specific
date or the facts on which such representations and warranties are
based have been changed by transactions contemplated or permitted by
the Credit Agreement and, when required by this Agreement,
supplemental Schedules or information have been delivered with respect
thereto);
(b) no change in the financial condition of any Company which
is a Material Adverse Event has occurred;
(c) no Default or Potential Default has occurred and is
continuing; and
(d) the funding of such Loan is permitted by Law.
Very truly yours,
TCA CABLE TV, INC.
By: ________________________________
(Name) ______________________________
(Title) _____________________________
Rate: ___________
Confirmed by: ______________________________
EXHIBIT "B" - Page 2
<PAGE> 73
EXHIBIT C
CONVERSION NOTICE
_____________, _____
NationsBank of Texas, N.A., as Administrative Agent
NationsBank Plaza, 64th Floor
901 Main Street
Dallas, TX 75202
Attn: Jay S. Tweed
Reference is made to the Credit Agreement dated as of July 21, 1995
(as renewed, extended, amended, supplemented, replaced, or restated, the
"Credit Agreement"), between the undersigned, NationsBank of Texas, N.A., Texas
Commerce Bank National Association and the Lenders (as defined therein).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The undersigned
hereby gives you notice pursuant to Section 2.2(d) of the Credit Agreement that
it elects to convert a Loan under the Credit Agreement from one Type to another
Type or elects a new Interest Period for a LIBOR Rate Loan, and in that
connection sets forth below the terms on which such election is requested to be
made:
<TABLE>
<S> <C>
(A) Date of conversion or last day of
applicable Interest Period (a Business Day) __________
(B) Type and principal amount of existing
Loan being converted or continued 4 __________
(C) New Type of Loan selected (or Type of
Loan continued) 5 __________
(D) For conversion to, or continuation of, __________
a LIBOR Rate Loan,
</TABLE>
____________________
4 Not less than $100,000 or an integral multiple of
$100,000 (if a Base Rate Loan); not less than
$1,000,000 or a greater integral multiple of $1,000,000
(if a LIBOR Rate Loan); not greater than the unused
Commitment, as reduced or canceled.
5 LIBOR Rate Loan or Base Rate Loan.
EXHIBIT "C" - Page 1
<PAGE> 74
Interest Period selected and the last thereof 6 _____________
On the date the rate is set, please confirm the interest rate below
and return by facsimile transmission to ________________________________.
Borrower hereby certifies that on the date hereof and as of the
Conversion Date, no Default or Potential Default has occurred and is
continuing.
Very truly yours,
TCA CABLE TV, INC.
By _______________________________
(Name) ____________________________
(Title) ___________________________
Rate: _________
Confirmed by: ____________________________
____________________
6 LIBOR Rate Loan--1, 2, 3, 6 or 12 months. In no event may the Interest
Period end after the Termination Date.
EXHIBIT "C" - Page 2
<PAGE> 75
EXHIBIT D
COMPLIANCE CERTIFICATE
FOR ___________ ENDED _________, __________
DATE: _______________, _______
ADMINISTRATIVE AGENT: NationsBank of Texas, N.A., as Administrative Agent
BORROWER: TCA Cable TV, Inc.
________________________________________________________________________________
This certificate is delivered under the Credit Agreement (as renewed,
extended, amended, supplemented, replaced, or restated, the "Credit Agreement")
dated as of July 21, 1995, between Borrower, Administrative Agent, Texas
Commerce Bank National Association and the Lenders (as defined therein), all
defined terms in which have the same meanings when used in this certificate.
I certify to Administrative Agent and the Lenders that:
(a) I am the treasurer or chief financial officer of the Companies,
and, as such, I am authorized to deliver this certificate on behalf of the
Companies;
(b) the Financial Statements of the Companies attached to this
certificate were prepared in accordance with GAAP, and present fairly the
consolidated financial condition and results of operations of Borrower and its
Consolidated Subsidiaries as of, and for the (three, six, or nine months, or
fiscal year) ended on, ______________, 199_ (the "Subject Period");
(c) a review of the activities of the Companies during the Subject
Period has been made under the supervision of the chief financial officer with
a view to determining whether, during the Subject Period, the Companies have
kept, observed, performed, and fulfilled all of their respective obligations
under the Loan Papers, and during the Subject Period, to my knowledge (i) the
Companies kept, observed, performed, and fulfilled each and every covenant and
condition of the Loan Papers (except for the deviations, if any, set forth on a
schedule annexed to this certificate) in all material respects, and (ii) no
Default (nor any Potential Default) has occurred which has not been cured or
waived (except the Defaults or Potential Defaults, if any, described on the
schedule annexed to this certificate);
EXHIBIT "D" - Page 1
<PAGE> 76
(d) the status of compliance by Borrower with Sections 7.22(a) through
(c) of the Credit Agreement at the end of the Subject Period is as set forth in
the calculations annexed to this certificate, which calculations are set forth
in such detail as Administrative Agent shall have requested; and
(e) any changes to Schedules 6.2, 6.3, 6.11, 6.14 or 6.17 during the
Subject Period are annexed to this Certificate.
By _____________________________________
Chief Financial Officer or Treasurer
EXHIBIT "D" - Page 2
<PAGE> 77
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Assignment and
Acceptance") is dated ________________, ____, between ________________________
("Assignor") and _____________________ ("Assignee").
PRELIMINARY STATEMENTS:
A. Reference is made to the Credit Agreement dated as of
July 21, 1995 (said Credit Agreement, as it may hereafter be amended or
otherwise modified from time to time, being referred to as the "Credit
Agreement") among TCA Cable TV, Inc. ("Borrower"), NationsBank of Texas, N.A.
(the "Administrative Agent"), the financial institutions parties thereto as the
Lenders thereunder, and NationsBank of Texas, N.A. and Texas Commerce Bank
National Association, as Managing Agents ("Managing Agents"). Unless otherwise
defined, terms are used herein as defined in the Credit Agreement.
B. This Assignment and Acceptance is made with reference
to the following facts:
(i) Assignor is a Lender under and as defined in
the Credit Agreement and, as such, presently holds a percentage of the
rights and obligations of the Lenders under the Credit Agreement.
(ii) As of the date hereof, the Commitment is
$__________, Assignor's Specified Percentage is ___%, and Assignor's
Specified Percentage of the Commitment is $__________.
(iii) As of the date hereof, the unpaid principal
of the Loan is $____________, and Assignor's Specified Percentage of
the Loan is $__________.
(iv) On the terms and conditions set forth below,
Assignor desires to sell and assign to Assignee, and Assignee desires
to purchase and assume from Assignor, as of the Effective Date (as
defined below), a portion of Assignor's Specified Percentage of the
Commitment equal to _______% (the "Assigned Percentage").
EXHIBIT "E" - Page 1
<PAGE> 78
AGREEMENT.
NOW, THEREFORE, Assignor and Assignee hereby agree as follows:
1. Assignor hereby sells and assigns to Assignee,
without recourse and, except as provided in paragraph 2 of this Assignment and
Acceptance, without representation and warranty, and Assignee hereby purchases
and assumes from Assignor, Assignor's rights and obligations under the Credit
Agreement, to the extent of the Assigned Percentage (including without
limitation, (a) the Assigned Percentage of the Commitment as in effect as of
the Effective Date and (b) _____% of the Loan owing to Assignor on the
Effective Date).
2. Assignor (a) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement, any other Loan Paper or any other instrument or document
furnished pursuant thereto, or with respect to the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other Loan Paper or any other instrument or document furnished
pursuant thereto or any collateral; and (c) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or any Company or any Person or the performance or observance by
Borrower or any Company or any Person of any of its obligations under the Loan
Papers or any other instrument or document furnished pursuant thereto.
3. Assignee (a) confirms that it has received a copy of
the Credit Agreement, together with copies of the most recent financial
statements delivered to Assignor pursuant to Section 7.3 of the Credit
Agreement, and such other Loan Papers, documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (b) agrees that it will, independently and
without reliance upon the Administrative Agent, either Managing Agent, Assignor
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement and the other Loan
Papers; (c) appoints and authorizes the Administrative Agent and each Managing
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement and the other Loan Papers as are delegated to the
Administrative Agent and Managing Agents, respectively, by the terms thereof,
together with such powers as are reasonably incidental thereto; (d) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement and the other Loan Papers are required to be
performed by it as a Lender; (e) specifies, as its address for notice, the
office set forth beneath its name on the signature pages hereof; and (f)
confirms that it is an Eligible Assignee.
EXHIBIT "E" - Page 2
<PAGE> 79
4. The effective date for this Assignment and Acceptance
(the "Effective Date") shall be the date following execution by the parties
hereto on which Assignor receives from Assignee an amount in same day funds
equal to _____% of the Loan owing to Assignor on such date and the
Administrative Agent, each Managing Agent and Borrower receive notice thereof
and an executed copy of this Assignment and Acceptance; provided, however,
that, if required by Section 11.13 of the Credit Agreement, Borrower shall have
previously approved this Assignment and Acceptance in writing. Borrower
acknowledges its obligations under the Credit Agreement, and agrees, within 5
Business Days after receiving an executed copy of this Assignment and
Acceptance to execute and deliver to the Administrative Agent, in exchange for
the Note originally delivered to Assignor, new Notes to the order of Assignor
and Assignee in amounts equal to their respective Specified Percentages of the
Commitment.
5. As of the Effective Date, (a) Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
and Acceptance, have the Rights and obligations of a Lender thereunder, (b)
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its Rights and be released from its obligations under the Credit
Agreement and other Loan Papers, and (c) Assignor's Specified Percentage shall
be ______% of the Commitment, and Assignee's Specified Percentage shall be
________% of the Commitment.
6. From and after the Effective Date, the Administrative
Agent shall make all payments under the Credit Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest and fees with respect thereto) to Assignee. Assignor and
Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the laws of the state of Texas, without
reference to principles of conflict of laws.
ASSIGNOR:
_______________________________________
By: ___________________________________
Name:
Title:
EXHIBIT "E" - Page 3
<PAGE> 80
ASSIGNEE:
___________________________________
By: ________________________________
Name:
Title:
____________________________________
____________________________________
____________________________________
Attention: ___________________
Telephone No.: (___) ____-_____
Telecopier No.: (___) ____-_____
Accepted and approved this ____
day of ___________, _____:
TCA CABLE TV, INC.
________________________________________
By: __________________________________
Its: __________________________________
EXHIBIT "E" - Page 4
<PAGE> 1
EXHIBIT 10.2
EXECUTION COPY
________________________________________________________________________________
________________________________________________________________________________
TCA CABLE TV, INC.
$100,000,000.00
7.26% SENIOR NOTES DUE JUNE 23, 2005
________________________________________
NOTE AGREEMENT
________________________________________
Dated as of June 23, 1995
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
(Not Part of Agreement)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. CONDITIONS AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3A. CERTAIN DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3B. OPINION OF PURCHASERS' SPECIAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3D. PURCHASE PERMITTED BY APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3E. PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3F. PRIVATE PLACEMENT NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3G. SALE OF NOTES TO OTHER PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4A. REQUIRED PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4C. NOTICE OF OPTIONAL PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4D. PARTIAL PAYMENTS PRO RATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4E. RETIREMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4F. PUT OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4F(1). GRANT OF PUT OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4F(2). NOTICES; EXERCISE OF PUT OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5A. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5B. INSPECTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5C. COVENANT TO SECURE NOTES EQUALLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5D. AGREEMENT ASSUMING LIABILITY ON NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5E. MAINTENANCE OF INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5F. FRANCHISES, LICENSES AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5G. CABLE TV SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5H. POLLUTION AND OTHER REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6A. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6A(1). OPERATING CASH FLOW RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6A(2). FIXED CHARGE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6A(3). INTEREST EXPENSE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6B. SUBORDINATED DEBT LIMITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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<TABLE>
<S><C> <C>
6C. LIEN, DEBT AND OTHER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6C(1). LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6C(2). DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6C(3). LOANS, ADVANCES AND INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6C(4). SALE OF STOCK AND DEBT OF SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6C(5). MERGER AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6C(6). LEASE RENTALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6C(7). SALE AND LEASE-BACK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6C(8). SALE OR DISCOUNT OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6C(9). TRANSACTIONS WITH STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6C(10). GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7A. ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7B. RESCISSION OF ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7C. NOTICE OF ACCELERATION OR RESCISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7D. OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8A. ORGANIZATION; QUALIFICATION; CORPORATE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8B. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8C. ACTIONS PENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8D. OUTSTANDING DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8E. TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8F. FRANCHISES AND LICENSES; MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8G. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8H. CONFLICTING AGREEMENTS AND OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8I. OFFERING OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8J. USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8K. POLLUTION AND OTHER REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8L. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8M. GOVERNMENTAL CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8N. ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8O. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8P. INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8Q. PUBLIC UTILITY HOLDING COMPANY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9. REPRESENTATIONS OF EACH PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9A. NATURE OF PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9B. SOURCE OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10A. YIELD MAINTENANCE TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10B. OTHER TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<S> <C> <C>
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11A. NOTE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11B. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11C. CONSENT TO AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES . . . . . . . . . . . . . . . . . . . . 30
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 31
11G. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11H. DISCLOSURE TO OTHER PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11I. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11J. PAYMENTS DUE ON NON-BUSINESS DAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11K. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11L. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11M. SATISFACTION REQUIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11N. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11O. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11P. BINDING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11Q. SEVERALTY OF OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11R. MAXIMUM INTEREST PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
Schedules and Exhibits:
Information Schedule
Schedule 6C -- Existing Guaranties
Schedule 8C -- Actions Pending
Schedule 8F -- Material Contracts
Schedule 8H -- Agreements Restricting Debt
Schedule 8O -- Financial Projections
Exhibit A -- Form of Note
Exhibit B -- Form of Opinion of Company's Counsel
Exhibit C -- Form of Notice of Sale
(iii)
<PAGE> 5
TCA CABLE TV, INC.
3015 SSE Loop 323
Tyler, Texas 75713-1489
As of June 23, 1995
To Each of the Purchasers Named in the
Information Schedule attached hereto
$100,000,000 Senior Notes
Ladies and Gentlemen:
The undersigned, TCA Cable TV, Inc. (the "COMPANY"), hereby agrees
with the purchasers named in theInformation Schedule attached hereto (the
"PURCHASERS") as follows:
PARAGRAPH 1. AUTHORIZATION OF ISSUE OF NOTES.
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the
issue of its senior promissory notes in the aggregate principal amount of
$100,000,000, each to be dated the date of issue thereof, to mature June 23,
2005, to bear interest on the unpaid balance thereof from the date thereof
until the principal thereof shall have become due and payable at the rate of
7.26% per annum and on overdue payments at the rate specified therein, and to
be substantially in the form of Exhibit A attached hereto. The term "NOTES" as
used herein shall include each such senior promissory note delivered pursuant
to any provision of this Agreement and each such senior promissory note
delivered in substitution or exchange for any other Note pursuant to any such
provision. Capitalized terms used herein have the meanings specified in
paragraph 10.
PARAGRAPH 2. PURCHASE AND SALE OF NOTES
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to
each Purchaser and, subject to the terms and conditions herein set forth, each
Purchaser agrees to purchase from the Company Notes delivered by the Company in
the aggregate principal amount of Notes set forth opposite such Purchaser's
name in the Information Schedule at 100% of such aggregate principal amount.
The Company will deliver to each Purchaser, at the offices of Thompson &
Knight, P.C. at 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201, one or
more Notes registered in such Purchaser's name, evidencing the aggregate
principal amount of Notes to be purchased by such Purchaser and in the
denomination or denominations specified with respect to such Purchaser in the
Information Schedule against the payment of the purchase price thereof by
transfer of immediately available funds for credit to the Company's account as
set forth in the Information Schedule on the dates of closing (the "CLOSINGS"
or the "DATES OF CLOSING"), which shall be June 23, 1995, and June 29, 1995, or
any other dates on or before June 30, 1995 (the "CANCELLATION DATE"),
1
<PAGE> 6
upon which the Company and the Purchasers may mutually agree, such payment to
be ratable among Purchasers in accordance with any partial funding of such
Notes at each Closing.
PARAGRAPH 3. CONDITIONS PRECEDENT.
3. CONDITIONS AT CLOSING. Each Purchaser's obligation to purchase
and pay for the Notes to be purchased by such Purchaser hereunder is subject to
the satisfaction, on or before the Closing Dates of the following conditions:
3A. CERTAIN DOCUMENTS. Each Purchaser shall have received
the following, each dated the first Date of Closing:
(i) The Notes to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the
Board of Directors of the Company approving this Agreement and
the Notes, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to sign
this Agreement and the Notes and the other documents to be
delivered hereunder.
(iv) Certified copies of the Certificate of
Incorporation and By-laws of the Company.
(v) A favorable opinion of Jackson & Walker, special
counsel to the Company, satisfactory to the Purchasers and
substantially in the form of Exhibit B attached hereto and as
to such other matters as the Purchasers may reasonably
request.
(vi) A good standing certificate for the Company
from the Secretary of State of Texas dated as of recent date
and such other evidence of the status of the Company as the
Purchasers may reasonably request.
(vii) Additional documents or certificates with
respect to legal matters or corporate or other proceedings
related to the transactions contemplated hereby as the
Purchasers may reasonably request.
3B. OPINION OF PURCHASERS' SPECIAL COUNSEL. Such Purchaser
shall have received from Thompson & Knight, P.C., who are acting as
special counsel for the Purchasers in connection with this
transaction, a favorable opinion satisfactory to such Purchaser as to
such matters incident to the matters herein contemplated as such
Purchaser may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in paragraph 8 shall be true
on and as of each Date of Closing,
2
<PAGE> 7
except to the extent of changes caused by the transactions herein
contemplated; there shall exist on each Date of Closing no Event of
Default or Default; and the Company shall have delivered to such
Purchaser an Officer's Certificate, dated each Date of Closing, to
both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The offer by the
Company of, and the purchase of and payment for the Notes to be
purchased by such Purchaser on the Dates of Closing on the terms and
conditions herein provided (including the use of the proceeds of such
Notes by the Company) shall not violate any applicable law or
governmental regulation (including, without limitation, Section 5 of
the Securities Act or Regulation G, T or X of the Board of Governors
of the Federal Reserve System) and shall not subject such Purchaser to
any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and such
Purchaser shall have received such certificates or other evidence as
it may request to establish compliance with this condition.
3E. PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby
and all documents incident thereto shall be satisfactory in substance
and form to such Purchaser, and such Purchaser shall have received all
such counterpart originals or certified or other copies of such
documents as such Purchaser may reasonably request.
3F. PRIVATE PLACEMENT NUMBER. The Notes shall have been
assigned, or the Company shall have applied for, a private placement
number by Standard & Poor's CUSIP Service Bureau.
3G. SALE OF NOTES TO OTHER PURCHASERS. The Company shall
have sold to the other Purchasers the Notes to be purchased by them at
each such Closing and shall have received payment in full therefor.
PARAGRAPH 4. PREPAYMENTS.
4. PREPAYMENTS. The Notes shall be subject to prepayment only with
respect to the required prepayments specified in paragraph 4A and also under
the circumstances set forth in paragraph 4B.
4A. REQUIRED PREPAYMENTS. Until the Notes shall be paid in
full, the Company shall apply to the prepayment of the Notes, without
premium, the sum of $14,285,716 on June 23, in each of the years 1999
to 2004, inclusive, and such principal amounts of the Notes, together
with interest thereon to the prepayment dates, shall become due on
such prepayment dates. Any prepayment made by the Company pursuant to
any other provision of this paragraph 4 shall not affect its
obligation to make any prepayment required by this paragraph 4A. The
remaining principal amount of the Notes, together with interest
accrued thereon, shall become due on the maturity date of the Notes.
If less than the aggregate principal amount of Notes set forth
opposite such Purchaser's name in theInformation Schedule are sold to
any Purchaser, the amount of each such prepayment shall be reduced to
an amount calculated by multiplying the amount of the prepayment
otherwise required by this
3
<PAGE> 8
paragraph 4A by a fraction, the numerator of which shall be the
principal amount of Notes sold to such Purchaser and the denominator
of which shall be the aggregate principal amount of Notes set forth
opposite such Purchaser's name in the Information Schedule.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The
Notes shall be subject to prepayment, in whole at any time or from
time to time in part on any required prepayment date (provided that no
prepayment shall be in an amount less than $5,000,000 or an integral
multiple of $1,000,000 in excess of such amount), at the option of the
Company, at 100% of the principal amount so prepaid plus interest
thereon to the prepayment date and the Yield-Maintenance Amount, if
any, with respect to each Note. If the Company and the holder of any
Note shall prior to the prepayment date designate in writing a
different premium, the premium so designated shall be payable on the
prepayment date in lieu of the Yield-Maintenance Amount with respect
to such Note. Any partial prepayment of the Notes pursuant to this
paragraph 4B shall be applied in satisfaction of required payments of
principal in inverse order of their scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give
the holder of each Note to be prepaid pursuant to paragraph 4B
irrevocable written notice of any prepayment not less than 10 Business
Days prior to the prepayment date, specifying such prepayment date and
specifying the aggregate principal amount of the Notes to be prepaid
on such date and any applicable premium (together with a sample
calculation of such premium), identifying each Note held by such
holder, and the principal amount of each such Note, to be prepaid on
such date and stating that such prepayment is to be made pursuant to
paragraph 4B. Notice of prepayment having been given as aforesaid,
the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the
premium, if any, herein provided, shall become due and payable on such
prepayment date. The Company shall, on or before the day on which it
gives written notice of any prepayment pursuant to paragraph 4A, give
telephonic notice to each Significant Holder which shall have
designated a recipient for such notices in the Information Schedule
attached hereto or by notice in writing to the Company.
4D. PARTIAL PAYMENTS PRO RATA. Upon any partial prepayment
of the Notes pursuant to paragraph 4A or 4B, the principal amount to
be prepaid shall be applied pro rata to all Notes at the time
outstanding (including, for the purpose of this paragraph 4D only, all
Notes prepaid or otherwise retired or purchased or otherwise acquired
by the Company or any of its Subsidiaries or Affiliates other than by
prepayment pursuant to paragraph 4A or 4B) according to the respective
unpaid principal amounts thereof.
4E. RETIREMENT OF NOTES. The Company shall not, and shall
not permit any of its Subsidiaries or Affiliates to, prepay or
otherwise retire in whole or in part prior to their stated final
maturity, or purchase or otherwise acquire, directly or indirectly,
Notes held by any holder unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or purchase
or otherwise acquire, as the case may be, the same proportion of the
aggregate principal amount of Notes held by
4
<PAGE> 9
each other holder of Notes at the time outstanding upon the same terms
and conditions. Any Notes so prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding for
any purpose under this Agreement, except as provided in paragraph 4D.
4F. PUT OPTION.
4F(1). GRANT OF PUT OPTION. The Company hereby
gives and grants to the holder of each Note the option, right
and privilege (such option, right and privilege herein
collectively referred to as the "PUT OPTION") to require the
Company, upon or after the occurrence of a Trigger Event, to
purchase from such holder on the terms and conditions
hereinafter set forth, and the Company agrees so to purchase
from such holder, for an amount equal to the Agreed
Consideration, all but not less than all, Notes held by such
holder.
4F(2). NOTICES; EXERCISE OF PUT OPTION. Within 10
Business Days after any Responsible Officer of the Company has
knowledge of the occurrence of a Change in Control or Trigger
Event, the Company shall give the holder of each Note written
notice thereof describing such Change in Control or Trigger
Event, and the facts and circumstances surrounding the
occurrence thereof, in reasonable detail. At any time prior
to 90 days after the holder of any Note shall receive such
notice of a Trigger Event, such holder may exercise its Put
Option by delivering to the Company, and the Company shall
deliver a copy thereof to each other holder of a Note, at the
respective addresses provided pursuant to paragraph 11I (if so
provided), and to each Purchaser, at its address specified in
the Purchaser Schedule attached hereto, a notice of sale
substantially in the form of Exhibit C attached hereto (a
"NOTICE OF SALE"); provided, that after the first such Notice
of Sale is given as to a particular Trigger Event, the holder
of each other Note shall have until the later of (a) the
expiration of such 90-day period or (b) 20 days after its
receipt of the first such Notice of Sale to exercise its Put
Option in the manner specified above; and provided, further,
that if the Company receives one or more Notices of Sale from
the Majority Holder(s), the Company shall give the holder of
each Note prompt written notice (a "PURCHASE NOTICE") thereof,
whereupon the holder of each Note shall have until the later
of (x) the expiration of such 90-day period or (y) 20-days
after its receipt of the Purchase Notice to exercise its Put
Option by delivering to the Company a Notice of Sale. If, but
only if, the Majority Holder(s) shall deliver a Notice or
Notices of Sale pursuant to any provision of the preceding
sentence, the Company shall purchase the Notes then held by
each holder that has given a Notice of Sale on the date
specified in the Purchase Notice (which shall be not less than
30 days nor more than 45 days after the Purchase Notice), and
such holder shall sell such Notes to the Company, without
recourse, representation, or warranty (other than as to such
holder's full right, title and interest to such Notes free of
any adverse claim thereto), at a price, payable in immediately
available funds by wire transfer to the account specified
pursuant to paragraph 11A hereof or to such other account as
may be specified in such notice, equal
5
<PAGE> 10
to the Agreed Consideration. The holder of each Note shall have the
rights specified in this paragraph 4F with respect to each Trigger
Event that shall occur, regardless of any act or omission to act with
respect to any previous Trigger Event.
PARAGRAPH 5. AFFIRMATIVE COVENANTS.
5. AFFIRMATIVE COVENANTS. So long as any Note is outstanding and
unpaid, the Company covenants as follows:
5A. FINANCIAL STATEMENTS. The Company will deliver to each
Significant Holder in triplicate
(i) as soon as practicable and in any event within
60 days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year, consolidated
statements of operations, statements of changes in
shareholders' equity and statements of cash flows of the
Company and its Subsidiaries for the period from the beginning
of the current fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in
reasonable detail and certified by an authorized financial
officer of the Company, subject to changes resulting from
year-end adjustments;
(ii) as soon as practicable and in any event within
90 days after the end of each fiscal year, consolidated
statements of operations, statements of changes in
shareholders' equity and statements of cash flows of the
Company and its Subsidiaries for such year, and a consolidated
balance sheet of the Company and its Subsidiaries as at the
end of such year, setting forth in each case in comparative
form corresponding consolidated figures from the preceding
annual audit, all in reasonable detail and satisfactory in
scope to the Required Holder(s) and, as to the consolidated
statements, certified to the Company by independent public
accountants of recognized national standing selected by the
Company whose certificate shall be in scope and substance
reasonably satisfactory to the Required Holder(s);
(iii) promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices and
reports as it shall send to its stockholders and copies of all
registration statements (without exhibits) and all reports
which it files with the Securities and Exchange Commission (or
any governmental body or agency succeeding to the functions of
the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each
other report submitted to the Company or any Subsidiary by
independent accountants in connection with any annual, interim
or special audit made by them of the books of the Company or
any Subsidiary; and
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(v) with reasonable promptness, such other
information respecting the condition or operations, financial
or otherwise, of the Company or any of its Subsidiaries as
such Significant Holder may reasonably request.
Together with each delivery of financial statements required by
clauses (i) and (ii) above, the Company will deliver to each
Significant Holder an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance by the Company and its
Subsidiaries with the provisions of paragraph 6A and, the Officer's
Certificate delivered with the financial statements required to be
delivered by clause (ii) above shall further set forth, (except to the
extent specifically set forth in such financial statements) (i) the
aggregate amount of interest accrued on Debt and Capitalized Lease
Obligations of the Company and Subsidiaries (if any) during the fiscal
period covered by such financial statements, (ii) the aggregate amount
of operating lease rental payments (other than rental payments for
tower sites and utility poles) made during such fiscal period by the
Company and Subsidiaries (if any) which (stated separately) were of
the kinds subject to the restrictions of paragraph 6C(6), (iii) the
amounts at the end of such fiscal period of Operating Cash Flow (all
computed in accordance with the provisions hereof and showing the
method of computation), and (iv) the aggregate amounts of depreciation
on physical property charged on the books of the Company and
Subsidiaries (if any) during such fiscal period. Each such Officer's
Certificate shall state that to the best of the subject officer's
knowledge, there exists no Event of Default or Default, or, if any
Event of Default or Default exists, specifying the nature and period
of existence thereof and what action the Company proposes to take with
respect thereto.
Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver to each Significant Holder a
certificate of such accountants stating that, in making the audit
necessary for their certification of such financial statements, they
have obtained no knowledge of any Event of Default or Default, or, if
they have obtained knowledge of any Event of Default or Default,
specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their
failure to obtain knowledge of any Event of Default or Default which
would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards. The Company
also covenants that immediately after any Responsible Officer obtains
knowledge of an Event of Default or Default, it will deliver to each
holder of a Note an Officer's Certificate specifying the nature and
period of existence thereof, and what action the Company proposes to
take with respect thereto. Each holder of a Note is hereby authorized
to deliver a copy of any financial statement delivered pursuant to
this paragraph 5A to any regulatory body having jurisdiction over such
holder.
5B. INSPECTION OF PROPERTY. The Company will permit any
Person designated by any Significant Holder in writing, at such
Significant Holder's expense, to visit and inspect any of the
properties of the Company and its Subsidiaries, to examine the
corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to
discuss the affairs, finances and accounts of any such corporations
with the principal officers of the
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<PAGE> 12
Company, all at such reasonable times and as often as such Significant
Holder may reasonably request.
5C. COVENANT TO SECURE NOTES EQUALLY. The Company will, if
it or any Subsidiary shall create or assume any Lien upon any of its
property or assets, whether now owned or hereafter acquired, other
than Liens permitted by the provisions of paragraph 6C(1) (unless
prior written consent to the creation or assumption thereof shall have
been obtained pursuant to paragraph 11C), make or cause to be made
effective provision whereby the Notes will be secured by such Lien
equally and ratably with any and all other Debt thereby secured so
long as any such other Debt shall be so secured.
5D. AGREEMENT ASSUMING LIABILITY ON NOTES. If at any time
any Person should become liable (as co- obligor, endorser, guarantor
or surety) on any Debt of the Company or on any Debt of any
Subsidiary, the Company will, at the same time, cause such Person to
deliver to each holder of any Note an agreement pursuant to which such
Person shall become similarly liable on the Notes.
5E. MAINTENANCE OF INSURANCE. The Company will, and will
cause each Subsidiary to maintain insurance in such amounts and
against such liabilities and hazards as customarily is maintained by
other companies operating similar businesses and together with each
delivery of financial statements under clause (ii) of paragraph 5A,
and upon the written request of Required Holder(s), it will deliver an
Officer's Certificate specifying the details of such insurance in
effect.
5F. FRANCHISES, LICENSES AND AGREEMENTS. The Company will
maintain, preserve and comply, in all material respects, with the
terms of all franchises, licenses and agreements with public and
private utilities and governmental agencies or instrumentalities
(including the Federal Communications Commission) material to the
conduct, operation and maintenance of each Cable TV System it
operates.
5G. CABLE TV SYSTEM. The Company will use materials and
workmanship in the construction and operation of any Cable TV System
of sufficient quality to conform with applicable standards and
regulations of the FCC and will provide each subscriber with picture
and sound in compliance and conformity with standards set by the FCC,
except for any failure to so conform or comply which could not
directly or indirectly have a material adverse effect on the Company.
5H. POLLUTION AND OTHER REGULATIONS. The Company will comply
in all material respects, and will cause each of its Subsidiaries to
comply in all material respects, with all laws and regulations
relating to pollution and environmental control, equal employment
opportunity and employee safety in all jurisdictions in which the
Company and its Subsidiaries are doing business.
PARAGRAPH 6. NEGATIVE COVENANTS.
6. NEGATIVE COVENANTS. So long as any Note is outstanding and unpaid
or any Purchaser shall have any commitment hereunder, the Company covenants as
follows:
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6A. FINANCIAL COVENANTS.
6A(1). OPERATING CASH FLOW RATIO. The Company covenants that
it will not permit the aggregate amount of the Debt of the Company and
all Subsidiaries to be in excess of 375% of Operating Cash Flow during
the 12 month period preceding such calculation. For purposes of this
calculation, Operating Cash Flow shall include the pro forma Operating
Cash Flow for corporate acquisitions which have been actually
completed and shall exclude any Operating Cash Flow from assets which
have been sold.
6A(2). FIXED CHARGE RATIO. The Company covenants that it
will not permit the sum of consolidated net income plus allowances for
depreciation, amortization and deferred tax expenses at any time for
the twelve month period ending as of such time, to be less than 105%
of the sum of (i) all cash dividends, Related Investments and capital
expenditures (other than purchases of Cable TV Systems whether
directly or through the purchase of stock in a corporation whose
assets consist of Cable TV Systems, which corporation immediately
after such purchase will be a Subsidiary) for such 12 month period
then ended plus (ii) scheduled principal payments due on all Debt
during the 12 month period next following the date of such
calculation.
6A(3). INTEREST EXPENSE RATIO. The Company covenants that it
will not. permit Operating Cash Flow for the Company and all
Subsidiaries at any time for the twelve month period ending as of such
time to be less than 200% of aggregate interest expense for the
Company and all Subsidiaries for such twelve month period.
6B. SUBORDINATED DEBT LIMITATION. The Company covenants that
it will not make any payments of interest or principal on Subordinated
Debt in violation of the terms of subordination applicable to such
Subordinated Debt, and in any event so long as a Default or an Event
of Default exists.
6C. LIEN, DEBT AND OTHER RESTRICTIONS. The Company covenants
that it will not and will not permit any Subsidiary to:
6C(1). LIENS. Create, assume or suffer to exist any Lien
upon any of its property or assets, whether now owned or hereafter
acquired (whether or not provision is made for the equal and ratable
securing of the Note in accordance with the provisions of paragraph
5C), except
(i) Liens for taxes not yet due or which are being
actively contested in good faith by appropriate proceedings,
(ii) other Liens incidental to the conduct of its
business or the ownership of its property and assets which are
not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the
aggregate materially detract from the value of its property or
assets or materially impair the use thereof in the operation
of its business,
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(iii) Liens on property or assets of a Subsidiary to
secure obligations of such Subsidiary to the Company or
another Subsidiary,
(iv) Liens on property of the Company securing Debt
of the Company and all Subsidiaries resulting from Capitalized
Lease Obligations, provided that at the time of incurrence,
such obligation would not create a violation of any provision
of this paragraph 6,
(v) other Liens on property of the Company or
Subsidiaries securing Debt of the Company and all Subsidiaries
not in excess of an aggregate amount of $10,000,000 at any
time outstanding, and
(vi) Liens existing on any property of any
corporation at the time it becomes a Subsidiary, or existing
prior to the time of acquisition upon any property acquired by
the Company or any Subsidiary through purchase, merger or
consolidation or otherwise, whether or not assumed by the
Company or such Subsidiary, or placed on property at the time
(or within 90 days following the time) of acquisition by the
Company or any Subsidiary to secure all or a portion of (or to
secure Debt incurred to pay all or a portion of) the purchase
price thereof, provided that (a) all of such property is not
or shall not thereby become encumbered in any amount in excess
of seventy-five percent (75%) of the aggregate cost thereof
and (b) any such Lien shall not encumber any other property of
the Company or such Subsidiary.
6C(2). DEBT. Create, incur, assume or suffer to exist any
Debt, except that (i) the Company (but not any Subsidiary) may create,
incur, assume or suffer to exist any Debt if such action would not
cause a violation of paragraph 6A(1), 6A(2), or 6A(3) and (ii) any
Subsidiary may create, incur, assume or suffer to exist any Debt to
the Company or to another Subsidiary.
6C(3). LOANS, ADVANCES AND INVESTMENTS. Make or permit to
remain outstanding any loan or advance to, or investments in, or make
any capital contribution to, any Person, except that the Company or
any Subsidiary may
(i) make or permit to remain outstanding loans or
advances to any Subsidiary,
(ii) own, purchase or acquire (1) Cable TV Systems
or other assets necessarily related to Cable TV Systems
(including for example and not by way of limitation, assets
related to programming, syndication, broadcasting, production,
licensing, entertainment and microwave and fiber optic and
similar transmission and reception), or (2) the stock,
obligations or other securities of a corporation or other
entity which is engaged in the ownership or operation of Cable
TV Systems or businesses necessarily related to Cable TV
Systems which corporation or other entity is or will,
immediately after such purchase or acquisition, be a
Subsidiary.
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(iii) acquire and own stock, obligations or
securities received in settlement of debts (created in the
ordinary course of business) owing to the Company or any
Subsidiary,
(iv) own, purchase or acquire (1) certificates of
deposit in United States commercial banks having capital
resources in excess of $100,000,000, (2) certificates of
deposit in United States commercial banks having capital
resources of less than $100,000,000 provided that the entire
amount of said certificates of deposits is insured by the
Federal Deposit Insurance Corporation, (3) prime commercial
paper issued by a United States corporation or utility
provided such obligation is rated A-1 by Standard & Poors or
P-1 by Moody's Investors Services, Inc., in each case due
within one year from the date of purchase and payable in the
United States in United States dollars, (4) obligations of the
United States Government or any agency thereof, and (5)
obligations guaranteed by the United States Government, in
each case due within one year of the date of purchase,
(v) make or permit to remain outstanding travel and
other like advances to officers and employees in the ordinary
course of business,
(vi) make or permit to remain outstanding loans or
advances to, or investments in, any other Person, provided
that the aggregate principal amount of such loans and advances
shall not exceed $1,000,000 at any time outstanding for the
Company and all Subsidiaries, and
(vii) make Related Investments which would not cause
a violation of paragraph 6A(2).
6C(4). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or
otherwise dispose of, or part with control of, any shares of stock or
Debt of any Subsidiary, except to the Company or another Subsidiary,
and except that all shares of stock and Debt of any Subsidiary at the
time owned by or owed to the Company and all Subsidiaries may be sold
as an entirety for a cash consideration which represents the fair
value (as determined in good faith by the Board of Directors of the
Company) at the time of sale of the shares of stock and Debt so sold,
provided that the assets of such Subsidiary do not constitute a
substantial part (i.e., assets which constitute more than 10% of the
Consolidated Assets of the Company and its Subsidiaries or which have
contributed more than 10% of Consolidated Net Earnings for any of the
three fiscal years then most recently ended) of the Consolidated
Assets of the Company and all Subsidiaries and further provided that,
at the time of such sale, such Subsidiary shall not own, directly or
indirectly, any shares of stock or Debt of any other Subsidiary
(unless all of the shares of stock and Debt of such other Subsidiary
owned, directly or indirectly by the Company and all Subsidiaries are
simultaneously being sold as permitted by this paragraph 6C(4)) or any
Debt of the Company.
6C(5). MERGER AND SALE OF ASSETS. Merge or consolidate with
any other corporation or sell, lease or transfer or otherwise dispose
of all or a substantial part (i.e., assets which constitute more than
10% of the Consolidated Assets of the
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Company and its Subsidiaries or which have contributed more than 10%
of Consolidated Net Earnings for any of the three fiscal years then
most recently ended) of its assets to any Person, except that
(i) any Subsidiary may merge with the Company
(provided that the Company shall be the continuing or
surviving corporation) or with any one or more other
Subsidiaries,
(ii) any Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to the Company or
another Subsidiary,
(iii) the Company may merge with any other
corporation, provided that (a) the Company shall be the
continuing or surviving corporation, and (b) immediately after
giving effect to such merger, no Event of Default or Default
shall exist, and
(iv) the Company may carry out a plan of
reorganization designed solely to change the Company's state
of incorporation, provided that (a) such plan has been
approved by its shareholders, (b) such action would not create
a Default or an Event of Default under this Agreement and (c)
the Company furnishes each holder of any Note such documents
relating to said reorganization as any such holder or its
counsel may require.
6C(6). LEASE RENTALS. Enter into or permit to remain in
effect, any agreements to rent or lease (as lessee) any real or
personal property (other than utility poles and tower sites) for terms
(including any option to renew or extend any term which has been
exercised) of more than one year providing for annual Operating Lease
Rentals to be paid by the Company and all Subsidiaries in excess of an
aggregate of $750,000 per annum.
6C(7). SALE AND LEASE-BACK. Enter into any arrangement with
any lender or investor or to which such lender or investor is a party
providing for the leasing by the Company or any Subsidiary of real or
personal property which has been or is to be sold or transferred by
the Company or any Subsidiary to such lender or investor or to any
Person to whom funds have been or are to be advanced by such lender or
investor on the security of such property or rental obligations of the
Company or any Subsidiary, provided that (i) any property acquired or
constructed after the date of this Agreement may be sold or leased
back by the Company or any Subsidiary if such sale and lease-back
occurs within the 12 month period following the date of acquisition or
construction of such property and (ii) such action would not result in
a violation of paragraph 6C(6).
6C(8). SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse,
or discount or otherwise sell for less than face value thereof any of
its notes or accounts receivable, except for receivables arising
through the use by customers of MasterCard, Visa or American Express
charge cards in the ordinary course of business.
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6C(9). TRANSACTIONS WITH STOCKHOLDERS. Directly or
indirectly purchase, acquire or lease any property from, or sell,
transfer or lease property (other than shares of stock of the Company)
from, or sell, dispose of or lease any property to, or otherwise deal
with, in the ordinary course of business or otherwise (i) any
Substantial Stockholder, or (ii) any corporation (except a Subsidiary)
in which a Substantial Stockholder or the Company (either directly or
through Subsidiaries) owns 5% or more of the outstanding stock except
that (a) any Substantial Stockholder may be a director, officer or
employee of the Company or any Subsidiary and may be paid reasonable
compensation in connection therewith and (b) such acts and
transactions prohibited by this paragraph 6C(9) may be performed or
engaged in if upon terms not less favorable to the Company or any
Subsidiary than if no relationship described in clauses (i) and (ii)
above existed.
6C(10). GUARANTEES. Make or permit to remain outstanding
guarantees of the obligations of any Person in excess of an aggregate
of $100,000 except by endorsement of instruments for deposit or
collection in the ordinary course of business and except for existing
guarantees described on Schedule 6C attached hereto.
PARAGRAPH 7. EVENTS OF DEFAULT.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur
and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
principal of or premium on any Note when the same shall become
due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any
interest on any Note for more than ten days after the date
due; or
(iii) the Company or any Subsidiary defaults in any
payment of principal of or interest on any other Debt (other
than any guaranty) in excess of $1,000,000 which continues
beyond any period of grace provided with respect thereto, or
the Company or any Subsidiary fails to perform or observe any
other agreement, term or condition contained in any agreement
under which any such Debt is created (or if any other event
thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is
to cause, or to permit the holder or holders of such Debt (or
a trustee on behalf of such holder or holders) to cause, such
obligation to become due prior to any stated maturity or the
Company fails to pay any guaranty in accordance with its
terms; or
(iv) any representation or warranty made by the
Company herein or by the Company or any of its officers in any
writing furnished in connection with
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or pursuant to this Agreement shall be false in any material
respect on the date as of which made; or
(v) the Company fails to perform or observe any
term, covenant or agreement contained in paragraphs 5C, 5D, or
6; or
(vi) the Company fails to perform or observe any
other agreement, covenant, term or condition contained herein
and such failure shall not be remedied within 30 days after
any Responsible Officer receives written notice thereof or
obtains actual knowledge thereof; or
(vii) the Company or any Subsidiary (a) makes an
assignment for the benefit of creditors or (b) is generally
not paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of
the Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar
law, whether now or hereafter in effect (the "Bankruptcy
Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or
applies to any tribunal for, or consents to, the appointment
of, or taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company or any
Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under
the Bankruptcy Law of the United States or any proceedings
(other than proceedings for the voluntary liquidation and
dissolution of a Subsidiary) relating to the Company or any
Subsidiary under the Bankruptcy Law of any other jurisdiction;
or
(x) any such petition or application is filed, or
any such proceedings are commenced, against the Company or any
Subsidiary and the Company or such Subsidiary by any act
indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in
any such proceedings, and such order, judgment or decree
remains unstayed and in effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of
the Company and such order, judgment or decree remains
unstayed and in effect for more than 60 days; or
(xii) any order, judgment or decree is entered in
any proceedings against the Company or any Subsidiary
decreeing a split-up of the Company or such Subsidiary which
requires the divestiture of assets representing a substantial
part, or the divestiture of the stock of a Subsidiary whose
assets represent a substantial part, of the consolidated
assets of the Company and its Subsidiaries (determined in
accordance with generally accepted accounting
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<PAGE> 19
principles) (i.e. assets which constitute more than twenty
percent (20%) of the Company and its Subsidiaries or which
have contributed a substantial part of the consolidated net
income of the Company and its Subsidiaries (determined in
accordance with generally accepted accounting principles)
(i.e. more than twenty percent (20%) of the Consolidated Net
Earnings of the Company and its Subsidiaries for any of the
three (3) fiscal years then ended) or which requires the
divestiture of assets, or stock of a Subsidiary, which shall
have contributed more than 20% of the Consolidated Net
Earnings for any of the three fiscal years then most recently
ended, and such order, judgment or decree remains unstayed and
in effect for more than 60 days; or
(xiii) one or more final judgments or orders in an
aggregate amount in excess of $1,000,000 is rendered against
the Company or any Subsidiary and either (i) enforcement
proceedings have been commenced by any creditor upon any such
judgment or order or (ii) within 30 days after entry thereof,
such judgment is not discharged or execution thereof stayed
pending appeal, or (iii) within 30 days after the expiration
of any such stay, such judgment is not discharged; or
then (a) (I) if such event is an Event of Default
specified in clause (i) or (ii) of this paragraph 7A
and it pertains to all holders of Notes, then any
holder of any Note (other than the Company or any of
its Subsidiaries or Affiliates) may at its option, by
notice in writing to the Company, declare such Note
to be, and such Note shall thereupon be and become,
immediately due and payable at par together with
interest accrued thereon, without presentment,
demand, protest or notice of any kind (including,
without limitation, notice of intent to accelerate
and notice of acceleration of maturity), all of which
are hereby waived by the Company,
(II) if such event is an Event of Default
specified in clause (i) or (ii) of this paragraph 7A
and it pertains to less than all holders of Notes,
then any holder of any Note which has not received a
payment giving rise to such Event of Default (other
than the Company or any of its Subsidiaries or
Affiliates) may at its option, by notice in writing
to the Company, declare such Note to be, and such
Note shall thereupon be and become, immediately due
and payable at par together with interest accrued
thereon and together with the Yield Maintenance
Amount, if any, with respect to such Note, without
presentment, demand, protest or notice of any kind
(including, without limitation, notice of intent to
accelerate and notice of acceleration of maturity),
all of which are hereby waived by the
Company,provided that the Yield-Maintenance Amount,
if any, with respect to each such Note shall be due
and payable upon such declaration only if:
(A) such holder shall have given to the
Corporation, at least 5 Business Days before
such declaration, written notice stating its
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intention so to declare the Note to be
immediately due and payable and identifying
such Event of Default, and
(B) such Event of Default shall be continuing at
the time of such declaration;
(b) if such event is an Event of Default specified in
clause (vii)(a), (viii), (ix), (x) or (xi) of this
paragraph 7A with respect to the Company, all of the
Notes at the time outstanding shall automatically
become immediately due and payable at par together
with interest accrued thereon, without presentment,
demand, protest or notice of any kind (including,
without limitation, notice of intent to accelerate
and notice of acceleration of maturity), all of which
are hereby waived by the Company, and
(c) if such event is any Event of Default other than as
specified in preceding clause (b), then, whether or
not notice has been give pursuant to clause (a), the
Required Holder(s) may at its or their option, by
notice in writing to the Company, declare all of the
Notes to be, and all of the Notes shall thereupon be
and become, immediately due and payable together with
interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to
each Note, without presentment, demand, protest or
notice of any kind (including, without limitation,
notice of intent to accelerate and notice of
acceleration of maturity), all of which are hereby
waived by the Company,provided that the
Yield-Maintenance Amount, if any, with respect to
each Note shall be due and payable upon any
declaration pursuant to this paragraph 7A only if (I)
the event whose occurrence permits such declaration
is an Event of Default specified in any of clauses
(i) to (vi), inclusive of this paragraph 7A, (II) the
Required Holder(s) shall have given to the Company,
at least 10 Business Days before such declaration,
written notice stating its or their intention to
declare or join in declaring the Notes held by such
Required Holder(s) to be immediately due and payable
and identifying one or more such Events of Default
whose occurrence on or before the date of such notice
permits such declaration and (III) one or more of the
Events of Default so identified shall be continuing
at the time of such declaration.
7B. RESCISSION OF ACCELERATION. At any time after any or all
of the Notes shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) may, by notice in
writing to the Company, rescind and annul such declaration and its
consequences if (i) the Company shall have paid all overdue interest
on the Notes, the principal of and Yield-Maintenance Amount, if any,
payable with respect to any Notes which have become due otherwise than
by reason of such declaration, and interest on such overdue interest
and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Company shall not have paid any
amounts which have become due solely by reason of such declaration,
(iii) all Events of Default and Defaults, other than non-payment of
amounts which
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have become due solely by reason of such declaration, shall have been
cured or waived pursuant to paragraph 11C, and (iv) no judgment or
decree shall have been entered for the payment of any amounts due
pursuant to the Notes or this Agreement. No such rescission or
annulment shall extend to or affect any subsequent Event of Default or
Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note
shall be declared immediately due and payable pursuant to paragraph 7A
or any such declaration shall be rescinded and annulled pursuant to
paragraph 7B, the Company shall forthwith give written notice thereof
to the holder of each Note at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default shall occur and
be continuing, the holder of any Note may proceed to protect and
enforce its rights under this Agreement and such Note by exercising
such remedies as are available to such holder in respect thereof under
applicable law, either by suit in equity or by action at law, or both,
whether for specific performance of any covenant or other agreement
contained in this Agreement or in aid of the exercise of any power
granted in this Agreement. No remedy conferred in this Agreement upon
the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy conferred herein or now or
hereafter existing at law or in equity or by statute or otherwise.
PARAGRAPH 8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows:
8A. ORGANIZATION; QUALIFICATION; CORPORATE AUTHORITY. The
Company is a corporation duly organized and validly existing in good
standing under the laws of the State of Texas, each Subsidiary is duly
organized and validly existing in good standing under the laws of the
jurisdiction in which it is incorporated, and the Company has and each
Subsidiary has the corporate power to own its respective property and
to carry on its respective business as now being conducted, and the
Company is and each Subsidiary is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the Company owns a Cable TV System, or in which
the failure to be so qualified or in good standing could have a
material adverse effect on the Company or such Subsidiary. The
execution, delivery and performance by the Company of this Agreement
and the Notes are within the Company's corporate powers and have been
duly authorized by all necessary corporate action.
8B. FINANCIAL STATEMENTS. The Company has furnished each
Purchaser with the following financial statements, identified by a
principal financial officer of the Company: (i) a consolidated balance
sheet of the Company and its Subsidiaries as at October 31 in each of
the years 1993 and 1994, and consolidated statements of operations,
statements of changes in shareholders' equity and statements of cash
flows of the Company and its Subsidiaries for each such year, all
certified by Coopers &
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Lybrand, Certified Public Accountants; and (ii) a consolidated balance
sheet of the Company and its Subsidiaries as at April 30, 1995 and a
consolidated statement of income and statement of changes in financial
position for the six-month period ended on each such date, prepared by
the Company. Such financial statements (including any related
schedules and/or notes) are true and correct in all material respects
(subject, as to interim statements, to changes resulting from audits
and year-end adjustments), have been prepared in accordance with
generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and
contingent, of the Company and its Subsidiaries required to be shown
in accordance with such principles. The balance sheets fairly present
the condition of the Company and its Subsidiaries as at the dates
thereof, and the statements of income and statements of changes in
financial position fairly present the results of the operations of the
Company and its Subsidiaries for the periods indicated. There has
been no material adverse change in the business, condition or
operations (financial or otherwise) of the Company and its
Subsidiaries taken as a whole since October 31, 1994.
8C. ACTIONS PENDING. There is no action, suit, investigation
or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, or any properties or
rights of the Company or any of its Subsidiaries, by or before any
court, arbitrator or administrative or governmental body, except the
matters described on Schedule 8C attached hereto. There is no action,
suit, investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries
which purports to affect the validity or enforceability of this
Agreement or any Note.
8D. OUTSTANDING DEBT. Neither the Company nor any of its
Subsidiaries has outstanding any Debt except as permitted pursuant to
this Agreement. There exists no default under the provisions of any
instrument evidencing such Debt or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its
Subsidiaries has good and indefeasible title to its respective real
properties (other than properties which it leases) and good title to
all of its other respective properties and assets, including, but not
limited to, the properties and assets reflected in the balance sheet
as at October 31, 1994 referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by paragraph
6C(1). The Company and its Subsidiaries enjoy peaceful and
undisturbed possession of all leases necessary in any material respect
for the operation of their respective properties and assets, none of
which contain any unusual or burdensome provisions which could
reasonably be expected to materially affect or impair the operation of
such properties or assets. All such leases are valid and subsisting
and are in full force and effect.
8F. FRANCHISES AND LICENSES; MATERIAL CONTRACTS. The Company
and each of its Subsidiaries have obtained all franchises, licenses,
consents, approvals and authorizations granted or issued by any public
or governmental body, agency or authority necessary to own and operate
the Cable TV Systems and all such franchises,
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<PAGE> 23
licenses, consents, approvals and authorizations are in full force and
effect. Except for the matters described on Schedule 8F attached
hereto, the Company and each of its Subsidiaries have outstanding no
contractual undertakings or commitments not made in the ordinary
course of business except the Operating Agreements.
8G. TAXES. The Company has and each of its Subsidiaries has
filed all federal, state and other income tax returns which, to the
best knowledge of the officers of the Company and its Subsidiaries,
are required to be filed, and each has paid all taxes as shown on such
returns and on all assessments received by it to the extent that such
taxes have become due, except such taxes as are being contested in
good faith by appropriate proceedings for which adequate reserves have
been established in accordance with generally accepted accounting
principles. Federal, state and other income tax returns of the
Company and its Subsidiaries have been examined and reported on by the
taxing authorities or the assessment of further income tax deficiency
is closed by applicable statutes and satisfied for all fiscal years
prior to and including the fiscal year ended on October 31, 1991.
8H. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the
Company nor any of its Subsidiaries is a party to any contract or
agreement or subject to any charter or other corporate restriction
which materially and adversely affects its business, condition or
operations (financial or otherwise). Neither the execution nor
delivery of this Agreement or the Notes, nor the offering, issuance
and sale of the Notes, nor fulfillment of nor compliance with the
terms and provisions hereof and of the Notes will conflict with, or
result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result
in the creation of any Lien (other than as permitted by clause (i) or
(ii) of paragraph 6(C)(1)) upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, the charter or by-laws
of the Company or any of its Subsidiaries, any award of any arbitrator
or any material agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation
to which the Company or any of its Subsidiaries is subject except for
breaches, defaults and violations of agreement which have been waived
in writing. Neither the offering, issuance or sale of the Notes will
conflict with, or result in a breach of the terms, conditions or
provisions of or constitute a default under or result in any violation
of, or result in the creation of any Lien (other than as permitted by
clause (i) or (ii) of paragraph 6(C)(1)) upon any of the properties or
assets of the Company or any of its Subsidiaries pursuant to any
agreement (including any agreement with stockholders), instrument,
order, judgment, decree, statue, law, rule or regulation (whether or
not considered material) to which the Company or any of its
subsidiaries is subject. Neither the Company nor any of its
Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing Debt of the Company or such
Subsidiary, any agreement relating thereto or any other contract or
agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of the
Company of the type to be evidenced by the Notes except as set forth
in the agreements listed in Schedule 8H attached hereto.
8I. OFFERING OF NOTES. Neither the Company nor any agent
acting on its behalf has, directly or indirectly, offered the Notes or
any similar security of the
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<PAGE> 24
Company for sale to, or solicited any offers to buy the Notes or any
similar security of the Company from, or otherwise approached or
negotiated with respect thereto with, any Person other than
institutional investors in privately-negotiated transactions, and
neither the Company nor any agent acting on its behalf has taken or
will take any action which would subject the issuance or sale of the
Notes to the provisions of Section 5 of the Securities Act or to the
provisions of any securities or Blue Sky law of any applicable
jurisdiction.
8J. USE OF PROCEEDS. The proceeds of sale of the Notes will
be used to refinance outstanding indebtedness or to purchase the San
Angelo Cable TV System and the Eldorado Cable TV System and to pay
related costs and expenses. None of the proceeds of the sale of the
Notes will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any
"margin stock" as defined in Regulation G (12 CFR Part 207) of the
Board of Governors of the Federal Reserve System ("MARGIN STOCK") or
for the purpose of maintaining, reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any stock that is
currently a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of
such Regulation G. Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause this
Agreement or the Notes to violate Regulation G, Regulation T or any
other regulation of the Board of Governors of the Federal Reserve
System or to violate the Exchange Act, in each case as in effect now
or as the same may hereafter be in effect.
8K. POLLUTION AND OTHER REGULATIONS. The Company and each of
its Subsidiaries is in substantial compliance with all laws and
regulations relating to pollution and environmental control, equal
employment opportunity and employee safety in all jurisdictions in
which the Company and each of its Subsidiaries is doing business.
8L. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan (other than a Multiemployer
Plan). No liability to the PBGC has been or is expected by the
Company to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA
Affiliate which is or would be materially adverse to the Company and
its Subsidiaries taken as a whole. Neither the Company, any
Subsidiary nor any ERISA Affiliate has incurred or presently expects
to incur any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which is or would be materially adverse to
the Company and its Subsidiaries taken as a whole. The execution and
delivery of this Agreement and the issuance and sale of the Notes will
be exempt from or will not involve any transaction which is subject to
the prohibitions of section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed under
section 502(i) of ERISA or a tax could be imposed pursuant to section
4975 of the Code. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the
accuracy of the representation of each Purchaser in paragraph 9B as to
the source of funds to be used by it to purchase the Notes.
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<PAGE> 25
8M. GOVERNMENTAL CONSENT. Neither the nature of the Company,
or of any Subsidiary, nor any of their respective businesses or
properties, nor any relationship between the Company or any Subsidiary
and any other Person, nor any circumstance in connection with the
offering, issuance, sale or delivery of the Notes is such as to
require any authorization, consent, approval, exemption or any action
by or notice to or filing with any court or administrative or
governmental or regulatory body (other than routine filings after the
Date of Closing with the Securities and Exchange Commission and/or
state Blue Sky authorities) in connection with the execution and
delivery of this Agreement, the offering, issuance, sale or delivery
of the Notes or fulfillment of or compliance with the terms and
provisions hereof or of the Notes.
8N. ENFORCEABILITY. This Agreement is, and the Notes when
delivered hereunder will be, legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their
terms.
8O. DISCLOSURE. Neither this Agreement nor any other
document, certificate or statement furnished to any Purchaser by or on
behalf of the Company in connection herewith contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein
not misleading. There is no fact known to the Company which is
peculiar to the Company or any of its Subsidiaries (as opposed to
general economic or industry conditions) which materially adversely
affects or in the future may (so far as the Company can now foresee)
materially adversely affect the business, property or assets, or
financial condition of the Company or any of its Subsidiaries and
which has not been set forth in this Agreement or in the other
documents, certificates and statements furnished to each Purchaser by
or on behalf of the Company prior to the date hereof in connection
with the transactions contemplated hereby. The financial projections
contained in Schedule 8O are reasonable based on the assumptions
contained therein and the best information available to the Company.
8P. INVESTMENT COMPANY ACT. The Company is not an
"investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
8Q. PUBLIC UTILITY HOLDING COMPANY ACT. The Company is not a
"holding company," or a "subsidiary company" of a "holding company,"
or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
PARAGRAPH 9. REPRESENTATIONS OF EACH PURCHASER.
9. REPRESENTATIONS OF EACH PURCHASER. Each Purchaser represents as
follows:
9A. NATURE OF PURCHASE. Such Purchaser is acquiring the Notes to be
purchased by it hereunder for investment and not with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act, provided that the disposition of such Purchaser's property shall at all
times be and remain within its control.
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<PAGE> 26
9B. SOURCE OF FUNDS. All of the funds to be used by such Purchaser
to purchase the Notes are assets of an insurance company general account and,
if any assets in the general account are, or may be, assets of any "employee
benefit plan" within the meaning of Section 3(3) of ERISA, such Purchaser meets
the conditions for application of the general exemption in Section I of the
Proposed Class Exemption for Certain Transactions Involving Insurance Company
General Accounts (59 Fed. Reg. 43134 (1994)).
PARAGRAPH 10. DEFINITIONS.
10. DEFINITIONS. For the purpose of this Agreement, the terms
defined in paragraphs 1 and 2 shall have the respective meanings specified
therein, and the following terms shall have the meanings specified with respect
thereto below (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
10A. YIELD MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4B
(any partial prepayment being applied in satisfaction of required
payment of principal in inverse order of their scheduled due dates) or
is declared to be immediately due and payable pursuant to paragraph
7A, as the context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on a semi-annual
basis) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City local time) on the Business
Day next preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate
Service (or such other display as may replace Page 678 on the Telerate
Service) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date, or if such yields shall not be reported as
of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields
reported, for the latest day for which such yields shall have been so
reported as of the Business Day next preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of
such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond
equivalent yields in accordance with accepted financial practice and
(b) interpolating linearly between yields reported for various
maturities.
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"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying
(a) each Remaining Scheduled Payment of such Called Principal (but not
of interest thereon) by (b) the number of years (calculated to the
nearest one-twelfth year) which will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal
and interest thereon that would be due on or after the Settlement Date
with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to
be prepaid pursuant to paragraph 4B or is declared to be immediately
due and payable pursuant to paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value
of the Called Principal of such Note over the sum of (i) such Called
Principal plus (ii) interest accrued thereon as of (including interest
due on) the Settlement Date with respect to such Called Principal.
The Yield-Maintenance Amount shall in no event be less than zero.
10B. OTHER TERMS.
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control
with, the Company, except a Subsidiary. A Person shall be deemed to
control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
"AGREED CONSIDERATION" shall mean, as of the date of purchase
by the Company of the Notes held by the holder of any Note upon the
exercise by such holder of its Put Option, the sum of (i) the
outstanding aggregate principal amount of Notes held by such holder on
such date, plus (ii) all accrued and unpaid interest to such date on
such Notes, plus (iii) the Yield-Maintenance Amount as of such date
with respect to each such Note.
"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or
a Sunday and (ii) a day on which commercial banks in New York City are
required or authorized to be closed.
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"CABLE TV SYSTEM" shall mean all related licenses, franchises
and permits (other than for television and radio broadcasting) issued
under Federal, State or local laws from time to time, or other
authority or right, which authorize a person to receive or distribute,
or both, by cable, satellite or other technology, audio, data and
visual signals within a geographical area for the purpose of providing
entertainment or other services, together with all agreements with
public utilities and microwave transmission companies, pole
attachment, use, access or rental agreements, utility easements and
all other property owned or used in connection with the entertainment
and services provided pursuant to, and all interest of such person to
receive revenues from, or pursuant to, said licenses, franchises and
permits.
"CAPITALIZED LEASE OBLIGATION" shall mean any rental
obligation which, under generally accepted accounting principles, is
or will be required to be capitalized on the books of the Company or
any Subsidiary, in each case taken at the amount thereof accounted for
as indebtedness (net of interest expenses) in accordance with such
principles.
"CHANGE IN CONTROL" shall mean (a) the direct or indirect
acquisition by any person (as such term is used in Section 13(d) and
Section 14(d)(2) of the Exchange Act) or related persons constituting
a group (as such term is used in Rule 13d-5 under the Exchange Act),
of (i) the beneficial ownership of issued and outstanding shares of
Voting Stock of the Company, the result of which acquisition is that
such person or such group possesses in excess of 35% of the combined
voting power of all then issued and outstanding Voting Stock of the
Company, or (ii) the power to elect, appoint, or cause the election or
appointment of, at least a majority of the members of the Board of
Directors of the Company, or (b) the sale of all or substantially all
of the assets of the Company; provided, however, that in the case of
subparagraph (a), the Current Control Group shall be deemed not to be
persons or members of such acquiring group in determining whether such
direct or indirect beneficial ownership or power has been acquired by
any person or any group.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"CONSOLIDATED ASSETS" shall mean all assets of the Company and
its Subsidiaries.
"CONSOLIDATED NET EARNINGS" shall mean consolidated gross
revenues of the Company and its Subsidiaries less all operating and
nonoperating expenses of the Company and its Subsidiaries including
all charges of a proper character (including current and deferred
taxes on income, and current additions to reserves), but not including
in gross revenues any gains (net of expenses and taxes applicable
thereto) in excess of losses resulting from the sale, conversion or
other disposition of capital assets i.e., assets other than current
assets), any gains resulting from the write-up of assets, any equity
of the Company or any Subsidiary in the unremitted earnings of any
corporation which is not a Subsidiary, any earnings of any Person
acquired by the Company or any Subsidiary through purchase, merger or
consolidation or otherwise for any year prior to the date of
acquisition, or any deferred credit representing the excess of equity
in any Subsidiary at the date of acquisition over the cost of the
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<PAGE> 29
investment in such Subsidiary; all determined in accordance with
generally accepted accounting principles.
"CURRENT CONTROL GROUP" shall mean (i) Robert M. Rogers, (ii)
his spouse, children and lineal descendants, and (iii) the estate of,
or any trust with not less than fifty percent (50%) of the assets of
such trust designated for the benefit of, any of the foregoing
persons.
"DATE OF CLOSING" shall have the meaning specified in
paragraph 2.
"DEBT" shall mean and include without duplication,
(i) any obligation payable more than one year from
the date of creation thereof which, under generally accepted
accounting principles, is shown on the balance sheet as a
liability (including Capitalized Lease Obligations but
excluding reserves for deferred income taxes and other
reserves to the extent that such reserves do not constitute an
obligation),
(ii) any obligation payable on demand or within a
period of one year from the date of the creation thereof for
borrowed money (and any notes payable and drafts accepted
representing extensions of credit whether or not representing
obligations for borrowed money)
(iii) indebtedness which is secured by any Lien on
property owned by the Company or any Subsidiary, whether or
not the indebtedness secured thereby shall have been assumed
by the Company or such Subsidiary,
(iv) guarantees, endorsements (other than
endorsements of negotiable instruments for collection in the
ordinary course of business) and other contingent liabilities
(whether direct or indirect) in connection with the
obligations, stock or dividends of any Person,
(v) obligations under any contract providing for the
making of loans, advances or capital contributions to any
Person, or for the purchase of any property from any Person,
in each case in order to enable such Person primarily to
maintain working capital, net worth or any other balance sheet
condition or to pay debts, dividends or expenses,
(vi) obligations under any contract for the purchase
of materials, supplies or other property or services if such
contract (or any related document) requires that payment for
such materials, supplies or other property or services shall
be made regardless of whether or not delivery of such
materials, supplies or other property or services is ever made
or tendered,
(vii) obligations under any contract to rent or
lease (as lessee) any real or personal property if such
contract (or any related document) provides that the
obligation to make payments thereunder is absolute and
unconditional under conditions not customarily found in
commercial leases then in general
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<PAGE> 30
use or requires that the lessee purchase or otherwise acquire
securities or obligations of the lessor,
(viii) obligations under any contract for the sale
or use of materials, supplies or other property or services if
such contract (or any related document) requires that payment
for such materials, supplies or other property or services, or
the use thereof, shall be subordinated to any indebtedness (of
the purchaser or user of such materials, supplies or other
property or the Person entitled to the benefit of such
services) owed or to be owed to any Person,
(ix) obligations under any other contract which, in
economic effect, is substantially equivalent to a guarantee,
(x) Subordinated Debt, and
(xi) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA;
all as determined in accordance with generally accepted accounting
principles.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member
of the same controlled group of corporations as the Company within the
meaning of section 414(b) of the Code, or any trade or business which
is under common control with the Company within the meaning of section
414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement
in connection with such event for the giving of notice, or the lapse
of time, or the happening of any further condition, event or act, and
"Default" shall mean any of such events, whether or not any such
requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"FCC" shall mean the Federal Communications Commission or any
successor agency providing the same function.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind or any other similar type of
preferential arrangement (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement,
any lease in the nature thereof, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code of any
jurisdiction).
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<PAGE> 31
"MAJORITY HOLDER(S)" shall mean the holder or holders of at
least 51% of the aggregate principal amount of the Notes from time to
time outstanding.
"MULTIEMPLOYER PLAN" shall mean any plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of
ERISA).
"NOTES" shall have the meaning specified in paragraph 1.
"NOTICE OF SALE" shall have the meaning specified in paragraph
4F(2).
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by a Responsible Officer of the Company.
"OPERATING AGREEMENTS" shall mean all of the franchise
agreements, pole agreements and any and all other agreements executed
by the Company or any Subsidiary in connection with the Company's or
any Subsidiary's operation of Cable TV Systems in compliance with the
rules and regulations of the FCC.
"OPERATING CASH FLOW" shall mean for the period in question,
total revenues less operating expenses plus depreciation and
amortization expense. Operating expenses include programming,
technical, selling, promotion, general and administration expenses but
do not include interest or income tax expense.
"OPERATING LEASE RENTALS" shall mean rentals payable under
leases of any property (other than utility poles and tower sites)
which would not be capitalized on the Company's balance sheet as
defined in accordance with generally accepted accounting principles.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor entity.
"PERSON" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such
term is defined in section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been
made, by the Company or any ERISA Affiliate.
"PURCHASE NOTICE" shall have the meaning specified in
paragraph 4F(2).
"PUT OPTION" shall have the meaning specified in paragraph
4F(2).
"RELATED INVESTMENT" shall mean any investment in the stock or
other interest in any Person whose principal business is the cable
television business or one or more businesses that are necessary
thereto, including, for example, and not by way of limitation, the
programming, syndication, broadcasting, production, licensing,
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<PAGE> 32
entertainment and microwave and fiber optic and similar transmission
and reception businesses.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least 66-2/3% of the aggregate principal amount of the Notes from time
to time outstanding.
"RESPONSIBLE OFFICER" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting
officer of the Company or any other officer of the Company involved
principally in its financial administration or its controllership
function.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SIGNIFICANT HOLDER" shall mean (i) each Purchaser, so long as
such Purchaser shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other holder of at least 10% of the
aggregate principal amount of the Notes from time to time outstanding.
"SUBORDINATED DEBT" shall mean Debt of the Company which is
expressly and validly subordinated to the Note under conditions and
pursuant to terms and provisions approved by Required Holder(s) in
writing.
"SUBSIDIARY" shall mean any corporation, association,
partnership, joint venture, or other business or corporate entity,
organized under the laws of any state of the United States of America,
Canada, or any province of Canada, which conducts the major portion of
its business in and makes the major portion of its sales to Persons
located in the United States of America or Canada, and 80% of the
equity ownership of which, except directors' qualifying equity
interests, shall, at the time as of which any determination is being
made, be owned by the Company either directly or through Subsidiaries.
"SUBSTANTIAL STOCKHOLDER" shall mean a Person that directly or
indirectly through one or more Subsidiaries owns 5% or more of the
outstanding stock of the Company or a Subsidiary of the Company.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this
Agreement.
"TRIGGER EVENT" shall mean that, within 18 months following a
Change in Control, either (i) there shall be a Default or Event of
Default under this Agreement, (ii) the Debt of the Company and all of
its Subsidiaries shall be in excess of 325% of Operating Cash Flow
during the 12-month period preceding such calculation (calculated in
the same manner as compliance with paragraph 6A(i)), or (iii) the
Current Control Group ceases to hold at least 15% of the combined
voting power of all of the then issued and outstanding Voting Stock of
the Company.
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<PAGE> 33
"VOTING STOCK" shall mean, with respect to any corporation,
any shares of stock of such corporation whose holders are entitled
under ordinary circumstances to vote for the election of directors of
such corporation (irrespective of whether at the time stock of any
other class or classes shall have or might have voting power by reason
of the happening of any contingency).
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references
in this Agreement to "generally accepted accounting principles" shall be deemed
to refer to generally accepted accounting principles in effect in the United
States at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to clause (ii) of paragraph 5A or, if no such
statements have been so delivered, the most recent audited financial statements
referred to in clause (i) of paragraph 8B.
PARAGRAPH 11. MISCELLANEOUS.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of,
interest on and any Yield Maintenance Amount payable with respect to
such Note, which comply with the terms of this Agreement, by wire
transfer of immediately available funds for credit (not later than
12:00 noon, New York City local time, on the day due) to the account
or accounts of such Purchaser, if any, as are specified in the
Information Schedule attached hereto, or, in the case of any Purchaser
not named in the Information Schedule or any Purchaser wishing to
change the account specified for it in the InformationSchedule, such
other account or accounts in the United States as such Purchaser may
from time to time designate in writing, notwithstanding any contrary
provision herein or in any Note with respect to the place of payment.
Each Purchaser agrees that, before disposing of any Note, such
Purchaser will make a notation thereon (or on a schedule attached
thereto) of all principal payments previously made thereon and of the
date to which interest thereon has been paid. The Company agrees to
afford the benefits of this paragraph 11A to any Transferee which
shall have made the same agreement as each Purchaser has made in this
paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the
transactions contemplated hereby shall be consummated, to pay, and
save each Purchaser and any Transferee harmless against liability for
the payment of, all out-of-pocket expenses arising in connection with
such transactions, including (i) all document production and
duplication charges and the fees and expenses of any special counsel
engaged by such Purchaser or such Transferee in connection with this
Agreement, the transactions contemplated hereby and any subsequent
proposed modification of, or proposed consent under, this Agreement,
whether or not such proposed modification shall be
29
<PAGE> 34
effected or proposed consent granted, and (ii) the costs and expenses,
including attorneys' fees, incurred by such Purchaser or such
Transferee in administering this Agreement and enforcing any rights
under this Agreement or the Notes or in responding to any subpoena or
other legal process issued in connection with this Agreement or the
transactions contemplated hereby or by reason of such Purchaser's or
any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case. The
obligations of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by any
Purchaser or any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the Company
shall obtain the written consent to such amendment, action or omission
to act, of the Required Holder(s) except that, without the written
consent of the holder or holders of all Notes at the time outstanding,
no amendment to this Agreement shall change the maturity of any Note,
or change or affect the principal of, or change or affect the rate or
time of payment of interest on or any Yield Maintenance Amount payable
with respect to any Note, or affect the time, amount or allocation of
any prepayments, or change the proportion of the principal amount of
the Notes required with respect to any consent, amendment, waiver or
declaration. The Company will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of any Note as
consideration for or as an inducement to the entering into by any such
holder of any waiver or amendment of any of the terms and provisions
of this Agreement unless such remuneration is concurrently paid, on
the same terms, ratably to each holder of then outstanding Notes.
Each holder of any Note at the time or thereafter outstanding shall be
bound by any consent authorized by this paragraph 11C, whether or not
such Note shall have been marked to indicate such consent, but any
Notes issued thereafter may bear a notation referring to any such
consent. No course of dealing between the Company and the holder of
any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such
Note. As used herein and in the Notes, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to
time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $100,000, except as may be necessary to
reflect any principal amount not evenly divisible by $100,000. The
Company shall keep at its principal office a register in which the
Company shall provide for the registration of Notes and of transfers
of Notes. Upon surrender for registration of transfer of any Note at
the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and
of a like aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any Note,
such Note may be exchanged for other Notes of like tenor and of any
authorized denominations, of a like aggregate principal amount, upon
surrender of the Note to be exchanged at the principal office of the
Company. Whenever any Notes are so
30
<PAGE> 35
surrendered for exchange, the Company shall, at its expense, execute
and deliver the Notes which the holder making the exchange is entitled
to receive. Each installment of principal payable on each installment
date upon each new Note issued upon any such transfer or exchange
shall be in the same proportion to the unpaid principal amount of such
new Note as the installment of principal payable on such date on the
Note surrendered for registration of transfer or exchange bore to the
unpaid principal amount of such Note. No reference need be made in
any such new Note to any installment or installments of principal
previously due and paid upon the Note surrendered for registration of
transfer or exchange. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer duly executed, by the holder of such
Note or such holder's attorney duly authorized in writing. Any Note
or Notes issued in exchange for any Note or upon transfer thereof
shall carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that neither
gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note
of the loss, theft, destruction or mutilation of such Note and, in the
case of any such loss, theft or destruction, upon receipt of such
holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company
will make and deliver a new Note, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company may treat the
Person in whose name any Note is registered as the owner and holder of
such Note for the purpose of receiving payment of principal of,
interest on and any Yield Maintenance Amount payable with respect to
such Note and for all other purposes whatsoever, whether or not such
Note shall be overdue, and the Company shall not be affected by notice
to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any part of
such Note to any Person on such terms and conditions as may be
determined by such holder in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or
made in writing by or on behalf of the Company in connection herewith
shall survive the execution and delivery of this Agreement and the
Notes, the transfer by any Purchaser of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon
by any Transferee, regardless of any investigation made at any time by
or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, THIS AGREEMENT AND THE NOTES EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PURCHASERS AND THE COMPANY
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER HEREOF.
11G. SUCCESSORS AND ASSIGNS. All covenants and other
agreements in this Agreement contained by or on behalf of any of the
parties hereto shall bind and inure
31
<PAGE> 36
to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so
expressed or not.
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges
that the holder of any Note may deliver copies of any financial
statements and other documents delivered to such holder, and disclose
any other information disclosed to such holder, by or on behalf of the
Company or any Subsidiary in connection with or pursuant to this
Agreement to (i) such holder's directors, officers, employees, agents
and professional consultants, (ii) any other holder of any Note, (iii)
any Person to which such holder offers to sell such Note or any part
thereof, (iv) any Person to which such holder sells or offers to sell
a participation in all or any part of such Note, (v) any federal or
state regulatory authority having jurisdiction over such holder, (vi)
the National Association of Insurance Commissioners or any similar
organization or (vii) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with any
law, rule, regulation or order applicable to such holder, (b) in
response to any subpoena or other legal process, (c) in connection
with any litigation to which such holder is a party or (d) in order to
protect the investment of any holder in any Note.
11I. NOTICES. All written communications provided for
hereunder shall be sent by registered mail, return receipt requested,
or nationwide overnight delivery service (with charges prepaid) and
(i) if to any Person listed in theInformation Schedule attached
hereto, addressed to it at the address specified for such
communications in such Information Schedule, or at such other address
as it shall have specified in writing to the Person sending such
communication, and (ii) if to any other holder of any Note which is
not a Person listed in such Information Schedule, addressed to such
other holder at such address as such other holder shall have specified
in writing to the Person sending such communication, or, if any such
other holder shall not have so specified an address, then addressed to
such other holder in care of the last holder of such Note which shall
have so specified an address to the Person sending such
communication;provided, however, that any such communication to the
Company may also, at the option of the Person sending such
communication, be delivered by any other means either to the Company
at its address specified in the Information Schedule or to any
Authorized Officer of the Company. Any telephonic communication
pursuant to paragraph 4C or any other telephonic or facsimile
communication shall be effective to create any rights or obligations
under this Agreement only if, as to telephonic communications, an
Authorized Officer of the party conveying the information and of the
party receiving the information are parties to the telephone call and,
as to telephonic and facsimile communications, such communication is
followed by a written communication sent as set forth in the first
sentence of this paragraph 11I.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on, or Yield-Maintenance Amount payable with
respect to, any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day. If the date for
any payment is extended to the next succeeding Business Day by reason
of
32
<PAGE> 37
the preceding sentence, the period of such extension shall be included
in the computation of the interest payable on such Business Day.
11K. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only
and do not constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms
of this Agreement required to be satisfactory to any Purchaser or to
the Required Holder(s), the determination of such satisfaction shall
be made by such Purchaser or the Required Holder(s), as the case may
be, in the sole and exclusive judgment (exercised in good faith) of
the Person or Persons making such determination.
11N. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF TEXAS. This Agreement may not be
changed orally, but (subject to the provisions of paragraph 11C) only
by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is
sought.
11O. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of
which together shall constitute one instrument.
11P. BINDING AGREEMENT. When this Agreement is executed and
delivered by the Company and Purchasers, it shall become a binding
agreement between the Company and Purchasers.
11Q. SEVERALTY OF OBLIGATIONS. The sales of Notes to the
Purchasers are to be several sales, and the obligations of the
Purchasers under this Agreement are several obligations. Except as
provided in paragraph 3F, no failure by any Purchaser to perform its
obligations under this Agreement shall relieve any other Purchaser or
the Company of any of its obligations hereunder, and no Purchaser
shall be responsible for the obligations of, or any action taken or
omitted by, any other Purchaser hereunder.
11R. MAXIMUM INTEREST PAYABLE. The Company, each Purchaser
and any other holders of the Notes specifically intend and agree to
limit contractually the amount of interest payable under this
Agreement, the Notes and all other instruments and agreements related
hereto and thereto to the maximum amount of interest lawfully
33
<PAGE> 38
permitted to be charged under applicable law. Therefore, none of the
terms of this Agreement, the Notes or any instrument pertaining to or
relating to this Agreement or the Notes shall ever be construed to
create a contract to pay interest at a rate in excess of the maximum
rate permitted to be charged under applicable law, and neither the
Company, any guarantor nor any other party liable or to become liable
hereunder, under the Notes, any guaranty or under any other
instruments and agreements related hereto and thereto shall ever be
liable for interest in excess of the amount determined at such maximum
rate, and the provisions of this paragraph shall control over all
other provisions of this Agreement, any Notes, any guaranty or any
other instrument pertaining to or relating to the transactions herein
contemplated. If any amount of interest taken or received by any
Purchaser or any holder of a Note shall be in excess of said maximum
amount of interest which, under applicable law, could lawfully have
been collected by such Purchaser or such holder incident to such
transactions, then such excess shall be deemed to have been the result
of a mathematical error by all parties hereto and shall be refunded
promptly by the Person receiving such amount to the party paying such
amount, or, at the option of the recipient, credited ratably against
the unpaid principal amount of the Note or Notes held by such
Purchaser or such holder, respectively. All amounts paid or agreed to
be paid in connection with such transactions which would under
applicable law be deemed "interest" shall, to the extent permitted by
such applicable law, be amortized, prorated, allocated and spread
throughout the stated term of this Agreement and the Notes.
"Applicable law" as used in this paragraph means that law in effect
from time to time which permits the charging and collection of the
highest permissible lawful, nonusurious rate of interest on the
transactions herein contemplated including laws of the State of Texas
and of the United States of America, and "maximum rate" as used in
this paragraph means, with respect to each of the Notes, the maximum
lawful, nonusurious rates of interest (if any) which under applicable
law may be charged to the Company from time to time with respect to
such Notes.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterparts of this letter and return the same to
the Company, whereupon this letter shall become a binding agreement among the
Company and the Purchasers.
Very truly yours,
TCA CABLE TV, INC.
By________________________________________
Jimmie F. Taylor
Vice President, Chief Financial Officer
and Treasurer
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<PAGE> 39
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By______________________________________
Vice President
PRUCO LIFE INSURANCE COMPANY
By______________________________________
Vice President
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AMERICAN GENERAL LIFE INSURANCE COMPANY
THE FRANKLIN LIFE INSURANCE COMPANY
By______________________________________
Title:
35
<PAGE> 40
INFORMATION SCHEDULE
TCA CABLE TV, INC.
(1) Address for Notices:
TCA Cable TV, Inc.
3015 SSE Loop 323
Tyler, Texas 75713-0489
Attention: President
(2) Receipt of telephonic or facsimile notices:
(903) 595-3701
(903) 595-1929 (facsimile)
P-1
<PAGE> 41
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
--------- ----------
<S> <C> <C>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $73,065,300 $73,065,300
</TABLE>
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "7.26% Senior Notes
due June 23, 2005, Security No. !INV5108!", and
the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4069
Investment Operations Group (Attention: Manager)
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
1201 Elm Street - Suite 4900
Dallas, Texas 75720
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
(201) 802-6660
(201) 624-6432 (facsimile)
(5) Tax Identification No.: 22-1211670
P-2
<PAGE> 42
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
--------- ----------
<S> <C> <C>
PRUCO LIFE INSURANCE COMPANY $1,934,700 $1,934,700
</TABLE>
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 000-55-455
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "7.26% Senior Notes
due June 23, 2005, Security No. !INV5108!", and
the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made.
(2) Address for all notices relating to payments:
Pruco Life Insurance Company
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4069
Investment Operations Group (Attention: Manager)
(3) Address for all other communications and notices:
Pruco Life Insurance Company
c/o Prudential Capital Group
1201 Elm Street - Suite 4900
Dallas, Texas 75720
Attention: Managing Director
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
(201) 802-6660
(201) 624-6432 (facsimile)
(5) Tax Identification No.: 22-1944557
P-3
<PAGE> 43
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
--------- ----------
<S> <C> <C>
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY $15,000,000 $15,000,000
</TABLE>
All payments to be by wire transfer of immediately available funds, with
sufficient information (including PPN #, interest rate, maturity date, interest
amount, principal amount and premium amount, if applicable) to identify the
source and application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Variable Annuity Life Insurance Company
AC-0125-821-9
OBI=PPN # and description of payment
Fund Number PA 54
Payment Notices to:
The Variable Annuity Life Insurance Company and PA 54
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
Two Newport Office Park
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices, telephonic notices and all other correspondences to:
The Variable Annuity Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway
Houston, Texas 77019-2155
Facsimile Number: (713) 831-1366
Tax I.D. Number: 74-1625348
P-4
<PAGE> 44
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
--------- ----------
<S> <C> <C>
AMERICAN GENERAL LIFE INSURANCE COMPANY $5,000,000 $5,000,000
</TABLE>
All payments to be by wire transfer of immediately available funds, with
sufficient information (including PPN #, interest rate, maturity date, interest
amount, principal amount and premium amount, if applicable) to identify the
source and application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Life Insurance Company
AC-0125-880-5
OBI=PPN # and description of payment
Fund Number PA 40
Payment Notices to:
American General Life Insurance Company and PA 40
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
Two Newport Office Park
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices, telephonic notices and all other correspondences to:
American General Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway
Houston, Texas 77019-2155
Facsimile Number: (713) 831-1366
Tax I.D. Number: 25-0598210
P-5
<PAGE> 45
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
--------- ----------
<S> <C> <C>
THE FRANKLIN LIFE INSURANCE COMPANY $5,000,000 $5,000,000
</TABLE>
All payments to be by wire transfer of immediately available funds, with
sufficient information (including PPN #, interest rate, maturity date, interest
amount, principal amount and premium amount, if applicable) to identify the
source and application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Franklin Life Insurance Company
AC-2492-440-9
OBI=PPN # and description of payment
Fund Number PA 37
Payment Notices to:
The Franklin Life Insurance Company and PA 37
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
Two Newport Office Park
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices, telephonic notices and all other correspondences to:
The Franklin Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway
Houston, Texas 77019-2155
Facsimile Number: (713) 831-1366
Tax I.D. Number: 37-028165
P-6
<PAGE> 46
Schedules to be attached:
Schedule 6C -- Existing Guaranties
Schedule 8C -- Actions Pending
Schedule 8F -- Material Contracts
Schedule 8H -- Agreements Restricting Debt
Schedule 8O -- Financial Projections
P-7
<PAGE> 47
EXHIBIT A
FORM OF NOTE
TCA CABLE TV, INC.
7.26% SENIOR NOTE DUE JUNE 23, 2005
No. _____ June 23, 1995
$________
FOR VALUE RECEIVED, the undersigned, TCA CABLE TV, INC. (the
"Company"), a corporation organized and existing under the laws of the State of
Texas, hereby promises to pay to ____________________, or registered assigns,
the principal sum of ________________________ DOLLARS ($__________) on June 23,
2005, with interest (computed on the basis of a 360-day year--30-day month) (a)
on the unpaid balance thereof at the rate of 7.26% per annum from the date
hereof, payable quarterly on the twenty-third day of September, December, March
and June in each year, commencing with the September next succeeding the date
hereof, until the principal hereof (or any portion thereof) shall have become
due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of Yield Maintenance Amount (as
defined in the Note Agreement referred to below), and, to the extent permitted
by applicable law, any overdue payment of interest, payable quarterly as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate per annum from time to time equal to the lesser of (i) the maximum rate
permitted by applicable law or (ii) the greater of (i) 10% or (ii) the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York from
time to time in New York City as its Prime Rate, effective as of the effective
date of the change of such Prime Rate, calculated from the date such overdue
principal was due until paid in full.
Payments of principal of, interest on and any Yield Maintenance Amount
payable with respect to this Note are to be made at the main office of Morgan
Guaranty Trust Company of New York in New York City or at such other place as
the holder hereof shall designate to the Company in writing, in lawful money of
the United States of America.
This Note is one of a series of Senior Notes issued pursuant to a Note
Agreement dated as of June 23, 1995 (the "Agreement"), among the Company and
the original purchasers of the Notes named in the Information Schedule attached
thereto and is entitled to the benefits thereof. As provided in the Agreement,
this Note is subject to prepayment, in whole or from time to time in part on
the terms specified in the Agreement.
A-1
<PAGE> 48
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for a like principal amount will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
The Company agrees to make required prepayments of principal on the
dates and in the amounts specified in the Agreement. This Note is also subject
to optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, notice of intent to accelerate, notice of acceleration (to the extent
set forth in the Agreement), protest and diligence in collecting.
Should any indebtedness represented by this Note be collected at law
or in equity, or in bankruptcy or other proceedings, or should this Note be
placed in the hands of attorneys for collection, the Company agrees to pay, in
addition to the principal, premium, if any, and interest due and payable
hereon, all costs of collecting or attempting to collect this Note, including
reasonable attorneys' fees and expenses (including those incurred in connection
with any appeal).
The Company, and the purchaser and the registered holder of this Note
specifically intend and agree to limit contractually the amount of interest
payable under this Note to the maximum amount of interest lawfully permitted to
be charged under applicable law. Therefore, none of the terms of this Note
shall ever be construed to create a contract to pay interest at a rate in
excess of the maximum rate permitted to be charged under applicable law, and
neither the Company nor any other party liable or to become liable hereunder
shall ever be liable for interest in excess of the amount determined at such
maximum rate, and the provisions of paragraph 11R of the Agreement shall
control over any contrary provision of this Note.
A-2
<PAGE> 49
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF TEXAS AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.
TCA CABLE TV, INC.
By__________________________________
Jimmie F. Taylor
Vice President, Chief Financial
Officer and Treasurer
A-3
<PAGE> 50
EXHIBIT B
FORM OF OPINION OF JACKSON & WALKER
[Letterhead of Jackson & Walker]
June 23, 1995
The Prudential Insurance Company of America
Pruco Life Insurance Company
Three Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
American General Life Insurance Company and PA 40
c/o State Street Bank and Trust Company
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street, Two Newport Office Park
North Quincy, Massachusetts 02171
Ladies and Gentlemen:
We have acted as counsel for TCA Cable TV, Inc. (the "Company") in
connection with the Note Agreement, dated as of June 23, 1995, among the
Company and you (the "Note Agreement"), pursuant to which the Company has
issued to you today 7.26% Senior Notes due June 23, 2005 of the Company in the
aggregate principal amount of $75,000,000 (the "Notes"). All terms used herein
that are defined in the Note Agreement have the respective meanings specified
in the Note Agreement. This letter is being delivered to you in satisfaction
of the condition set forth in paragraph 3B of the Note Agreement and with the
understanding that you are purchasing the Notes in reliance on the opinions
expressed herein. In this connection, we have examined such certificates of
public officials, certificates of officers of the Company and copies certified
to our satisfaction of corporate documents and records of the Company and of
other papers, and have made such other investigations, as we have deemed
relevant and necessary as a basis for our opinion hereinafter set forth. We
have relied upon such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters contained
therein which were not independently established. With respect to the opinion
expressed in paragraph 3 below, we have also relied upon the representation
made by each of you in paragraph 9A of the Note Agreement.
Based on the foregoing and upon such investigation as we have deemed
necessary, it is our opinion that:
B-1
<PAGE> 51
1. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Texas. Each
Subsidiary is a corporation duly organized and validly existing in good
standing under the laws of its jurisdiction of incorporation. The Company and
its Subsidiaries have the corporate power to carry on their respective
businesses as now being conducted. The Company has the corporate power to
enter into the Agreement and perform its obligations under the Agreement and
the Notes.
2. The Note Agreement and the Notes have been duly
authorized by all requisite corporate action and duly executed and delivered by
authorized officers of the Company, and are valid obligations of the Company,
legally binding upon and enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3. It is not necessary in connection with the offering,
issuance, sale and delivery of the Notes under the circumstances contemplated
by the Note Agreement to register the Notes under the Securities Act or to
qualify an indenture in respect of the Notes under the Trust Indenture Act of
1939, as amended.
4. The extension, arranging and obtaining of the credit
represented by the Notes do not result in any violation of Regulation G, T or X
of the Board of Governors of the Federal Reserve System.
5. The execution and delivery of the Note Agreement and
the Notes, the offering, issuance and sale of the Notes and fulfillment of and
compliance with the respective provisions of the Note Agreement and the Notes
do not conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, or require any authorization,
consent, approval, exemption or other action by or notice to or filing with any
court, administrative or governmental body or other Person (other than routine
filings after the date hereof with the Securities and Exchange Commission
and/or state Blue Sky authorities) pursuant to, the charter or by- laws of the
Company or any of its Subsidiaries, any applicable law (including any
securities or Blue Sky law), statute, rule or regulation or (insofar as is
known to us after having made due inquiry with respect thereto) any agreement
(including, without limitation, any agreement listed in Exhibit C to the Note
Agreement), instrument, order, judgment or decree to which the Company or any
of its Subsidiaries is a party or otherwise subject.
A copy of this letter may be delivered by you or any Transferee to any
Person to which you or such Transferee sells or offers to sell any Note or a
participation in any Note, and such Person may rely upon this letter as if it
were addressed and had been delivered to such Person on the date hereof.
Subject to the foregoing, this letter may be relied upon by you only in
connection with the transactions contemplated by the Agreement and may not be
B-2
<PAGE> 52
used or relied upon by you or any other Person for any other purpose
whatsoever, without our prior written consent.
Very truly yours,
JACKSON & WALKER
B-3
<PAGE> 53
EXHIBIT C
FORM OF NOTICE OF SALE
[Letterhead of Note Holder]
TCA Cable TV, Inc.
3015 SSE Loop 323
Tyler, Texas 75713-1489
Gentlemen:
Reference is made to the Note Agreement, dated as of June 23,
1995 (the "Note Agreement"), among TCA Cable TV, Inc. (the "Company") and The
Prudential Insurance Company of America, Pruco Life Insurance Company, The
Variable Annuity Life Insurance Company, American General Life Insurance
Company and The Franklin Life Insurance Company, that provides, among other
things, for the issuance and sale by the Company of its 7.26% Senior Notes due
June 23, 1995, in the aggregate principal amount of $100,000,000. In
accordance with paragraph 4F of the Note Agreement, the undersigned hereby
exercises its Right to Put with respect to all Notes held by it.
Please transfer, in immediately available funds, on the date
specified in the Change in Control Purchase Notice to be given by you pursuant
to paragraph 4F(2) of the Note Agreement, the Agreed Put Consideration with
respect to the foregoing exercise of the undersigned's Right to Put.
Date: _______________, _____
[NAME OF HOLDER OF NOTES]
By:___________________________________
Name:
Title:
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